The threshold limit of exemption for all assessees are proposed to be increased by Rs10,000, thus giving every assessee a relief of Rs1,000; in the case of a woman assessee; threshold limit to be increased from Rs135,000 to Rs145,000 and in case of a senior citizen from Rs185,000 to Rs195,000 giving him or her a relief of Rs2,000.

Highlights of the proposals
* Deduction in respect of medical insurance premium under section 80D would be increased to a maximum of Rs15,000 and, in case of a senior citizen, a maximum of Rs20,000.

* Surcharge on income tax on all firms and companies with a taxable income of Rs1 crore or less to be removed.

* Benefit of section 36(1)(viii) to be available to cooperative banks to be also allowed deduction in respect of provision for bad and doubtful debts under section 36(1)(viia)

* Amalgamation and de-merger of banking companies is tax neutral - benefit to be extended to cooperative banks.

* Concessions under section 80IA for infrastructure facilities to be extended to cross country natural gas distribution network, including gas pipeline and storage facilities integrated to the network; and to navigation channel in the sea.

* Issue of urban tax-free bonds to be facilitated through State Pooled Finance Entities formed for raising funds for a group of urban local bodies.

* Benign assessment procedure for assessees engaged in diamond manufacturing and trading who declare profits from such activities at 8 per cent or more of turnover.

* Five-year income tax holiday for 2-3-4-star hotels and convention centres with a seating capacity of not less than 3,000 in NCR or in adjacent districts of Faridabad, Gurgaon, Ghaziabad or Gautam Budh Nagar from April 1, 2007 to March 31, 2010.

* Concession under section 35(2AB) to be extended for five more years until March 31, 2012.

* Tax holiday to undertakings in Jammu & Kashmir to be extended for another five years up to March 31, 2012.

* Minimum Alternate Tax (MAT) to be extended to income in respect of which deduction is claimed under sections 10A and 10B; deduction under section 36(1)(viii) to be restricted to 20 per cent of profits each year.

* Pass-through status for venture capital investments in biotechnology; information technology relating to hardware and software development; nanotechnology; seed research and development; research and development of new chemical entities in the pharmaceutical sector; dairy industry; poultry industry; production of bio-fuels, and hotel-cum-convention centres of a certain description and size.

* Limit of Rs50 lakh per investor per year with respect to capital gains bonds issued by NHAI and REC under section 54EC to continue.

* Rate of dividend distribution tax to be raised from 12.5 per cent to 15 per cent on dividends distributed by companies; and to 25 per cent on dividends paid by money market mutual funds and liquid mutual funds to all investors.

* Expenditure on free samples and on displays to be excluded from the scope of fringe benefit tax (FBT); ESOPs to be brought under FBT.

* Cash withdrawals by central and state governments to be excluded from the scope of banking cash transactions tax (BCTT) - exemption limit for individuals and HUFs to be raised from Rs25,000 to Rs50,000.

* An additional cess of 1 per cent on all taxes to be levied to fund secondary education and higher education and the expansion of capacity by 54 per cent for reservation for socially and educationally backward classes.

* List of declared goods under section 14 of the CST Act to be amended to cover all small aircraft with minimum takeoff mass of less than 40,000 kg operated by scheduled airlines.