Startup tax deduction extension broadens eligibility and redefines qualifying businesses, enhancing access to incentives.
Availability of deduction under Section 80-IAC is extended and qualifying conditions modified: an eligible start-up may claim the deduction for three consecutive assessment years within a specified post incorporation window, subject to a turnover ceiling assessed across seven previous years commencing from the start up's date of incorporation, and subject to engagement in qualifying business activity (innovation, development or improvement of products, processes or services, or scalable business models with high potential for employment generation or wealth creation). The amendments apply from the start of the fiscal year and to the relevant assessment year and onward.

Tax deduction for Farm Producer Companies extended to qualifying entities with specified turnover for a limited term.
The provision extends the deduction under Section 80P to Farm Producer Companies whose gross total income includes income from marketing members' agricultural produce, supplying agricultural implements/seeds/livestock to members, or processing members' produce. The deduction is available to FPCs subject to a turnover cap and is granted for a specified limited five-year period beginning in the financial year 2018-19, with effect from the fiscal year starting 1 April 2019 for subsequent assessment years.

Interest deduction for senior citizens expanded, with higher TDS threshold; standard salary deduction introduced, replacing certain allowances.
A new deduction specifically for senior citizens will cover interest on deposits and displace the existing savings account interest deduction for them while the threshold for withholding tax on interest paid to senior citizens is raised. Separately, a standard deduction for salary income is introduced up to a prescribed limit or the salary amount, and exemptions for transport allowance (with an exception for differently abled persons) and medical reimbursement are withdrawn.

Enhanced medical deduction for senior citizens: deductible limit increased for specified diseases, effective from the next assessment year.
An amendment increases the monetary ceiling under the Section 80DDB deduction for medical treatment of specified diseases, equalising the deductible limit for senior citizens and very senior citizens and applying to the assessment year commencing after the effective fiscal date; existing eligibility criteria and documentation requirements continue to govern claims.

Health insurance deduction for senior citizens increased; single premium policies permitted pro rata deduction under amended rules.
Amendment increases the health insurance deduction for senior citizens, covering annual premiums and preventive health check ups, and allows medical expenditure for very senior citizens. Single premium multi year health policies qualify for deduction on a pro rata basis for the years of cover, subject to the prescribed monetary limit. These changes take effect from 1 April 2019 and apply to the assessment year commencing thereafter.

Presumptive income for heavy goods vehicles revised to tonnage-based deemed earnings per month replacing flat per-vehicle rate.
The proposal amends Section 44AE to treat heavy goods vehicles (above 12 tonnes GVW) under a tonnage-based deeming rule: deemed income equals a specified amount per ton of gross or unladen weight per month or part thereof, or the amount actually claimed, whichever is higher; non-heavy vehicles remain taxed under the existing per-vehicle presumptive rate, with the amendment effective from 1 April 2019.

Taxation of compensation expanded to include payments for contract termination or modification as business or employment income.
The proposal amends section 28 to tax any compensation received or receivable, whether revenue or capital, for termination or modification of contracts relating to business as business income, and provides that compensation for termination or modification of employment contracts shall be taxable under section 56.

Significant economic presence creates business connection for tax purposes, enabling source-country taxation of income from digital transactions.
The proposal treats significant economic presence as a business connection where a non-resident carries out transactions in goods, services or property (including downloads) exceeding a prescribed revenue threshold, or systematically and continuously solicits business or interacts with a prescribed number of users in India through digital means; only income attributable to such transactions or activities shall be deemed to accrue or arise in India, irrespective of the non-resident's physical presence or residence, with thresholds to be prescribed after stakeholder consultation.

Business connection scope expanded to include agents who habitually conclude contracts or play principal roles, broadening PE exposure.
The Budget proposes amending the domestic definition of business connection to align with MLI modified DAPE and anti fragmentation rules by including business activities carried out through a person who habitually concludes contracts or habitually plays the principal role leading to their conclusion by the non resident; applicable contracts are those in the non resident's name, for transfer or use of the non resident's property, or for provision of services by the non resident, with the amendment effective from the stated implementation date and applying to the corresponding assessment year onward.

Restriction on cash application of income requires exempt entities to follow TDS and disallowance rules, curbing untraced receipts.
Specified disallowance and payment-tracing provisions applicable in computing business income are to apply mutatis mutandis for determining application of income by charitable/religious entities and entities exempt under the specified exemption clause, thereby restricting cash application, reinforcing TDS compliance, and creating an audit trail for verification of application of income.

