Indian benchmark indices rallied sharply in trade on Friday after FM Nirmala Sitharaman proposed a historical corporate tax rate cut for domestic companies as well as new manufacturing firms. At around 12:22 pm, the Sensex was up 1922 points, while the 50-share NSE index jumped 552 points or 5 per cent to trade at 11,251 points.

Any domestic company gets an option to pay income tax at a rate of 22 per cent subject to condition that they will not avail any incentive, the Finance Minister said. Companies opting for 22 per cent income tax slab won't have to pay minimum alternative tax; effective rate will be 25.17 per cent including surcharges, cess, she added.

On the Sensex, among the top gainers are stocks like Tata Steel, Maruti Suzuki, HDFC Bank, Yes Bank and RIL.

Nifty Auto has been the major gainer in trade today with an over 8% surge. Within the segment, Eicher Motors logged the highest one-day gain in 20 years of almost 24% to Rs. 19,488 per share. Ashok Leyland climbed 16%, Maruti Suzuki and TVS Motor jumped 11% each and Tata Motors advanced 10%.

Shares of HDFC Bank also advanced 10% in intra-day deal, its highest one-day gain in more than 30 months. For the quarter ended March, the effective tax rate at the bank stood at 33.4%.

Heavyweight Reliance Industries also rose over 8% to Rs. 1269.90 per share after the effective corporate tax rate has been brought down to 25.17% from more than 32%.

Shares of IT companies climbed higher in trade after the FM announced relief on the buyback tax. In order to provide relief to listed companies which have already made a public announcement to buyback shares before July 5, 2019, it is provided that tax on buyback of shares in case of such cos, shall not be charged, the Finance Minister said.

Meanwhile, rupee gained further to 70.91 per US dollar after the government proposed corporate tax rate. Also, the yield on 10-year benchmark bonds reversed its early losses due to the RBI's governor stance on more rate cuts.

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