A) Surcharge on Income-tax:

Surcharge on income tax on all firms and companies with a taxable income of Rs. one crore or less has been removed.

• In the case of every individual, HUF, association of persons and body of individuals, whether incorporated or not, at the rate of ten per cent of such tax where the income or the aggregate of such income paid or likely to be paid and subject to the deduction, exceeds rupees ten lakh.
• In the case of every firm, artificial judicial person & domestic company, at the rate of ten percent of such tax.
• In the case of every company other than domestic company, at the rate of two and half per cent of such tax

C) Education Cess:

An additional surcharge called as ‘Education cess’ shall be levied at the rate of three percent on the amount of tax deducted inclusive of surcharge as stated in paras ‘A’ and ‘B’ above.

3. Section 192 of the income-tax Act, 1961: Broad scheme of tax.

Deduction at source from "salaries" etc.
3.1 Every person who is responsible for paying any income chargeable under the head "salaries" shall deduct income-tax on the estimated income of the assessee under the head "salaries" for the financial year 2007-2008. The income-tax is required to be calculated on the basis of the rates given above and SHALL BE DEDUCTED ON AVERAGE AT THE TIME OF EACH PAYMENTS e.g. FROM SALARY EVERY MONTH.

Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of section 192 of the Act:-

Any sum received under a life insurance policy, including the sum allotted by way of bonus on such policy other than,

• Any sum received under sub- section(3) of section 80DD.
• Any sum received under a Keyman insurance policy.
• · Any sum received under an insurance policy affected on or after 1-4-2003 in respect of which the premium paid in any of the years during the term of the policy exceeds twenty per cent of the actual capital sum assured.

In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year out of his Income chargeable to tax being the aggregate of the sums given below not exceeding one lakh rupees. 

• Payment of insurance premium to effect or to keep in force insurance on the life of the individual, the wife or husband or any child of the individual; provided the premium paid is not in excess of twenty per cent of the actual capital sum assured.
  
• Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan of the Life Insurance Corporation of India or any other insurer as the Central government may by notification in the official gazette specify on the life of the individual, the wife, the husband or any child of the individual provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity.
  
• i) for participation in the Unit-Linked Insurance Plan, 1971, of the Unit Trust of India; specified in Schedule II of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002.
  ii) for participation in any Unit-Linked Insurance Plan of the LIC Mutual Fund notified by the Central Government under clause (23D) of section 10, as the Central Government may, by notification in the Official Gazzette, specify in this behalf
  
• Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation as the Central Government may by notification in the Official Gazette, specify.
  

NOTE: Section 80 CCE.
The aggregate amount of deduction under section 80C, section 80CCC, and shall not, in any case exceed one lakh rupees.

Under This section, a deduction up to Rs 10,000 (Rs 15,000 in case of senior citizens) is allowed in respect of premium paid by cheque towards health insurance policy, like "Mediclaim". Such premium can be paid towards health insurance of spouse, dependent parents as well as dependent children of the assessee provided that such insurance is in accordance with the scheme framed by,

• The General Insurance Corporation of India as approved by the Central Government in this behalf or
• any other insurer and approved by the Insurance Regulatory and Development Authority.

However, the deduction can be allowed for a sum not exceeding Rs.20,000 per annum where the assessee or his wife or husband, or dependent parents is a senior citizen which means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year.

4. under section 80DD an assessee, has during the previous year.

• a. Incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a handicapped dependant; or
• b. Paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or Unit Trust of India subject to the conditions specified in sub-section (2) and approved by the Board in this behalf for the maintenance of handicapped dependant. The assessee shall in accordance with and subject to the provisions of this section, be allowed a deduction of a sum of forty thousand rupees in respect of the previous year.

Provided that where such dependent is a person with severe disability, the provisions of this section shall have effect as if for the words “fifty thousand rupees”, the words “seventy five thousand rupees” had been substituted.

The assessee claiming a deduction under this section shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner, along with the return of income under section 139 in respect of assessment year for which the deduction is claimed.

