Tax deductions and tax credits are very similar in that they are both tools for helping tax payers reduce their tax obligations. However, they function slightly differently.
A tax deduction decreases the amount of income that a tax payer can be taxed on. Deductions are based on contributions, donations, insurance policies and other eligible expenses that may be subtracted from the total income.
For example*, if you purchase an insurance policy with a premium of 10,000 THB and your annual income is 480,000 THB, your remaining taxable income will be reduced to 470,000 THB.
A tax credit decreases the amount of actual taxes you must pay. Tax credits are based on personal situations such as educational costs, high family expenses, and other individual circumstances, depending on the country's tax code.
For example*, suppose you are financially caring for both of your parents and are eligible for a 2,500 THB tax credit. In that case, you may use this to reduce the taxes you owe directly. If you owe 8,000 THB in taxes, by applying the 2,500 THB tax credit, you would only owe 5,500 THB in taxes.