Allow me to share with you the process of off-market selling of Liquidbees fractional units using CDSL Easiest without any paperwork, and my personal learnings along the way.
Thanks to @mohitmehra, @Bhuvan, @dexter007 and Sonia Nischal from Zerodha support for guiding me in this journey.
Disclaimer: Long post ahead. Grab your coffee and cookies.
Around September last year, I asked myself if investing in Liquidbees is worth it. P.S. This is not a verdict and it may differ for you whether to invest or not. I didn’t find a good reason considering my portfolio and equity vs debt (other) ratio and other factors. So I decided to sell Liquidbees and make an exit. While I could sell off the whole units in the secondary market, but you can’t sell fractional units in the secondary market, they remained as leftovers in my holding. The fractional units are the dividends accumulated over time and they were lying unused as rupee lost because only whole units pay dividends.
Last month I thought of getting rid of the fractional units too so there are no traces of Liquidbees in my account. I searched on the FAQ articles, raised a query on Zerodha support, and found DIS slip method as a way to sell fractional units in the off-market back to the AMC.
Then the roller-coaster ride began.
To issue DIS booklet, you need to send the form to Zerodha HQ. Since I hate paperwork I requested if there is any other way instead of courier, I was told to e-sign the DIS request form using Digio and submit on the ticket online. I did so.
A few days later I was told my address on DIS request form (Mumbai) is different from the address in Demat account (Hometown address as a/c was opened using Aadhaar) and as per regulatory guidelines, the DIS booklet can only be sent to the registered address in Demat account. Solution - I was asked to change the address of my Demat account to Mumbai by sending a physically signed address change request paper form to Zerodha. Again, paperwork I thought.
Then I found a hack. I went to UIDAI website and since my Passport has Mumbai address I submitted a request to change my Aadhaar address to Mumbai online by uploading my passport as proof. And once it was done, I just did a Re-KYC of my Zerodha account using Aadhaar so the Mumbai address gets reflected in my Demat. Thankfully, not a single paper I had to sign or courier.
I had overcome the first hurdle. I then requested Zerodha to send me DIS booklet at my Mumbai address. While waiting for DIS booklet, I noticed this thread about off-market selling Liquidbees fractional units using CDSL Easiest. I remembered I already have an account with CDSL Easi.
So I logged into my CDSL Easi account and while exploring the menu, I found upgrade to Easiest. You can register for Easiest or upgrade to Easiest if you are already registered to Easi.
P.S. Don’t forget to add Nippo AMC BOID 1301240005856404 as trusted BOID because we want to sell fractional units back to the AMC.
P.P.S. Upgrading to Easiest doesn’t take away Zerodha POA. So don’t worry.
While I had successfully submitted the upgrade to Easiest Request and was awaiting for Zerodha to accept it (takes around 2 days), the curious me started exploring the other menu items. Murphy’s law says whatever has to go wrong would go wrong. I clicked on “Deregister Easiest” and before I knew I was logged out. It took me a while to realize that I had stepped over a landmine and it was too late now. My CDSL account was deactivated. But CDSL website is also at fault because it didn’t ask for any confirmation - Do you really want to deregister? Yes, No.
Sent an email to CDSL that I deregistered by mistake. It was an accidental click. CDSL responded by asking me to request Zerodha to reject the deregister request so I could login again. Raised a ticket with Zerodha and messaged Mohit who helped me get my account back. Sigh!
IMPORTANT: Do NOT click DeRegister in CDSL Easi. It doesn’t ask for your confirmation.
Once I retrieved my CDSL Easiest account, I was now ready to initiate an off-market transfer of Liquidbees fractional units to AMC. But I was finding it confusing what to fill for this field and that. So I requested Mohit again if any support team member can connect me over a call and guide me using screen sharing tools. There, Sonia Nischal from the Zerodha team guided me and I took screenshots of the journey and now sharing it here so it would be easier for anyone to follow.
