Tax Liability Exemption, Deduction, related to individual, Expenses & Income, Rebate, Deemed income and clubbing of income

A friend says her salary is ten lakh, but she will only pay tax on a part of it. Another says his father put a flat in his wife’s name so the rent would be taxed at a lower rate, and the taxman did not allow it. A third says a gift from a stranger was taxed, but a gift from an uncle was not. Each of these is a different tool in the same box: exemption, deduction, rebate, deemed income and clubbing. Learn what each tool does and you can place any such story in the right pigeonhole.

In two minutes

Income-tax law starts from what a person earns, removes what the Act exempts, adds what the Act deems to be income, merges in the income of others that the Act says belongs with the taxpayer (clubbing), subtracts permitted deductions, and finally reduces the tax itself by a rebate.

The rest of this chapter

The full explanation, the cheat sheet, every previous-year question at every mark weight, the quiz and the answer skeletons are part of Law of Taxation on LexBlox Semester. Sign in to unlock the subject, or read Module 1 of Legal Language and Writing free.