A) Surcharge on Income-tax:

Surcharge on income tax on all firms and companies with a taxable income of Rs.1 crore or less will get removed.

• In the case of every individual, HUF, association of persons and body of individuals, whether incorporated or not, at the rate of ten per cent of such tax where the income or the aggregate of such income paid or likely to be paid and subject to the deduction, exceeds  rupees ten  lakh.
• In the case of every firm, artificial judicial person & domestic company, at the rate of ten  percent  of such tax.
  
• In the case of every company other than domestic company, at the rate of two and half per cent of such tax. 

C) Education Cess:

An additional surcharge called as ‘Education cess’ shall be levied at the rate of three percent on the amount of tax deducted inclusive of surcharge as stated in paras ‘A’ and ‘B’ above.

3. Section 192 of the income-tax Act, 1961:
Broad scheme of tax

Deduction at source from "salaries" etc.
3.1  Every person who is responsible for paying any income chargeable under the head "salaries" shall deduct income-tax on the estimated income of the assessee under the head "salaries" for the financial year 2007-2008. The income-tax is required to be calculated on the basis of the rates given above and SHALL BE DEDUCTED ON AVERAGE AT THE TIME OF EACH PAYMENTS e.g. FROM SALARY EVERY MONTH.

Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of section 192 of the Act:-

Any sum received under a life insurance policy, including the sum allotted by way of bonus on such policy other than,

• any sum received under  sub- section(3) of section 80DD
• Any sum received under a Keyman insurance policy
• Any sum received under  an insurance policy effected on or after  1-4-2003 in respect of which the premium paid in any of the years  during the term of the policy exceeds twenty per cent of the actual capital sum assured.

In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted, in accordance with and subject to the provisions of this section, the whole of the amount paid or deposited in the previous year out of his Income chargeable to tax being the aggregate of the sums given below   not exceeding one lakh rupees. 

• Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the wife or husband or any child of the individual; provided the premium paid  is not in excess of twenty per cent of the actual capital sum assured.
  
• Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan of the Life Insurance Corporation of India or any other insurer as the Central government may by notification in the official gazette specify on the life of the individual, the wife, the husband or any child of the individual provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity
  
• Any sum paid as contribution in the case of an individual, for himself, spouse or any child,
  i) for participation in the Unit-Linked Insurance Plan, 1971, of the Unit Trust of India; specified in Schedule II of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002.
  ii) for participation in any Unit-Linked Insurance Plan of the LIC Mutual Fund notified by the Central Government under clause (23D) of section 10, as the Central Government may, by notification in the Official Gazzette, specify in this behalf
  
• Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation as the Central Government may by notification in the Official Gazette, specify.
  

NOTE: Section 80 CCE.
The aggregate amount of deduction under section 80C, section 80CCC, and shall    not, in any case exceed one lakh  rupees.

Under section 80D, a deduction can be allowed for a sum not exceeding Rs.15,000 per annum to the extent payment is made by cheque out of his income chargeable to tax to keep in force an insurance on the health of the assessee or on the health of the spouse, dependent parents or dependent children of the assessee provided that such insurance is in accordance with the scheme framed by

• the General Insurance Corporation of India as approved by the Central Government in this behalf or
• any other insurer and approved by the Insurance Regulatory and Development Authority.

However, the deduction can be allowed for a sum not exceeding Rs.20,000 per annum where the assessee or his wife or husband, or dependent parents is a senior citizen which means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year.

4. Under section 80DD an assessee, has during the previous year

• Incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a handicapped dependent; or
• Paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or the Unit Trust of India for the maintenance of handicapped dependent-shall in accordance with and subject to the provisions of this section be allowed a deduction of a sum of fifty thousand rupees in respect of  the previous year.

Provided that where such dependent is a person with severe disability, the provisions of this section shall have effect as if for the words “fifty thousand rupees”, the words “seventy five thousand rupees” had been substituted.

The assessee claiming a deduction under this section shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner, along with the return of income under section 139 in respect of assessment year for which the deduction is claimed.