Domestic shares surged on Thursday after news agency Reuters reported citing an official that the government is likely to roll back its recently imposed higher tax on foreign portfolio investors (FPIs). The S&P BSE Sensex index rose as much as 570.07 points to touch 37,260.57 at the day's strongest level, and the broader NSE Nifty benchmark climbed to 11,009.70, up 154.20 points from the previous close. At 2:58 pm, the Sensex traded 515.83 points - or 1.41 per cent - higher at 37,206.33, while the Nifty was up 134.90 points - or 1.24 per cent - at 10,990.40.

Top percentage gainers on the 50-scrip index at the time were HCL Tech, Tata Motors, JSW Steel, Reliance Industries, Mahindra & Mahindra, Bharat Petroleum and Hero MotoCorp, trading between 2.65 per cent and 5.94 per cent higher.

Reliance Industries, HDFC Bank, Infosys and TCS were the top contributors to the gains in Sensex.

The official said the government will either issue a notification or an executive order, which could be later submitted to parliament for approval, to exempt the foreign portfolio investors, mainly registered as trusts, from the increase in surcharge on super rich taxpayers, according to Reuters.

In the Union Budget for 2019-20, Finance Minister Nirmala Sitharaman increased the surcharge from 15 per cent to 25 per cent for those with taxable incomes of between Rs 2 crore and Rs 5 crore, and to 37 per cent for those earning more than Rs 5 crore. The new tax surcharge was applicable on individual taxpayers as well as trusts.

Most FPIs earn more than Rs 5 crore in a year and hence would come under the highest income tax bracket.

They had urged the government to reconsider its decision arguing the move will hit the competitiveness of Indian capital markets.

(With inputs from Reuters)