Record Date vs Ex-Date: Who Gets the Dividend, Bonus, or Rights

TL;DR

• The record date is the cut-off chosen by the company to identify which shareholders are eligible for a corporate action like dividend, bonus, split, or rights.
• The ex-date is the first trading day on which the share trades without the right to receive the corporate action; buyers on or after this day do not get the benefit.
• Under SEBI's T+1 settlement, the ex-date typically equals the record date because settlement happens the next trading day.
• Buying a share on the cum date and selling it on the ex-date is called dividend stripping; it is regulated to prevent tax avoidance under Section 94(7) of the Income-tax Act.
• All corporate action announcements are made under Regulation 30 of the SEBI LODR Regulations and must be disclosed to exchanges within 30 minutes of board approval.

What this means in plain terms

When a company declares a dividend or any other benefit, it cannot give it to every person who traded the stock that year. It picks one specific date, called the record date, and looks at its share register that evening. Whoever shows up as a holder on the record date gets the benefit, even if they sell the next morning.

The ex-date matters because the stock price drops by roughly the dividend amount on the ex-date. Buyers from the ex-date onwards know they are not entitled to the upcoming benefit, so they pay a price that already excludes it.

How the dates relate

Record date

The date on which the company looks at its depository records to identify eligible shareholders. If you appear in the NSDL or CDSL beneficial owner list on this date, you get the benefit.

Ex-date

The day from which the stock trades ex-corporate-action. From the ex-date onwards, a buyer will not receive the upcoming benefit. The exchange opens the stock with a price adjusted downward by the expected dividend or bonus value.

Cum date

The last day on which you can buy the share with rights to the corporate action. You must buy on or before the cum date and ensure your demat reflects ownership by the record date.

Under T+1 settlement

Since SEBI's T+1 rolling settlement is now standard, if you buy on the cum date (T), your shares are credited on T+1, which is the record date itself. So practically, the ex-date and record date are the same day for most stocks.

Common corporate actions

Cash dividends

The company pays a fixed amount per share to eligible holders, usually within 30 days of the record date. Dividends are taxable in the hands of the recipient at their applicable slab rate under Section 56 (income from other sources) and TDS applies under Section 194 if the amount exceeds Rs. 5,000 per year per company.

Bonus issues

Free additional shares are credited to demat accounts of holders on the record date. The cost basis of bonus shares is zero under Section 55(2)(aa)(iiia) for capital gains computation.

Stock splits

The face value of the share is reduced and additional shares are credited proportionally. Cost basis is adjusted in the same proportion.

Rights issues

Existing shareholders are offered the right to buy more shares at a discount to market price, in proportion to their existing holding. They can subscribe, partially subscribe, renounce in favour of someone else, or let the rights lapse.

Buybacks

The company offers to buy back its own shares from holders. Under Section 115QA, buyback proceeds were earlier taxed in the company's hands, but Budget 2024 shifted the tax incidence to shareholders from October 2024, treating buyback proceeds as dividend income.

Why the dates moved closer together

T+2 to T+1

India moved from T+2 rolling settlement to T+1 settlement in a phased manner from February 2022 to January 2023, becoming the first major market to adopt T+1. Under T+2, the ex-date was typically one trading day before the record date; under T+1 they coincide.

T+0 and instant settlement

SEBI launched optional T+0 settlement for select stocks in March 2024 and continues to expand it. For instant settlement, the practical effect on ex-dates is the same; you must own the share before the record date by close of market on the previous session.

Tax implications

Dividend stripping under Section 94(7)

If you buy shares within 3 months before a dividend record date and sell them within 3 months after, any short-term capital loss is ignored to the extent of dividend received. This anti-avoidance rule prevents using dividends to manufacture artificial losses.

Bonus stripping under Section 94(8)

A similar rule applies for bonus issues. If you sell the original shares within 9 months of bonus allotment, the short-term loss on those original shares is disregarded to the extent of the value of bonus shares received.

TDS on dividends

Companies deduct TDS at 10 percent under Section 194 on dividends exceeding Rs. 5,000 per year per shareholder. NRIs face higher TDS rates under Section 195 with treaty benefits available.

