The government hiked the effective tax rates for individuals with a taxable income of Rs 2 crore-Rs 5 crore and over Rs 5 crore by around 3 and 7 per cent respectively.

It proposed a TDS or tax deducted at source of 2 per cent on cash withdrawals exceeding Rs 1 crore from a bank account in a year, and mandatory filing of returns by certain categories of assessees - measures largely viewed to discourage cash dealings and push tax compliance.

Ms Sitharaman also proposed that all companies having annual turnover up to Rs 400 crore will now come under the 25 per cent bracket of corporate tax, as against Rs 250 crore. The announcement would cover 99.3 per cent of the companies operating in the country, the Finance Minister said.

"Pre-filled tax returns will be made available to taxpayers which will contain details of salary income, capital gains from securities, bank interests, and dividends etc. and tax deductions," she said in her Budget speech. Information regarding these incomes will be collected from the concerned sources such as banks, stock exchanges, mutual funds, retirement fund body EPFO (Employee Provident Fund Organization) and state registration departments.

In a move aimed at pushing affordable housing, the government allowed an additional deduction of up to Rs 1.5 lakh against interest paid on loans borrowed till March 31, 2020 to buy houses worth up to Rs. 45 lakh.

Ms Sitharaman said that Aadhaar and Permanent Account Number (PAN) will be "interchangeable" for filing income tax returns (ITRs). "More than 120 crore Indians now have Aadhaar card, therefore for ease of tax-payers, I propose to make PAN card and Aadhaar card interchangeable and allow those who don't have PAN to file returns by simply quoting Aadhaar number. They would be able to use that wherever one is required to use PAN," the Finance Minister said.

The government proposed to increase the income tax exemption limit on withdrawal from National Pension System (NPS) to 60 per cent, from the existing 40 per cent. NPS is a government-sponsored retirement planning instrument.

It proposed an additional income deduction of Rs 1.5 lakh on interest paid on loans taken to purchase electric vehicles.

The government also announced a scheme to invite global companies through a transparent competitive bidding to set up mega-manufacturing plants in sunrise and advanced technology areas. The companies will be provided with investment-linked income tax exemptions under section 35AD of the Income Tax Act and other indirect tax benefits, the Finance Minister said.