SEBI had to fix a tax problem caused by a transfer that was never a sale.
I have spent more than three decades in broking, and investors ask a great deal about buying shares, but far fewer ask what happens to those shares after they die.
People assume the answer is on the nomination form. Name your spouse or child, and the matter is settled. It may not be.
A nominee gives the depository someone to transfer the securities to when the account holder dies. Securities and Exchange Board of India (SEBI) describes that person as a trustee who passes the securities to the legal heirs under the succession plan.
The nominee and the legal heir may be the same person, but the two roles are different. This difference even created a tax problem.
When a nominee passed securities to a legal heir, the nominee could be assessed for capital gains. SEBI introduced a reporting code for these transfers from January 2026.
Since September, investors can name up to three nominees on a demat account, which makes the form more flexible. It does not replace the conversation about who should ultimately inherit the shares.
We have made it remarkably easy to build a portfolio on a phone. Take a few minutes to check whether the name on your nomination form still fits your family's plans.
(For educational purposes only. This is not investment or legal advice.)
