Understanding Revenue Tax Legislation: Exemptions, Deductions, and Reductions

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Understanding Income Tax Law: Exemptions, Deductions, and Discounts

Most of us want higher incomes. But there is seldom anyone who also thinks about paying taxes on this income. Tax evasion is a crime and therefore compliance with tax laws is a necessity. What if there is a way to avoid unnecessary tax burdens while still complying with the rules?

Here is a brief look at the parts of the Income Tax Act that describe benefits through exemptions, deductions and discounts. Before we evaluate these benefits to see how they fit into our tax planning systems, it is important to understand what these terms mean and how the benefits under each category differ from one another. This helps in assessing how these apply when calculating our tax liabilities.

While it is best to use the services of a formal practitioner, it would still be a good idea to access this knowledge for yourself and evaluate how we might position it in our specific business or investment decisions. A proactive approach is always desirable, especially when it comes to our finances.

Even so, reading a law may not be as easy as reading simple text. Therefore, knowing the structure of a law is an important preface for a layperson.

In this short video we find a simple mechanism to decipher the structure of a law and then to know the aspects of the income tax law that describe the benefits of exemptions, deductions and discounts.