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How are shares settled in a BTST transaction?

In a Buy Today Sell Tomorrow (BTST) transaction, shares can be sold before they are delivered to the demat account. To learn more, see What is BTST and how does it work?

These transactions are settled by first crediting shares to the client’s account on the day they are received from the Clearing Corporation (CC) and earmarking them for delivery on the same day against the sale of the stock that has already been carried out.

Example Scenario

  1. 100 shares of Reliance were bought on Monday and sold on Tuesday.
  2. As per the T+1 settlement cycle for the purchase, the shares are transferred to the demat account on Tuesday.
  3. On Tuesday, Zerodha will earmark the 100 shares of Reliance against the sale made on Tuesday.
  4. These shares will be debited from the client’s account towards the settlement on Wednesday (T+1 from the sale made on Tuesday).

By transferring the shares to the client’s account, subsequently earmarking and debiting for sale settlement, clients will be assured of getting credit for all corporate actions directly in their name. Similarly, if any TDS was deducted for dividends, the same would be filed against their PAN and reflected in their 26AS instead of being passed on from the broker's PAN.

Since the shares are credited to their demat account and then debited for BTST transactions, DP charges will apply just like normal delivery transactions. To learn more, see What does Depository Participant (DP) charge mean?