TAXATION LAW ON DIFFERENTIATION BETWEEN TAX EXEMPTION AND TAX DEDUCTIONS.TO: SUJITH P. SURENDRAN FACULTY, COLS. HUF Partnership Firm NRI income by interest. Income of accompanying member. Income by foreigner. . Travel allowance NRI income by remuneration Payments outside India for services outside India. 10) • • • • • • • • • Agricultural income.TAX EXEMPTIONS (U/Sec. • • • • • • • • • • • • Gratuity Provident fund Superannuation fund Any special allowance Interest Payment by Indian Co.engaged in aircraft operations Scholarships Allowance Reward Pension Income of local authority Income of scientific research association . • Income of news agency • Income of organization involved in development of professional education. • Certain members of society. . • Certain income of a registered union. • Income from dividend • Income from a long term capital asset. • Subsidy from certain business. In respect of educational expenses In respect of donations . 80C-80U) • • • • • • • • • In respect of certain payments. In respect of investments In respect of deposits In respect of contribution to pension scheme In respect of health insurance premia In respect of maintenance In respect of loan for higher education.TAX DEDUCTIONS (S. In respect of undertakings in north-eastern states. .• • • • • • • • • In respect of rents paid In respect of donations to political parties In respect of new industrial undertakings In respect of profits from projects outside india In respect of earnings in convertible foreign exchange In respect of profits on exports In respect of profits by undertakings engaged in development of Special Economic Zones. In respect of profits from collecting and processing bio-degradable waste. • In respect of professional income from foreign sources. • In respect of royalties from foreign enterprises. • In respect of income of co-operative societies. • In respect of profits & gains from business of publication of books • In respect of professional income of authors of text books in indian languages. . professors.• In respect of employment of new workmen • In respect of certain incomes of offshore banking units & international financial service centre. • In respect of remuneration from foreign sources of teachers. • In respect of royalty on patents • In case of a person with disability . certain income can be exempted from tax provided certain conditions are met. Usually when the government wants to encourage savings. Of course. Likewise. • The word “deduct” means “to subtract or take away from the total”. means the amount is taken away (reduced) from the total taxable income. it’s an exemption. . when a particular income is not taxable at all.10 & S. In the case of income tax. the word “deduction” as far as income tax goes. “exemption” gives you the freedom to not pay the tax.DIFFERENCE BETWEEN S.80 • The word “exempt” means “free from an obligation from doing something”. they offer deductions for investing in certain instruments and hence lower your taxable income by that extent. So. • Exemptions are given in the Income Tax Act which are the thrust areas of the government (i.• A tax exemption is a set in stone dollar figure used to reduce your taxable income. • Deductions are given to boost savings for social welfare & other activities with which the country will be able to get strength in the desired field. The amount doesn't change regardless of your personal situation. ..e. • The amount of the deduction changes depending upon your circumstances. areas the government wishes to boost) and/or the earning body is a weaker section of the society and/or requires growth in those activities. • Deductions mean you need to include the income first in computing the total income. then only the deduction would be available to you. • There may be a monetary ceiling with respect to the deduction • There is generally no limit for an exemption.• Exemptions mean the income in respect of the exempt item is tax free altogether and is not to be included while computing the total income. If you fulfil/ qualify with respect to the conditions provided for claiming the deduction. . B.THANK YOU. BY: SAKSHI KHURANA B.LL.A. R450209071 2009-14 .