Buy a share on its record date and, in India or the US today, you will usually miss the dividend. That catches out plenty of investors who learned the rule a few years ago. The record date is the day a company checks its register to decide who gets a dividend, bonus or split. The ex-date is the first trading day on which a buyer no longer qualifies. Under T+1 settlement the two now normally fall on the same day, so you have to buy before the record date, by the close of the previous trading session.
Key takeaways
- Every corporate action runs on four dates: announcement, ex-date, record date and payment date.
- With T+1 settlement, the ex-date and the record date normally coincide, in India for all stocks since 27 January 2023 and in the US for record dates from 29 May 2024.
- The last day to buy and qualify is the trading day before the ex-date. Buy on the ex-date and you miss out; sell on it and you still get paid.
- Expect the share price to drop by roughly the dividend on the ex-date. The payout is not free money.
- Indian companies deduct 10% TDS on dividends, but resident individuals are exempt if that company pays them ₹10,000 or less in the year, other than in cash (rules as of October 2026).
Four dates run every corporate action
Dividends, bonus issues and stock splits all follow the same basic calendar, and the US regulator’s Investor.gov glossary sets out the standard definitions. Indian practice matches it, with one wrinkle. Exchanges here recognise only a “record date” and no longer accept a book-closure date in its place, according to NSE’s corporate action filing FAQs, updated in July 2026.
| Date | What it means | What you need to do |
|---|---|---|
| Announcement (declaration) date | The board (or shareholders at the AGM, for a final dividend) approves the action and announces the amount or ratio and the record date. | Nothing yet. Note the dates. |
| Ex-date | The first trading day on which the stock trades without the benefit. A buyer from this day onward does not qualify. | Hold the shares at the close of the trading day before this. |
| Record date | The cut-off day on which the company (via the depositories in India) takes the list of eligible shareholders. | Your shares must have settled into your demat or brokerage account by this date. |
| Payment / allotment date | Cash is paid, or bonus/split shares are credited. | Check your bank or demat account. |
Why are the ex-date and record date the same under T+1?
Settlement decides it. You become the registered owner of a share only when the trade settles, and under T+1 that happens one business day after you trade. A purchase made the day before the record date settles on the record date and counts. One made on the record date settles a day late and does not. The first day a buyer misses out, the ex-date, is therefore the record date itself.
Under the older T+2 cycle, trades took two days to settle and the ex-date sat one trading day before the record date. Plenty of older articles and broker FAQs still describe that gap, which explains much of the confusion.
India: T+1 for all stocks since January 2023
SEBI opened the door with a circular dated 7 September 2021 that allowed T+1 on an optional basis. Exchanges moved stocks across in batches, smallest companies first, from February 2022, and NSE’s circular of 26 December 2022 shifted every remaining security to T+1 rolling settlement from 27 January 2023. Brokers have since updated their guidance. Zerodha’s support note, for instance, says the ex-date and record date are the same for corporate actions unless a trading holiday falls in between and pushes them apart. Exchange announcements bear this out: the BSE-sourced listings for MCX’s ₹10-to-₹2 split and A-1 Limited’s 3:1 bonus carry identical ex-dates and record dates.
The US followed in May 2024
The SEC adopted T+1 in February 2023, with a compliance date of 28 May 2024. Nasdaq’s issuer alert spelled out what that meant for dividends: for record dates from 29 May 2024, the ex-dividend date is generally the same day as the record date, where it used to be one business day earlier. NYSE Chicago made the same change through a rule filing with the SEC. If the record date is not a business day, Investor.gov says the ex-date moves to the business day before.
One American exception trips people up. When a distribution is worth 25% or more of the share’s value, as with large special dividends and most stock splits, the ex-date is the first business day after the payment date rather than the record date. Sell between the record date and the ex-date and the entitlement goes with the shares; your broker settles it through a “due bill”.
Ex-date vs record date on a dividend timeline
Take a hypothetical Indian company with no holidays in the window. “R” is the record date, and the days counted are trading days.
| Day | Event | Buy on this day: get the dividend? | Sell on this day: keep the dividend? |
|---|---|---|---|
| Announcement (some days before R) | Board declares ₹10 per share, record date R | Yes | No |
| R − 1 | Last day the stock trades “cum-dividend” | Yes (settles on R) | No |
| R | Ex-date and record date | No (settles on R + 1) | Yes |
| R + 1 onward | Stock trades ex-dividend | No | Yes |
| Payment date | Cash credited to the bank account linked to your demat account | Paid to whoever was on the register on R | |
The cash does not take long to arrive. Section 127 of the Companies Act, 2013 requires a declared dividend to be paid within 30 days of declaration.
Buying before the ex-date vs on it: we ran the numbers
Say an Indian company declares a dividend of ₹10 per share and the stock closes at ₹500 on R − 1. The figures are illustrative. In a live market the exchange adjusts the reference price and the stock then trades freely, so the actual opening price moves with everything else.
| Investor A | Investor B | Investor C | |
|---|---|---|---|
| When bought | On or before R − 1 | On or before R − 1 | On R (ex-date) |
| Shares | 500 | 1,500 | 500 |
| Value at ₹500 (close on R − 1) | ₹2,50,000 | ₹7,50,000 | n/a |
| Value at ₹490 (theoretical ex-price) | ₹2,45,000 | ₹7,35,000 | ₹2,45,000 |
| Gross dividend | ₹5,000 | ₹15,000 | ₹0 |
| TDS at 10% (resident, PAN on record) | ₹0 (within ₹10,000 limit) | ₹1,500 | ₹0 |
| Cash credited | ₹5,000 | ₹13,500 | ₹0 |
| Shares + gross dividend after ex-date | ₹2,50,000 | ₹7,50,000 | ₹2,45,000 |
The bottom row tells most of the story.
