Many of the people are unaware of the confusing terms in the taxation world. The taxpayer goes around without comprehension of certain definitions that are important for his daily life. Without acknowledgment to these terms, the taxpayer cannot account to his taxes or worse, could regard the misunderstanding of taxes resulting in potential damage to the taxes.

What is the tax benefit? It is basically an intentional method of reducing the compressing burden over the shoulders of the taxpayer. It supports the cause of commercial activity while permissibly reducing the tax return. The liability pertaining to tax can be benefitted by impending adjustability for the taxpayer through the tax benefit. It is not called tax benefit for no reason.  They are available throughout a specific period of time involving the tax per year.

The types of tax benefit may be “Above the Line” Deductions, Itemized Deductions, 2% Floor, Miscellaneous Itemized Deductions, Other Assorted Deduction Limitations.

Now coming to the terms that may prove to be hard in understanding for the taxpayers are as follows. We aim to reduce the misunderstanding surrounding these concepts such that the taxpaying methods can be made easy and simple for you.

Income Tax Deduction

This type of tax benefit is more of a specificity type that needs to fulfill a certain line in order to reduce the income that is influenced by the tax. They are permissible only if they set under acclamation of the income that is under the head and also from the gross total income of the taxpayer. The above can be claimed if the taxpayer has invested in specific departments under a specific criterion or suffered from the specific expenditure.

Income Tax Exemption

The taxpayer has to pay the tax for the amount of income that he is provided with. The departments have assigned specific exemptions to the kind of salary that the taxpayer generates because, for different types, there are different exemptions. These taxes can only be claimed if the income is generated from a specific source and does not relate to the gross income. Tax exemptions that are allowed to be claimed from the gross salary and cannot be claimed for consideration under any other head.

Income Tax Rebate

The items that can be termed as are permissible to be put under acclamation from the gross total of the tax that is due to be payable are referred to as the income tax rebate. The rebate can be calculated through the help of the tax liability that is part of the taxpaying methods. The rebate can be claimed if you are aware of the tax liability. It is a particularly specific amount which can be provided once the deduction has been carried out from your net tax liability.

It is, however, important to notice the difference between the rebate and the other two income tax types. The rebate can be claimed on the tax that is payable but the other two tax incomes are claimed only under the umbrella of the gross incomes.