SEBI Introduces 'TLH' Code for Smooth Transmission of Securities from Nominee to Legal Heir in CBDT Reporting

The Securities and Exchange Board of India (SEBI) has introduced a standardized reason code, "TLH" (Transmission to Legal Heirs), to streamline the reporting of securities transfers from nominees to legal heirs to the Central Board of Direct Taxes (CBDT). This initiative aims to eliminate ambiguities and ensure that such transmissions are not mistakenly treated as taxable transfers, thereby exempting them from capital gains tax under Section 47(iii) of the Income Tax Act. The TLH code will be implemented by Registrars to an Issue and Share Transfer Agents (RTAs), listed issuers, depositories, and depository participants from January 1, 2026. This move is expected to simplify the transmission process and reduce administrative burdens for stakeholders involved in the transfer of securities due to inheritance.