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Santhosh Poojary (SIEMPRE AHÍ PARA TI)     29 November 2010

Tax Exemption vs Tax Deduction ( Brief Summary)

 

tax exemption

 

The tax exemption policy is promoted by the Government to the individuals or an organization. It means to lessen the tax burden on some sections of society for maintaining a proper equilibrium. The main motive of the tax deduction is to raise the commerce in a particular state which is under the economic depression.


Tax exemption is applicable to all the countries like the exemption from income tax, property tax, sales tax and lots more. Tax exemption changes the structure of the economy but sometimes it creates some adversity. There are some conditions that should be followed like tax payer’s age, his property, net income, etc. Now let’s have a look over the tax deduction which is different from the tax exemption policy.

 

 


Tax deduction


Tax deduction affects the income of a person. It represents an expense that would be incurred by a person. It is subtracted from the gross income which results into the lower taxable income. Tax deduction is an advantage for those earning people who are liable to pay direct taxes. In other words, tax reduction is a deduction of a person’s gross income that reduces the amount of money used in estimating the due tax. For example, if a person takes a benefit of a $ 500 tax deduction on his $ 40000 worth of taxable income, then his taxable income is decreased to $ 39500. The amount of money that a taxpayer can save is $ 500. Lower income groups are taxed at a low rate. As the income of taxpayer increases, the tax percentage also rises.

There are several countries that offer tax deductions to their citizens but vary in several ways like amount, type and requirements. Moreover, tax deduction can be carried over various field works like business tax deduction, home improvement tax deduction, sales tax deduction and many more.


 



 13 Replies

Sunshine

Sunshine (Helping All)     29 November 2010

thanx san...

Sunshine

Sunshine (Helping All)     29 November 2010

thanx san...

Vikas Gupta

Vikas Gupta (CHARTERED ACCOUNTANT)     29 November 2010

Originally posted by : Sneha..sunshine..

thanx san...
Faiz Ahmed

Faiz Ahmed ( Article Trainee)     29 November 2010

Rightly said Santhosh.

 

 

In brief there are three concepts which can be briefed out:-

Exemption---Income  which is not taxable at all

Deductions-- Reduction from the taxable Income

Relief---------Some relaxation on payment of tax or taxability on Income 

4 Like
Santhosh Poojary

Santhosh Poojary (SIEMPRE AHÍ PARA TI)     29 November 2010

 

Originally posted by : Faiz Ahmed

Rightly said Santhosh.

 

 

In brief there are three concepts which can be briefed out:-

Exemption---Income  which is not taxable at all

Deductions-- Reduction from the taxable Income


Relief---------Some relaxation on payment of tax or taxability on Income 

 Thanks Faiz Bhai for Value Addition

1 Like
CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta ("PROUD TO BE AN INDIAN")     29 November 2010

Well Defined Santosh.....Keep it up.....

MS SAMEER

MS SAMEER (CMA*CA*CMDM*ast FUND MANAGER*LEGAL ADVISOR)     29 November 2010

tnq                  


(Guest)

HAy SAN

Very Nice Explanation .

Thank u buddy

1 Like
Sandya

Sandya (Article)     29 November 2010

Well Explained .

Vinay Raja

Vinay Raja (student-IPCC)     30 November 2010

good conceptual clarity

thanks san

1 Like
Murali

Murali (CA Final Student)     30 November 2010

hi everybody,

pls confirm, Sec 10A loss can be setoff against other income

1 Like
Priyanka Nikhil Salian

Priyanka Nikhil Salian (ARTICLED ASSISTANT)     30 November 2010

awesome comparisons keep it ups

1 Like
Bharadwaj Tallapragada

Bharadwaj Tallapragada (CA-FINAL:NOV2015 ASPIRANT)     07 June 2013

superb discussion santosh ji. thanks to faiz ji for his value adition!

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