Corporate tax cut: Following Finance Minister Nirmala Sitharaman’s revolutionary decision to cut corporate tax in India, the BSE Sensex and Nifty 50 saw a growth of more than 5% when compared to yesterday’s closing. The Sensex jumped some 2200 points during the day’s trading as did the Nifty spurring 11,000, the corporate tax cut has come as a ray of hope for India Inc and the stockbrokers who have been incurring losses for consecutive days. As the Sensex zoomed, hours after Sitharaman announced the cut, the sectors which drove the ecstatic jump in the bourses were automobiles, banking, and public sector units (PSU).
Sector-wise, in the automobile section, Hero Motors saw a 12.52% growth, Bajaj Auto 6.92%, TVS Motors 13.36%, and Eicher Motors witnessed a growth of 13.21% whereas in the hotel sector, stocks trended higher than usual as it is expected that GST rates will be cut for properties that tend to take Rs 7500 per night and attract 28% GST. Hotel stocks such as TAJ GVK and Resorts saw a 5% growth, Hotel Leela at 3.5%, Indian Hotels and lemon tree hotels at 1.7% and 0.8 respectively.
The new tax structure has boosted the economy and helped stocks make profits. For the past few consecutive days, the businesses have been making a loss but Nirmala Sitharaman press conference earlier today has boosted the confidence of the investors and industrialists as Sensex has plunged by 2200 points today. Apart from automobile, and hotel sectors, even bank stocks surged with Indusland Bank at 10.74%, SBI at 10.09%, HDFC bank at 9.06%, ICICI bank saw growth of more than 5%, Axis Bank 6.65%, Koak Bank 5.86%, Yes Bank 2.40%. However, Tech Mahindra, NTPC, Tata Consultancy Services, Infosys, Powergrid saw a loss ranging from 0.35% to 2.39%.
Top 5 things to know from Corporate Tax cut of today:
- Taxes cut from 30% to 22% for local businesses to expand the Make In India campaign. 22% is exclusive of cess etc, 25.17% inclusive of cess.
- Domestic manufacturing companies which will begin operations from October 1, 2019, onwards will have to pay 15% tax which totals to 17.01 % including cess.
- The reduction in corporate tax will cost the exchequer Rs 1,45,000 crore in revenue foregone.
- Listed companies that have announced a buyback of shares before July 5, 2019, will be exempt from buyback tax.
- Surcharge won’t be applicable on capital gains.