03 August 2009
Exemption: Every income of the assessee is charged to tax unless specifically exempted under the Act. Sec. 10 provides list of incomes which are not to be included in the total income of the assessee for tax purpose. In other words, these incomes are out of the purview of income tax and for tax purpose, total income is computed without taking these incomes into consideration.
Deduction: From the gross total income of the assessee, deductions are allowed on fulfillment of conditions as prescribed in the various sections of chapter VIA. Chapter VIA of the Act (comprises of sections 80C to 80U) provides for various deductions from gross total income. Apart from deduction under chapter VIA, several sections of the Act also provide for deduction while computing income under each head of income E.g. Sec. 16(i) allows Standard Deduction to compute income under the head “Salaries”.
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