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National Securities Depository Limited

About NSDL
Although India had a vibrant capital market which is more than a century old, the paper-based
settlement of trades caused substantial problems like bad delivery and delayed transfer of title to
investors. The enactment of Depositories Act in August 1! paved the way for establishment of
"#D$, the first depository in India. This depository promoted by institutions of national stature
responsible for economic development of the country has since established a national
infrastructure of international standard that handles most of the settlement in dematerialised form
in Indian capital market.

%sing innovative and fle&ible technology systems, "#D$ works to support the investors and
brokers in the capital market of the country. "#D$ aims at ensuring the safety and soundness of
Indian marketplaces by developing settlement solutions that increase efficiency, minimise risk and
reduce costs. At "#D$, we play a 'uiet but central role in developing products and services that
will continue to nurture the growing needs of the financial services industry.
In the depository system, securities are held in depository accounts, which is more or less similar
to holding funds in bank accounts. Transfer of ownership of securities is done through simple
account transfers. This method does away with all the risks and hassles normally associated with
paperwork. (onse'uently, the cost of transacting in a depository environment is considerably
lower as compared to transacting in physical share certificates.
Basic Facilities
%nder the provisions of the Depositories Act, "#D$ provides various services to investors and
other participants in the capital market like, clearing members, stock e&changes and issuers of
securities. These include basic facilities like account maintenance, dematerialisation,
rematerialisation, settlement of trades through market transfers, off market transfers ) inter-
depository transfers, distribution of non-cash corporate actions and nomination* transmission.
The depository system, which links the issuers, depository participants +D,s-, "#D$ and clearing
corporation* clearing house of stock e&changes, facilitates holding of securities in dematerialised
form and effects transfers by means of account transfers. This system which facilitates scripless
trading offers various direct and indirect benefits to the market participants.
Special Facilities
Depository is a facility for holding securities electronically in which securities transactions are
processed by book entry. In addition to the core facilities of electronic custody and trade
settlement, "#D$ provides special infrastructure facilities for transactions like pledge,
hypothecation of securities, automatic delivery of securities to clearing corporations, distribution of
non-cash corporate benefits +.onus, /ights, I,0s etc.- and Internet-based services such as
#,11D-e and IDeA#.
"#D$ after having modernised the settlement system in the Indian (apital is now in the process
of establishing a nation wide Ta& Information "etwork +TI"- on behalf of the Income Ta&
Department +ITD-. "#D$-TA2 I"30/4ATI0" "1T50/6 was launched on 7anuary 1, 899:.
This is designed to make the ta& administration more effective, furnishing of returns convenient,
reduce compliance cost and bring greater transparency.
The Task 3orce on Direct Ta&es set up by ;overnment of India under the (hairmanship of Dr.
<i=ay 6elkar recommended the establishment of a national TI" as the solution to most of the
problems being faced by the Income Ta& administration in the country. This network is envisaged
to integrate primary information of ta& payments made in designated banks, ta& deduction at
source, etc.
The scope of services offered as a part of TI" is being gradually enhanced in phases.
(urrently, TI" is involved in the receipt of digitised TD# returns, digitisation of paper TD# returns,
receiving and storing data relating to ta& collections coming from banks through 0nline Ta&
Accounting #ystem +0$TA#-.
ITD has made it mandatory for all corporate deductors to file their e-TD# returns in electronic form
through TI"-3acilitation (entres +TI"-3(s- managed by "#D$. "#D$ is also facilitating
digitisation of TD# return being filed in physical form with the TI"-3(s to facilitate the entities not
having the wherewithal to digitise. This has resulted in reduction of compliance costs for
corporates, which had to file loads of paper by way of TD# returns.
3rom 7une 1, 899: it has become mandatory for banks to upload ta& payment data to TI" through
0$TA#. In addition, TI" is also involved in the process of issuance of ,ermanent Account
"umber +,A"- ) Ta& Deduction Account "umber +TA"- on behalf of ITD.
The road ahead involves demateriali>ation of TD# (ertificates. This will entail data upload by
deductors on an ongoing basis to TI" and matching this with bank challans and subse'uent
posting of ,A" level data to an electronic ledger of each ,A" and also posting of ta&es paid
directly by the ta& payer to the ,A" ledger. Thus each ,A" holder can have a single
comprehensive statement depicting total ta& to his credit ? paid by him and deducted on his behalf
by other entities. The need to obtain TD# certificates from multiple agencies and preserving those
certificates will be eliminated.
National Securities Depository Limited
:th ) @th 3loor, A 5ing, Trade 5orld, 6amala 4ills (ompound
#enapati .apat 4arg, $ower ,arel, 4umbai - :99 91A
Tel.B 8::899. 3a&B 988 8:C8A*!A@1. e-mailB infoDnsdl.co.in
51.#IT1#
Depository httpB**www.nsdl.co.in
#,11D-e httpB**speed-e.nsdl.com
4A,I" httpB**mapin.nsdl.com
Ta& Information "etwork +TI"- httpB**www.tin-nsdl.com