Markets regulator Sebi on Friday introduced a simplified framework for transferring securities from a nominee to the authorized heir, aimed toward decreasing pointless tax and compliance hassles.Under the present system, such transfers had been generally handled as “sales” and assessed for capital positive factors tax, regardless that Section 47(iii) of the Income Tax Act, 1961, exempts them. Nominees may declare refunds later, however this process usually induced delays and inconvenience, PTI reported.To deal with this, a Sebi Working Group consulted the Central Board of Direct Taxes (CBDT) and launched a brand new reporting code – “TLH” (Transmission to Legal Heirs). The code will be sure that such transfers are reported accurately and should not taxed as capital positive factors.“It has been decided that a standard reason code viz. ‘TLH’ shall be used by the reporting entities while reporting the transmission of securities from nominee to legal heir, to the CBDT so as to enable proper application of the provisions of the Income Tax Act, 1961,” Sebi mentioned in its round.From January 1, 2026, all reporting entities – together with RTAs, listed firms, depositories, and depository members – shall be required to make use of the TLH code for such transactions.Earlier, Sebi had additionally streamlined the process of appointing nominees. The nominee acts as a trustee of the securities of the unique safety holder and transfers them to the authorized heir based on the succession plan, making certain smoother transition of belongings.