Distinguish between exemptions, deductions and rebate under the Income-tax Act, 1961.

Exemptions Deduction Rebate 1. Exemptions means a source of income is exempt from Income Tax Act whether fully or partially. 1. Deductions are incentives provided by the government to reduce the Taxable income. 1. Rebate is a specified percentage of or an amount reduced from total income tax payable. 2. The exempted income is not included in the total Income of the assessee. 2. Income in respect of which deduction is allowed is firstly included in income and then deductions are allowed under different heads of income as well as from the total income. 2. Tax rebate is allowed as a reduction from the total tax payable. 3. Chapter III (Section 10) of the Income Tax Act, 1961 deals with exempt income. 3. Chapter VI-A (Section 80C to 80U) of the Income Tax Act, 1961 deals with deductions. 3. Section 87A deals with rebate under Income Tax Act, 1961.