The BSE Sensex advanced over 1,300 points to a high of 37,421.70.
Led by the spike in equities, the market capitalisation of BSE-listed companies climbed Rs 2.11 trillion to Rs 1.4 trillion.
From the 30-share Sensex basket, barring NTPC, all other 29 scrips were trading in the green led by Tata Steel, Maruti Suzuki India, HDFC Bank and Yes Bank, which were trading with gains of up to 5.7 per cent.
The rupee also rallied 66 paise to 70.68 against the US dollar on announcements made by the finance minister.
In a major fiscal booster, the government on Friday slashed effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies.
Making the announcement, Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.
This, she said is being done to promote investment and growth.
The government has also decided to not levy enhanced surcharge introduced in the Budget on capital gain arising from sale of equity shares in a company liable for securities transaction tax.
Also, the super-rich tax will not to apply on capital gains arising 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.