What are Exemptions
- Income which is not taxable is called Exempt Income.
- Government has given lots of tax concessions called Exemptions
- If exemption is given,by government, no tax is payable Under Income tax Act.
Example: - Agricultural Income is exempt
What are Deductions
Items which are reduced from Income are called Deductions.
Gross Total Income
Net total Income
Hence Deductions lead to decrease in Income and hence decrease in tax.