1. Income derived from sapling and seeding grown in a nursery shall be deemed to be
2. Threshold Exemption limit for Individual, HUF, BOI and AOP increased by Rs. 40,000/-.
3. Threshold Exemption limit for woman increased by Rs. 35,000/ - and for Senior citizen increased by Rs. 30,000/-.
4. Slab Rates of Personal tax are changed, providing approx Tax benefit of Rs. 50,000/- P.A.
5. No changes in Corporate tax rates.
6. Income Tax Act to be amended to provide that reverse mortgage would not amount to “transfer”; and the stream of revenue received by the senior citizen would not be “income”.
7. Charitable entities carrying on regular trade, commerce or business or providing services in relation to any trade, commerce or business and earning incomes would not be allowed for
   claiming that their activities also fall under charitable purpose.
8. Section 35 is amended to extend the benefit of weighted deduction of 125% of payment made by the person to a company for scientific research on fulfillment of certain conditions.
9. Benefit of amortisation of certain preliminary expenses under Section 35D allowed to assessees in the service sector.
10. STT paid to be treated like any other deductable expenditure against business income.
11. Commodities Transaction Tax (CTT) leviable on options and futures to be introduced on the same lines as STT.
12. Cash Expenditure paid to a person in a day in excess of Rs 20,000 is not allowed as deduction.
13. Deduction u/s 80C also Includes the post office time deposit and deposit in an account under the Senior Citizen Saving Scheme.
14. Additional deduction Rs. 15,000/- allowed u/s 80D to an individual paying medical insurance premium of his/her parents.
15. Tax holiday is provided u/s 80IB of the Act to new Hospitals constructed in certain areas.
16. Tax holiday is provided u/s 80ID of the Act to new Hotels constructed in World Heritage Site.
17. It is proposed to add back the defeered tax and dividend distributed tax in the book profit computed for calculation of MAT with retrospective effect from A.Y. 2001-02.
18. Domestic Holding companies can claim the benefit of dividend distributed tax paid by its domestic subsidary companies w.e.f April 1, 2008.
19. Rate of tax on Short Term capital gain arising from transfer of Equity shares where STT is charged, is increased from 10% to 15%.
20. Expenditure on creche facilities, sponsorship of an employeesportsperson, organising sports events for employees and guest houses is excluded from the purview of FBT.
21. Value of Fringe Benefit is decresed from 50% to 20% on expenditure of festival celebration; consequnetly FBT is reduced from 17% to 6.8% (Approx.).
22. Due Date of filing of Income Tax return in case of companies and person required to get its accounts audited under section 44AB is changed to 30th September in stead of present date of 31st October.
23. No Tax would be deducted at source from the interest income of resident from security issued by the company being in dematerialised form and listed in recognised stock exchange
    w.e.f June 1, 2008.
24. AOP/BOI are also made responsible to deduct tax according to the provisions of Section 194C of the Act.
25. It is proposed that the person responsibale for deduction of the incometax under section 195 shall file the information electronically w.e.f April 1, 2008.
26. To mitigate hardship in the present provision of the Act relating to credit of TDS/ TCS, Board to frame rules.
27. Scheme of dematerlisation of TDS/TCS form is further extended to April 1, 2010.
28. General rate of excise (CENVAT) has been reduced from 16% to 14%.
29. The threshold limit of service tax exemption for small service providers is being increased from the present level of Rs. 8 lakh to Rs. 10 lakh w.e.f. 01/04/2008.
30. Widening of Service tax base by levy of service tax on new services and expanded the scope of existing services.
31. Penalty for non-compliance of Service Tax provisions has been enhanced significantly.
32. CST is reduced from 3% to 2%.
33. Banking Transaction tax is abolished w.e.f. April 1, 2009.

Weighted deduction of 125% under section 35 is extended to payment made to the Companies
Section 35 is amended to extend the benefit of weighted deduction of 125% of payment made by the person to an approved company registered in India having main object of scientific research and development on fulfillment of certain prescribed conditions. Previously, Payment made only to approved scientific research association, approved University, college or other institution is eligible for weighted deduction of 125%.

Preliminary Exp deduction under section 35D extended to non industrial unit
Under the existing Section 35D, an Indian company or a resident assessee, in respect of expenses incurred in connection with extension of an industrial unit is entitled to a deduction of one fifth of expenses for five consecutive years. Now expenses incurred in connection with extension of a non industrial unit i.e. service sector is also eligible for deduction under this section.

Deduction of Securities Transaction Tax
STT paid by the assessee is allowed as deduction while computing taxable business income under section 36(1)(xv). Consequently, rebate of STT provided in Sec 88E has been withdrawn. Earlier, STT was not allowed as business expenditure in pursuance of section 40(a)(ib) of the Act.

