National Securities Depository Limited (NSDL): Composition and List of Services
NSDL (National Securities Depository Limited) is one of two agencies authorised by the Income Tax Department to manage PAN-related services. TIN NSDL is responsible for the issuance of fresh PAN cards and approving corrections/changes. Apart from PAN-related services, there are a host of other services that NSDL offers.
This blog lists out all the services provided by NSDL, the benefits and the necessary measures taken by NSDL to ensure safety. Read on!
A Brief Overview of NSDL
NSDL was established in 1995 to modernise the Indian financial market by providing necessary infrastructures for the Indian security market. NSDL provided the facility to hold bonds and shares in a dematerialised format in depository accounts, which allows for quick transfer of securities.
Besides depositories, NSDL also set up and operates several e-governance projects. It has implemented around 18 projects across seven ministries and autonomous bodies. Some of them are as follows:
- Tax Information Network (TIN) for PAN-related services
- Central Recordkeeping Agency for social security services- NPS (National Pension System) and APY (Atal Pension Yojana)
- Registrar for Unique Identification Number (UID) (for Aadhaar-based authentication and e-sign services)
In 2013, NSDL demerged into two separate companies — National Securities Depository Limited and NSDL e-Governance Infrastructure Limited. While the former was responsible for only the depositories business, the latter was made for all other services, including TIN, PAN, UID and CRA.
Recently, NSDL e-Governance has changed its name to Protean eGov Technologies Limited. It now manages TIN on behalf of the Income Tax Department (ITD) and has a 46.8% market share in PAN issuance.
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Central Depositories in India
At present, there are two central depositories in India, namely:
- National Security Depository Limited (NSDL)
- Central Depository Services Limited (CDSL)
NSDL and CDSL are depositories that help in storing securities electronically. All stock brokers in India are registered to either NSDL, CDSL or both. Both of these depositories are SEBI-registered.
After buying shares in the stock market, NSDL and CDSL help you receive the shares in your Demat account with great ease. They convert the physical share certificates to an electronic form and vice versa. They further help maintain your Demat account and send periodic status reports and accounts statements to help monitor your portfolio better.
These depositories also help to store other financial instruments like Mutual Funds, Governments Securities, Debentures, bonds, etc.
While the National Stock Exchange backs NSDL, CDSL is promoted by the Bombay Stock Exchange. As both depositories provide their services to the stock brokers, who then deal with the investors, they do not charge the investors directly.
Composition of TIN NSDL
The Income Tax Department of India set up the Tax Information Network (TIN) to modernise the taxation system using technology. TIN NSDL is a repository of nationwide tax information used for processing, accounting, monitoring, and collection of direct taxes. Protean eGov Technology Ltd manages the TIN-NSDL portal on behalf of the IT Department.
The following describes the working of this network.
- TIN consists of two main sub-systems — ERACS (Electronic Return Acceptance and Consolidation System) and OLTAS (Online Tax Accounting System).
- ERACS mostly assists in the preparation of AIR (Annual Information Return), TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) returns.
- ERACS works by processing information supplied by taxpayers and fed to the TIN central system. It is an internet-based tool that uploads TDS and TCS returns electronically to the central system.
- On the other hand, OLTAS is utilised by ITD to collect information about tax deposits from different branches in the country. It then sends this information daily to the central system so that relevant authorities can review it.
Banks Authorised by NSDL
Following are the authorised banks who are also principal shareholders in NSDL:
- State Bank of India
- Canara Bank
- Dena Bank
- Oriental Bank of Commerce
- Union Bank of India
- HSBC
- Standard Chartered Bank
- HDFC Bank
- Axis Bank
- Deutsche Bank
- Citibank
List of Services Provided by TIN NSDL
1. E-tax Payment
This facility of NSDL allows taxpayers to pay their outstanding taxes online. Those with a bank account and debit card/net banking facility can fill up and submit the challan through an external portal.
2. E-TDS/E-TCS Returns
Taxpayers need to deduct tax at source when making payments as per the Income Tax Act. TIN NSDL allows you to submit TDS/TCS returns in both physical and electronic formats.
All tax paying entities in India have to quote their PAN for high-value transactions. On TIN-NSDL’s web portal, you can apply for a new PAN, check application status and make changes/corrections.
4. TAN Related Services
Under Section 203A of the IT Act, individuals/firms that deduct/collect tax at source need a TAN (Tax Deduction and Collection Account Number). These entities can apply for a new TAN and request correction on TIN NSDL.
5. AIN Registration
Some account offices have to get an Account Office Identification Number (AIN). These entities can apply for AIN at NSDL. Moreover, they can download their Book Identification Number (BIN).
