Diwali came early for India Inc after the Centre reduced effective corporate tax to 25.17% inclusive of all cess and additional payments for domestic companies.

Making the announcement, Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.

Sitharaman said the revenue on reduction in corporate tax and other relief measures will be Rs 1.45 lakh crore annually.

The move puts India’s tax rate on par with Asian nobels and will boost efforts to attract investments as companies look for alternative destinations to sidestep supply chain disturbance from the U.S.-China trade war.

RBI Governor Shaktikanta Das welcomed the government announcement, calling it a “bold move.’’ Domestic investor wealth soared by Rs 2.11 lakh crore in morning trade on Friday.

“The government has taken a bold and proactive step to bring the much-needed tax reforms, which will boost investment and also aid to private cycle capex. The lowering of corporate tax rates will widen the tax net and gradually bring in more revenues to the government. Overall, the move will make Indian companies globally competitive, a welcome step to arrest slowdown and lift up the market sentiments,” said Sanjeev Hota, Head of Research Sharekhan added.

The minister said listed companies which have announced buyback of shares prior to July 5, will not be charged with super rich tax.

Markets responded with a massive surge. The 30 share Sensex jumped 1,600 points while Nifty topped 11,000-mark.

All the players in the Sensex pack were trading in the green with Tata Steel gaining the most 5.19 per cent. It was followed by Maruti Suzuki (up 5% ), HDFC Bank (up 4.86% ), YES Bank (up 4.62% ) and Reliance Industries (up 3.50% ).

Among the sectoral indices on BSE, the Auto index rallied the most 3.69%. Bankex, Capital Goods, Metal, Consumer Durables and Oil & Gas were up between 1.50 % and 3.70 %.

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