Domestic equity benchmark BSE Sensex spiralled over 1,900 points in morning session on Friday after Finance Minister Nirmala Sitharaman announced a slew of measures to boost manufacturing and revive the sagging economy.
In a major booster to the market, the government has decided to not levy the enhanced surcharge introduced in the Budget on capital gain arising on sale of equity shares in a companies liable for securities transaction tax.
Also, the super-rich tax will not to apply on capital gains from sale of any security including derivatives in hands of foreign portfolio investors. In another relief, Sitharaman said listed companies which have announced buyback of shares prior to July 5 will not be charged with super rich tax.
Sitharaman told reporters that the new rates would be “comparable with the lowest tax rates in South Asian region and in South East Asia”.
Today’s announcement was the latest in a series of measures announced by the government in the past few weeks to provide a fillip to growth that has fallen to six-year low of 5% in June quarter. The Indian economy has been suffering from weak consumer demand with car sales in the world’s number four automobile market plunging 41 percent in August, the worst monthly fall on record.
Soon after the announcement, the 30-share index zoomed 1904.06 points, or 5.28 per cent, to 37,997.53 at 12 noon, 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. The rupee too appreciated 66 paise to 70.68 against US dollar following the finance minister’s announcements.
On Saturday, Sitharaman also announced mega shopping festivals on the lines of popular Dubai Shopping Festival to attract capital and tourists and boost economic activity. The government has also easing restrictions on foreign investment in four key sectors, including coal mining, in an effort to attract more capital from abroad.
Ashutosh Datar, an independent economist, told AFP that tax cuts were “long overdue as India has one of the highest tax rates in the world”.
