Domestic stock markets soared on Thursday as Sensex jumped over 1,900 points after Finance Minister Nirmala Sitharaman on Friday proposed corporate tax rate cut for domestic companies.
The benchmark BSE Sensex index zoomed 5.28 per cent, or 1904.06 points, to 37,997.53 at 12 noon, while the NSE Nifty50 was up 526.15 points, or 4.92 per cent at 11,230.95 points, posting the biggest single-day gain in a decade.
Top gainers in the Sensex pack included Maruti, M&M, HDFC Bank, Tata Motors, Yes Bank, Tata Steel, L&T, ICICI Bank, Bajaj Auto and RIL, rallying up to 9 per cent.
Meanwhile, Rupee has touched an intraday high of 70.67 per dollar.
The government slashed the effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies.
The Ordinance to slash corporate tax rates for domestic companies has been cleared by Cabinet, Sitharaman announced in a press conference.
In effect, the corporate tax rate will be 22 per cent for domestic companies, if they do not avail any incentive or concession.
To provide relief to companies which continue to avail incentive or exemptions, the Government has proposed to give a Minimum Alternate Tax (MAT) relief. The MAT rate has been reduced to 15 per cent from the existing 18.5 per cent.
Sitharaman also said that new domestic manufacturing companies incorporated after October 1, can pay income tax at a rate of 15 per cent without any incentives.
Sitharaman said that with this change, the effect tax rate for companies will be 17.01 per cent inclusive of surcharge and cess.
Making the announcement, Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.
In the past few weeks, the government has announced a series of steps to boost growth that had fallen to a six-year low of 5 per cent in June quarter.