Relief: Computation of Total Income Video Lecture | Income Tax Laws - B Com

Ans. Relief in computation of total income refers to specific deductions or exemptions allowed by the income tax laws that reduce the taxable income of an individual or entity. These deductions or exemptions are provided to ease the tax burden on taxpayers and promote certain activities or investments.

Ans. There are various types of relief available under income tax laws, including: 1. Deductions: These are specific amounts that can be subtracted from the gross total income to arrive at the taxable income. Examples include deductions for expenses incurred for medical treatment, education, or housing loans. 2. Exemptions: Certain incomes are exempt from tax, such as agricultural income, dividends from mutual funds, or income from specified bonds. 3. Tax credits: These are credits given for specific purposes, such as foreign tax credits, relief for taxes paid in another country, or relief for taxes paid on royalty income. 4. Rebates: Rebates are a type of relief that directly reduces the tax liability. For example, individuals below a certain income threshold may be eligible for a rebate under the income tax laws. 5. Special provisions: Certain provisions like relief for startups, relief for senior citizens, or relief for disabled individuals are also available under the income tax laws.

Ans. Deductions are specific amounts that can be subtracted from the gross total income to arrive at the taxable income. These deductions help in reducing the total income for tax purposes by lowering the taxable income. For example, if an individual has a gross total income of $50,000 and claims a deduction of $10,000, the taxable income will be reduced to $40,000. Consequently, the tax liability will be calculated on the reduced taxable income, resulting in a lower tax burden for the taxpayer.

Ans. Yes, an example of an exemption under income tax laws is agricultural income. In many countries, income derived from agricultural activities is exempt from income tax. This exemption is provided to support and promote agricultural activities, considering their importance for food security and rural development. Therefore, if an individual earns income solely from agricultural activities, that income may be exempt from income tax.

Ans. The main difference between deductions and exemptions under income tax laws is the manner in which they reduce the taxable income: - Deductions: Deductions are specific amounts that can be subtracted from the gross total income to arrive at the taxable income. They directly reduce the taxable income and lower the tax liability. Examples include deductions for expenses incurred for medical treatment, education, or housing loans. - Exemptions: Exemptions refer to certain types of income that are entirely excluded from the computation of taxable income. They are not included in the gross total income itself. Examples include agricultural income, dividends from mutual funds, or income from specified bonds. Exemptions provide a complete relief from tax on the specified types of income.