Capital gains on rights subscription

When you subscribe to a rights issue, your cost of acquisition is the rights issue price plus any premium paid for renouncement. The original shares' cost basis remains unchanged.

A real example

Vikram, 44, Rs. 42L CTC, Mumbai, owns 500 shares of a large-cap FMCG company that announces a Rs. 18 per share dividend with a record date of December 12, 2025. The cum date is December 11, 2025; the ex-date is December 12, 2025 (same as record date under T+1).

Here is what happens:

1. On December 11 closing, Vikram still holds 500 shares. He is on the demat register on the morning of December 12.
2. The dividend of 500 x Rs. 18 = Rs. 9,000 will be credited to his bank account within 30 days.
3. TDS at 10 percent under Section 194 = Rs. 900 is deducted. He receives Rs. 8,100 net.
4. The full Rs. 9,000 is added to his income from other sources in FY 2025-26 and taxed at his slab rate, with credit for the TDS of Rs. 900.
5. On December 12 the stock opens lower by approximately Rs. 18 to reflect the ex-dividend status.
6. If Vikram had sold on December 12, he would still have received the dividend (since he was on record on Dec 12 morning) but would have sold at the ex-dividend price. He cannot do both, by design.

If he had bought on December 11 specifically to grab the dividend and sold on December 12, Section 94(7) would disallow any short-term capital loss up to Rs. 9,000.

What to do this week

1. Mark upcoming record dates for stocks you own; check the BSE and NSE corporate action calendars on their websites.
2. Verify your bank account and demat details with your DP so dividends and bonus shares credit smoothly.
3. Review your dividend income for the year against the AIS on the income tax portal to ensure all dividend payments have been reflected.
4. Track TDS on dividends in Form 26AS and ensure your ITR captures both the gross dividend and TDS credit.
5. Run the 6-step assessment at https://myfinancial.in to see your old-vs-new regime delta, unused deductions, and insurance gap in under 10 minutes.

FAQ

What is the difference between record date and ex-date today?

Under T+1 settlement they are typically the same day. The cum date is the last trading day before, on which you can buy to receive the corporate action.

What if I buy on the cum date but my shares are not credited in time?

In rare cases of settlement failure, you may not appear on the record date. The depository system is robust enough that this is uncommon; if it happens, you may need to follow up with your DP and broker.

Can I buy a stock the day before the record date to get the dividend?

Yes, but you will pay a price that includes the dividend. After ex-date the price drops, so the net economic effect is roughly neutral, minus tax on the dividend at your slab rate.

Are foreign holders eligible if they hold via FPI route?

Yes, as long as they are on the depository register on the record date. TDS rates differ for non-residents under Section 195, with possible relief under DTAA.

Does the ex-date apply to rights issues?

Yes. The ex-rights date is when the stock starts trading without the entitlement to participate in the rights offer. Buyers from this date do not get rights entitlement.

How is the price adjusted on ex-date?

The exchange sets the opening price on ex-date by reducing the previous close by the dividend amount (for cash dividends) or by the bonus/split ratio. Market forces then drive the price further during the day.

Is dividend reinvestment treated as a corporate action?

Dividend reinvestment plans (DRIPs) are mostly seen in mutual funds, not stocks. For mutual funds, the dividend reinvestment option creates additional units at the post-dividend NAV without a separate record date for retail investors.

Sources

• https://www.sebi.gov.in/legal/regulations/jul-2015/securities-and-exchange-board-of-india-listing-obligations-and-disclosure-requirements-regulations-2015_30708.html
• https://www.incometax.gov.in/iec/foportal/sites/default/files/IT-Act.pdf
• https://www.nseindia.com/companies-listing/corporate-filings-actions
• https://www.bseindia.com/corporates/corporate_act.aspx
• https://www.sebi.gov.in/legal/circulars/jan-2023/introduction-of-t-1-rolling-settlement-cycle_67302.html

This is general information, not personalised advice. For your situation, consult a Certified Financial Planner.