MANAGEMENT

Detailed explanation-1: -Tax credit is a sum that can be subtracted from the total payable tax and offsets the overall liability. If an individual is charged more tax, then the excess tax is given as a tax credit which can be adjusted against future tax liabilities.

Detailed explanation-2: -How do tax credits work? Tax is calculated as a percentage of your income. Your tax credits are deducted from this to give the amount of tax that you have to pay. A tax credit will reduce your tax by the amount of the credit.

Detailed explanation-3: -A tax credit is a provision that reduces a taxpayer’s final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer’s tax bill directly.

Detailed explanation-4: -TDS is the amount of tax which is deducted by the employer or deductor from the taxpayer and is deposited to the Income Tax Department on behalf of him/her. The TDS rates are set on the basis of the age bracket and income of different individuals.

Detailed explanation-5: -Tax credits directly reduce the amount of tax you owe, while tax deductions reduce your taxable income. For example, a tax credit of $1, 000 lowers your tax bill by that same $1, 000.