Guide · Corporate actions · Updated 2026-09-23

Under T+1 the record date is the ex-date, and a purchase made on it gets nothing

The study of look-ahead bias from corporate actions measured this convention for a backtest. This page is for the holder: who is on the register, what arrives afterwards, and what a rule learned under T+2 now gets wrong, with every count taken from the exchange's own files.

The register decides, and only a settled purchase is on it

A record date is the date on which a company fixes who receives a benefit. It does not look at trades. The registrar takes the depositories' list of beneficial owners as it stands at the close of that day and pays, allots or credits against it. A share is on that list only once the purchase that bought it has settled: the clearing corporation's pay-out moves it into the buyer's demat account on the settlement day, and until then the buyer holds a contract, not a share.

Everything else follows from that. The ex-date is not a separate decision by the company. It is the first session whose purchase cannot settle before the register is struck, and the exchange sets it from the settlement calendar. The price on that session trades without the benefit, which is why it steps down.

Until recently there was a second way to fix the register. A company could close its transfer books instead of naming a record date, and before 12 December 2024, 4,144 of the 7,239 entries on the exchange's equity list, 57.2 per cent, did; the register was then the one at the close of the day before the books shut, and 1,618 of the 1,705 closures since T+1 that began on a trading session went ex one session before the closure. SEBI's amendment of regulation 42 of the listing regulations, notification SEBI/LAD-NRO/GN/2024/218 of 12 December 2024, omitted the provision, and the exchanges confirmed on 7 February 2025 (BSE notice 20250207-33) that book closure need not be announced for any purpose. Since then 15 of 3,503 entries have used it, none for a dividend and none after 21 January 2025. An explainer built on book closure describes a mechanism that has gone.

Shares pledged as margin never leave the register. The pledgor remains the beneficial owner and receives the corporate benefits during the pledge, in the words of the depository's investor FAQ on pledge (CDSL), so a holding used as collateral is paid like any other.

Two cycles, one session apart

India settled equities two business days after the trade from 1 April 2003 until the move to T+1, which SEBI permitted from 1 January 2022 by circular SEBI/HO/MRD2/DCAP/P/CIR/2021/628 of 7 September 2021 and the exchanges ran in phases: a first list of securities moved on 25 February 2022 (BSE notice 20220125-56), and every remaining security, including every stock with derivatives, on 27 January 2023 (BSE notice 20221226-37). Under T+2 the last purchase to settle by the record date was made two sessions before it, so the ex-date was the session before the record date. Under T+1 the last such purchase is made the session before, so the ex-date is the record date. The mechanics of the cycle itself are in the guide to T+1 settlement.

For a holder the rule reads best as a timetable: a record date on a Thursday, and a purchase on each day of that week.

The exchange's list bears the rule out, as the backtest study found: before the first phase, all 177 actions whose record date was a trading session went ex one session earlier, and since 27 January 2023, 5,004 of 5,154 went ex on the record date. The rule does not depend on the kind of action, and each exception, in every kind, traces to a day that traded without settling.

The trap, stated plainly

Buying on the record date gets nothing. It never did, under either cycle, because a purchase on the record date settles after the register is struck. What T+1 changed is that the record date is now also the ex-date, the session on which the price opens without the dividend, so the buyer pays the ex price and receives no dividend. Nothing is lost, since the price has already stepped down, and nothing is gained; the costs of the trade are real.

Three variants catch people who know the basic rule. The old shortcut on the sell side: under T+2 a holder could sell on the session before the record date, then the ex-date, and keep the dividend. That sale now settles on the record date, the buyer is on the register, and the dividend goes with the share, as the seller's column of the table shows. The value is not lost, because it is in the cum price received, but it arrives as sale proceeds taxed as a capital gain rather than as a dividend taxed at the holder's slab. The new shortcut on a settlement holiday, buy by the session before the record date, fails whenever the record date trades without settling, which is the next section. A purchase that is never delivered is the third. For a security under corporate action the clearing corporation holds no auction when a seller fails to deliver; the shortage is closed out in cash at the higher of the highest price across the exchanges from the trade day to the auction day, or 20 per cent above that day's settlement price (NSE Clearing's settlement FAQ, questions 7, 10 and 11, and the guide to short delivery and the auction). The buyer is compensated in money and is not on the register.

