Ex-Dividend Date Explained: Record Date, Dividend Yield and How Dividends Are Taxed in India
- November 12, 2026
- Posted by: Ankit Jaiswal
- Category: Market
Buy before the ex-date to receive the dividend. Under T+1, the cut-off date and record date fall on the same day. Dividends are taxed at your slab rate, with 10% TDS above Rs 10,000 a year.
Quick Answer
The ex dividend date is the first day on which a share trades without the right to the declared dividend, so you must buy the share before that day to receive it. Under the T+1 cycle, the ex-date and the record date fall on the same day. The share price usually drops by about the dividend amount on the ex-date, and the dividend you receive is taxed at your income slab rate.
The ex-dividend date is the date every dividend investor needs to know, because it decides who gets paid and who does not. Buy a share a day too late and the dividend goes to the seller instead.
This guide explains how the dividend calendar works, why the price falls on the cut-off date, how to read dividend yield and payout ratio, and how dividends are taxed in India, including the TDS rule.
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The Dividend Timeline: Declaration to Payment
- Declaration date: the board announces the dividend per share. A final dividend also needs shareholder approval at the annual general meeting.
- Record date: the cut-off date used by the company to decide which shareholders are entitled.
- Dividend date: the first day the share trades without the dividend.
- Payment date: the company pays the dividend into your bank account, normally within 30 days of declaration.
An interim dividend is declared during the year, usually with quarterly or half-yearly results. A final dividend is declared after the year ends and must be approved by shareholders.
Ex-Dividend Date vs Record Date Under T+1
Under the old longer settlement cycle, the ex-date fell one day before the record date. With T+1 settlement, the shares bought today are delivered tomorrow, so the cut-off date and the record date now fall on the same day. To be on the record, you must have bought the shares at least one working day before that date.
If you buy on the ex-date or later, you do not get the dividend. If you sell on or after the ex-date, you still get it, as long as you held the shares before the cut-off date.
Why the Share Price Drops on the Ex-Date
On the ex-date, the stock opens lower by roughly the amount of the dividend, because the cash is about to leave the company and go to shareholders. A dividend does not create wealth by itself. It moves value from the share price into your bank account. Large dividend payers in indices such as the Nifty 50 show the same adjustment.
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How to Read Dividend Yield and Payout Ratio
| Measure | Formula | What it tells you |
|---|---|---|
| Dividend yield | Annual dividend per share divided by share price | The income return at the current price |
| Payout ratio | Dividends divided by net profit | How much of profit is paid out |
| Dividend per share | Total dividend divided by number of shares | The rupee amount you receive per share |
A very high dividend yield can signal trouble, because the yield rises when the price falls. Check whether profits and cash flow can support the dividend before you buy only for income.
Dividend Tax in India
Dividends are taxed in the hands of the shareholder at the applicable income tax slab rate, and the company deducts TDS before paying. For a resident individual, TDS of 10 percent applies when the dividends from a company exceed Rs 10,000 in a financial year, and the rate rises to 20 percent if the PAN is not valid. TDS is not the final tax. You report the dividend as income and claim credit for the TDS.
Tax rules and forms change from time to time, so check the current provisions or speak to a tax professional before you file.
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Conclusion
The ex-dividend date is the line that separates buyers who receive a dividend from buyers who do not. Under T+1, the ex-date and record date coincide, so buy before that day and expect the price to adjust.
Judge dividends by yield and payout ratio, remember that they are taxed at your slab rate, and do not buy a share only to catch a dividend.
Disclaimer: Data and figures in this article are sourced from publicly available information. These may or may not be accurate. Please verify all data with the official NSE (nseindia.com) and BSE (bseindia.com) websites before making any investment decision. Investments in securities are subject to market risk. This content is for educational purposes only and is not investment advice by Univest (SEBI RA INH000013776).
Frequently Asked Questions
What is the ex-dividend date?
Ans. The ex dividend date is the first day on which a share trades without the right to the declared dividend. To receive the dividend you must have bought the share before that day. On the cut-off date, the price usually falls by about the dividend amount.
What is the difference between the record date and the dividend date?
Ans. The record date is the cut-off the company uses to decide who is entitled to the dividend. The ex-date is the first day the share trades without it. Under T+1 settlement, both now fall on the same day.
Do I get the dividend if I buy on the ex-date?
Ans. No. If you buy on the ex dividend date or later, the dividend goes to the previous holder. You must buy at least one working day before the cut-off date to be on the company’s record.
How is dividend income taxed in India?
Ans. Dividend income is added to your total income and taxed at your slab rate. The company deducts TDS of 10 percent when dividends from it exceed Rs 10,000 in a year, and 20 percent if PAN details are not valid. TDS can be claimed as credit.
What is dividend yield?
Ans. Dividend yield is the annual dividend per share divided by the current share price, shown as a percentage. It tells you the income return at today’s price. A very high yield can mean the price has fallen sharply, so check the sustainability of the payout.
What is the difference between interim and final dividend?
Ans. An interim dividend is declared during the financial year, often with quarterly results, and does not need shareholder approval. A final dividend is recommended after year end and becomes payable only once shareholders approve it at the annual general meeting.
Should I buy a share just to get a dividend?
Ans. Usually not. The share price falls by about the dividend on the ex-date, so you gain no extra value, and the dividend is taxed at your slab rate. Buy a share for the business and its long-term prospects, and treat the dividend as a bonus.
