Smooth transmission of securities from Nominee to Legal Heir
Ease of Doing Investment -Smooth transmission of securities from Nominee to Legal Heir
Date: September 19, 2025
Issued by: Securities and Exchange Board of India (SEBI)
What has changed?
When a security holder passes away, their nominee is responsible for transferring the securities to the rightful legal heir (as per the succession plan).
Earlier, while making this transfer, the nominee could be wrongly asked to pay capital gains tax. Although such transfers are not taxable under the Income Tax Act, the nominee had to first pay and then apply for a refund – causing delays and inconvenience.
The New Simplified Process
- SEBI, in consultation with the Income Tax Department (CBDT), has introduced a new reporting code: “TLH” (Transmission to Legal Heirs).
- All Registrars, Issuers, Depositories, and Depository Participants must now use this code when reporting such transactions.
- Using this code ensures the transaction is rightly treated as tax-free, avoiding unnecessary tax demands on nominees.
Key Points for Investors
- No capital gains tax will be levied on transfer of securities from nominee to legal heir.
- Effective Date: January 1, 2026
- The usual documentation and process for claiming securities by legal heirs remains the same as per SEBI rules.
Why this matters?
This change will save nominees from unnecessary tax hassles and make the inheritance of securities smoother and faster.
Go To SEBI
Read More on SEBI