One rule survives all three: read the ex-date the exchange publishes for the action and buy before it. The exchange derives it from the clearing calendar, which a rule of thumb cannot see.

Settlement holidays move the ex-date back a session

A settlement holiday is a day on which the exchanges trade and the clearing corporation neither collects nor pays out, usually a bank holiday in Mumbai that is not a trading holiday: Gudi Padwa, Buddha Pournima, Parsi New Year, Id-e-Milad, or the annual closing of bank accounts on 1 April. NSE Clearing publishes the list each December and revises it when the state moves a holiday. Weekend special sessions, the Union budget days and the disaster-recovery drills, trade on days that settle nothing too.

On such a record date the previous session's purchase settles only on the next settling day, after the register is struck, so the last cum purchase moves back a session and the ex-date with it. The clearing corporation's revised calendar for May 2024 (NCL/CMPT/61543) shows the mechanics: purchases made on 22 May settled on 24 May, because 23 May, Buddha Pournima, did not settle. All 3 actions with a record date of 23 May went ex on 22 May.

Of the 150 actions since 27 January 2023 that went ex a session before a record date on which the market traded, 114 fall on 18 weekday settlement holidays in NSE Clearing's lists, 8 on 4 weekend sessions, and 28 on 9 September 2025, the session after the revised Id-e-Milad holiday, when capital market purchases made on 8 September settled on 10 September (NCL/CMPT/70069). The rule runs the other way too: no action with a record date on any of those days went ex on the record date. Where the record date is not a session at all, the ex-date is the last session before it, 340 actions, or one earlier where that session was itself a settlement holiday, 4 actions, the Saturdays after the Friday holidays of 1 November 2024 and 5 September 2025.

Id-e-Milad alone accounts for 67 of the 150. It falls in August or September, when 45.5 per cent of dividend ex-dates since T+1 fell, and the state moved it three times: from 28 to 29 September in 2023 (NCL/CMPT/58636), to 18 September in 2024 while the clearing corporation kept 16 September as well (NCL/CMPT/63950), and to 8 September in 2025 with 5 September kept (NCL/CMPT/70039). A calendar can change after a record date is fixed, and the exchange re-points the ex-date when it does.

The notice has shortened as well. The same December 2024 amendment cut the notice regulation 42(2) requires for a record date from seven working days to three, excluding the day of intimation and the record date, keeping seven for schemes of arrangement, and cut the minimum gap between two record dates from thirty days to five working days. The exchanges read the rule as three clear working days between the board's approval and the record date (BSE notice 20250207-33). A board that approves an interim dividend on a Monday can fix a Friday record date, which under T+1 leaves Tuesday, Wednesday and Thursday to buy.

Same-day settlement is shut on the one day it would matter

The optional T+0 segment, a beta since 28 March 2024 widened in December 2024 toward the top 500 companies (the T+0 guide covers the mechanics), settles a purchase the same day. In principle that could put a purchase made on the record date onto the register. The exchanges close the door. NSE's FAQ on trading in T+0 settlement lists no trading in a T+0 security on the ex-date of any corporate action in the corresponding T+1 security, including a scheme of arrangement, on an index rebalancing day, or on a settlement holiday; BSE's FAQ adds that the security is re-activated after the ex-date. Since the ex-date is the record date, the one session on which a same-day purchase could have reached the register is the one session on which the segment does not trade.

Nor does the segment change anything earlier: a T+0 purchase on the session before the record date qualifies, as a T+1 purchase in that session would, so the last day to buy is the same whichever cycle is used.

The fall that is not a loss, measured

On the ex-date the share trades without the dividend, so the holder's wealth is the ex price plus a receivable, and the cash that left the company is what the price no longer carries; the guide to dividend investing works the arithmetic. The exchange's file does not make this visible. Its previous-close field on the ex-date carried the unadjusted cum close in 7,187 of 7,189 ex-dividend dates, so a day's change computed from it shows the dividend as a loss.

