Benchmark indices have closed marginally positive amid volatility after the Finance Ministry on Friday issued clarification on Tax Residency Certificate.
The 30-share Sensex ended at 18,919 up 57 points or 0.30% and the 50-share Nifty ended at 5,720 up by 27 points or 0.47%.
The Sensex and the Nifty reached an intra-day high of 18,989 levels and 5,739 mark, respectively.
The Government in a release today said that, in the explanatory memorandum to the Finance Act, 2012, it was stated that the Tax Residency Certificate containing prescribed particulars is a necessary but not sufficient condition for availing benefits of the DTAA (Double Taxation Avoidance Agreements).
However, it has been pointed out that the language of the proposed sub-section (5) of section 90 could mean that the Tax Residency Certificate produced by a resident of a contracting state could be questioned by the Income Tax Authorities in India.
The government wishes to make it clear that that is not the intention of the proposed sub-section (5) of section 90.
The Tax Residency Certificate produced by a resident of a contracting state will be accepted as evidence that he is a resident of that contracting state and the Income Tax Authorities in India will not go behind the TRC and question his resident status.
Among international front, Japan's Nikkei stock average edged higher on Friday, led by demand for real estate stocks as investors bet on the new Bank of Japan chief pursuing aggressive monetary easing to pull the world's third-largest economy out of deflation.
Back home, Union Finance Minister Palaniappan Chidambaram in his Budget announcement on Thursday tried to perform a delicate balancing act by both responding to the political requirements of a pre-election-year Budget and the economic compulsions of fiscal consolidation
BSE Consumer Durable index surged by over 3% followed by counters like Capital Goods, Auto, Power and Metal, all gaining between 1-2%. However, BSE Realty index slipped by 4%.
Maruti Suzuki was the top Sensex gainer, up almost 5%. The country's largest car maker Maruti Suzuki India (MSI) today reported 7.89% decline in its total sales at 1,09,567 units in February 2013.
M&M gained after the company reported 11% year-on-year growth in its auto sales numbers at 47,824 units in February 2013.
Other notable gainers include JSPL, Tata Power, Bajaj Auto, L&T, Cipla, HUL and HDFC.
ITC slipped by over 1% after the proposed hike in excise duty by 18% on cigarettes.
Healthcare stocks Dr Reddy's Labs and Sun Pharma were down after no allocations were made in the Budget towards the health sector.
Hero MotoCorp declined by over 1% on reports that the workers at company’s Gurgaon unit went on hunger strike from Thursday to demand higher wages.
Among other shares, Suzlon Energy zoomed by 18% after hitting a new low yesterday on promoter's stake sale news.
Adani Enterprises ended lower by 2% ahead of its promoter’s stake sell plan via Offer for Sale (OFS) route on Monday.
Meanwhile, BSE Midcap index gained 0.29% whereas BSE Smallcap index ended marginally lower.
The market breadth ended weak with 1,522 shares declining and 1,336 shares advancing.