Tax deductions are considered after taking into account exempt incomes. It is the amount of income an assessee can claim as deduction from her gross income for tax purposes.

It could be an investment made or expenses incurred by an assessee on specified avenues under different sections of the Income-tax Act, 1961. For instance, an assessee can claim deduction of up to 1.5 lakh under section 80C for investments made in instruments such as Public Provident Fund. Expenses such as children’s education fee and stamp duty paid on registration of a house also qualify for deduction under 80C.

Sections 80D, 80E, 80U and 80G also qualify for deduction. Limit and avenues differ in each section.

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