When a demat account holder dies, the securities inside do not get sold or frozen forever — they are transmitted to the nominee or legal heirs. This is different from a normal transfer, it triggers no capital-gains tax, and how painful it is depends almost entirely on one thing the deceased did or did not do: register a nominee. Here is the full 2026 process, the documents, and the ₹5 lakh rule that decides whether you need a court.
Transmission vs transfer — why the difference matters
A transfer is a voluntary move of securities you initiate while alive (a sale, a gift, or a shift between your own accounts). A transmission is the operation of law that moves securities out of a deceased holder's account to the rightful claimant. Two consequences flow from this:
- No capital-gains tax on transmission itself. Inheriting shares is not a "transfer" under the Income Tax Act, so nothing is taxed at the point of transmission. Tax arises only later, when the heir sells — and even then, the original purchase cost and holding period of the deceased are inherited.
- No brokerage or stamp duty on the transmission entry.
The three scenarios
What the family must do depends on how the account was held:
| How the account was held | What happens | Difficulty |
|---|---|---|
| Joint demat account | Securities pass to the surviving holder(s) by "deletion of name" — the simplest route | Easy |
| Single holder with a nominee | Nominee claims via a Transmission Request Form + death certificate | Easy |
| Single holder without a nominee | Legal heirs claim; documents scale with value (the ₹5 lakh rule) | Hard |
This is exactly why registering a nominee is the highest-leverage five-minute task in personal finance — it moves your family from the bottom row to the middle row. See demat account nomination rules for how to add one.
With a nominee: the easy path
The nominee submits to the depository participant (DP):
- A Transmission Request Form (TRF).
- A notarised / attested copy of the death certificate.
- The nominee's own KYC and a client master report of the demat account the securities will move into.
There is no value threshold for nominee transmission — it works whether the holdings are ₹50,000 or ₹50 lakh. Remember, though, that a nominee receives the securities as a trustee, not necessarily as the final owner; ownership still follows the Will or succession law, a distinction the Supreme Court reaffirmed in 2024 (covered in our nomination guide).
Without a nominee: legal heirs and the ₹5 lakh rule
When there is no nominee, the documents required scale with the value of the holdings. SEBI raised the simplified-documentation threshold from ₹1 lakh to ₹5 lakh per account:
| Value of holdings (no nominee) | What you need |
|---|---|
| Up to ₹5 lakh | Transmission Request Form, notarised death certificate, affidavit, no-objection certificates (NOC) from all other legal heirs, and a letter of indemnity. No court order needed. |
| Above ₹5 lakh | The above plus a court instrument: a succession certificate, probate of the Will, or letter of administration. |
₹5 lakh is the SEBI standard floor; some DPs apply a higher threshold (a few go up to ₹15 lakh) at their own discretion before insisting on a court document, so always ask your specific DP first — it can save months. The court route (succession certificate / probate) typically takes several months and involves legal fees, which is the entire cost a nominee would have avoided.
Step-by-step transmission process
- Get multiple notarised copies of the death certificate — banks, DPs and registrars each want one.
- Identify the demat account(s) and their holdings. The deceased's Consolidated Account Statement (CAS) lists every holding across CDSL and NSDL in one place.
- Open (or use) a demat account in the claimant's name to receive the securities.
- Submit the TRF + documents to the deceased's DP per the scenario above.
- DP verifies and forwards to the depository; on approval the securities are credited to the claimant's demat account, usually within a few weeks for nominee/below-threshold cases.
- Close the deceased's account once empty — see how to close a demat account.
Tax and cost: what the heir owes
Inheriting the shares costs nothing in tax. When the heir eventually sells, capital gains are computed using the deceased's original purchase price and the deceased's holding period is added to the heir's — so long-held shares stay eligible for long-term capital-gains treatment. Plan the eventual sale, not the inheritance, for tax. (Dividends received after transmission are taxed in the heir's hands as normal.)
The single lesson families learn the hard way: a registered nominee turns a multi-month, court-involved ordeal into a two-week form submission. If you are reading this before a death in the family, the action item is to add nominees to every demat account today.
Frequently Asked Questions
Is there any tax when shares are transmitted after death?
No. Transmission of shares to a nominee or legal heir is not treated as a transfer under the Income Tax Act, so there is no capital-gains tax, brokerage or stamp duty at the point of transmission. Tax arises only when the heir later sells the shares, and the gain is computed using the deceased's original purchase cost. The deceased's holding period is also carried over, which helps the shares qualify for long-term capital-gains treatment.
What documents are needed to transmit shares if there is a nominee?
The nominee submits a Transmission Request Form (TRF), a notarised copy of the death certificate, their own KYC, and a client master report of the demat account that will receive the securities. There is no value threshold for nominee transmission — it works regardless of the holdings' worth, and no court document is required.
When is a succession certificate required for transmission of shares?
A succession certificate, probate of the Will, or letter of administration is required when there is no nominee and the value of holdings exceeds the simplified-documentation threshold of ₹5 lakh per account. Below ₹5 lakh, legal heirs can transmit with a TRF, notarised death certificate, affidavit, NOCs from other heirs and a letter of indemnity. Some depository participants apply a higher threshold (up to around ₹15 lakh) at their discretion, so confirm with the specific DP.
What happens to shares in a joint demat account when one holder dies?
The securities pass to the surviving holder(s) through a simpler "deletion of name" process rather than a full transmission. The surviving holder submits a request with a notarised death certificate, and the deceased's name is removed, leaving the holdings intact in the survivor's account. No succession certificate is involved.
How long does transmission of shares take?
For nominee transmission or legal-heir cases below the ₹5 lakh threshold, the securities are usually credited to the claimant's demat account within a few weeks of submitting complete documents. Cases above the threshold that require a succession certificate or probate take several months, because obtaining the court instrument is itself a lengthy legal process.
Sources: SEBI circular raising the transmission simplified-documentation threshold to ₹5 lakh; NSDL and CDSL transmission of securities guidelines and FAQs; Income Tax Act provisions on inheritance and capital gains. Confirm exact documents and thresholds with the depository participant. Current as of 2026.