How a dividend reaches your bank: the timeline, step by step

Riya's mum owns 200 shares of Sameer Chai Ltd. In May she heard the word "dividend" on the news. By June she was asking Riya every Sunday where her money was.

So Riya drew her a timeline. This is it, with Sameer asking the questions Riya's mum was too polite to ask.

Fri 15 May, the board recommends

Day 0

The board approves the FY26 results and recommends a final dividend of ₹0.50 a share. With 5 crore shares, that's ₹2.5 crore.

Thu 6 Aug and Fri 7 Aug, the two dates that decide who gets paid

Days 83 and 84

The record date is the day the company takes its list of shareholders. Whoever is on it gets the dividend. Sameer Chai fixed Friday 7 August. A listed company has to tell the stock exchanges at least three working days ahead, not counting the day it tells them or the record date itself.

From the 7th, the share usually trades "ex-dividend", without this dividend. That's why the price often dips by about the dividend amount that morning. Nobody lost anything. The ₹0.50 has simply moved from the share price to a payment that's on its way.

Fri 21 Aug, the AGM declares it

Day 98

Now shareholders vote. They can approve the ₹0.50 or cut it, but they can't raise it above what the board recommended. Once approved, the dividend is declared, and two legal clocks start.

1. Within 5 days the company must put the full ₹2.5 crore into a separate bank account. For Sameer Chai, that's by 26 August.
2. Within 30 days it must pay every shareholder. That's by 20 September. If it misses, directors who knowingly allowed it face penalties, and the company owes 18% a year interest for the delay.

Fri 28 Aug, the money moves, and so does the tax rule

Day 105

Sameer Chai pays a week after the AGM, well inside the 30 days. The money goes straight to the bank account linked to each shareholder's demat account.

Before paying, the company checks whether to deduct tax (TDS). From 1 April 2026, the new Income-tax Act, 2025 replaces the 1961 Act, so the old Section 194 is history. Dividend TDS now sits in Section 393(1), at 10%. The Finance Act, 2026 left that rate and the exemption below unchanged.

Three things trip people up here.

• No TDS isn't no tax. The ₹100 is still her income and goes in her tax return, taxed at her own slab.
• A missing PAN costs extra. If a shareholder hasn't given a valid PAN, the company must deduct at a higher rate, generally 20%.
• The ₹10,000 is per company, per tax year. It counts what that one company pays her, not her dividends from everyone.

The interim dividend, a shorter road

Everything above is a final dividend. An interim dividend skips the AGM. The board declares it on its own during the year, and the same 5-day deposit and 30-day payment clocks start from that board meeting.

Sameer Chai's board is planning one for November 2026: ₹0.25 a share, ₹1.25 crore in all. If it goes ahead, Riya's mum gets 200 × ₹0.25 = ₹50. Her total from Sameer Chai for the 2026-27 tax year would be ₹150, nowhere near ₹10,000, so no TDS.

When the money doesn't arrive

Sometimes the payment bounces. An old bank account, a closed account, a name that doesn't match. The law has a slow but safe path for that money.

There's a sharper rule too. If no dividend on a share has been paid or claimed for seven consecutive years, the shares themselves move to the IEPF, not just the cash. One claimed dividend in that run resets the count.

What this timeline teaches

The pattern is the same at almost every listed Indian company, even when the dates move:

• The board proposes. The record date decides who. The AGM makes it final. The payment date is when you see it.
• The record date usually comes before the AGM, so the list is fixed before the vote.
• Tax is checked at the moment of payment, under whatever law is in force that day.