When someone in your family passes away and they have had shares or mutual funds, those investments need to move to the right person. Simple enough in theory.

But in practice, families face months of confusion. Different brokers ask for different papers. Nobody explains what to do first. And some investments never get claimed at all.

SEBI, which is the body that regulates Indian stock markets, has been fixing this problem step by step. In September 2025, it released a rule to stop nominees from being wrongly taxed. Then in June 2026, it approved a completely new set of rules that make the whole process faster and simpler.

This piece explains both changes in plain language, so you understand exactly what SEBI has done and what it means for your family. If you want to make sure your own family is prepared, AasaanWill can help you write a Will and plan your estate properly.

Key Highlights

• The The Transmission to Legal Heir (TLH) code, mandatory from January 2026, stops nominees from being wrongly taxed on transmission

• SEBI's June 2026 rules add Quick Transmission Processing for small paper and demat holdings

• Limits for the simple, low-paperwork process have been doubled under the new rules

• Court documents are no longer required for uncontested transmission cases 

What Is Share Transmission?

When an investor passes away, their shares are transferred to the rightful successor. This process is called share transmission.

Share transmission is different from a sale. In a sale, the owner voluntarily transfers the shares. In transmission, the transfer happens because the shareholder has died.

Since it is not treated as a sale, Section 47(iii) of the Income Tax Act provides that no capital gains tax applies at the time of transmission. The person inheriting the shares does not have to pay tax simply because the shares are transferred to them.

That is what the law says. The problem was that, for years, the tax system did not always follow this principle.

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Share Transmission Then and Now: How SEBI Fixed the Problem

Here is what used to happen.

When an investor passed away, the shares were first transferred to the nominee named in the demat account. A nominee is not the owner of the shares. They are only a temporary holder whose role is to pass the shares to the legal heirs.

The problem arose when the nominee transferred the shares to the legal heirs. Some brokers and banks incorrectly recorded this transfer as a sale. As a result, the Income Tax Department generated a tax demand against the nominee, even though no sale had taken place and the nominee had not earned any money.

The nominee then had to spend time and effort getting the tax demand corrected or claiming a refund adding unnecessary stress for a family already coping with a loss.

AasaanWill's blog on the difference between a nominee and a legal heir explains why this confusion causes so many family disputes.

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SEBI Fix 1: The TLH Code (September 2025)

On 19 September 2025, SEBI issued Circular No. SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/130.

The circular introduced a simple but important change. Brokers, banks, registrars, and depositories must now use a specific reporting code called TLH when reporting the transfer of shares from a nominee to the legal heir. TLH stands for Transmission to Legal Heir.

Using the TLH code tells the Income Tax Department that the transfer is a transmission, not a sale. As a result, no capital gains tax demand should be generated against the nominee.

The requirement became mandatory from 1 January 2026.

SEBI Fix 2: The New Rules (June 2026)

At its 214th Board Meeting on 19 June 2026, SEBI approved a much bigger set of changes. Here is each one explained simply.

A Fast Track for Small Amounts

SEBI created a new fast-track path called Quick Transmission Processing, or QTP.

For physical shares worth up to Rs 10,000 per company, QTP applies with very little paperwork. For demat shares worth up to Rs 30,000 per account, QTP also applies.

This matters because many families simply gave up on small old investments. The paperwork felt too hard. QTP removes that problem for smaller amounts.

Higher Limits for the Simple Process

Before June 2026, the simpler paperwork route was only available for:

Physical shares up to Rs 5 lakh per company

Demat shares up to Rs 15 lakh per account

SEBI has now doubled both limits:

Physical shares: up to Rs 10 lakh per company

Demat shares: up to Rs 30 lakh per account

Many more families now qualify for the shorter, simpler process instead of the longer one. (Source: Business Standard, June 2026)

No More Court Documents for Most Cases

One of the biggest delays used to be probate. This is a court order that officially approves a Will. Getting it could take months and cost money.

SEBI has now removed this requirement for cases where nobody is disputing the inheritance. A simpler certificate from a government office is now enough.

PAN Does Not Need to Be Submitted Again

When a demat account is opened, PAN is already provided. SEBI recognised that asking the family to submit it again during the claims process made no sense. This step has been removed.