How closely the price actually falls by the dividend depends on size. The measurement takes 7,018 ex-dividend dates from 16 February 2022 to 18 September 2026, removes the market's move using the Nifty 500 and each stock's own median move over the previous 60 sessions, and expresses what is left as a multiple of the dividend. As a control, the identical arithmetic runs on an ordinary session six sessions earlier with the same dividend, where the right answer is zero.

Three findings follow, all measured. Most dividends are too small to see: the median was 0.52 per cent of the price against a median daily standard deviation, net of the market, of 2.06 per cent, and 36.0 per cent of these stocks closed above their cum close on the ex-date while only 46.6 per cent fell by the dividend or more. Where the dividend stands clear of the noise, the fall is close to the dividend: a median of 0.87 at the open for dividends of 2 to 5 per cent and 1.02 above 5 per cent, with the placebo at zero in every group. In the middle of the range the median sits below the dividend, 0.65 at the open for dividends of 1 to 2 per cent, inside a band that spans an ordinary day's noise. That shortfall is before tax, which treats a dividend and a price change differently, and before costs, and the next section shows what a round trip built on it leaves after both.

What arrives, when, and how it is taxed

A dividend is income in the year it is paid, taxed at the holder's slab as income from other sources. The payer withholds 10 per cent where the year's dividends to that holder exceed ₹10,000, a threshold raised from ₹5,000 with effect from 1 April 2025 (section 194 of the 1961 Act, now within section 393 of the 2025 Act); the guide to dividend taxation covers the credit timing and the withdrawn interest deduction. The ex-date fall is not an expense against that income. It becomes part of a capital gain or loss only when the shares are sold, and a capital loss stays inside the capital gains head: it can meet capital gains and be carried forward for eight years, never dividend income (the guide to set-off and carry-forward; rates in the capital gains guide).

That asymmetry is why the classic round trip, buy on the last cum day and sell on the ex-date, loses after tax even when the price falls by exactly the dividend.

The anti-avoidance rule usually quoted against the trade is not what defeats it. Section 94(7) of the 1961 Act ignores a loss on securities bought within three months before a record date and sold within three months after it, but only where the dividend is exempt, and a dividend from an Indian company has been taxable in the holder's hands since 1 April 2020. The tax on the dividend does the work instead.

A derivatives position across the ex-date

A futures or options position is not a shareholding and is never on the register. What protects it across an ex-date is either the price or an adjustment, and the line between them is 2 per cent. SEBI's circular SEBI/HO/MRD2/MRD2_DCAP/P/CIR/2022/90 of 28 June 2022 lowered the threshold from 5 per cent: a dividend at or above 2 per cent of the share price, measured on the close before the board announced it (that day's close if it announced after the market shut), is extraordinary and adjusted, and below it nothing is adjusted (NSE Clearing's page on corporate actions adjustment). Measured against the last cum close, 617 of the 7,018 ex-dividend dates here, 8.8 per cent, reached 2 per cent.

Timing follows the settlement rule. The clearing corporation adjusts after the close of trading on the last cum day, which under T+1 is the session before the record date, so adjusted strikes and base prices apply from the ex-date. Stock options are European, exercisable only at expiry (NSE Clearing's settlement mechanism page), so a short call cannot be assigned early to capture a dividend, a risk option writers in markets with American-style options manage around ex-dates. At expiry, stock futures and in-the-money options settle by delivery, and since the March 2023 expiry the delivery obligation has been netted with the cash market obligation of the expiry day (NCL/CMPT/55330 of 20 January 2023), so it settles on the next settling day like a purchase made on the expiry day: the receiving side is on the register only if expiry falls on or before the last cum day. The fair value of a future with a dividend inside its life is covered in the guide to the forward price, and delivery risk at expiry in the guide to pin risk.

What the date is actually for

A record date is an administrative cut-off, and the ex-date is a settlement fact derived from it. Neither creates value: the dividend moves money the holder already owned out of the company, and the price steps down by about that much where the step can be seen at all. What a holder controls is the day: the session before the record date, unless the exchange's published ex-date says the calendar has moved it.

Reading a date as the output of a mechanism, rather than memorising a rule that breaks when the plumbing changes, is the habit the curriculum is built to teach.