Tax Credits & Reduction in Tax Liability

Question 1

What are Tax Credits?

Answer 1

Reduction in Tax liability

vs Deductible allowance - reduction in total income
vs allowable deductions - expenses allowed against specific head income

Question 2

Are Tax Credits allowed against FTR & MTR

Answer 2

Generally - against NTR only however 4 tax credits allowed against FTR & MTR

• 65B (investment/BMR)
• 65D (newly established undertaking)
• 65E (Industrial undertaking established before 1-7-2011)
• 100C (NPO)

Question 3

What are reductions from Tax liability (NTR)

Answer 3

• Reductions u/P III of IInd SCh
• Foreign Tax Credit (103)
• Other tax credit u/P 10 of Ch III of ITO