Corporate tax on domestic firms have been reduced from 30 per cent to 25.2 per cent.

The centre's decision to reduce corporate tax for domestic companies was welcomed across the industry, with Biocon chairman Kiran Mazumdar Shaw saying that the move signals government's commitment to spur economic growth and "support legitimate tax abiding companies".

Corporate tax on domestic firms have been reduced from 30 per cent to 25.2 per cent, Finance Minister Nirmala Sitharaman said at a press briefing in Goa this afternoon, bringing the rates among lowest in Asia. The markets immediately rose after the announcement, with the benchmark Sensex surging over 1,950 points and Nifty climbing above 11,250 mark, after days of choppy trading.

Kiran Mazumdar Shaw, whose tweets yesterday had drawn an instant retort from Finance Minister, was among the first to welcome the move.

"Corporate Tax Rate Cut From 30% To 25.2% To Spur Growth- this is a great move which will firmly revive growth and investment. My hats off to FM Nirmala Sitharaman for this bold but most needed move," Kiran Mazumdar Shaw, the chairman of Biocon, tweeted.

Kotak Mahindra Bank MD Uday Kotak hailed the move as a "bold, progressive step forward" taken to supports legitimate tax abiding companies. He said the move will help Indian companies compete with lower tax jurisdictions like the US.

"Reducing corporate tax rate to 25% is big bang reform. Allows Indian companies to compete with lower tax jurisdictions like the U.S. It signals that our government is committed to economic growth and supports legitimate tax abiding companies. A bold, progressive step forward," he tweeted.

Pawan K Goenka, Managing Director Mahindra & Mahindra, tweeted:

Looks like Diwali has come early. - Pawan K Goenka (@GoenkaPk) September 20, 2019

The new tax structure is effective from April 1, 2019. This change will be made through an ordinance to amend the Income Tax Act, 1961, Ms Sitharaman said.

New companies formed on or after October 1 will attract a base tax rate of 15% and effective rate of 17.01%, bringing it to the same level as in Singapore.

The announcement is seen as the biggest move so far by the Narendra Modi government to fight the slowdown after GDP growth slumped to a six-year low of five per cent in the April-June quarter of the current fiscal. Mr Sitharaman said that the total revenue foregone for the reduction in corporate tax rate and other relief measures was estimated at Rs 1,45,000 crore.

While domestic companies have a lot to cheer about, the Finance Minister said she is "conscious" of the effect the announcement would have on India's fiscal deficit target.