Introduction of Commodity Transaction Tax
Commodity transaction tax has been introduced to levy tax on options in goods and commodity derivates on the same line as STT. Commodity transaction tax paid by the assessee is allowed as
deduction while computing taxable business income under section 36(1)(xvi) of the Act.

Disallowance of Payments made in a day in cash in excess of Rs. 20,000
Cash Expenditure paid to a person in a day in excess of Rs 20,000 is not allowed as deduction. Earlier limit of Rs. 20,000/- was according to transaction wise, instead of day wise per person, e.g. cash paid to a person in a day in various transaction not exceeding Rs. 20,000/-, however aggregating in excess of Rs. 20,000/- is now not allowed. But earlier the same was allowed.

Five years tax holiday to hospitals located in specified area
A deduction (under sub section 11B of section 80 IB) of 100 % of profits & gains derived from the business of a newly established hospital located in any place outside the urban agglomerations
especially in tier-2 and tier-3 towns shall be allowed for first five consecutive assessment years. The new hospital should be constructed and has started or start functioning at any time between
01.04.2008 to 31.03.2013.

Five years tax holiday for hotels in specified area
A deduction (u/s 80 ID) of 100 % of profits & gains derived from the business of newly constructed hotels shall be allowed for first five consecutive assessment years. The new hotel should be constructed or has started or starts functioning at any time between 01.04.2008 to 31.03.2013 & located in specified districts having a world heritage site.

Credit of Dividend distribution tax
Domestic Holding companies can claim the benefit of dividend distributed tax paid by its domestic subsidiary companies by deducting the dividend received from the subsidiary company while computing the dividend distribution tax. Credit of dividend distributed tax is available on fulfillment of certain conditions that subsidiary company had paid the tax under section 115O on such dividend and further holding company is not the subsidiary of any other company. Provision would be applicable from April 1, 2008.

 E-filling of information under section 195
Presently, the person responsible for deduction of the income tax under section 195 is required to furnish an undertaking accompanied by the certificate of chartered accountant to the authorised bank. Now it is proposed that person responsible for deduction of the income tax under section 195 shall provide the information relating to Non resident, given in the required undertaking and prescribed certificate of chartered accountant electronically in the form and in the manner to be prescribed by the
board. Provision would be applicable from April 1, 2008.

Credit of TDS/ TCS
To mitigate hardship in the present provision of the Act relating to credit of TDS/ TCS, It is proposed to substitute the present section being Section 199 and section 206 C(4) with the rule to be framed
by the board in this behalf for providing sum sort of flexibility considering the ongoing technology and business process changes. Further, scheme of dematerlisation of TDS/TCS form is extended to
April 1, 2010.

Fringe Benefit Tax
Fringe benefit tax exemption has been provided on expenditure on or payment through pre-paid electronic meal card, crche facilities, sponsorship of an employee-sportsperson, organising sports events for employees and guest houses. Further the expenditure on festival celebration would be levied at the rate of 20% instead of 50%.

Threshold limit of exemption of Income Tax
The basic limit of exemption is increased from Rs. 1,10,000/- to Rs. 1,50,000/-. Further the tax slab rates on total income also changed. The new tax slab rates are as under:-Upto Rs. 1,50,000/-
Rs. 1,50,001/- to Rs. 3,00,000/- 10%
Rs. 3,00,001/- to Rs. 5,00,000/- 20%
Above Rs. 5,00,000/- 30%
In case of every individual, being a woman resident in India, and below the age of sixty-five years at any time during the previous year, the basic exemption limit is raised from Rs. 1,45,000/- to Rs. 1,80,000/-.
In case of every individual, being a resident in India, who is the age of sixty-five years or more at any time during the previous year, the basic exemption limit is raised from Rs. 1,95,000/- to Rs. 2,25,000/-.
There is no change in limit of surcharge, education and secondary & higher education cess.

Deduction under section 80C
Senior Citizen Saving Scheme 2004 and the five years Post Office Time Deposit Account also added in the limit under Section 80C of the Income Tax Act.

Deduction of Section 80D from the A.Y. 2009-2010
Additional deduction of Rs. 15,000/- allowed under section 80D to an individual paying medical insurance premium for his/her parents. Further in case of senior citizen the limit is also increased
from Rs. 15,000/- to Rs. 20,000/-.

