Key Differences Between Deduction and Exemption Deduction means subtraction i.e. an amount that is eligible to reduce taxable income. Exemption means exclusion, i.e. if certain income is exempt from tax then it will not contribute to the total income of a person.
It is for an assessee to decide whether expenditure incurred in the course of his business. The expenditure may be incurred voluntarily without any necessity, but it is for the purpose of business or business earn profit after that expenditure, then it will be deductible under provisions of Section 37.
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