Clarification on DEMAT-to-DEMAT Share Transfers and ITR Reporting

During the previous financial year, certain shares were transferred between two DEMAT accounts under the same ownership, without any actual sale. However, Quicko’s automatic calculation has incorrectly flagged these transfers as sales, showing capital gains or losses.

The transactions are showing in the Income Tax AIS. During ITR verification, this will cause an automatic mismatch, and the Income Tax Department may issue a notice later. What’s the correct way to address this?

Demat-to-Demat transfers are non-monetary and not taxable, hence not reported in ITR. However, maintaining transfer records is essential for audit trails and ownership verification. Always consult a tax advisor for transaction-specific guidance.