Securing Your Legacy: The Complete Guide to Nomination and Transmission of Securities in India (2026 Edition)

Introduction: A ₹82,000 Crore Wake-Up Call

As of January 2026, India's equity markets have reached an unprecedented scale. With over 20 crore active demat accounts across NSDL and CDSL, representing 12.7 crore unique investors, the wealth held in digital format is staggering. However, a darker reality looms beneath these numbers: unclaimed shares worth approximately ₹82,199 crore lie dormant across 1,561 listed companies. In the mutual fund sector, unclaimed money surged by 20% during the 2024-25 period, crossing ₹3,400 crore.

This is not merely a statistic about forgotten dividends; it represents thousands of families struggling to access their rightful inheritance during times of grief. Without meticulous nomination and transmission planning, your hard-earned wealth can become trapped in a bureaucratic labyrinth. On January 10, 2025, the Securities and Exchange Board of India (SEBI) revolutionized the nomination framework to address this crisis, making it more flexible yet more structured for the retail investor.

In this comprehensive guide, we will break down the legalities, the costs, and the step-by-step procedures required to ensure your securities reach your loved ones without delay. Whether you are a seasoned investor or just starting, understanding these mechanics is essential for your family's financial security.

Understanding the Basics: Nomination vs. Transmission

Nomination: Your First Line of Defense

Nomination is a proactive designation. It is the process where an account holder identifies one or more persons—known as nominees—who will receive the securities upon the holder's demise. Think of it as a standing instruction to your Depository Participant (DP).

Under the SEBI circular of January 2025, nomination is now virtually mandatory. Investors must either provide nominee details or formally "opt out" through a specialized Video In-Person Verification (IPV) process to ensure the choice is deliberate and recorded.

Transmission: The Legal Transfer Process

While nomination is the "instruction," transmission is the "action." It is the legal process of moving securities from a deceased holder's demat account to the rightful claimant. Unlike a regular transfer (which is a voluntary act like selling or gifting), transmission occurs by operation of law. This process is governed by the Indian Succession Act, 1925, and specific SEBI regulations designed to prevent fraud while ensuring efficiency.

The SEBI Revolution: The 2025 Nomination Framework

What Changed on January 10, 2025?

The SEBI landmark circular titled "Revise and Revamp Nomination Facilities in the Indian Securities Market" introduced four pillars of change:

1. Increased Nominee Limit: Investors can now designate up to 10 nominees per demat account, up from the previous limit of three. This allows for complex estate planning, where a portfolio can be split among spouses, children, parents, and even charitable trusts.
2. Mandatory KYC for Nominees: To prevent verification delays during transmission, nominees must now have their PAN, Aadhaar, and address proof on record at the time of nomination.
3. Opt-Out via Video IPV: Choosing not to nominate is no longer a simple checkbox. It requires a video-based verification to protect families from accidental gaps in coverage.
4. Standardized Forms: Uniformity across all RTAs (Registrar and Transfer Agents) and depositories has simplified the digital submission process.

Implementation Timeline

Why Nomination Matters: Real Numbers, Real Impact

Case Study: The ₹15 Lakh Learning

Consider the case of Rajesh Sharma, a 42-year-old professional from Pune. He held a portfolio worth ₹15 lakh but had no nominee. Upon his sudden passing in 2024, his wife, Priya, faced a nightmare scenario compared to a similar case with a registered nominee.

The Comparison of Outcomes

The Cost Breakdown for Priya (No Nominee):

• Legal Heir Certificate: ₹5,000 (Months 1-3)
• Court Fees (Maharashtra): ₹30,000 (2.00% of estate value)
• Legal Fees: ₹25,000
• Total Financial Loss: ₹55,000

The Hidden Cost of Inaction

Beyond the visible legal fees, inaction leads to:

• IEPF Transfer: Shares with unclaimed dividends for seven years are transferred to the Investor Education and Protection Fund, making recovery significantly harder.
• Opportunity Cost: The inability to sell or rebalance during market volatility.
• Emotional Toll: Forcing grieving family members to navigate courts and tahsildar offices.

Step-by-Step: Adding or Updating Nominees

For New Demat Accounts (Post-March 2025)

When opening an account with brokers like Zerodha, Groww, or ICICI Direct, you will be presented with the Nomination Form. You must:

1. Provide the full name, PAN, and Aadhaar of each nominee.
2. Specify the percentage share for each (e.g., Spouse 50.00%, Son 25.00%, Daughter 25.00%).
3. Appoint a guardian if the nominee is a minor (under 18).

For Existing Demat Accounts

The Online Method (Preferred):

1. Log into your DP's portal (e.g., Zerodha Console).
2. Navigate to 'Profile' or 'Account Settings' and select 'Nomination'.
3. Upload the PAN and Aadhaar scans of your nominees.
4. E-sign the request using your Aadhaar-linked OTP.
5. Processing is typically completed in 7-15 days.

