Homework Answers
The correct answer is OPTION D i.e Deductions can reduce tax liability directly.
OR
The statement about deductions is FALSE is that deductions can reduce tax liability directly.
Explanation
Deduction in income tax are such expenses or pre-defined amounts
which the taxpayer is allowed to subtract from his gross total
income.
It can also be said that a deduction lowers the taxpayer taxable
income and indirectly his tax liability.
From the above explanation it can be concluded that :-
- Deductions can lead to a decrease in tax liability.
- Deductions reduce taxable income.
- Deductiond are an adjustment to Income.
So, the only false statement about deductions is that deductions can directly reduce the tax liability.
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