6. Annual Information Return
Entities involved in high-value transactions can file their AIR, track its status, register and change/renew their Digital Signature Certificate via TIN NSDL.
7.Online PAN verification
Entities approved by the ITD (for example, banks, NBFCs, KRAs, etc.) can verify PAN details of taxpayers and make status enquiry.
8. Submit Form 24G
Payments and accounts offices, as well as district treasury offices, need to file form 24G as per IT notifications.
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Value Added Services
In addition to all the core services of trade settlement and electronic custody, NSDL provides many other services like:
- Hypothecation of securities
- Distribution of cash and non-cash corporate benefits
- Dividend distribution
- Stock lending
- Automatic delivery of securities
- Public issues
- Lending and borrowing
- SMS alert
Benefits of NSDL
NSDL was established to address the issues that appeared because of holding the securities in physical form. Mentioned below are some of the benefits of NSDL:
1. No Risk Concerning Physical Certificates:
The primary reason behind establishing NSDL was to eradicate the risks involved with physical certificates, such as risks of damage due to wear and tear, theft, destruction, mutilation, etc. Such risks can now be avoided as NSDL holds these certificates in a digital format. No additional costs have to be incurred for issuing duplicate certificates.
2. No Bad Deliveries:
During paper-based transactions, there was no chance of checking the quality of assets before buying them. This risk has been eliminated, as the securities held in NSDL are dematerialised, and there is no chance for bad deliveries.
3. No Stamp Duty:
As the securities get transferred through depositories, no stamp duty needs to be paid, which was an essential component in the traditional format.
4. Hassle-free Transfer and Registration of Securities:
In a depository system, once you buy a security, you become the owner of the same. This was not the case in the traditional system, where they had to send them to the company registrar to change the ownership.
5. Faster Settlement:
NSDL helps in the faster settlement of transactions. The settlement is complete within two working days. This improves liquidity and helps in faster turnover for the investor.
6. Quick Disbursement of Non-cash Corporate Benefits:
NSDL helps to credit corporate benefits directly to the investor’s account much more easily. These benefits are in the form of bonds, debentures and shares. It also offers a safer and faster way to transfer these funds.
7. Reduced Paperwork:
As the whole process is conducted online, maintaining a huge trail of lengthy documents is no longer necessary.
8. Status Reports:
Periodic reports are sent via mail containing details of transactions executed and holding status. This helps the investors assess their financial scenario.
9. Reduced Brokerage:
As the whole process is conducted online, the brokers do not have to indulge in a lot of paperwork or face the adversities of being an introducer. Thus, the brokerage charge is less these days.
10. Ease in Changing Investor Details:
In the traditional format, it was difficult to change the communication details of the investor. The investors had to change the same in all the companies they had invested in. However, uploading the relevant KYC documents and changing the investor details easily is possible in the online format.
11. Easy Sale of Securities Held on Behalf of Minors:
No prior approval of the court is required for selling the securities held in Demat form purchased on behalf of the minor.
12. Simplified Transmission Process:
If the investor plans to transfer the ownership, he/she can do it easily by providing the relevant documents to the depository participants. The investor does not have to communicate individually to all the companies where he/she holds a share.
Safety Measures Taken by NSDL
As the transactions on NSDL involve large sums of money, necessary measures are taken by the depository to ensure safety. Some of them are:
- Based on the criteria decided by SEBI (Securities and Exchange Board of India), only credible entities get selected as depository participants.
- For better control, the depository participants are asked to provide periodic account statements.
- All transactions through NSDL are recorded on a central server and visible on the database maintained by business partners.
- NSDL does random checks to find out if there is any discrepancy in the statements issued by the depository participants.
- All data exchange between NSDL and business partners is encrypted in line with the latest technologies.
- NSDL conducts regular audits on depository participants and Registrar & Transfer Agents.
- The depository participants are allowed to make any debit or credit entry in the concerned account only after verification from the clients.
- Business partners must resolve all grievances of investors, or else the investor can approach NSDL.
- Depositor account holders can freeze their accounts at their convenience. An account holder can freeze both debit and credit, only debit, a specified number of securities that are part of an ISIN in an account or a specific ISIN in an account.
- NSDL also provides insurance cover for any error or omission from the end of the depository participants.
- All the computers and software used by NSDL and the business partner must conform to industry standards.
- A disaster backup is available 24×7 for any natural or man-made disaster. This backup site is identical to the main one and operates only when the main computer is inoperational.
- All hardware, software and communication networks are reviewed periodically to ensure security and effectiveness.
- A certificate course is available for depository participants so that they can explain the whole process to local investors.
