CIRCULAR
SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/130 September 19, 2025
To,
The Registrars to an Issue and Share Transfer Agents (RTAs)
The Listed Issuers
The Depositories
The Depository Participants through Depositories
Madam / Sir,
Sub: Ease of Doing Investment - Smooth transmission of securities from
Nominee to Legal Heir
1. SEBI has streamlined the process of appointing nominee. The nominee acts as a
Trustee of the securities of the original security holder and transfers the securities
to the legal heir as per succession plan.
2. As per existing procedure for effecting such transfers, the nominee, while
transferring the securities to legal heir, may get assessed for capital gains tax.
Payment of tax by the nominee in such a situation may not be appropriate
considering that in terms of clause (iii) of Section 47 of the Income Tax Act, 1961,
such transmission is exempted and not considered as “transfer”. While the
nominee may claim refund of such tax, this process causes inconvenience to the
nominee.
3. In order to alleviate this inconvenience, a Working Group (“WG”) was formed. The
WG, based on engagement with the Central Board of Direct Taxes (“CBDT”),
recommended that to address the issue, reporting entities should use the reason
code “TLH” (i.e. Transmission to Legal Heirs), while reporting such transactions to
the CBDT.
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4. Accordingly, in order to streamline the process of transmission of securities from
nominee to legal heir and resolve the abovementioned issues related to taxation,
it has been decided that a standard reason code viz. “TLH” shall be used by the
reporting entities while reporting the transmission of securities from nominee to
legal heir, to the CBDT so as to enable proper application of the provisions of the
Income Tax Act, 1961.
5. The procedural requirements for transmission of securities to legal heir shall
continue to be as provided under the provisions of SEBI (Listing Obligations and
Disclosures Requirements) Regulations, 2015 and Master Circular for Registrars
to an Issue and Share Transfer Agents dated June 23, 2025 (as updated from time
to time).
6. RTAs, Listed Issuers, Depositories and Depository Participants are directed to take
note of above and make necessary system changes and implement above
proposal with effect from January 01, 2026.
7. This circular is issued in exercise of powers conferred under Section 11(1) of
Chapter IV of the Securities and Exchange Board of India Act, 1992, Section 19 of
Chapter IV of the Depositories Act, 1996, Regulation 40(1) read with Regulation
101 of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 and Securities and Exchange Board of India
(Registrars to an Issue and Share Transfer Agents) Regulations, 1993 to protect
the interests of investors in securities and to promote the development of, and to
regulate the securities markets.
8. This circular is available on SEBI website at www.sebi.gov.in under the
category: ‘Legal → Circulars’.
Yours faithfully,
Aradhana Verma
General Manager
Tel. No.: 022-26449633
E-mail: aradhanad@sebi.gov.in
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