The Offline Method:

1. Download NSDL Form SH-13 or the CDSL equivalent from your broker's site.
2. Attach self-attested copies of your PAN and the nominee's documents.
3. Submit physical copies to the nearest DP branch and receive an acknowledgment.

The Transmission Process: Navigating the Inevitable

Scenario 1: Nominee Exists (The Optimal Path)

If a nominee is registered, the process is streamlined and usually takes 4-6 weeks.

Required Documents:

• Transmission Request Form (TRF) signed by the nominee.
• Original or notarized Death Certificate.
• Nominee’s PAN card and identity proof.
• Last received demat statement of the deceased.

Scenario 2: Joint Demat Accounts

In a joint account, the Mode of Operation is critical:

• 'Anyone or Survivor': Upon the death of the first holder, the survivor continues to operate the account. They simply submit the death certificate, and the deceased's name is removed within 15 days.
• 'Jointly': This mode requires all holders' signatures for every trade. If one dies, the account is frozen until a full transmission process to the legal heirs/nominee is completed. This mode is rarely recommended for families.

Scenario 3: No Nominee (The Complex Route)

If no nominee exists, the path depends on the portfolio value:

1. Below ₹5 Lakh: Requires a Legal Heir Certificate from the Tahsildar, an Indemnity Bond, and an Affidavit from all heirs. Time: 5-7 months. Cost: ₹2,000-₹5,000.
2. Above ₹5 Lakh: A Succession Certificate from a District Court is mandatory. This involves public notices in newspapers and a 30-45 day objection period. Time: 6-14 months.

Succession Certificate Costs by State:

• Maharashtra: 2.00% of estate value (Max ₹1 lakh).
• Karnataka: 3.00% of estate value (Max ₹1 lakh).
• Tamil Nadu: 3.00% of estate value.
• Delhi: Flat fee for smaller estates, variable for larger ones.

Special Situations and Legal Nuances

Nominee vs. Legal Heir: The Trustee Rule

It is a common misconception that a nominee owns the assets. Under the Indian Succession Act, the nominee acts as a Trustee. They are legally obligated to distribute the assets to the legal heirs mentioned in a Will or determined by personal law (e.g., Hindu Succession Act, 1956). If a nominee refuses, the legal heirs can claim the assets through court intervention.

NRI Demat Accounts

NRIs must be extra cautious. Transmission involves FEMA (Foreign Exchange Management Act) regulations. Nominees should ideally be identified early to avoid the need for certified documents from Indian Embassies, which can delay the process by months.

Minor Nominees

A minor can be a nominee, but a guardian must be appointed. The guardian manages the assets in the minor's interest. Once the minor turns 18, a fresh nomination is required to transition control to the adult.

Tax Implications for Heirs

Capital Gains Tax

Inheriting securities is tax-free at the point of transmission in India. However, tax applies when the heir sells the shares:

• Cost of Acquisition: The cost is not 'zero' or the market price at inheritance. It is the original price paid by the deceased (Cost Basis carries over).
• Holding Period: The period for which the deceased held the shares is added to the heir's holding period to determine if it is Long-Term Capital Gains (LTCG) or Short-Term Capital Gains (STCG).

Post-Budget 2026 Rules:

• LTCG: 12.50% (for holdings > 1 year).
• STCG: 20.00% (for holdings ≤ 1 year).
• Exemption: First ₹1.25 lakh of LTCG is exempt annually.

Common Mistakes to Avoid

1. "I'm Too Young": Accidents do not discriminate by age. A 25-year-old in Bengaluru without a nominee left her parents with a 10-month court battle for her ₹8 lakh portfolio.
2. Outdated Nominees: Forgetting to remove an ex-spouse or replace a deceased nominee creates a "no-nominee" legal status.
3. Incomplete KYC: SEBI's 2025 rules mean a name without a PAN is an invalid nomination.
4. Physical Shares: Old certificates in trunks do not link to demat nominations. Dematerialize them immediately to ensure they are covered by your digital nomination.
5. Not Informing Family: An estimated 15-20% of IEPF transfers occur because families didn't even know the demat account existed.

Your 30-Day Nomination Action Plan

Key Takeaways for Investors

• Nominate Early: Adding a nominee takes 10 minutes but saves 14 months of legal work.
• Use the 10-Nominee Rule: Diversify your beneficiaries to avoid future disputes among heirs.
• Check Mode of Operation: Ensure joint accounts are set to 'Anyone or Survivor'.
• Maintain an Inventory: Ensure your family knows the DP Name, Account ID, and where your Will is kept.
• Update Regularly: Review your nominations every 2-3 years or after major life events like marriage or childbirth.

What This Means for Investors

The ₹82,000 crore unclaimed wealth crisis is a reminder that wealth creation is only half the battle; wealth preservation is the other half. SEBI's 2025 framework is a gift to the retail investor, providing the tools to bypass the expensive and slow Indian court system. By aligning your nominations with a legally valid Will, you ensure that your legacy is a blessing to your family, not a burden. Investors should monitor for any potential reintroduction of Inheritance Tax in future budgets, as current laws are highly favorable for heirs.