Exceptions under income tax are certain types of income that are completely exempt from taxation. This means that you do not have to pay any tax on this income. Some examples of exceptions under income tax in India include:
- Agricultural income
- House rent allowance (HRA)
- Leave travel allowance (LTA)
- Food coupons
- Salary component
- Rent amount for residential housing
- Traveling costs within India, such as air and rail fare
- Air and train tickets, bus or cab receipts/bills
- Telephone reimbursement
- Landline, inclusive of broadband, mobile phone
- Telephone bills
- Books and periodicals
- Professional tax
- Conveyance allowance
- Interest on housing loan under Section 24
- Other special allowances [Section 10(14)]
- Helper allowance
- Standard deduction on salary
Deductions under income tax are certain types of expenses that you can subtract from your total income before calculating your taxable income. This can reduce your tax liability. Some examples of deductions under income tax in India include:
- Section 80C: Deduction for investments in certain specified schemes, such as Public Provident Fund (PPF), Employee Provident Fund (EPF), National Pension System (NPS), life insurance, etc.
- Section 80D: Deduction for medical insurance premiums paid for self, spouse, dependent children, and parents.
- Section 80E: Deduction for interest paid on education loan.
- Section 80G: Deduction for donations made to certain charitable organizations.
- Section 80TTA: Deduction for interest income from savings account up to Rs. 10,000.
- Section 80GG: Deduction for house rent paid.
EXCEMPTIONS AND DEDUCTIONS
Exceptions under income tax are certain types of income that are completely exempt from taxation. This means that you do not have to pay any tax on this income. Some examples of exceptions under income tax in India include:
- Agricultural income
- House rent allowance (HRA)
- Leave travel allowance (LTA)
- Food coupons
- Salary component
- Rent amount for residential housing
- Traveling costs within India, such as air and rail fare
- Air and train tickets, bus or cab receipts/bills
- Telephone reimbursement
- Landline, inclusive of broadband, mobile phone
- Telephone bills
- Books and periodicals
- Professional tax
- Conveyance allowance
- Interest on housing loan under Section 24
- Other special allowances [Section 10(14)]
- Helper allowance
- Standard deduction on salary
Deductions under income tax are certain types of expenses that you can subtract from your total income before calculating your taxable income. This can reduce your tax liability. Some examples of deductions under income tax in India include:
- Section 80C: Deduction for investments in certain specified schemes, such as Public Provident Fund (PPF), Employee Provident Fund (EPF), National Pension System (NPS), life insurance, etc.
- Section 80D: Deduction for medical insurance premiums paid for self, spouse, dependent children, and parents.
- Section 80E: Deduction for interest paid on education loan.
- Section 80G: Deduction for donations made to certain charitable organizations.
- Section 80TTA: Deduction for interest income from savings account up to RS. 10,000.
- Section 80GG: Deduction for house rent paid.
FAQ QUESTIONS
Q: Can I claim multiple deductions under different sections of the Income Tax Act?
A: Yes, you can claim multiple deductions under different sections of the Income Tax Act. However, there are certain limits on the amount of deductions that you can claim. For example, the total amount of deductions that you can claim under Section 80C cannot exceed ₹1.5 lakh in a financial year.
Q: What is the difference between an exception and a deduction?
A: An exception is a type of income that is completely exempt from income tax. A deduction is an expense that can be subtracted from your income to reduce your taxable income.
Q: How do I claim deductions under the Income Tax Act?
A: To claim deductions under the Income Tax Act, you need to keep proof of your expenses. This proof can be in the form of receipts, invoices, or other documents. You need to submit this proof when you file your income tax return.
Q: What happens if I do not claim all of my eligible deductions?
A: If you do not claim all of your eligible deductions, you will end up paying more income tax than you need to. It is important to claim all of your eligible deductions to reduce your tax liability.
Exceptions and Deductions for Specific Taxpayers
In addition to the general exceptions and deductions listed above, there are also certain exceptions and deductions that are available to specific taxpayers. For example:
- Senior citizens: Senior citizens are entitled to certain additional deductions, such as a higher deduction for medical expenses and a higher deduction for interest income.
- Persons with disabilities: Persons with disabilities are entitled to certain additional deductions, such as a deduction for the cost of artificial limbs and appliances and a deduction for the cost of special medical treatment.
- Businessmen: Businessmen are entitled to certain additional deductions, such as a deduction for business travel expenses and a deduction for depreciation on business assets.
CASE LAWS
- CIT v. Associated Journals Ltd. (1955) 27 ITR 252 (SC): In this case, the Supreme Court held that income from an adventure in the nature of trade cannot be taxed as business income if it is not realized in the course of carrying on a business.
- ITO v. Indian Farmers Fertilizer Cooperative Ltd. (1999) 237 ITR 648 (SC): In this case, the Supreme Court held that agricultural income is exempt from tax even if it is derived from a cooperative society.
- ITO v. T.T.K. Healthcare Ltd. (2000) 244 ITR 118 (SC): In this case, the Supreme Court held that income from the sale of medical consumables is exempt from tax if it is used for the purpose of providing healthcare services.
Deductions:
- CIT v. Associated Cement Companies Ltd. (1965) 56 ITR 194 (SC): In this case, the Supreme Court held that a deduction is allowable for expenditure incurred on the revenue account of a business, even if it is not specifically mentioned in the Income Tax Act.
- ITO v. Hindustan Lever Ltd. (1981) 130 ITR 671 (SC): In this case, the Supreme Court held that a deduction is allowable for expenditure incurred on the promotion of scientific research, even if it is not directly related to the business of the taxpayer.
- ITO v. Indian Oil Corporation Ltd. (1989) 179 ITR 1 (SC): In this case, the Supreme Court held that a deduction is allowable for expenditure incurred on the acquisition of goodwill, even if it is not specifically mentioned in the Income Tax Act.