Both tax deduction and tax exemption are forms of tax relief or tax break extended by the government to tax payers.
If it is a tax exemption then that particular income will not be charged to income tax. In case of tax deduction one’s income tax liability decreases by the specified amount for investing in or spending money on the specified avenues.
For instance interest from tax free bonds and long term capital gain from equity mutual funds have tax exemption. This means no income tax is to be paid on such interest and profit made on selling equity mutual fund units. Similarly you get tax deduction up to Rs 1 lakh under section 80C for certain investments and expenses. This means if you make those investments or accrue those expenses, your taxable income reduces by the actual amount or Rs 1 lakh, whichever is higher.
All Gold FAQs
- Can I trade in Gold without actually buying physical gold?
- Which one would be the best option to invest- E-Gold, Gold Mutual Fund, Gold ETFs or Jewelry/Gold coins?
- How much percentage of my investment portfolio should be allocated to Gold?
- What is Capital Gains Tax?
- What is the difference between Long term and Short term capital gains tax?
- Is there a way to claim exemption from tax on capital gain on selling Gold ETF/mutual fund units?
- What about liquidity of Gold ETFs?
- How can one trade in gold futures in India?
- Under Capital Gains tax, can long term loss in equities be set-off against long term gain in equities in the next financial year?