Tax on distributed corporate profits imposed, companies pay final tax on dividends while shareholders receive dividend exemption. The Finance Act, 1997 revises income tax and withholding rates, introduces a tax on profits distributed by domestic companies while exempting corresponding dividend income for shareholders, and creates sector specific tax incentives (notably for telecommunication, industrial parks and selected hotels). It reforms presumptive taxation by requiring maintenance and audit of accounts for electing assessees and allows partner salary and interest deductions in firm computations. The Act strengthens compliance by mandating returns based on economic indicators, enabling magnetic media TDS returns, altering TDS rules on government securities and lottery winnings, and refines MAT with a carry forward credit for MAT paid.