What is Tax Deduction?
Tax deduction refers to a reduction in taxable income that lowers the amount of tax an individual
or business owes to the government. These deductions help taxpayers save money by legally
lowering their tax liabilities.
Key Features of Tax Deduction
- 📌 Reduces overall taxable income.
- 📌 Available for individuals and businesses.
- 📌 Encourages savings and investments.
- 📌 Different deductions apply to different income sources.
Types of Tax Deductions
- 💼 Business Expense Deductions – Expenses incurred for business
operations.
- 🏡 Home Loan Interest Deductions – Savings on interest paid for
home loans.
- 📚 Education Expenses – Tax benefits for tuition fees and
student loans.
- 🏥 Medical Expenses – Deductions for medical insurance and
health-related costs.
- 📈 Investment-linked Deductions – Benefits for investing in
specific schemes (e.g., PPF, ELSS).
Why Tax Deductions Matter?
Understanding and utilizing tax deductions helps taxpayers save money and manage their
finances more effectively.
- ✅ Reduces taxable income, lowering the total tax payable.
- ✅ Encourages investments and savings through eligible schemes.
- ✅ Supports financial planning and wealth management.
