Tax deductions and exemptions are special rules that can help individuals reduce the amount of income tax they have to pay. They are ways to save some of your money and not have to give it all to the government as taxes.
Here's how they work:
Table of contents [Show] Deductions | Exemptions |
| A tax deduction is like a special discount that reduces the amount of money the government considers as your income. It means you get to keep more of your hard-earned money. Let's say you earned 100 rupees, but you have a tax deduction of 30 rupees. That means the government will only tax you on 70 rupees instead of the full 100 rupees. | Tax exemptions are another way to save money on taxes. It's like having certain parts of your income completely protected, and you don't have to pay any tax on that amount. For example, if you have an exemption of 20 rupees, the government will not tax you on that 20 rupees at all. |
Now, you might wonder how you can get these deductions and exemptions. Well, the government offers them for specific things that they want to encourage or support. For example:
Education Expenses
The government wants to encourage people to get a good education. So, if your parents paid for your school fees or tuition, they might be able to get a tax deduction for that amount. It helps your parents save some money.
Medical Expenses
The government understands that medical expenses can be costly. So, if your parents paid for medical treatments or medicines, they might be able to get a tax deduction for those expenses. It helps your family save money on healthcare costs.
House Rent
If your parents live in a rented house, they might be eligible for a tax deduction on the rent they pay. It encourages people to have a place to live and reduces the burden of taxes.
The idea is to help people with their important expenses and make sure they have enough money to meet their needs.
