New Delhi: Markets gave a big thumbs up to Finance Ministry's announcement on reduction of corporate tax and MAT rates with both the domestic equity indices closing 5.32 percent higher on Friday.
In its largest single-day jump in the last 10 years, the BSE Sensex rose 1921.15 points or 5.32 percent at 38,014.62 while the NSE Nifty zoomed 569.40 points or 5.32 percent to 11,274.20.
The government on Friday announced that corporate tax rates will be slashed to 22% for domestic companies and 15% for new domestic manufacturing companies. The Government has brought in the Taxation Laws (Amendment) Ordinance 2019 to make certain amendments in the Income-tax Act 1961 and the Finance (No. 2) Act 2019.
“In order to promote growth and investment, a new provision has been inserted in the Income-tax Act with effect from FY 2019-20 which allows any domestic company an option to pay income-tax at the rate of 22% subject to condition that they will not avail any exemption/incentive. The effective tax rate for these companies shall be 25.17% inclusive of surcharge & cess. Also, such companies shall not be required to pay Minimum Alternate Tax,” an official release said.
Major gainers in the Sensex pack were Heromoto Corp, Maruti, IndusInd Bank, Bajaj Finance, SBI, M&M, HDFC Bank, HUL, L&T, Vedanta, ICICI Bank and Asian Paint, rising upto 12.52 percent. On the other hand shares of Powergrid, Infosys, TCS, NTPC and Tech Mahindra were major losers, falling upto 2.39 percent.
After opening at 36,214.92, the Sensex touched a high of 38,378.02 and low of 36,085.74 intra-day while the Nifty shuttled between a high of 11,381.90 and low of 10,691.00.