On Friday, India announced an unexpected and deep cut in corporate tax rates, amounting to roughly $20 billion in reductions at the current size of the economy. The government slashed the corporate tax rate for Indian companies to 22 percent from 30 percent with effective tax rate lowered to 25.2 percent from 34.9 percent earlier (including surcharge and cess) and cut the minimum alternate tax rate to 15 percent from 18.5 percent. The government also announced a special 17 percent rate for new companies incorporated on or after October 1, 2019, and starting new manufacturing facilities before March 2023.
By Monday evening, the “Sensex” similar to the Dow Jones average had risen over 3,000 points, and overall stock values were up about 8 percent, making this the best two day performance the Indian stock market has ever seen.
Finance Minister Nirmala Sitharaman said on Sunday “The top consideration on which India was rejected as an investment destination is now better than everybody else… For someone who is coming up with new investment, no country is offering 15 per cent (base tax rate, effective 17 per cent). We are giving 15 per cent with no MAT (minimum alternate tax) and simpler taxation structure.” India’ central bank, the Reserve Bank of India agreed; Reserve Bank Governor Shaktikanta Das said “The reduction in corporate tax is a bold measure which will be highly positive for the economy.”
Last updated: December 26th, 2025
