Multiple Demat accounts, need help with query on taxation, LTCG etc

Hi,

Let me explain my setup first.

I have 2 demat accounts, one with SBICap Securities(SSL) and another with RKSV(a discount broker).

  1. With SSL, I have “revoked” the Power of Attorney(PoA) for this account. Secondly, I have CDSL Easiest facility as well for transfer of securities using which I can transfer my shares from SSL to RKSV demat account. I keep all my long term shares in this account.

  2. With RKSV, I use this account to do all buying and selling. Once I feel that I need to keep a security for long term portfolio, I use Delivery Instruction Slip to transfer them from RKSV to my SSL demat account(RKSV doesn’t provide CDSL Easiest facility), so this step is bit slow and manual.

When I need to sell my long term shares i.e ones residing in SSL, I tranfer those shares using CDSL Easiest facility to my RKSV demat account and can therefore sell using RKSV trading platform.

Both the accounts are only on my name. My question is that if now I intend to sell my shares which are being held in SSL by using the above procedure, would there be any issue due to laws of taxation e.g FIFO or any other that I might be unaware of?

More elaborately, by simple transfer of shares from one account to another(both held by same individual), does the total time period for which a share is held by individual changes?(for classifying the resulting gains on selling as STCG or LTCG for taxation purpose).

Are there any chances to lose advantage of saving tax from Long Term Capital Gains for securities that were held by me for more than 1 year in SSL, but just transferred yesterday to RKSV for selling purpose?

For those who are curious as why this tedious setup; I didn’t plan all this, but a couple of mistakes(both from my end and from employees of SSL) triggered me into revoking the PoA with SSL and I ended up with this setup(which I am pretty happy with).
The PoA I had with SSL held them accountable for nothing and provided them with a blanket legal protection for almost anything. I wasn’t comfortable with it.

Regards
kartik

First of all I admit that this kind of setup was so far not known to me hence would like to know in detail about that from other people I know who are active traders.

Hence, I can not guide you with your first query.

But as far as the second query is concerned, if you are keeping the long term holdings in your SSL account for more than one year and after that you transfer to sell off then you will enjoy the tax savings scheme under “Long Term Capital Gains” without any issues.

Thanks @Debanjan_M for your response. Any answers from esteemed members like @Yogesh_s or anyone who participated in the thread “Selecting a broker” would be greatly appreciated.

Thanks for your help and patience.

You can move your shares between your own demat accounts without any tax incidence. Make sure that when you transfer shares from one account to your own other account, you select ‘Transfer to Own Account’ and not ‘Off-market Sale’ as the reason. Off-Market Sale will attract both STCG and LTCG tax as you won’t pay STT on such sale.

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Thanks a lot for your prompt reponse :slight_smile:
[EDITED]
Does this mean that when I transfer shares from one Demat account to another own Demat account, STT is charged? I don’t remember exactly if I was ever charged STT for this. Just that broker charges 0.04% of value of shares. I’ve always selected “Transfer between another account of the same holder” as the reason.

Thanks

No STT is not changed for off-market transfer.

What will be brokerage charges by HDFCSEC, when i transfer my shares from HDFCSEC to Zerodha.
i am planning to close HDFCSEC.

I already have an ICICI Direct Brokerage account with an NSDL Demat account. The annual charges for the Demat account are debited by ICICIDirect. Can I open an account with say Zerodha but linked with the same Demat Account. In this case, I assume ICICI Direct will continue debiting the annual charges but Zerodha will able to deposit stocks there. I am fine with being able to sell the ICICID bought stock through ICICI & sell only ones bought through Zerodha with the zerodha account. Any other caveats I should be aware of?

it is better to own a demat account with the broker you want to trade with, as the problem with such arrangement is that you can buy from any broker but whenever you have to sell, you need to fill delivery instruction slip and deposit the shares to broker’s pool account (zerodha in this case). So, selling will never be automatic as they can not take POA for that account.

There is no marking on shares where DP remembers which shares you bought from which account.

If buy the share using Zerodha, even then will I have to fill delivery slip & deposit the shares ?

Sorry - I didn’t frame my question correctly. What I meant to ask was this - " If I buy the share using Zerodha, even then will I have to fill delivery slip etc while selling it?"

Yes. You have to fill Delivery Slip whenever you sell through zerodha… For ICICI it will not be required unless you revoke POA, even for shares bought through zerodha.

Zerodha has stopped supporting third party demat accounts.
So now if you open a zerodha trading account - It must be linked to Zerodha Securities Demat account only.