Taxation of dividends and mutual fund distributions altered-companies and funds pay additional tax; recipients exempt. Prescribes income-tax rates and surcharge rules for assessment year 2003-04; clarifies definitions of income, not ordinarily resident and business connection; reallocates tax incidence by exempting dividends and unit income in recipients' hands while levying additional income-tax at payer level; restricts certain insurance and foreign-interest exemptions; introduces targeted incentives (SEZ reinvestment, Offshore Banking Unit deduction, author and patent royalty deductions, regional tax holiday) and significant procedural reforms including new search-assessment provisions, electronic filing and annual information returns.