What Is the Record Date?
The Record Date is the day the company checks its official list of shareholders. Anyone whose name appears on this list will get the dividend.
Since Indian markets now follow T+1 (Transaction + 1) day settlement, your shares must settle in your demat account by this day. In simple words, you normally need to buy the shares one business day before the record date to be eligible.
What Is the Ex-Dividend Date?
The Ex-Dividend Date is even more important from an investor’s point of view. It is the first day the stock trades without dividend rights.
- If you buy the share before the ex-dividend date → you will get the dividend
- If you buy the share on or after the ex-dividend date → you will not get the dividend (The seller receives the dividend in that case).
For NRIs who track the market across time zones, keeping an eye on this date makes it easier to plan purchases.
Settlement Cycle and Its Impact on NRIs
| Settlement Cycle |
Ex-Dividend Date |
Record Date |
| Earlier (T+2) |
Two days before record date |
Later date |
| Now (T+1) |
Usually the day before record date or even the same day |
Faster process |
With the T+1 cycle now in place, planning has become easier, especially for NRIs. You simply need to hold the shares until the ex-dividend date to qualify.
Illustration of a Record and Ex-Dividend Date
Suppose ABC Ltd. announces a dividend with the following dates:
| Event |
Date |
| Declaration Date |
1 June |
| Ex-Dividend Date |
18 June |
| Record Date |
18 June |
| Payment Date |
30 June |
Here is how the Record Date and Ex-Dividend Date affect your eligibility, as an NRI, for getting dividends from ABC Ltd:
- The Record Date (18 June) is the day the company checks its list of shareholders to decide who will get the dividend.
-
If you buy the share on 17 June:
Your shares will settle by 18 June, so your name will appear in the company’s records on the record date. You will receive the dividend.
-
If you buy the share on 18 June or later:
The shares will not settle in time for the record date. Your name will not appear in the company’s records. You will not receive the dividend.
Documents Required to Get Dividend for an NRI
NRIs need the following documents to receive dividends from Indian companies:
- PAN Card
- NRE/NRO Account Details
- KYC Documents
- Tax Residency Certificate (TRC)
- Form 10F
- FATCA Declaration
IMPORTANT NOTE: Submit these before the dividend payout to avoid delays or higher TDS.
Can You Sell on the Record Date and Still Receive the Dividend?
Yes. You will receive the dividend if you owned the shares before the ex-dividend date. Even if you sell the shares on the record date, you are still eligible. The company checks its shareholder list only once for that dividend.
What Happens to the Share Price on the Ex-Dividend Date?
On the ex-dividend date, the share price may drop by roughly the amount of the dividend. This is normal because new buyers will not receive the payout, so the price adjusts accordingly.
Special Rule for Large Dividends
If a company announces a very large dividend (≥25% of the share value), the ex-dividend date may be set after the payment date. NRIs should check company announcements carefully to avoid missing high-value payouts.
Key Tips for an NRI Shareholder
As an NRI investor, you should keep the following tips in mind while investing in India:
-
Time Zones:
Indian markets may open while you are asleep. Check the market timings in your local time before buying shares.
-
Documentation:
Make sure your PAN, NRE/NRO account details, TRC, and KYC are updated. Only verified NRIs can receive dividends smoothly. If you do not submit PAN or required DTAA documents, the higher TDS rate (20% plus surcharge & cess) will be applied.
-
Dividend Taxes:
- Dividend income from Indian companies is taxed at 20% TDS for NRIs.
- On top of the 20% TDS, surcharge and health & education cess (4%) are also added when the standard rate is applied.
- If your country has a DTAA (Double Taxation Avoidance Agreement) with India, the TDS may be lower.
- To apply this, you need to provide required documents such as a Tax Residency Certificate (TRC) and Form 10F.
- If the company applies the DTAA rate, no surcharge or cess is added on top of that treaty rate.
- TDS is deducted automatically before the dividend is credited to your account.
-
Strategy:
Buying shares only for dividends can be risky. Prices may drop on the ex-dividend date, and transaction costs reduce profits. Plan carefully before buying.
Conclusion
Once you know the purpose of these dates, dividend eligibility becomes very easy to understand. The Record Date tells the company who should get the dividend, and the Ex-Dividend Date tells investors the last day they must buy shares to qualify.
With the T+1 settlement cycle, the process is smoother, especially for NRIs who monitor the market from different countries. If you buy the shares before the ex-dividend date, your name appears in the company’s records, and you will receive the dividend on the payment date.
Invest 18k/month & get 2 Crore# Tax-Free*
Manage your funds online60k + happy customers across 25+ countries
Compare & Choose30+ Plans and 150+ Fund options
