Finance Minister Nirmala Sitharaman on Friday proposed to slash corporate tax for domestic companies and new local manufacturing companies through an ordinance. She said that total revenue foregone for reduction in corporate tax rate is estimated at Rs 1.45 lakh crore per year.

"Any domestic company gets an option to pay income taxat a rate of 22% subject to condition that they will not avail any incentive.Enhanced surcharge introduced in Budget shall not apply on capital gain arising on sale of equity shares in a company liable for Securities Transaction Tax," the finance minister said at a press conference in Goa.She furthersaid that super-rich tax will not to apply on capital gains arising from sale of any security, including derivatives in hands of foreign portfolio investments (FPIs).

As Sitharaman made some big announcements, Sensex zoom edover 900 points to 37,042.59, while Nifty rallies 254 points to 10,959.10.Rupee also rallied 66 paise to 70.68 against US dollar.The announcement comes amid demand for rate cut, keeping in mind the revenue position and the need to boost sagging economic growth. The GST (Goods and Services Tax) Council, headed by Sitharaman, held a crucial meeting to decide on tax moderation.

The 37th meeting of the GST Council, which also comprises ofrepresentatives of all states and Union Territories, will take place in Goa amid fall in economic growth, which has hit a six-year low of 5% for the first quarter of the current fiscal.There have been demands pouring in from various sectors — from biscuits to automobiles and FMCG to hotels — to reduce tax ratesin the wake of economic slowdown. The argument propagated has been to boost the consumption and domestic demand by reducing GST rates further.

However, many of the states are of the view that it would not be tax prudent to allow GST rate reduction at this stage as the compensation cess fund, utilised to compensate the states under the GST Act incase the revenue is below the targeted growth rate, has turned negative.Meanwhile,sources said the GST Council's Fitment Committee, which comprises revenueofficials of both Centre and States, has rejected demands for a cut in tax rate on items ranging from biscuits to car, owing to tight revenue position.

The GST Council may consider introduction of a special composition scheme for taxpayers supplying brick kilns, sand mining activitiesand stone crushers with an increased rate, sources said.

It is expected to discuss amendments in GST Laws to accommodate creation of Jammu & Kashmir and Ladakh as UTs and will also discuss theproposal moved by Kerala on introducing e-way bill system for movement of goldand precious stones, sources said. It is likely to deliberate on the proposalof linking new GST registration with Aadhar and take the quarterly review ofcases at National Anti-profiteering Authority (NAA), sources added.

Fitment panel in its report, which will be placed before theGST Council, has some good news for hotel industry as it has recommendedraising tariff ceiling to up to Rs 12,000 per night under 18% GST slab. Atpresent, 18% GST rate is applicable for hotel tariff up to Rs 7,500 per night.

The committee also rejected the telecom ministry's proposalto reduce GST rate for telecom services from the present 18% to 12% , thesources said.

It was also decided not to tinker with the present GSTstructure for biscuits, bakery products, breakfast cereals, fruits andvegetables, mineral water, ready-to-eat packaged items, and several other foodproducts.The committee rejected the proposal of reduction in GST rate on saleof cruise tickets, which attracts GST of 18 percent, the sources added.