Service tax changes implement targeted exemptions and caps affecting air travel, construction, sponsorships, ports, power distribution and rail transport.
Finance Act, 2010 implements changes to service tax via notifications effective from 1 July 2010: additions and amendments to taxable services, exemptions for air transit and certain regional air travel, capped air passenger charges, exemptions for specific construction services and where land value is included, sponsorship exemptions for specified bodies, a negative list for port and airport services, exemptions for services to authorised electricity distributors, and an administrative extension of rail goods transport exemption.

Service tax on renting of immovable property: retrospective amendment stayed, prospective levy remains subject to scrutiny.
High Court proceedings challenged a retrospective amendment to the Finance Act, 1994 seeking to tax renting of immovable property; the court found the challenge to the retrospective operation prima facie substantial and stayed only the retrospective effect, while indicating that arguments against the amendment's prospective application were not, at first glance, sufficient to warrant interdiction.

Direct Tax Code commencement affirmed; calls for GST convergence and inclusive growth to boost jobs and investment.
Announcement confirms commencement of the Direct Tax Code as scheduled effective 1st April 2011 and urges industry chambers to press for early convergence on Goods and Services Tax. The Finance Minister emphasised inclusive growth to generate employment and wealth, noted rising foreign direct investment and export trends, and highlighted the need for expanded skilled manpower to meet industry demand.

EET taxation of retirement savings proposed, but core provident funds and approved life and annuity products retain EEE treatment.
The Code proposes an Exempt Exempt Taxation (EET) regime where specified contributions are deductible, accumulations remain exempt while invested, and withdrawals are taxed at the individual marginal rate; rollovers between permitted accounts will not be treated as withdrawals. Taxation on an EET basis is prospective with existing balances in certain provident funds preserved; however, Exempt Exempt Exempt (EEE) treatment will be retained for core provident funds, specified pension schemes, approved life insurance products and annuities, and pre existing EEE investments will continue to enjoy EEE treatment.

Income from employment: employer retirement contributions excluded from salary; retirement receipts exempt within prescribed limits and perquisites clarified.
Income from employment under the DTC is gross salary less permissible deductions; salary includes perquisites, retirement receipts and employer contributions to approved retirement funds. A centralised Retirement Benefits Account scheme was considered but is not proposed due to administrative complexity and hardship. Employer contributions to approved funds within prescribed limits will not be salary, and specified retirement receipts will be exempt subject to monetary limits. Perquisite valuation will be set by rules: medical perquisites follow existing practice with higher limits, and rent free accommodation will not be valued at market rent.

Wealth tax proposed on net wealth of individuals and HUFs, targeting specified unproductive assets and broad taxpayer coverage.
Wealth tax is proposed on net wealth of individuals, HUFs and private discretionary trusts as assessed on the valuation date; net wealth equals assets chargeable to wealth tax (including financial and deemed assets) less debts and after exempted assets such as stock in trade and a single residential property. Specified unproductive assets will be subject to the tax, productive assets are proposed to be exempt, and the levy will apply to all taxpayers except non profit organisations, with threshold and rate to be calibrated within overall tax policy.