TAXATION LAW ON DIFFERENTIATION BETWEEN TAX EXEMPTION AND TAX DEDUCTIONS.

TO: SUJITH P. SURENDRAN FACULTY, COLS.

TAX EXEMPTIONS (U/Sec. 10)

Agricultural income. HUF Partnership Firm NRI income by interest. Travel allowance NRI income by remuneration Payments outside India for services outside India. Income by foreigner. Income of accompanying member.

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 income of a registered union. Certain members of society. Subsidy from certain business. Income from dividend Income from a long term capital asset.

TAX DEDUCTIONS (S. 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. In respect of educational expenses In respect of donations

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 undertakings in north-eastern states. In respect of profits from collecting and processing bio-degradable waste.

 In respect of employment of new workmen In respect of certain incomes of offshore banking units & international financial service centre. 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. In respect of remuneration from foreign sources of teachers, professors. In respect of professional income from foreign sources.

 In respect of royalty on patents In case of a person with disability

DIFFERENCE BETWEEN S.10 & S.80

The word exempt means free from an obligation from doing something. In the case of income tax, exemption gives you the freedom to not pay the tax. So, when a particular income is not taxable at all, its an exemption. Of course, certain income can be exempted from tax provided certain conditions are met. The word deduct means to subtract or take away from the total. Likewise, the word deduction as far as income tax goes, means the amount is taken away (reduced) from the total taxable income. Usually when the government wants to encourage savings, they offer deductions for investing in certain instruments and hence lower your taxable income by that extent.

 A tax exemption is a set in stone dollar figure used to reduce your taxable income. The amount doesn't change regardless of your personal situation. The amount of the deduction changes depending upon your circumstances. Exemptions are given in the Income Tax Act which are the thrust areas of the government (i.e., 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 are given to boost savings for social welfare & other activities with which the country will be able to get strength in the desired field.

 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. Deductions mean you need to include the income first in computing the total income. If you fulfil/ qualify with respect to the conditions provided for claiming the deduction, 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.

THANK YOU.
BY: SAKSHI KHURANA B.A.LL.B. R450209071 2009-14