Tax Glossary A‑Z

Assessment Year is the year in which income from the previous financial year is reported and assessed for tax purposes. In simple terms, you earn in one period and usually file or assess in the following AY.

Advance tax means paying tax during the year instead of waiting only for the end. It becomes especially relevant when income is not fully covered through employer-side deduction.

Financial Year is the period in which income is earned. It is different from Assessment Year, which is the period in which that income is generally reported and assessed.

ITR is the return filed to report income, taxes paid, and related information. It is the formal way of showing your tax position for a given year.

Form 16 is commonly associated with salary tax reporting and tax deducted by an employer. It helps salaried taxpayers review what was reported and deducted.

PAN is the main tax identity number used in the Indian tax system. It is central to filing, tracking tax records, and linking many financial activities.

TDS is tax deducted at the time a payment is made. It helps collect tax progressively, but it does not automatically settle every person’s final tax position.

Section 80C is a deduction bucket that can reduce taxable income in the right context. People often refer to it while discussing tax-saving investments and eligible payments.

The old tax regime is commonly associated with a structure where several deductions and exemptions may play a larger role in tax planning. It is usually compared directly against the new regime.

The new tax regime is generally seen as simpler for many taxpayers, but its suitability depends on the person’s deductions and overall income profile.

Aadhaar is a 12-digit unique identity number issued by the UIDAI. In tax, it's often linked with PAN for verification, filing ITR, and claiming refunds.

AIS is a comprehensive statement available on the e-filing portal that shows financial transactions, tax payments, and TDS/TCS details reported against your PAN. It is broader than Form 26AS.

The income threshold below which no tax is payable. It varies by age and regime. For most individuals under old regime: ₹2.5L, new regime: ₹3L.

An ITR filed after the due date (31 July) but within the time allowed (usually 31 Dec). It attracts late fee and may lose some benefits like carry-forward of losses.

Profit earned from the sale of a capital asset such as shares, mutual funds, real estate, or gold. Taxed as short‑term or long‑term based on holding period.

A surcharge on the income tax payable, currently Health and Education Cess at 4% of the base tax + surcharge. Added after tax calculation.

Provisions that attribute income from assets transferred to a spouse or minor child back to the transferor, preventing tax avoidance through shifting income.

An amount subtracted from gross total income to arrive at taxable income. Common deductions are under Section 80C, 80D, 80CCD, etc.

An individual who is not otherwise resident but whose Indian income exceeds ₹15 lakh and is not liable to tax elsewhere may be treated as resident for tax purposes.

The deadline for filing tax returns or making payments. For most individuals, the ITR filing due date is 31 July of the assessment year.

The process of confirming your ITR using Aadhaar OTP, net banking, or other methods. Without verification, the ITR is not valid, and refunds are not processed.

Income that is not taxable at all, like agricultural income or certain allowances. Different from deduction (which reduces taxable income).

A tax credit statement showing TDS, TCS, and tax payments against your PAN. Essential for cross‑checking before filing ITR.

A statement of claims and deductions submitted by an employee to the employer for TDS calculation during the year.

Total income before any deductions under Chapter VI‑A (like 80C, 80D). Calculated by summing income under all five heads.

The duration for which an asset is held before sale, determining whether the gain is short‑term or long‑term for capital gains tax.

Adjusting the purchase price of an asset for inflation using the Cost Inflation Index (CII), which reduces long‑term capital gains and tax.

The simplest income tax return form for individuals having salary, one house property, and interest income up to certain limits.

ITR form for individuals/HUFs with capital gains, more than one house property, foreign assets, or director status but no business income.

ITR form for individuals/HUFs having income from business or profession, including presumptive taxation.

Return form for individuals/HUFs/firms (other than LLP) opting for presumptive taxation under Section 44AD, 44ADA, or 44AE.

Gains on sale of a capital asset held beyond the specified long‑term period, taxed at special rates (e.g., 10% on equity above ₹1 lakh).

Non‑Resident External account – a rupee account for NRIs where interest is fully exempt from tax and both principal and interest are freely repatriable.

Non‑Resident Ordinary account – for NRIs to manage income earned in India. Interest is taxable, and repatriation is limited.

A simplified tax scheme where income is deemed at a fixed percentage of turnover (e.g., 8% under 44AD) without detailed books.

A tax rebate that reduces tax payable to zero for individuals with total income up to ₹5 lakh (old regime) or ₹7 lakh (new regime), subject to limits.

Process to correct an apparent mistake in the processed return or intimation under Section 154. Can be filed online via the e‑filing portal.

Determines the scope of taxable income in India – Resident, Non‑Resident (NRI), or Resident but Not Ordinarily Resident (RNOR). Based on days of stay.

A corrected version of the original ITR filed under Section 139(5) if you discover an error or omission within the time limit.

Section that allows deduction of interest on home loan up to ₹2 lakh for self‑occupied property; no upper limit for let‑out property.

Presumptive taxation for eligible businesses – income deemed at 8% (6% for digital receipts) of turnover up to ₹2 crore.

Presumptive taxation for specified professionals – income deemed at 50% of gross receipts up to ₹50 lakh.

Deduction for health insurance premiums up to ₹25,000 (₹50,000 for senior citizens) for self, family, and parents.

Deduction for interest on education loan for higher studies – no maximum limit, available for up to 8 years.

Deduction for donations to eligible charitable institutions – 50% or 100% of the amount, subject to qualifying limits.

Deduction up to ₹10,000 on interest from savings accounts for non‑senior citizens.

Deduction up to ₹50,000 on interest from deposits for senior citizens, available exclusively to those aged 60+.

Additional deduction up to ₹1.5 lakh on home loan interest for first‑time buyers satisfying specific conditions.

Additional deduction of ₹50,000 for contributions to NPS Tier‑I account, over and above the ₹1.5 lakh limit of 80C.

Gains on sale of a capital asset held for a short period – taxed at 15% for listed equity, and slab rate for non‑equity.

An additional tax on high‑income earners. Added to base tax before cess; rates vary from 10% to 37% based on income bracket.

The income after all applicable deductions, on which the tax is actually calculated using the slab rates.

Mandatory audit of accounts under Section 44AB if turnover exceeds specified limits; requires a report from a chartered accountant.

A scheme allowing taxpayers to settle pending tax disputes by paying the disputed tax amount and getting a waiver of interest and penalty.