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  • maria Mehra

  • December 1, 2025

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Understanding the meaning and workings of a tax write-off

India is a country that adheres to a progressive tax system, where the total taxable income affects the rate of tax positively. This means that the more money you earn, the more taxes you are required to pay. However, if you are interested in reducing the burden of your annual taxes, then you can also look for different ways to write off your taxes.  This article will explain what is a tax write off and how it works. Additionally, the guide will also tell you about the common tax write-offs and how you can use them. So, get ready to navigate the world of tax write-offs. 

Understanding the Meaning of Tax Write-off

The first thing that you need to know is the tax write off meaning. In simple terms, a tax write-off is a deduction or exemption on your taxes, which means that once implemented, your overall taxes will be less than they were earlier. These write-offs can be anything from specified investments to expenses, and even part of your income that you earn.  For instance, there are certain write-offs available for employees, including deductions for the house rent allowance (HRA) or even leave travel allowance (LTA) that they receive as a part of their salary. In the same manner, even businesses have tax write-offs. Depending on the type of income that you earn and your expenses, you can create an entire structure mentioning what you can write off and what you cannot. 

What is the working of a tax write-off?

Tax write-offs are things that are, basically, pretty much understandable. When you get the concept of tax write-offs and their functioning, you will have no problem at all spotting the deductions and exemptions that apply to you, and henceforth, you can take these to lessen your tax liability. 

  • Deductions from a Particular Head of Income

As per the Income Tax Act, 1961, we have five heads of income — that is, income from salaries, income from house property, profits and gains of business or professional activity, capital gains, and other income. A few of the tax write-offs are, indeed, deductions claimed under any of these five heads. For instance, the standard deduction through 16(ia) of the Income Tax Act, 1961, is a tax write-off that is taken from an employee’s gross salary. 

  • Deductions from the Total Income

Some deductions are granted on the total income that is derived from the five heads of income. One case in point of such tax write-offs is the series of allowances under 80C of the Income Tax Act, which includes the premium of life insurance, the amount of principal repaid in house loans, and investments in Public Provident Fund (PPF), National Pension Scheme (NPS), etc. 

  • Exempted Income

There are certain income types that are totally tax-free. Thus, these tax write-offs, although not taken away from the income, are instead not counted in it at all. This also effectively reduces the total tax liability.  Below are some common expenses that are capable of being  categorised as write off tax deductible to lessen your tax liability: 
  • Rent for your office premises 
  • Cost incurred on purchasing office supplies 
  • Cost of repairing and renovating your office 
  • Transport costs in the course of your business Visit us: Accountingbyte.com
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