SEBI Circular No.- SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/130 dated September 19, 2025
Applicable Act/Rule: SEBI Act, 1992; Depositories Act, 1996; SEBI (LODR) Regulations, 2015; SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993
Applicable Section/Rule Section 11(1) of SEBI Act, Section 19 of Depositories Act, Regulation 40(1) read with Regulation 101 of SEBI (LODR) Regulations, 2015
Effective Date – January 1, 2026
The Securities and Exchange Board of India (SEBI) has issued this circular to simplify the process of transmission of securities from nominee to legal heir. Earlier, nominees transferring securities to legal heirs were sometimes assessed for capital gains tax, despite such transmission being exempt under clause (iii) of Section 47 of the Income Tax Act, 1961. This caused inconvenience as nominees had to seek tax refunds.
To address this, SEBI constituted a Working Group (WG) which engaged with the Central Board of Direct Taxes (CBDT). The WG recommended that a uniform reporting mechanism be introduced to avoid misclassification of such transmissions. Based on these recommendations, SEBI has mandated the use of a standard reason code “TLH” (Transmission to Legal Heirs) by all reporting entities when reporting such transactions to CBDT. This ensures that these transmissions are not wrongly treated as taxable transfers.
Procedural requirements for transmission of securities will continue as per the SEBI (LODR) Regulations, 2015 and the Master Circular for RTAs dated June 23, 2025 (as updated). RTAs, Listed Issuers, Depositories, and Depository Participants are directed to make necessary system changes and implement this from January 1, 2026.
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