Share Transfer, explained in plain English
A share transfer moves shares from one shareholder to another. In a private limited company, the articles restrict transfers, usually by giving existing shareholders a right of first refusal. The transfer is made through a stamped Form SH-4 (or through the depository if the shares are in demat form), the board approves it, and the register of members and share certificate are updated in the buyer's name.
| Term | What it means |
|---|---|
| Form SH-4 | The prescribed share transfer deed. It is stamped, signed by the transferor and transferee, and delivered to the company within 60 days of execution (section 56(1)). |
| Stamp duty 0.015% | 0.015% of the consideration for a transfer on delivery basis, uniform across India since 1 July 2020 under the Indian Stamp Act, 1899 as amended by the Finance Act, 2019. |
| Right of first refusal | A pre-emption right in the articles: existing shareholders get the first chance to buy. |
| Transmission | Not a transfer: shares pass to the legal heir or nominee by operation of law on a shareholder's death. |
Stamp duty on share transfer: 0.015% since 1 July 2020
Stamp duty on a transfer of shares is 0.015% of the consideration, the same in every state. The Finance Act, 2019 amended the Indian Stamp Act, 1899, and the new rate applies to transfers from 1 July 2020, whether the shares are physical or in demat form.
Before that date, states charged their own rates, often 0.25%. Many websites still quote the old figure. If your SH-4 was stamped at 0.25% for a transfer after 1 July 2020, you paid far more than required.
| Consideration for the shares | Stamp duty at 0.015% |
|---|---|
| ₹1,00,000 | ₹15 |
| ₹10,00,000 | ₹150 |
| ₹50,00,000 | ₹750 |
| ₹1,00,00,000 | ₹1,500 |
For a physical transfer, the SH-4 is stamped before it is signed. For a demat transfer, the depository collects the stamp duty when the transfer is processed. The share purchase agreement should say which party bears it.
Physical SH-4 or demat transfer: which route applies
The route depends on whether your company is a small company. A private company that is not a small company must issue securities only in demat form and facilitate dematerialisation of existing shares under Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014. A shareholder of such a company who wants to transfer shares must dematerialise them first.
A small company has paid-up capital of up to ₹10 crore and turnover of up to ₹100 crore (from 1 December 2025). A holding or subsidiary company cannot be a small company. Small companies can still transfer physical shares through SH-4.
| Your company | How shares are transferred |
|---|---|
| Small company, shares in physical form | Stamped SH-4 lodged with the company; board approval; register and certificate updated |
| Not a small company | Shares dematerialised first; transfer through the depository participants of both parties; company's records updated through its RTA |
| Shares already in demat form (any company) | Depository transfer; stamp duty collected by the depository |
If your company has not set up demat yet, see our demat of shares service. A transfer cannot wait for it.
Share Transfer: how the work runs, step by step
A physical transfer takes five steps. The time limits come from sections 56 and 58 of the Companies Act, 2013.
| Step | Form or document | Who acts | Time limit |
|---|---|---|---|
| 1. Check the articles | Right of first refusal notice or waiver from other shareholders | Company and shareholders | As the articles provide |
| 2. Agree price and sign | Share purchase agreement; valuation report where needed | Buyer and seller | Before the deed is stamped |
| 3. Execute the deed | Form SH-4, stamped at 0.015% and signed by both parties with a witness | Buyer and seller | Deliver to the company within 60 days of execution (s.56(1)) |
| 4. Board approval | Board resolution approving the transfer; register of members updated | Board | Certificates delivered within one month of receiving the deed (s.56(4)(c)) |
| 5. Certificate | Old certificate endorsed in the buyer's name, or a new certificate issued | Company | Within the same one month |
SH-4 is not filed with the Registrar. The change of shareholder shows up in the company's next annual return (MGT-7 or MGT-7A), filed through our annual ROC filing service.
If the company refuses. A private company that refuses to register a transfer must send a notice of refusal to both parties within 30 days of receiving the deed (s.58(1)). The buyer can appeal to the National Company Law Tribunal within 30 days of the notice, or within 60 days of delivering the deed if no notice was sent (s.58(3)).
Share your documents by email or WhatsApp. We check every document before anything is signed or filed.
Transfers between a resident and a non-resident: FEMA and FC-TRS
A transfer of shares between a person resident in India and a person resident outside India must follow FEMA pricing rules and be reported in Form FC-TRS. The resident party files it on the RBI's FIRMS portal within 60 days of the transfer or of the receipt or remittance of funds, whichever is earlier.
- Price. For an unlisted company, a transfer from a resident to a non-resident cannot be below the fair value worked out by a chartered accountant, a SEBI-registered merchant banker or a practising cost accountant, under an internationally accepted pricing method on an arm's length basis. The valuation certificate should not be more than 90 days old.
- Fee. No filing fee. A late submission fee applies if FC-TRS is late: ₹7,500 plus 0.025% of the amount involved for each year of delay, capped at the amount involved.
- Our role. We prepare the SH-4 and company records; the FEMA side, including the valuation, runs through our FDI filing team. For valuation, see share valuation under Rule 11UA.
Tax on a share transfer
The seller pays capital gains tax on any gain. The buyer can be taxed if the price is below fair market value. Which Act applies depends on the date of transfer.
- Transfers up to 31 March 2026 (FY 2025-26): Income-tax Act, 1961. A purchase below fair market value can be taxed in the buyer's hands under section 56(2)(x), subject to the exceptions for gifts from relatives and other listed cases.
- Transfers from 1 April 2026 (Tax Year 2026-27): Income-tax Act, 2025, which carries forward the tax on property received below fair market value in section 92(2)(m), with relatives exempt under section 92(3).
A gift of shares still needs a transfer deed (or a demat transfer). A gift from a relative, as defined in the Income-tax Act, is generally outside the tax on gifts; a gift from a non-relative can be taxed in the recipient's hands.
We check the price against a valuation before the deed is signed, so the stamp duty, FEMA and tax positions line up. The seller reports the gain in the income-tax return; see income tax return filing.
Fees
| What | Amount |
|---|---|
| Regikart professional fee: SH-4 drafting, stamp duty computation, board resolution and minutes, register of members and certificate update | ₹2,499 |
| MCA filing fee | No government fee (SH-4 is not filed with the Registrar) |
| Stamp duty on the transfer | 0.015% of the consideration, paid to the government |
| FC-TRS (non-resident party) | No filing fee; late submission fee only if filed late |
| Valuation report, demat setup, FEMA filing | Quoted separately before we start |
Professional fees exclude GST at 18%. Government fees, where they apply, are paid at actuals to the department and are shown separately. Fees verified on 22 September 2026.
Documents you will need
- Share purchase agreement or the terms agreed between the parties
- Existing share certificates, or the demat account details of both parties
- PAN and address proof of the transferor and transferee
- The company's articles, for the transfer restrictions and pre-emption clause
- Right of first refusal notice or waivers from the other shareholders
- Valuation report, for a non-resident party or a transfer below fair value
- Board resolution and minutes, which we draft
Not sure which filing applies to you? Tell us what is changing and we will confirm the forms, deadlines and fee in writing.