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  • Sanskar Garg

Sec 80AB of Income Tax Act, 1961: Deductions to be made with reference to the income included in the

Updated: Oct 4, 2022

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A deduction is an expense that can be subtracted from a taxpayer's gross income in order to reduce the amount of income that is subject to taxation. The aggregate of income computed under each head, after giving effect to the provisions for clubbing of income and set off of losses, is known as "Gross Total Income". In computing the total income of an assessee, certain deductions are permissible under sections 80C to 80U from Gross Total Income.

As their names suggest, tax deducted at source (TDS) and tax collected at source (TCS) both attempt to collect money right from the source of income. In essence, it is a backdoor way of combining taxation with the "pay as you earn" principle additionally, "collect as it is earned." What's important to the government is the fact that it delays tax collection and guarantees a steady source of funding, enabling a wider and more effective tax basis. At the same time, it gives the taxpayer the incidence of tax and offers a quick and easy method of payment.

Section 80AB: Where any deduction is required to be made or allowed under any section in respect of any income then for the purpose of computing the deduction under that section, the net income computed in accordance with the provisions of the Income-tax Act (before making any deduction under this chapter i.e. Chapter VIA) shall alone be regarded as the income received by the assessee and which is included in his Gross Total Income.

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