- The dividend swaps value, it does not create it. For A and B, shares plus gross dividend come to exactly what they held the evening before, ignoring market moves. Investor.gov warns that a stock “may fall by that amount” on the ex-dividend date when the payout is significant.
- Investor C loses nothing. C paid the lower ex-price and gets no dividend, which is fair, since C never paid for it.
- TDS is a prepayment, not the final tax. B’s ₹1,500 is not an extra cost. The full ₹15,000 is added to B’s income and taxed at the applicable slab rate, and the TDS is set off against that bill when B files a return.
The arithmetic is the same in the US. A holder of 100 shares receives $50 from a $0.50 dividend, provided they owned the stock at the close before the ex-date, subject to US withholding rules for their tax status.
How is TDS on dividends calculated in India?
Dividends have been taxed in the shareholder’s hands since the Finance Act, 2020 abolished dividend distribution tax, covering dividends received from 1 April 2020. The withholding rules moved house this year. From 1 April 2026, TDS on dividends falls under Section 393 of the Income-tax Act, 2025, which replaces Section 194 of the 1961 Act. The rates as published by the Income Tax Department (data as of October 2026):
| Situation (resident shareholder) | TDS |
|---|---|
| Dividend from a domestic company, general rule (Section 393(1), Table item 7) | 10% |
| Individual whose total dividend from that company in the tax year is ₹10,000 or less, paid other than in cash (Section 393(4), Table item 10(f)) | Nil |
| PAN not furnished or invalid | 20% (per a 2026 company TDS notice filed with NSE, citing Section 397(2)) |
| Valid Form 121 declaration submitted (replaces Forms 15G/15H) | Nil, if eligible |
The ₹10,000 threshold is counted per company, across everything that company pays you in the tax year, so an interim and a final dividend from the same company are added together. Non-resident shareholders follow separate withholding rules and tax treaties.
Record date vs ex-date for bonus issues and stock splits
Eligibility works the same way. In India you must hold the shares at the close of the day before the ex-date, which is also the record date. The difference lies in how the price adjusts and when the new shares turn up.
| Action | Before ex-date | After ex-date (theoretical) | Your total value |
|---|---|---|---|
| 1:1 bonus | 100 shares × ₹1,000 | 200 shares × ₹500 | ₹1,00,000 either way |
| Split, face value ₹10 to ₹2 (1 becomes 5) | 100 shares × ₹1,000 | 500 shares × ₹200 | ₹1,00,000 either way |
SEBI tightened the bonus timeline from 1 October 2024 (circular CIR/CFD/PoD/2024/122). The deemed allotment date is now the working day after the record date (T+1); bonus shares reach demat accounts by noon that day and can be traded from T+2. In the gap, the price drop can make a portfolio look as if it has lost money. It has not. The extra shares are on their way.
Where investors go wrong
- Buying on the record date. Under T+1 that is the ex-date, so the trade settles a day too late. The last day to buy is the trading day before.
- Trusting old T+2 explainers. Guides that put the ex-date a day before the record date describe the rule as it stood before both markets switched.
- Selling a day early. Sell on R − 1 and the dividend goes to the buyer. Sell on the ex-date or later and it stays with you.
- Counting the dividend as profit. The price adjustment offsets it and the payout is taxable income, which is why “dividend capture” trades often make less than they appear to on paper.
- Working out the dates yourself. A trading or settlement holiday can split the ex-date and the record date, so go by the exchange announcement.
- Letting PAN, Aadhaar link or bank details lapse. A missing or inoperative PAN can double the TDS rate, and wrong bank details hold up payment.
- Using US large-dividend timing everywhere. Only US distributions of 25% or more (including most splits) go ex after the payment date rather than on the record date.
This article is for information and education only and is not investment, tax or financial advice. Figures were checked on 27 October 2026; confirm current details with the official source or a registered adviser before acting.
FAQ
If I buy shares on the record date, will I get the dividend?
Usually not. Under T+1 in India and the US, the record date is normally also the ex-date, and a trade made that day settles after the cut-off. Buy by the previous trading day.
Can I sell on the ex-date and still get the dividend?
Yes. If you held the shares at the close of the day before the ex-date, the dividend is yours even if you sell on the ex-date.
Why does the share price fall on the ex-date?
Cash or new shares are leaving the company and going to shareholders, so each share now carries less value. With a bonus or split, the price adjusts to the larger share count.
What is the difference between record date and book closure?
Book closure was an older practice in which the share register was closed for a period. NSE now recognises only the record date for corporate actions and does not accept a book-closure date in its place.
Is TDS deducted if my dividend is below ₹10,000?
For a resident individual, no TDS is deducted if your total dividends from that company in the tax year do not exceed ₹10,000 and are paid other than in cash. The dividend is still taxable income.
When will I receive a dividend after the record date?
On the payment date the company announces. In India, Section 127 of the Companies Act requires payment within 30 days of declaration.
Sources
- Investor.gov (SEC): Ex-Dividend Dates
- SEC press release 2023-29: T+1 settlement rules
- Nasdaq Issuer Alert 2024-1: T+1 and ex-dividend dates
- SEC Release 34-99874: NYSE Chicago ex-date rule change
- SEBI circular: Introduction of T+1 rolling settlement (7 September 2021)
- NSE circular NSE/CMTR/54992 (26 December 2022)
- NSE FAQs on filing of corporate actions (July 2026)
- Zerodha support: Record date and ex-date
- Business Standard: Ex-date alert (December 2025)
- Taxscan: SEBI circular on T+2 trading of bonus shares
- Income Tax Department: Section 393, Income-tax Act, 2025
- Company TDS-on-dividend communication filed with NSE (2026)
- TaxGuru: Abolition of DDT and its impact
- Companies Act, 2013, Section 127
