The Sensex skyrocketed over 1,300 points in morning session on Friday after finance minister Nirmala Sitharaman announced a slew of measures to revive the ailing economy.

In a major booster to the market, the government has decided to not levy the enhanced surcharge introduced in the budget on capital gains arising on sale of equity shares in a companies liable for securities transaction tax.

Also, the super-rich tax will not to apply on capital gains from sale of any security including derivatives in hands of foreign portfolio investors.

In another relief, the minister said listed companies which have announced buyback of shares prior to July 5 will not be charged with super rich tax.

The government has also slashed corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies.

Sitharaman said the revenue foregone on reduction in corporate tax and other relief measures will be Rs 1.45 lakh crore annually.

This, she said, is being done to promote investment and growth.

The 30-share index zoomed 1326.65 points, or 3.68 per cent, to 37,420.12 at 1120 hours, while the broader Nifty rose 362.95 points, or 3.39 per cent, to 11,067.75.

Top gainers in the sensex pack included Maruti, M&M, HDFC Bank, Tata Motors, Yes Bank, Tata Steel, L&T, ICICI Bank, Bajaj Auto and RIL, rallying up to 9 per cent.

On the other hand, TCS and NTPC were trading in the red.

The rupee too appreciated 66 paise to 70.68 against US dollar following the finance minister's announcements.

RBI governor Shaktikanta Das has reiterated his call for urgent structural reforms like labour, land and said that as Central bank 'we do not have a view on real interest rates'.

He said that more rate cuts depend on incoming data.

The government also slashed the income tax rate for companies by almost 10 percentage points to 25.17 per cent and offered a lower rate to 17.01 per cent for new manufacturing firms to boost economic growth rate from a six-year low by incentivising investments to help create jobs.

Sitharaman said the reduction in tax rates has been done by promulgating an ordinance to an amendment to the Income Tax Act.

'In order to promote growth and investment, a new provision has been inserted in the Income Tax Act, with effect from financial year 2020. It will allow any domestic company an option to pay income tax at 22 per cent subject to the condition that they will not avail any exemption or incentives,' she told reporters in Panjim.

After considering surcharges and cess, the effective tax rate will be 25.17 per cent.

This compares to 30 per cent corporate tax rate currently, and an effective tax rate of 34.94 per cent.

'To attract fresh investment in manufacturing and boost Make In India, new provision has been inserted in the I-T Act, which allows any new domestic company incorporated on or after October 1, 2019, making fresh investment in manufacturing, and starts operations before March 31, 2023, an option to pay income tax at 15 per cent,' she said.

The effective rate for new companies would come to 17.01 per cent after considering surcharges and cess subject to the condition that they do not avail any other tax incentive or concession such as tax holidays enjoyed by units in special economic zones (SEZ) or accelerated depreciation.

This compares to the current base rate of 25 per cent for new companies and an effective tax rate of 29.12 per cent.

Also, the companies will not have to pay minimum alternate tax (MAT).

She said any company which does not opt for a concessional tax regime and avails tax exemptions or incentives shall continue to pay tax at pre-amended rates. 'These companies can opt for concessional tax regime after the expiry of tax holiday or exemption,' she said.

To provide relief to companies which continue to avail exemptions and incentives, the rate of MAT has been reduced from existing 18.5 per cent to 15 per cent.

To provide relief to listed companies which have already made a public announcement of buyback of shares before July 5, 2019, tax on such buyback shall not be charged.

The tax cut will cost the exchequer Rs 1.45 lakh crore annually.

Sitharaman, however, sidestepped questions on the impact the concessions will have on the fiscal deficit target, saying that the government was conscious of the reality and will reconcile numbers.

With her maiden budget seemingly failing to address issues facing the economy and doing little to bolster growth that has slowed to a six-year low and check unemployment that has risen to a 45-year high, Sitharaman has over the past one month announced measures in three tranches for different sectors of the economy including automobiles, banks and real estate.

India's gross domestic product (GDP) growth slowed for the fifth consecutive quarter in April-June 2019 to 5 per cent, the lowest in six years. This was on the back of faltering domestic demand, with both private consumption and investment proving lacklustre.

In response, her initial policy measures included support for the automobile sector, reduction in capital gains tax, and additional liquidity support for shadow banks. Accompanying structural reforms included a further easing of the foreign direct investment regime and consolidation of the public banking sector.

In the third part, last Saturday (September 14), she announced a stressed asset fund to finance unfinished real estate projects and measures to boost exports.