NEW DELHI: Domestic investor wealth soared by Rs 2.11 trillion in morning trade on Friday as equity market rallied following a Rs 1.45 lakh crore corporate tax rate cut announced by Finance Minister Nirmala Sitharaman.
Sitharaman on Friday morning slashed effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies cheering everyone and sending the market to decadal single-day rally.
The BSE Sensex zoomed nearly 2000 points following the spike in equities, the market capitalisation of BSE-listed companies climbed Rs 2.11 trillion to Rs 1.4 trillion.
From the 30-share Sensex basket, barring NTPC, all other 29 scrips were trading in the green led by Tata Steel, Maruti Suzuki India, HDFC Bank and Yes Bank, which were trading with gains of up to 5.7 per cent.
Industry, stock market and experts cheered the corporate tax rate cut, saying the big bang reforms will push economic growth and investments.
Kotak Mahindra Bank CEO Uday Kotak tweeted:
Reducing corporate tax rate to 25% is big bang reform. Allows Indian companies to compete with lower tax jurisdictions like the U.S. It signals that our government is committed to economic growth and supports legitimate tax abiding companies.A bold, progressive step forward.— Uday Kotak (@udaykotak) September 20, 2019
RBI Governor Shaktikanta Das also welcomed the tax booster announcement and called it a bold move. He said one of the major drawbacks that we had was high corporate tax rates and today's drastic cut in the same will take the country closer to the rates that prevail in emerging economies such as Thailand, and the Philippines.
The rupee also rallied 66 paise to 70.68 against the US dollar on announcements made by the finance minister.
Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1. This, she said is being done to promote investment and growth.
The step to cut corporate tax is historic. It will give a great stimulus to #MakeInIndia, attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians. https://t.co/4yNwqyzImE— Narendra Modi (@narendramodi) September 20, 2019
The government has also decided to not levy enhanced surcharge introduced in the Budget on capital gain arising from the sale of equity shares in a company liable for a securities transaction tax.
Also, the super-rich tax will not apply on capital gains arising from sale of any security including derivatives in hands of foreign portfolio investors.
In another relief, the minister said listed companies which have announced a buyback of shares prior to July 5, will not be charged with super-rich tax.