Income tax exemption in India refers to a reduction in your tax burden by excluding a specific portion of your income from taxation.  

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The government provides a basic exemption limit for all taxpayers. This is a fixed amount of income that you don't have to pay tax on. 

Basic Exemption Limit

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The limit varies depending on your age group: – Below 60 years old: Rs. 2.5 lakh – Senior citizens (60-80 years old): Rs. 3 lakh – Very senior citizens (above 80 years old): Rs. 3.5 lakh

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The Income Tax Act offers various deductions and exemptions under different sections. 

Deductions and Exemptions under Specific Sections:

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Here's a step-by-step breakdown:  – Gross Total Income: This is your total income from all sources during the financial year, including salary, interest income, rental income, capital gains, etc.

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– Exempt Income: The basic exemption limit as per your age group is deducted from your gross total income. pen_spark

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Deductions under Specific Sections: You can claim deductions for various investments, expenses, and contributions made throughout the year under specific sections of the Income Tax Act. 

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– Tax Rate: Once you have your final taxable income, the government's tax slab system determines the tax rate applicable to you. 

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– India follows a progressive tax system, where tax rates increase with higher income levels.

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