1. Reduction on duty on the followings from:-

1. 7.5% to 5% on project imports
2. 7.5% to 5% on specified machinery for manufacture of sports goods
3. 10%/7.5% to Nil on specified raw materials and inputs for use in IT/ Electronic hardware industry & on specified parts of set-top boxes
4. 5% to Nil on iron or steel melting scrap and aluminum scrap
5. 10% to 5% on specified raw materials for tyre industry
6. 10% to Nil on helicopter simulators

2. Drugs & Kits

1. Duty on 6 specified drugs/kits and bulk drugs for their manufacture has been reduced from 10% to 5% with Nil CVD by way of excise duty exemption. These drugs are used in treatment of cancer/diabetes/ asthma/ hepatitis B, etc.
2. Duty of specified raw materials for manufacture if ELISA kits has been reduced from 10%/ 7.5% to 5%.

3. Tobacco Products:- Duty on cigars, cheroots and cigarillos has been increased from 30% to 60%.

4. Exemptions withdrawn

Exemption from additional duty of customs of 4% levied has been withdrawn from power generation projects (other than mega power projects), transmission, sub-transmission and distribution projects,
and goods for high voltage transmission projects.

1. Drugs & Pharmaceuticals

1. Duty reduced from 16% to 8% on all drugs (formulations), instant sterile dressing pads, burn therapy pads, sterile catgut, sterile absorbable surgical, first aid boxes & kits, etc.
2. Duty exempted on Anti-AIDS drug ATAZANAVIR & bulk drugs for its manufacture

2. Auto Sector :- Duty reduced from

1. 16% to 12% on small cars
2. 24% to 14% on hybrid cars
3. 8% to Nil on electric cars
4. 16% to Nil on end-use basis on specified parts of electric cars
5. 16% to 12% on buses and two-wheelers/ three wheelers.

3. IT & Communication Sector

1. Duty exempted on wireless data modem cards;
2. Duty reduced from 16% to 8% on specified convergence products;
3. Duty increased from 8% to 12% on packaged software.

4. Other Exempted from excise duty -

1. On packaged tender coconut water, paws, and puffed rice, milk containing edible nuts, tea/coffee premixes
2. On specified refrigeration equipment for installation of cold storage
3. On Composting machines
4. On menthol/ menthol flakes

5. Miscellaneous

The duty applicable to clearance of goods to domestic tariff area from EOU/ STP/ ETP Units, etc. has been revised from 25% of basic customs duty + excise duty payable on like goods to 50% of the
basic customs duty + excise duty payable on like goods.

1. Services in relation to Information Technology Software for use in business;
2. Management of Investment Services under Unit Linked Insurance Plans;
3. Recognized Stock Exchange Services in relation to securities;
4. Recognized/ Registered Association Services (commodity exchange) in relation to sale or purchase of goods/ forward contracts;
5. Processing & Clearinghouse Services in securities, goods or forward contracts;
6. Services of supply of tangible goods;
7. Services of supply of tangible goods;

1. To include:-

1. Purchase or sale of foreign securities under banking & other financial services;
2. Packing together with transportation of cargo, under cargo handling services;
3. Testing or analysis of information technology software, under technical testing and analysis
   services;
4. Inspection, examination & certification of information technology software, under technical
   inspection and certification services;
5. Services in relation to journey in a contract carriage vehicle, under tour operator services.

2. To exclude:-

1. Reference of information technology services, under business auxiliary services;
2. Computer software engineering consultancy, under consulting engineer services.

1. Services provided for booking accommodation in Hotels in India by a person located outside India to a person located outside India.
2. 75% of gross amount charged as freight by Goods Transport Agency.

1. Section 71 has been inserted to empower the Board to frame Scheme for preparation & filing of return through Service Tax Return Preparer.
2. Section 77 has been substituted to provide the following penalties:-

1. Time limit for filing of revised return has been enhanced from 60 days to 90 days (effective from 01/03/2008).
2. Following services provided in relation to goods/ material/ immovable property situated outside India at the time of providing service, to be considered as export:-
   a) Management, maintenance or repair;
   b) Technical testing or analysis; and
   c) Technical inspection & certification. (effective from
   01/03/2008).
3. Following services provided in relation to goods/ material/ immovable property situated in India at the time of providing service, to be considered as import:- a) Management, maintenance or repair;
   b) Technical testing or analysis; and
   c) Technical inspection & certification. (effective from
   01/03/2008).
4. Service tax rate has been enhanced from 2% to 4% under optional scheme for payment of service tax under works contract services. (effective from 01/03/2008).
5. Rule 6 on CENVAT Credit Rules, 2004 has been amended to provide the following options to the provider of output services, using common inputs/ input services for taxable as well as exempted services and opting not be maintain separate accounts:-
   a) either reverse the credit attributable to input/ input services used for providing exempted services; or
   b) pay 8% amount of the value of the exempted
   services.
   (effective from 01/04/2008).

1. Central Sales Tax rate being reduced from 3 per cent to 2 per cent from April 1, 2008.
2. Roadmap for Goods and Service Tax being prepared for introduction of GST from April 1, 2010.