The tax exemption policy is promoted by the Government to the individuals or an organization. It means to lessen the tax burden on some sections of society for maintaining a proper equilibrium. The main motive of the tax deduction is to raise the commerce in a particular state which is under the economic depression.

Tax exemption is applicable to all the countries like the exemption from income tax, property tax, sales tax and lots more. Tax exemption changes the structure of the economy but sometimes it creates some adversity. There are some conditions that should be followed like tax payer's age, his property, net income, etc. Now let's have a look over the tax deduction which is different from the tax exemption policy.

Tax deduction affects the income of a person. It represents an expense that would be incurred by a person. It is subtracted from the gross income which results into the lower taxable income. Tax deduction is an advantage for those earning people who are liable to pay direct taxes. In other words, tax reduction is a deduction of a person's gross income that reduces the amount of money used in estimating the due tax. For example, if a person takes a benefit of a $ 500 tax deduction on his $ 40000 worth of taxable income, then his taxable income is decreased to $ 39500. The amount of money that a taxpayer can save is $ 500. Lower income groups are taxed at a low rate. As the income of taxpayer increases, the tax percentage also rises.

There are several countries that offer tax deductions to their citizens but vary in several ways like amount, type and requirements. Moreover, tax deduction can be carried over various field works like business tax deduction, home improvement tax deduction, sales tax deduction and many more.