Deduction & Exemption are two Synonyms words in first appearance but has vital difference at length in Income Tax Act. Deduction means subtraction of an amount from the SUM of Income which is already have under different heads of Income. Whereas Exemption means the whole income itself is exempt from tax.
In income tax, exemption come under Chapter III - Incomes which do not form part of total income. Deductions come under Chapter VIA - Deductions to be made while computing total income.
Basically, exemptions are 'income' which should not be considered. Deductions are 'expenses' which are deducted from total income.
Exemption is it is not included in total income. exemption is excluded from income. Sec 10 broadly deduction there are many sections sec 10(13A) RULE 2A
HRA is part of salary and exemption can be claimed under section 10(13A)
Investments like PPF , Tax Saving FD : These are not form part of salary and these investments are made from savings and deduction can be claimed under section 80C
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