Comprehensive guide to Indian tax terminology - 43+ terms explained
Showing 43 terms
Section 80C allows deduction of up to ₹1.5 lakh from taxable income for investments in specified instruments like PPF, EPF, ELSS, NSC, life insurance premiums, home loan principal repayment, tuition fees, and 5-year bank FDs.
Example:
If you invest ₹1.5 lakh in PPF, your taxable income reduces by ₹1.5 lakh.
Tax paid in installments during the financial year if your tax liability exceeds ₹10,000. Payable in 4 installments: 15% by Jun 15, 45% by Sep 15, 75% by Dec 15, 100% by Mar 15.
Example:
If your total tax liability is ₹1 lakh, you must pay advance tax quarterly instead of paying all at year-end.
Total income from all sources including salary, business, rental income, capital gains, and other sources before applying deductions.
Example:
Salary ₹8L + rental income ₹2L + FD interest ₹50,000 = aggregate income ₹10.5L.
Income from agricultural land in India. Fully exempt from tax but included in total income to determine applicable tax slab.
Example:
₹2 lakh agricultural income is exempt but impacts your tax bracket calculation.
The year in which income earned in the previous financial year is assessed and tax is paid. Format: AY 2025-26 means income earned in FY 2024-25.
Example:
For income earned from April 2024 to March 2025 (FY 2024-25), you file ITR in AY 2025-26.
Income level below which no income tax is payable. For FY 2024-25: ₹2.5 lakh (general), ₹3 lakh (senior citizens 60-80 years), ₹5 lakh (super senior citizens above 80).
Example:
If your income is ₹2.4 lakh and you're under 60, you pay zero tax.
Additional tax levied on total tax amount. Currently 4% Health & Education Cess applies on income tax + surcharge.
Example:
Tax of ₹50,000 + cess of ₹2,000 (4%) = total ₹52,000.
Share of profits distributed by companies to shareholders. Fully taxable in hands of recipient at applicable slab rates from FY 2020-21.
Example:
Dividend income of ₹50,000 is added to your total income and taxed as per your slab.
Period from April 1 to March 31 for which income is earned and tax is calculated. Format: FY 2024-25 means Apr 1, 2024 to Mar 31, 2025.
Example:
Income earned from Apr 2024 to Mar 2025 is reported in FY 2024-25.
Annual tax statement showing all TDS deducted, advance tax paid, and self-assessment tax paid in your name. Available on income tax portal.
Example:
Form 26AS shows TDS of ₹80,000 deducted by employer and ₹5,000 by bank on FD interest.
Lump sum payment by employer to employee on retirement/resignation after 5 years of service. Exempt up to ₹20 lakh or as per formula (whichever is lower).
Example:
Gratuity of ₹15 lakh on retirement is fully tax-exempt.
Sum of all income from salary, house property, business, capital gains, and other sources before claiming deductions under Chapter VI-A.
Example:
Salary ₹10L + rental ₹2L + FD interest ₹50,000 = GTI ₹12.5L.
Form filed to report income, calculate tax, and claim refunds. Different ITR forms (ITR-1 to ITR-7) for different taxpayer categories.
Example:
Salaried individual with income under ₹50 lakh files ITR-1.
Simplified ITR form for individuals with income up to ₹50 lakh from salary, one house property, and other sources (interest, etc.).
Example:
If you have only salary income of ₹8 lakh and bank interest, file ITR-1.
For individuals/HUFs with income from salary, house property, capital gains, and other sources but not from business/profession.
Example:
If you sold stocks or have multiple house properties, file ITR-2.
Tax exemption for travel expenses within India during leave. Maximum 2 trips in 4-year block. Only travel cost exempt (not hotel, food).
Example:
Flight tickets of ₹30,000 for family vacation in India can be claimed as LTA.
Optional tax regime from FY 2020-21 with lower tax rates but no deductions (except standard deduction, employer NPS). Default from FY 2023-24. Slabs: ₹0-3L (nil), ₹3-7L (5%), ₹7-10L (10%), ₹10-12L (15%), ₹12-15L (20%), >₹15L (30%).
Example:
Income ₹10L → tax ₹62,500 (no deductions) vs old regime with deductions.
Government-backed fixed deposit for 5 years with guaranteed returns (~7-8%). Investment qualifies for Section 80C deduction up to ₹1.5 lakh.
Example:
Investing ₹1 lakh in NSC gives 80C deduction and assured returns.
10-character alphanumeric identifier issued by Income Tax Department. Mandatory for filing ITR, financial transactions above specified limits.
Example:
PAN card format: ABCDE1234F (5 letters, 4 numbers, 1 letter).
Tax paid by taxpayer after accounting for TDS and advance tax before filing return. Paid when tax liability exceeds TDS/advance tax.
Example:
Total tax ₹1L, TDS ₹80,000 → pay ₹20,000 as self-assessment tax before filing ITR.
Additional tax on high-income earners. Applicable when income exceeds ₹50 lakh. Ranges from 10% to 37% based on income level.
Example:
Income ₹60L → 10% surcharge on base tax amount.
Tax deducted by payer before making payment. Employer deducts TDS on salary, banks on FD interest (above ₹40,000), etc. Shown in Form 26AS.
Example:
FD interest ₹50,000 → bank deducts 10% TDS = ₹5,000.
Certificate issued by deductor showing TDS amount deducted. Form 16 (salary), Form 16A (other than salary).
Example:
Employer issues Form 16, bank issues Form 16A for FD interest TDS.