Draft Income-tax Rule 3 Requires Share Register, AGM, and Dividend Payment Only Within India to Ensure Domestic Control
Rule 3 of the Draft Income-tax Rules, 2026 prescribes mandatory arrangements for declaration and payment of dividends within India under section 2(42). Companies must maintain their share register at their principal place of business in India from no later than 1 April of the relevant tax year. The general meeting for passing accounts and declaring dividends must be held only within India. Additionally, any dividends declared, including on preference shares, must be payable exclusively within India to all shareholders.
Extract of Rule No. 3 of Draft Income-tax Rules, 2026
Rule 3
Prescribed arrangements for declaration and payment of dividends within India.
The arrangements referred to in section 2(42) to be made by a company for the declaration and payment of dividends (including dividends on preference shares) within India shall be as follows:
(a) The share-register of the company for all shareholders shall be regularly maintained at its principal place of business within India, in respect of any tax year from a date not later than the 1st day of April of such year;
(b) The general meeting for passing the accounts of the tax year and for declaring any dividends in respect thereof shall be held only at a place within India;
(c) The dividends declared, if any, shall be payable only within India to all shareholders.
