Janjivan Bureau / New Delhi : Finance Minister Nirmala Sitharaman announced corporate tax rate cut in a surprise Rs 1.45 lakh crore break aimed at reviving private investment, seeking to lift growth from a six-year low that has sapped jobs and fuelled discontent in the countryside. Today, Nirmala Sitharaman told in a press conference that the effective corporate tax rate will be lowered to around 25% from 30%, which she said would be on par with Asian peers, an announcement that led Sensex and Nifty to skyrocket.
“With effect from financial year 2019-20 … any domestic company has an option to pay income tax at the rate of 22%, subject to condition that they will not avail any exemption,” Sitharaman said. The effective tax rate for such companies will be around 25%, inclusive of surcharges, she said. Shortly after, BSE Sensex skyrocketed over 1,300 points. The 30-share index zoomed 3.68 per cent to 37,420.12 at 11:20 am, while the broader Nifty rose 362.95 points, or 3.39 per cent, to 11,067.75. 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. On the other hand, TCS and NTPC were trading in the red.
On Friday, Finance Minister Nirmala Sitharaman announced that basic corporate tax will be slashed to 22 percent, providing a Rs 1.45 lakh crore break which is intended to help revive private investments. Sitharaman’s move is likely to boost the economy which had been facing a six-year low resulting in dearth of employment opportunities and widespread discontent and dissatisfaction.
The corporate tax rate will be 22 percent for domestic companies without exemptions. The effective tax rate will be 25.17 percent, including surcharges and cess for these companies. The fact that the tax rate has been slashed from earlier 30 percent caused Sensex and Nifty to immediately skyrocket. Soon after the announcement, Sensex went up by 1200 points.
Naturally, investors and shareholders have been rejoicing. #CorporateTax and #Sensex have been the top hashtags since morning and most tweets and posts have been lauding Sitharaman for the move which people are hoping will give the stock market a much-needed push.
