March 17, 2025
8 mins read
When Samar’s grandfather passed away, he left him a pile of shares. Honestly, Samar had no idea what to do. An Inherited Stock sounds important, but at first, it just felt heavy — like responsibility more than wealth.
A few weeks in, though, he noticed something. These weren’t just paper slips; they carried stories. Some stocks had grown in value quietly over decades. Suddenly, managing Inherited Stock felt less like a chore and more like holding a financial diary.
That’s the thing about the inheritance of shares — it’s never only about numbers. It’s also about memory, law, tax, and the uncomfortable choices between selling and holding.
Shares aren’t tangible like jewellery or a bag of cash, you simply hand over. They follow a process — paperwork, verification, sometimes even courts. If a nominee is already listed, things move faster and with fewer headaches.
Transmission request form: Basically, the application to say, “Hey, these shares now belong to me.” It has to be attested and submitted to the company before anything else can move forward.
Death certificate: A certified copy of the original shareholder’s death certificate. It sounds like a lot of work, but the corporation can't legally start the transfer procedure without it.
Share certificate: The original proof that the shareholder owned those stocks. Handing this in is like handing over the key — without it, the ownership transfer just won’t happen.
PAN card: A self-attested copy of your PAN. It ties the shares to your identity and financial records, making sure everything is clean and tax-compliant once the transfer is approved.
Once you’ve gathered these, you’ll usually submit them to the registrar or bank. If the shares are worth less than ₹5 lakhs, you might also need an NOC from other legal heirs.
If the amount is more over ₹5 lakhs, more paperwork is needed, such as a will, a succession certificate, or even a letter of administration if there is no will.
Probate of will: Think of it as a stamp from the court saying, “Yes, this will is valid, follow it.” It explains how the shares and other assets should be divided.
Succession certificate: When no will exists, this court-issued certificate steps in. It authorises the nominee to handle money matters and make decisions about the inherited shares.
Letter of administration: If someone passes without leaving a will, the court may issue this letter. It lets a legal heir take control of the estate and carry out the transfer.
Once all of this is done and dusted, the shares finally shift hands. Not quick, not simple — but it ensures the ownership is crystal clear and disputes don’t crop up later.
Transferring shares into a demat account isn’t automatic. It goes something like this:
Step 1: Open a demat account with a bank or broker (a depository participant).
Step 2: Fill in the form with your details — personal, bank, contact.
Step 3: Submit KYC documents. Standard but essential.
Step 4: After verification and agreement, the account is live.
Step 5: Hand over the death certificate, transmission form, PAN, and share certificates to the registrar. Then, wait.
The classic dilemma: keep them or let them go? Emotion often whispers “hold.” Numbers sometimes shout “sell.” The truth? It depends on things like your risk appetite, how diverse your portfolio already is, and yes — tax.
If the shares mean something personal, keeping them feels right. But if your existing portfolio already mirrors the inherited one, maybe offload a portion. Spreading risk beats doubling down unknowingly.
When it comes to inherited stocks, one of the most frequently asked questions is related to their tax implications. Understanding the tax implications on inherited stocks is important for your financial planning. In fact, it may help you make decisions related to holding or selling these stocks. However, you must understand that there is no tax on the inheritance of stocks in India. This means you need not pay any tax for the price increase of the stocks from the time of their purchase to the time of the shareholder's demise.
However, once you've inherited the stocks, you are supposed to pay applicable taxes on capital gains, taxed at a long-term rate. Additionally, you also have to pay suitable taxes if the stocks offer dividends. In case you decide to sell these shares, they will be taxed as per the holding period of these equities.
The rush of inheriting shares makes people slip. A few traps to dodge:
Merging inherited and personal portfolios without thinking. Different goals, different contexts.
Selling out of emotion. Markets dip, grief stings, but rash moves rarely help.
Ignoring research. Inherited or not, these are your shares now — know the companies behind them.
Forgetting taxes. Dividends, capital gains, holding periods — overlooking them can cause headaches later.
Separate portfolios smartly: Don't just combine two sets of shares. If there are overlaps, rebalance.
Don't sell right away: Markets go up and down, but quick exits often don't last.
Do your research: the health of the company is more important than feelings.
Follow the regulations about taxes: Know how capital gains and dividends work.
Check your risk: Maybe an inheritance makes you want to take more risks.
Keep your long-term goals in mind, even as you change.
Inherited Stock is basically a mix of an asset and a memory. It can pay off debts, add variety, or just sit quietly in your portfolio. But it also needs your attention—paperwork, taxes, and decisions that can't be made quickly.
The inheritance of shares teaches something important: how you react to riches is just as important as what you get. The true work starts when you have to keep that equilibrium.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Bajaj Broking Financial Services Ltd. (BFSL) makes no recommendations to buy or sell securities.
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The cost basis for the inherited stocks is the ‘stepped-up basis’. This means they are calculated at the fair market value or stock’s FMV on the day of the demise of the original shareholder.
Yes, inherited stocks are subject to capital gains tax when selling them, however, they offer benefits in terms of price appreciation, cost basis, and more.
To inherit shares in your demat account, consider opening a demat account first. Now, submit all necessary documents like transmission form, death certificate, shares certificate, and more to the company's registrar to get the shares transmitted to your account.
Here is a list of documents required for the transmission of shares:
Transmission request form
Original death certificate
NOC
Shares certificate
Copy of your PAN
Yes, you may sell inherited stocks immediately once you receive them in your account. However, it is important to consider factors like tax implications, long-term, short-term capital gains, and more.
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