SEBI Proposes 'TLH' Code to Simplify Securities Transmission

SEBI has proposed a standard reason code 'TLH' to clarify the process of transferring securities from nominees to legal heirs, ensuring correct tax treatment. The move aims to prevent capital gains tax from being wrongly applied, encouraging transparency and consistency in financial reporting.

The Securities and Exchange Board of India (SEBI) has proposed a new standard reason code, 'TLH', to streamline the process of transferring securities from nominees to legal heirs and ensure appropriate tax treatment for these transactions.

According to a consultation paper released by SEBI, the 'TLH' code would be employed by registrars, depositories, and other reporting entities, providing clarity to the Central Board of Direct Taxes about such transmissions.

The initiative addresses current issues where some securities transmissions are incorrectly classified as normal sales, resulting in unnecessary capital gains tax taxes for nominees. The proposal is open for public comment until September 2, with necessary system changes required within three months of its final approval.