One Form Instead of Two

Earlier, the family had to fill a separate affidavit and a separate no-objection letter from all the heirs. Two forms, multiple signatures, usually a trip to a notary.

SEBI now allows both to be combined into one single form. 

Death Certificates Are Now Easier to Use

Death certificates from Indian government offices that come with a QR code are now accepted. No extra attestation needed.

If the person passed away abroad, the death certificate can now be verified through an Indian bank branch overseas or through a foreign bank that has a tie-up with an Indian bank. This helps NRI families significantly.

Fixed Deadlines for the Process

SEBI has now set firm timelines. For demat shares, the process must be completed within 7 days of receiving the papers. For physical shares, it must be completed within 21 days.

Families now have something concrete to hold brokers accountable to.

The Key Thing About Share Transmission Most People Do Not Know

A nominee is not the owner of the shares after the investor passes away.

The nominee is only a temporary holder. The Supreme Court of India confirmed this clearly in the Shakti Yezdani v Jayanand Salgaonkar case. The nominee must pass the shares to the legal heirs.

The legal heirs are decided by the investor's Will or by the law that applies to their religion in absence of a Will

This creates a common problem. Say your father named your uncle as nominee but wrote in his Will that you should get the shares. The shares go to your uncle first. Your uncle then has to pass them to you. If your uncle does not agree to thie, it becomes a dispute.

The simple fix: make sure the person you name as nominee is the same person named in your Will. AasaanWill's blog on nominee vs legal heir covers exactly what each person can and cannot do.

What Happens to Unclaimed Investments?

When families do not know that investments exist, or when the process feels too hard, the investments go unclaimed. After a number of years, they get moved to a government fund called IEPF (Investor Education and Protection Fund). Families can get them back from IEPF, but it takes extra time and effort.

The new SEBI rules reduce how many investments end up there. Faster timelines, less paperwork, and a quick path for small amounts all make it more likely that families actually complete the process.

5 Steps to Prevent Problems with Share Transmission

Check who your nominee is. Go into your demat account and mutual fund accounts and look at who is named. Make sure it is the person you want to receive the shares.

Make your nominee and your Will match. If your Will says one person gets your shares but your nominee is someone else, change one of them so they match. This removes the extra step.

Write down your investments. Make a simple list of every demat account, every mutual fund account, every broker name. Give this to your family. Most investments go unclaimed because the family simply did not know they existed.

Move paper shares to demat. If you still have old share certificates in paper form, get them into a demat account. The claims process for paper shares is longer. Demat makes it much easier.

Write a Will. This is the most important thing you can do. A clear Will tells everyone who gets what. It makes the whole process faster and avoids disputes. AasaanWill's blog on whether your nominee can claim mutual funds without a Will explains exactly what happens when no Will is in place.

Challenges that Families Face with Share Transmission

Even with all these new SEBI rules, things can still go wrong without proper planning.

• Not knowing the demat account or folio numbers, the person had

• Nominee and legal heir being different people creating an extra step that sometimes becomes a dispute

• No Will, so the family has to prove who the heirs are through a longer process

• Physical share certificates that nobody knew existed

• Investments are already in the IEPF because nobody claimed them in time

How AasaanWill Helps you with Inheritance Planning

AasaanWill helps you plan ahead so your family does not face these problems. Our team helps with:

• Writing a Will that names your legal heirs for all your investments including shares and mutual funds

• Making sure your nominee and your Will match so there are no extra steps

• Creating a simple written list of all your financial accounts that your family can actually find

• Helping families where someone has already passed away to understand the claims process step by step

• Advising on what papers are needed under the new SEBI rules

• Helping when shares are still in paper form

Instead of leaving your family to figure this out during the hardest time of their lives, AasaanWill helps you put everything in order today.

Conclusion

SEBI has made two major improvements.

The September 2025 TLH code stops nominees from being wrongly taxed when they pass shares to the legal heirs. This became live from January 2026.

