New Delhi: Ahead of the much-awaited Goods and Services Tax (GST) Council meeting later in the day, Union Finance Minister Nirmala Sitharaman on Friday announced a proposal to slash corporate tax rates for domestic companies and for new domestic manufacturing companies under the Income Tax Act. Also Read - Sensex rises 12,000 Points After FM Nirmala Sitharaman Announces Cut in Corporate Tax

Addressing a press conference at Panaji in Goa, Sitharaman announced the new provisions in a bid to promote economic growth under ‘Make in India’. Also Read - Banks Working With NBFCs to Increase Public Lending: Nirmala Sitharaman on Merger Move

“To boost Make in India, another insertion inserted to Income Tax Act with effect from 2019-20, which allows any new domestic company incorporated on or after 1st Oct 2019 making fresh investment in manufacturing an option to pay income tax at a rate of 15%,” Sitharaman asserted. Also Read - Nirmala Sitharaman Faces Outrage After Her Millennial Comment, #BoycottMillennials Trends on Twitter

She added, “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.”

“The effective tax rate for these companies shall be 25.17 % inclusive of all surcharge and cess,” she further mentioned.

The announcement by the Finance Minister comes amid rising demand for a rate cut in tax provisions as a requirement to boost the staggering economy that India is facing.

“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%,” the Union Minister announced.

“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,” she said.

“The enhanced surcharge shall not apply on capital gains arising on sale of any security including derivatives in the hands of foreign portfolio investors,” she added.

The Taxation Laws (Amendment) Ordinance 2019 has been brought in to lower tax for corporates. The total revenue foregone for the reduction in corporate tax rate and other relief is now estimated at Rs 1,45,000 crore.

The announcement has already amplified stock market rates, with Sensex jumping 1276.26 points, at 37,369.73 levels. Moments before the tax rate cut announcement the S&P BSE Sensex had crossed nearly 900 points to trade at 36,976.04 levels, while the NSE’s Nifty50 index reclaimed 10,850 level to trade at 10,865.30 levels, up over 150 points or 1.50 per cent.

Meanwhile, the Finance Minister will address the 37th meeting of the GST Council in Goa to decide upon the tax moderation taking into account the massive economic slowdown. India is currently facing one of its worst economic crisis with the GDP growth rate falling to a seven-year low of 5% in the first quarter of FY20.