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Home / Company Law & Secretarial Services / Declaration of Dividends
Last updated: 2 October 2026
Declaring a dividend involves more than a board decision — the source of profits, the approvals, the payment timeline, TDS and unpaid dividend rules all apply. Our team handles the process from the board meeting to the unpaid dividend account.
Under section 123 of the Companies Act, 2013, a dividend can be paid only out of profits of the current year, profits of earlier years after depreciation, or both — and not out of capital.
Based on sections 123–124 of the Companies Act, 2013, the Declaration and Payment of Dividend Rules, 2014 and the Income-tax Act, 2025. Last updated: 27 September 2026.
Provision on declaring dividends
To deposit the dividend in a separate account
To pay the dividend after declaration
To move unpaid amounts to the Unpaid Dividend Account
Unclaimed dividends then go to IEPF
Yearly dividend above which TDS applies for residents
Late payment is an offence, so timelines matter.
Dividend paid out of capital or without providing for depreciation.
Dividend not paid within 30 days of declaration.
Unclaimed amounts not moved to the Unpaid Dividend Account.
Dividends link to IEPF and capital decisions.
Unclaimed dividends.
Capitalising reserves.
Returning cash by buy-back.
Tax deduction on dividends.
Distributable profits and conditions confirmed.
Board resolution or AGM declaration.
Amount deposited in a separate account within five days.
Dividend paid within 30 days, with TDS.
Moved to the Unpaid Dividend Account.
IEPF tracking and statements for shareholders.
Unclaimed dividends have their own compliance trail.
Unpaid amounts moved within seven days after 30 days.
Details of unpaid dividends published as required.
Amounts unclaimed for seven years transferred to IEPF.
Shares with seven years of unclaimed dividends also transferred.
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No. Dividends can be paid only out of profits, after providing for depreciation.
Within 30 days of declaration.
They are moved to an Unpaid Dividend Account and, after seven years, to the IEPF Authority.
Yes, where dividend to a resident shareholder exceeds ₹10,000 in a year; non-residents are taxed at the applicable or treaty rate.
Shareholders at the AGM, on the board’s recommendation.
ACS – Director, Expertvuw Management Pvt Ltd
This work is handled by Expertvuw’s team, with filings made on the MCA portal. Certifications and audits required by law are issued by independent practising professionals engaged for your case.