The June 2026 rules go much further. A quick path for small amounts: Rs 10,000 for paper shares and Rs 30,000 for demat. Higher limits for the simple process: Rs 10 lakh for paper shares (up from Rs 5 lakh) and Rs 30 lakh for demat (up from Rs 15 lakh). No court document needed for most cases. No repeat PAN. One combined form instead of two. QR code death certificates accepted. A path for overseas death certificates. And fixed deadlines of 7 days for demat and 21 days for paper shares.

These are real improvements. But they work best when you have also done your own planning. Listing down your investments clearly, appointing a nominee and writing a Will are some of the first steps you need to take.

AasaanWill can help you with all of that right now.

Frequently Asked Questions

What is share transmission?

It is the process of moving an investor's shares to the right person after the investor passes away. It is not a sale. The investor has died and the shares simply need to go to the family.

Is share transmission taxed in India?

No. Section 47(iii) of the Income Tax Act says transmission is not a sale and no capital gains tax applies. The problem was that some brokers were reporting it as a sale by mistake, which the TLH code now fixes.

What is the TLH code SEBI introduced?

TLH stands for Transmission to Legal Heir. From January 2026, all brokers, registrars, and depositories must use this code when reporting a share transmission to the tax department. It tells the tax department this is not a sale, so no tax is charged on the nominee.

What did SEBI approve in June 2026?

SEBI approved a fast-track path for small amounts in share transmission, higher limits for the simple process, removed the court document requirement for most cases, removed the repeat PAN step, allowed one combined form instead of two, accepted QR code death certificates, created a path for overseas death certificates, and set fixed timelines of 7 days for demat and 21 days for paper shares.

What is Quick Transmission Processing?

It is the fast-track path SEBI created for small amounts. Paper shares up to Rs 10,000 per company and demat shares up to Rs 30,000 per account can be claimed with very little paperwork. This helps families claim small investments they might otherwise have given up on. (Source: SEBI Board Meeting, 19 June 2026)

What are the new limits for the simple process?

Paper shares: raised from Rs 5 lakh to Rs 10 lakh per company. Demat shares: raised from Rs 15 lakh to Rs 30 lakh per account. Many more families can now use the simpler route. (Source: SEBI Board Meeting Press Release, 19 June 2026 and Business Standard)

Do families still need a court document for large claims?

No, not for uncontested cases. SEBI has removed that requirement. A certificate from a government office is now enough in most cases. This removes one of the biggest delays in the old process.

Does PAN need to be submitted during the claims process?

No. PAN is already on file when the demat account was opened. SEBI has removed the need to submit it again, saving time for the family.

What is the combined form SEBI introduced?

Instead of a separate affidavit and a separate no-objection letter from all the heirs, SEBI now allows both in one single form. Less paperwork and fewer trips to the notary.

Are QR code death certificates accepted now for share transmission?

Yes. Death certificates from Indian government offices with a QR code are now accepted directly. For deaths abroad, the certificate can be verified through an overseas Indian bank branch or a foreign bank connected to an Indian bank.

What are the new timelines for the process of share transmission to legal heirs?

Demat shares must be processed within 7 days. Paper shares must be processed within 21 days. Both timelines start from when all the required documents have been received.

Is the nominee the same as the legal heir?

No. The nominee is a temporary holder, not the owner. The Supreme Court confirmed this in the Shakti Yezdani v Jayanand Salgaonkar case. The legal heir is the person who actually inherits, decided by a Will or by law.

What happens if the nominee and the legal heir are different people?

The nominee gets the shares first, then transfers them to the legal heir. This is an extra step that sometimes becomes a dispute. The best way to avoid it is to name the same person as both your nominee and your Will beneficiary.

What is IEPF?

IEPF is the Investor Education and Protection Fund. It holds unclaimed shares and dividends after a number of years. Families can get their investments back from IEPF but it takes extra time and steps.

Can AasaanWill help with estate planning to help faster transmission of share?

Yes. AasaanWill helps you write a Will for your investments, match your nominee with your legal heirs, and create a clear record of your financial accounts. AasaanWill can also help families already dealing with a transmission after a death.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. The information presented reflects the law as of the date of publication. For advice on your specific situation, please consult a qualified advocate.

“Ready to protect your family's investments? Visit aasaanwill to write your Will today.”