ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Tax is deducted based on which tax slab you belong to each year. Similarly, if you earn interest from a Fixed Deposit, the bank also deducts TDS. Since the bank does not know your tax slabs, they usually deduct TDS 10%, unless you haven’t mentioned your PAN (in that case a 20% TDS may be deducted).

Detailed explanation-2: -A deduction can only lower your taxable income and the tax rate that is used to calculate your tax. This can result in a larger refund of your withholding. A credit reduces your tax giving you a larger refund of your withholding, but certain tax credits can give you a refund even if you have no withholding.

Detailed explanation-3: -Answer: Your income is equal to the sum total of earnings deducted by expenditure. The earned income is further deducted by the government in order to procure different taxes for national constructions, the functioning of different schemes, etc.

Detailed explanation-4: -What is the difference between a tax credit and a tax deduction? A tax credit reduces the amount of money you must pay, while a tax deduction reduces your taxable income.