How Can NRIs Claim Their Dividends in India| North Loop Official Blog
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01 Sep 2020

How Can NRIs Claim Their Dividends in India

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Dividends matter. Not only are they a form of cash flow, but also a prime reflection of a company’s value and its fundamental strength. So it is necessary to keep track of your dividends and claim them correctly on time. Before we begin a detailed discussion on the same, you need to understand what unclaimed dividends are and how they are different from unpaid dividends.

When a company pays dividends, you have to claim it. If you fail to do so, the dividends paid by the company get considered as unclaimed dividends. However, if a company declares it but fails to distribute, it is referred to as unpaid dividend. If you are a shareholder of a company that declares dividends, you must claim it within 30 days of the declaration.

Moreover, as an NRI, it is not only necessary for you to claim it to receive the payments but also to disclose the additional income on your tax return.

How do dividends get credited, and what are the reasons they become unclaimed?

If you have opened an NRE or NRO account and linked it your Demat account, the dividends declared by the company get credited there by the RTA (Registrar and Transfer Agents). If you possess both NRE and NRO accounts, they get mapped to their respective Demat accounts and automatically credited through electronic fund transfer.

That means whichever one is linked to your Demat account, that particular bank account gets credited automatically after the dividends are declared and distributed. The primary difference between each is that the dividends received in the NRE account can get freely repatriated and those in the NRO account are eligible for repatriation only to the extent of $1 million per year along with other assets.

An important point to remember is that you can link one only bank account to your Demat account used for trading in stocks. Coming to the reasons why the dividends remain unclaimed, there are quite a few, with the most common one being the closure of the bank account that gets linked to your Demat account.

If any of the accounts close and a new one not linked to your existing Demat account, the dividends cannot get credited and end up becoming unclaimed dividends. Some other reasons include mismatch of signature, change of your address (office and residential) and also ignorance of the investments from which you receive the dividends. That usually happens when the investment gets done by somebody else, usually a family member, and in their absence, nobody else is aware of it.

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What happens when a dividend becomes unclaimed?

A dividend that does not get claimed within 30 days of its declaration gets transferred by the company within seven days to a special account called the “Unpaid Dividend Account” opened by the company with a scheduled bank in India.

Any amount in this account that remains unpaid or unclaimed for seven years from the date of transfer then gets transferred to the Investor Education and Protection Fund or IEPF.

How to claim your dividends?

You can claim your dividend by making an online application to the Authority set up by the Ministry of Corporate Affairs (MCA) in India. That can be done by submitting the Form IEPF-5 available on the government website along with payment of the application fee specified by the Authority.

You should also write a request letter to the company’s RTA mentioning the depository participant ID and client ID as well as the period for which the dividend has not gotten received.

After you have submitted your online application, you have to send the written letter to the RTA along with requisite documents like a copy of acknowledgement, indemnity bond, cancelled cheque, original share certificate, proof of entitlement and a copy of your passport.

After the company receives your claim form and completes verification, it sends a verification report to the IEPF Authority within 15 days, and the Authority either approves or rejects the Form and your enclosures submitted based on its authenticity subject to further verification. If your application gets approved, the Authority presents a bill to the Pay and Accounts Office for e-payment of the amount of dividend you have claimed.

Now that you know about company dividends and the process of claiming them, let us take a look at the best dividend yield mutual funds in India and also the popular low price and high dividend stocks in India. You can also read about other long-term investment options in India by clicking here .

10 Best Dividend Yield Funds in India (for a period of one year) –

Principal Dividend Yield Fund Direct Growth – 10.75%

Aditya Birla Sun Life Dividend Yield Fund Direct Growth – 9.98%

UTI Dividend Yield Fund Direct Growth – 6.61%

HSBC Asia Pacific (Ex Japan) Dividend Yield Fund Direct Growth – 15.61%

IDBI Dividend Yield Fund Direct Growth – 14.40%

HSBC Dividend Yield Equity Fund Direct Growth – 8.70%

Tata Dividend Yield Direct Plan Growth – 4.76%

ICICI Prudential Multiple Yield Fund Series 7 1825 Days Plan E Growth – 7.34%

ICICI Prudential Multiple Yield Fund Series 6 1825 Days Plan D Direct Growth – 6.78%

ICICI Prudential Multiple Yield Fund Series 8 1824 Days Plan A Direct Growth – 6.44%

Here are the 10 best dividend stocks in India that have a history of consistent dividends over the years –

Hindustan Petroleum

Indian Oil Corporation

Power Grid

Rural Electrification

Oil India

Power Finance

National Aluminum Co.

Hindustan Zinc

NTPC

BPCL

To open an NRE account with North Loop and invest directly into mutual funds, sign up here .

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This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended be advice. You must obtain professional advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax, investment or other professional advice from North Loop or its affiliates. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. All opinions expressed do not reflect the views of North Loop nor are endorsed by North Loop.