Long-term capital gains tax for foreign institutional investors applies above the exemption threshold after withdrawal of the exemption.
Withdrawal of the statutory exemption makes long-term capital gains on equity shares, equity-oriented fund units and business trust units taxable for foreign institutional investors; the FII tax provision is amended so gains are taxed only to the extent they exceed the applicable exempt threshold, with the amendment operative from the stated assessment year onward.

Dividend distribution tax on equity oriented mutual funds imposed on distributed income creating parity with growth funds.
Amendment requires a mutual fund that qualifies as an equity oriented fund, as defined under the new capital gains provision, to pay additional income-tax on income distributed to its unit holders, aligning tax treatment between dividend-paying and growth-oriented equity funds; the change is effective from the start of the next fiscal year.

Long-term capital gains on listed equity subject to a new concessional tax where securities transaction tax conditions are met.
Long-term capital gains on transfer of listed equity shares, units of equity oriented funds, and units of business trusts are brought into a new concessional tax regime subject to securities transaction tax conditions; indexation and foreign-currency computation benefits are disallowed, pre-cut-off acquisitions receive a deemed cost treatment using fair market value, equity oriented funds are defined by minimum equity investment thresholds, fair market value is fixed by reference to a specified valuation date or net asset value, and Chapter VIA deductions and the section 87A rebate are to be applied after reducing income by such capital gains.

Dividend distribution tax extended to deemed dividends, making companies liable for tax and collection on disguised payouts.
Amendment brings deemed dividends within the dividend distribution tax regime by deleting the Explanation to Chapter XII-D so that distributions referred to in sub clause (e) of clause (22) of section 2 are subject to dividend distribution tax under section 115 O. Such deemed dividends will be taxed at 30 per cent without grossing up, with the amendment applying prospectively to transactions undertaken on or after the commencement date specified by the amendment.

Accumulated profits definition expanded to include amalgamating company profits, widening dividend tax base and curbing amalgamation tax avoidance.
The amendment provides that, for dividend purposes, accumulated profits of an amalgamated company shall be increased by the accumulated profits of the amalgamating company, whether capitalised or not, on the date of amalgamation, thereby preventing use of amalgamation and capital reduction to circumvent tax on distributions and applying from the notified effective date.

Permanent Account Number as Unique Entity Number: non-individuals and designated representatives must obtain PAN to enable transaction linkage.
Non-individual entities undertaking financial transactions above a prescribed annual threshold must apply to the Assessing Officer for allotment of PAN to serve as a Unique Entity Number, and specified senior representatives or persons competent to act for such entities must also obtain PAN to enable linkage of entity transactions with natural persons; the amendment takes effect from 1st April, 2018.

Tax rates and surcharge framework updated, including marginal relief and a new health and education cess replacing prior cesses.
Rates for assessment year 2018-19 set slabbed income-tax rates for individuals with higher basic exemptions for senior citizens, entity-specific corporate rates including a concessional domestic company rate for qualifying turnover, and graduated surcharge regimes with marginal relief to limit surcharge increases on incomes crossing thresholds. TDS rates generally mirror the prior year, except for a new TDS obligation on long-term capital gains at a specified flat rate. The erstwhile education cesses are replaced by a consolidated Health and Education Cess levied on tax inclusive of surcharge, to which marginal relief does not apply.

Long-term capital gains taxation: proposed withdrawal of exemption and introduction of a concessional charging mechanism clarified by FAQs.
Proposed amendments withdraw the existing exemption for long-term capital gains on specified equity-class assets and introduce a new charging provision imposing a concessional tax on such gains above a threshold; the CBDT has issued FAQs to clarify scope, covered asset classes and the interaction of the new charging mechanism with existing Securities Transaction Tax.

GST compensation transfers classified outside tax administration, funded by cess and not a net central revenue outgo.
Specified amounts presented under "Tax administration" in the Union Budget 2018-19 consist of Transfers to States for GST compensation; these Transfers are to be financed from imposition of a cess and therefore do not involve any net outgo from revenues accruing to the Centre and do not form part of expenditure on tax administration.

Health protection scheme cashless coverage for vulnerable families; central funding assured with insurance or trust implementation options.
The planned nationwide health protection initiative will provide cashless inpatient coverage for poor and vulnerable families through public and selected private hospitals, operating on either an insurance or trust model. The scheme is affirmed as entirely state funded with an initial allocation and a commitment to supply additional funds as needed during rollout next financial year. Fiscal support for ongoing funding is projected from expected increases in direct tax and broader tax collections, and implementation will require central-state cooperation and attention to health infrastructure capacity.