Sensex jumps 1,921 points after latest finance ministry announcement ... Know how govt intends to revive economy
Finance Minister Nirmala Sitharaman has taken some welcome and bold steps to lift up the ailing economy; corporate tax rates have been slashed for domestic companies and new manufacturing firms.
New Delhi, Sep 20: Finance Minister Nirmala Sitharaman has taken some welcome and bold steps to lift up the ailing economy; corporate tax rates have been slashed for domestic companies and new manufacturing firms.
Almost immediately after the announcement, the markets registered a rise, with the Sensex surging over 1,300 points and Nifty climbing above the 10,900 mark after days of choppy trading.
SpiceJet chairman and managing director Ajay Singh welcomed the governemnt's decision, asserting that it will help to boost investment and market demand.
The benchmark indices logged the biggest ever gains in the history of trading in India as the government slashed the effective corporate tax rate to about 25 per cent from 30 per cent.
The sensex advanced by a massive 1921.15 points to 38,014.62 while the broader Nifty jumped to 11,275.45 after gaining 570.65 points or 5.33 per cent.
The biggest beneficiaries among the 30 Sensex stocks were HeroMoto Corp, Maruti Suzuki, IndusInd Bank, Bajaj Finance, State Bank of India and Bajaj Finance, which gained in the range of 9 to 12 per cent.
The badly beaten down auto stocks gained the most. Nifty auto jumped over 9.90 per cent while the Nifty banks index gained over 8 per cent.
"The announcements made by the Finance Minister is very positive for the economy, corporates and stock market. The effective tax after surcharges and cess will come down from 33 per cent to 25.17 per cent," said Rusmik Oza of Kotak Securities.
Here are five things that FM Nirmala Sitharaman said during her press briefing from Panaji:
1. We today propose to slash the corporate tax rates for domestic companies and for new domestic manufacturing companies.
2. To promote growth, a new provision has been inserted in the income tax act with effect from the fiscal year 2019-20, which allows any domestic company to pay income tax at the rate of 22% subject to the condition they will not avail any incentive or exemptions.
3. To provide relief to companies which continue to avail incentive or exemptions, even for them we are giving a Minimum Alternate Tax(MAT) relief, the MAT rate has been reduced to 15% from the existing 18.5%.
4. In order to stabilise the flow of funds into the capital market, it is provided that enhanced surcharge introduced in Budget of July 2019 shall not apply on capital gains arising on sale of equity share in a company or a unit of an equity-oriented fund.
5. The enhanced surcharge shall not apply on capital gains arising on sale of any security including derivatives in the hands of foreign portfolio investors.
The markets immediately rose after the announcement, with the Sensex surging over 1,300 points and Nifty climbing above the 10,900 mark after days of choppy trading.
Sensex rises 1276.26 points, currently at 37,369.73; Rupee rallies 66 paise to 70.68 against US dollar on FM announcements to boost growth.
In a major fiscal booster, the government on Friday slashed effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies.
While making the announcement, the Finance Minister said the new tax rate will be applicable from the current fiscal which began on April 1.
Sitharaman said the revenue foregone on reduction in corporate tax and other relief measures will be Rs 1.45 lakh crore annually.
She said the government was conscious of the effect the tax rebate would have on fiscal deficit and numbers would be reconciled.
News24 Bureau with Agencies (Input Manish Kumar)
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