Stock Market
After Budget mayhem, bulls return: Sensex, Nifty stage sharp recovery
Mumbai/IBNS: Indian equity markets staged a sharp rebound on Monday after Dalal Street witnessed a rout on Budget Day, media reports said.
At closing, the BSE Sensex ended 943.52 points higher, while the NSE Nifty 50 surged 262.95 points to settle above the 25,000 mark.
The recovery helped the markets erase nearly half of the losses suffered immediately after Union Finance Minister Nirmala Sitharaman presented the Union Budget on Sunday.
The rupee also strengthened, gaining 37 paise to 91.56 against the US dollar in early trade, a day after the Budget drew mixed reactions from investors.
Markets had plunged on Budget Day after the government proposed a hike in the Securities Transaction Tax (STT) on futures and options (F&O) trades, aimed at tightening oversight of what it described as speculative trading.
Key Budget Proposals
Recognising the need to strengthen critical digital infrastructure and attract global investment in data centres, Finance and Corporate Affairs Minister Nirmala Sitharaman proposed a tax holiday until 2047 for foreign companies providing global cloud services using data centre infrastructure located in India.
However, such companies will be required to service Indian customers through an Indian reseller entity, the Ministry of Finance said. The Budget also proposes a safe harbour margin of 15% on cost where the data centre service provider in India is a related entity.
To improve efficiency in electronic manufacturing through just-in-time logistics, the Finance Minister proposed a safe harbour regime for non-residents undertaking component warehousing in bonded warehouses at a profit margin of 2% of invoice value. The resulting tax incidence of around 0.7% would be significantly lower than that in competing jurisdictions.
In a move to promote toll manufacturing, the Budget proposes a five-year income tax exemption for non-residents providing capital goods, equipment, or tooling to toll manufacturers operating in bonded zones.
Further, the proposals include exemption of global (non-India sourced) income for non-resident experts for a period of five years under notified schemes, aimed at attracting global talent and encouraging longer professional engagements in India.
The Union Budget also proposes to exempt all non-residents paying tax on a presumptive basis from Minimum Alternate Tax (MAT).
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