Given the abolition of Dividend Distribution Tax, will the company commit to paying out all dividends received from its investments from fiscal 2020-21 onwards, given that to do otherwise will incur unnecessary and wasteful taxes?

The Union Budget 2020-21 presented by Finance Minister Nirmala Sitharaman abolished Dividend Distribution Tax (DDT).

Previously, companies were not taxed on dividends received, but they were subject to DDT on dividends paid out. Netting off was available where dividends were received from subsidiaries, but this did not apply to NBI as none of its investments qualify as subsidiaries (50% ownership required).

From fiscal year 2020-21 onwards, companies must pay income tax on all dividends received unless they pay out at least as much in dividends to their own shareholders at least one month before the tax filing date (Section 80M of the Income Tax Act). This applies to all dividends, not just those received from subsidiaries:

India: dividend tax pre- and post-April 2020

 Dividends receivedDividends paid
Before April 2020 (DDT regime)NO TAXDDT payable but deduction for dividends received from subsidiaries (50%+ ownership)
After April 2020Taxed as income but deduction for dividends paid out at least one month before tax filing dateNO TAX

NBI has received dividends from its investments (such as Shree Cement) in each of the last five years, and has rarely paid out even a small fraction of these to its own shareholders:

NBI: dividends paid and received

All figures in ₹ crore (10 million).
YearDividends receivedDividends paidPaid / received
20163.4-0%
201710.10.11%
20185.2-0%
20195.5-0%
202014.0-0%

Given the taxation changes, if NBI does not pay out all of the dividends it receives from fiscal 2020-21, it will naturally result in a higher tax bill and consequent destruction of shareholder value.