Upgrade and Save: Get 10% OFF on CAclubindia Pro Subscription! Use Code: SAVE10 Subscribe Now!

Deduction vs exemption vs rebate

Neha sharma (-) (1257 Points)

06 November 2013

What is the difference between Income Tax Deduction, Income Tax Exemption and Income Tax Rebate ???

Reply
Follow
Share

13 Replies

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 06 November 2013

exemption doesnt form part of total income while deduction form part of a total income. Rebate is a tax relief, it comes into the picture after applying tax rates on total incom. For instance, TAX rebate of rs 2000 under sec.87A .

Upgrade to CAclubindia Pro. Subscribe Now!

Mohan (Accounts Mgr) (209 Points)
Replied 06 November 2013

Exemptions like Sec.10 .... Total Income - Exemptions = Gross Income

Deductions like Sec.80.... Gross Income - Deduction = Net Income

Rebate like Sec.88,89 ..... Tax on Net Income - Rebate = Net Tax Payable

Neha sharma (-) (1257 Points)
Replied 06 November 2013

hmmm... If I go as per the above explanation, then why is Deduction under Section 24 allowed from House Property which reduces the total income of an assessee...

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 06 November 2013

sec 22 to 27 talks about income from house property. sec.24 deduction relates to house property. To knw exact income from h.p...u need to show deduction before gross total income. Chapter VI-A deduction alone i.e 80's comes after GTI.

Neha sharma (-) (1257 Points)
Replied 06 November 2013

My question is that if Deductions are allowed only from Gross Total Income, then howcome Sec 24 deduction is allowed from Income from House Property and not from Gross Total Income

Upgrade to CAclubindia Pro. Subscribe Now!

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 06 November 2013

no yr. Only chapter VI-A that talks on sec.80's. This chapter alone after GTI. Sec 16 deduction relates to salary and sec.24 H.P. To knw exact income from respective heads u give deduction before GTI.

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 06 November 2013

tel me sec 22 to 27 relates to H.P na. Sec. 24 is deduction towards interest on loan relates h.p.And after GTI ..its a chapter VI -A deduction. I mean its not just 'deduction'. Hope u understood now

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 06 November 2013

in general all says GTI is before giving deduction. But its chapter VI-A deduction only.

Neha sharma (-) (1257 Points)
Replied 06 November 2013

I'm still waiting for a resourceful answer for this query...

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 06 November 2013

hmmm u ipcc or final?

Upgrade to CAclubindia Pro. Subscribe Now!

Kishor Bhat (CA final CS executive (from Bangalore)) (1881 Points)
Replied 06 November 2013

u only think ..after GTI..in that tax computation format what wil u wright ? Just deductions or deductions under chapter VI-A..

Mohan (Accounts Mgr) (209 Points)
Replied 06 November 2013

Hmm..I dont know what your exact doubt / testing others ? anyway as per my level of knowledge...

1. Income from Salary (Total Salary - Sec. 10 like HRA exemption)

2. Income from H.P. (Total Rent - Sec.24 is adhoc deducton)

3. Income from Capital Gain ( Total Sale - Sec.54 exemption)

4. Income from Business / profession (Total Turnover - Sec.32 specific deduction / allowable exp)

5. Income from other sources (Total Receipts - Sec.57 general deduction)

to aggregate the above 5 you get GTI - Chapter VI A deductions = Net Total Income

on basis of Net Total Income Gross Tax will determined,

out of Gross Tax Payable Rebate will deduct to arrive Net Tax Liability..... There is no such condition / commitment the Term "Deduction" used at only the level of Chapter VIA. Hope you can understand .

1 Like