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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.

   Example:

                          Gross Total Income

            Less:     Deductions

                         Net total Income

 

Hence Deductions lead to decrease in Income and hence decrease in tax.

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CA Maninder Singh is a Chartered Accountant for the past 12 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.