Following finance minister’s major announcement slashing the income tax rates for domestic companies and new domestic manufacturing companies, the stock markets of the country-Sensex and Nifty have witnessed the highest single-day gain in the last 10 years. Sensex gained more than 1900 points while Nifty had rallied about 560 points.
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The measures announced by the finance minister was instantly welcomed by the markets as bulls started dominating the bears and the markets, which were until now plummeting saw a prompt surge after the FM made the announcement. After the upswing, the Sensex is currently hovering around 37800 mark and Nifty at 11200 mark.
Earlier, while making the announcement, FM Sitharaman stated that another insertion has been inserted in the Income Tax Act with effect from 2019-20 which will allow new domestic company incorporated after 1st October 2019 to make fresh investment in manufacturing with an option to pay income tax at the rate of 15%.
She further added that domestic companies can also pay income tax at the rate of 22% if they do not avail any incentive or exemptions. The effective tax rates for these companies will be 25.17% including surcharge and cess. To those companies who continue to avail the incentives, the minimum alternate tax (MAT) has been reduced to 15% from the current 18.5%.
In a massive move for the corporate sector, the Finance Minister, Nirmala Sitharaman announced steep cuts in corporation tax among a series of announcements. Sitharaman said that the total revenue forgone on account of today’s measures would be Rs 1.45 trillion per year.