When I cook, I always make a mental note of ingredients and pre-preparation required and the order what to do first and what next. Following the same method here, the pre-requisites for selling liquidbees fractional units as off-market transaction are -
-
An active CDSL Easiest account. Choose Account type - Trusted Account (PIN)
-
Nippon AMC BOID 1301240005856404 added as Trusted BOID to sell fractional units to AMC. If you haven’t done it, you can add it from Miscellaneous → ‘Edit Trusted Account’ in your CDSL Easiest login.
-
Keep the CDSL Easiest PIN handy. If you have misplaced or forgotten it, login to CDSL Easiest, go to Miscellaneous → Reset PIN and follow the steps.
-
Make a note of the quantity of liquidbees fractional units you want to sell. Go to console → holdings to find it. In my case it was 0.254 units totaling Rs 254.
P.S. If you have just sold the whole units in the secondary market and your account is due for dividend credit (happens monthly), I suggest you wait for a month so all pending dividends are credited as fractional units and then you can initiate off-market selling, otherwise you would receive some fractional units later (if any dues) and there would be leftovers.
-
Note the ISIN of Liquidbees = INF732E01037
-
For the off-market transfer you need to pay stamp duty for the transaction amount. Add CDSL in your bank account as a beneficiary with A/c number = CDSD followed by your 16 digit BOID and IFSC = ICIC0000104.
Some bank account have a cool-off period of 30 min before starting the transaction so adding the bank account in prior would help.
-
Now calculate the stamp duty to pay for the redemption amount (Rs 254 in my case). Login to CDSL Easiest, go to Transaction → Stamp Duty Calculator, enter the units to sell and the equivalent amount to determine the stamp duty to pay for the same. In my case Rs 0.04 to be paid as stamp duty.
-
Pay the necessary stamp duty amount in the CDSL account you added as a beneficiary in step #6. I transferred Rs 1 to the account.
-
In CDSL Easiest login, go to Transactions → Pay stamp duty → Balance Enquiry to verify.
You are now all set. Now follow the steps below to initiate off-market transaction:
- In CDSL Easiest login, go to Transaction → Setup → Bulk Setup. Select Counter BOID as 1301240005856404, the BOID of Nippon AMC that you had added as trusted BOID earlier. Select NSE as exchange. Select Date of transaction. Leave other fields as is.
P.S. Off-market transactions are carried out after 6 pm. So set-up and verify the transaction prior to that.
- Add ISIN INF732E01037 and quantity to sell. Reason for trade = Redemption of Mutual Fund Units and Remarks = Selling fractional units. Add the primary account number registered with your Zerodha account for both Bank account and Ref No.
- Click on Submit and Verify the transaction.
- Now you have to use your CDSL PIN to commit the transaction. Make sure of the amount, bank details before doing so.
-
It shows a message - authenticated successfully. That’s it. You now have to wait for Zerodha to accept the transaction.
-
On the date of transaction, you can verify your balance in Transactions → Pay stamp duty → Balance Enquiry to confirm that stamp duty has been deducted.
- You’ll get an email from CDSL that the said fractional units have been debited from your Zerodha account.
-
Nippon AMC would credit the redemption amount to your primary account registered with Zerodha in a week. It does so on a weekly basis.
-
Zerodha would debit off-market charges Rs 25 + GST from your ledger.
- In console Tax P&L doesn’t show the off-market transactions (which it should), so you will have to request Zerodha support to accordingly compute and update the Tax P&L for this off-market transaction from the backend.
That’s it.
Hope this helps you if you also want to sell fractional units of liquidbees without any paperwork.
@nithin, I have a request to update the SOP of Zerodha Support by recommending paperless ways as the first solution. Always. Digio-signed forms submitted on a Support ticket rather than sending physical forms by courier. Much more important in current times to encourage staying at home yet getting things done.
E.g. if Zerodha Support had told me at first only that I can get my address changed by updating Aadhaar address online (no paperwork) and doing Re-KYC of Zerodha account, it would have saved effort and time instead of recommending paperwork.
Similarly, if Zerodha support had told me about Off-market transfer using CDSL Easiest as the first solution instead of recommending DIS slip route, it would have been much helpful.
Also, all the above hassles would go away if only Zerodha AMC comes up with a growth-based low-cost Liquidbees equivalent ETF. Hopefully soon!