How to Apply for a PAN Card on TIN NSDL?
Follow the given steps to apply for a new PAN via TIN NSDL:
Step 1: Visit the official website
Visit the official website of TIN NSDL and click on the option to apply for a new PAN.
Step 2: Click on ‘New PAN’
Click on the ‘New PAN’ button. A new window will open.
Step 3: Select application type
After clicking on ‘Application Type’, select the correct form (Form 49A /Form 49AA) and taxpayer category.
Step 4: Fill out the form with your details
Enter your Name, DOB, mobile number, etc. Check the permission box and enter the CAPTCHA code and click ‘Submit’.
Step 5: Enter other personal details
On the next page, enter these details — your name, Aadhaar number and father/mother’s name. Then, click ‘Next’.
Step 6: Enter income and address information
Fill in your income details, address and contact details.
Step 7: Enter area details
Find and enter these details from the given window — AO number, type, area code and range code. Next, select and upload scanned copies of required documents.
Step 8: Upload or post the relevant documents
Next, select and upload scanned copies of required documents.
Step 9: Make the payment
After uploading the scanned copies of the necessary documents, a payment gateway will open for you to make the necessary payment.
Step 10: Verify with OTP
A One Time Password (OTP) will be sent to your mobile number which is registered with your Aadhaar card. Enter the OTP to verify your payment.
After this, you will be provided with the acknowledgement slip, which you have to download and send it to the NSDL office via post within 15 days.
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Offline Services through TIN Facilitation Centres
ITD has authorised TIN NSDL to set up TIN Facilitation Centres cum PAN Service Centres in almost every major city in the country. These centres provide PAN application forms Form (49A and Form 49AA).
People can get their required form and submit it at the nearest PAN Service Centre, along with the necessary documents to apply for a new PAN card. Users can also update their PAN cards, surrender additional PAN cards, deposit e-TDS/TCS returns, submit Form 24G from account offices and apply for TAN at these facilities.
How to find the Nearest TIN Facilitation Centre for PAN application?
Step 1
Visit the official website of TIN NSDL and click on ‘Facilitation Centre’.
Step 2
Click on ‘Search PAN Centre’ to find the nearest PAN Service Centre.
Step 3
To search by PIN Code, enter the PIN code of your residential address. Otherwise, you can enter the name of your city and state from the drop-down menu.
What is NSDL CAS?
The NSDL Consolidated Account Statement (CAS) is a single statement provided to a demat account holder. It consists of information related to all the transactions and holdings in an investor’s demat account.
The CAS provides details about all the investments made by an investor in the securities market which include information on investments made in mutual funds, equity shares, government bonds and certificates, treasury bills, etc. This statement helps investors to access their investment portfolio electronically.
Final Word
The Income Tax Department, with the help of NSDL e-Governance Infrastructure Limited, provides PAN card related services in India. It also provides other e-governance and IT services for the nation, including Aadhaar authentication, e-sign services and social security programs. Its various other services also makes it easy to get various Government-mandated documents online or offline. In other words, NSDL has proved to be a boon for both people and Government officials.
FAQs
Ans: After successful Aadhaar authentication, PAN applicants should take a printout of their acknowledgement receipt and sign it. They should put it in an envelope marked ‘Application for PAN’ and send it to NSDL’s office by courier/post within 15 days of application.
Ans: Keep the following things in mind:
• You need to furnish copies of proof of identity, address and date of birth.
• Applicants need to paste two colour photographs on this form.
• They need to mention the designation and code of their AO.
Ans: Yes, any person eligible for Aadhaar needs to quote his/her Aadhaar number in a PAN card application as per Section 139AA of the IT Act. If you do not have an Aadhaar card, you can apply for it and quote your Enrolment ID in the PAN application form.
Ans: Follow the given steps:
• Go to TIN NSDL’s official website and click on ‘online PAN services’.
• Select the option that allows you to check PAN/TAN application status.
• Choose PAN in the application type and enter the acknowledgement number.
• Enter the CAPTCHA code and click on ‘Submit’.
Ans: Follow these steps to make corrections via TIN NSDL’s official website:
• Click on ‘apply for PAN online’ in online PAN services.
• Click on ‘Apply’ and select the option saying ‘changes or correction in existing PAN card’.
• Fill out the form to submit correction details.
Ans: NSDL maintains investor holdings in electronic form. Other than that, it enables the rematerialisation and dematerialisation of securities to and from the depository, and facilitates electronic credit of shares in public offerings.
Ans: Yes, National Security Depository Limited is one of the central depositories in India alongside the Central Depository Services Limited. NSDL was established in August 1996.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
