Knowledge Center

Glossary

• Advance Tax Advance tax is income tax paid in instalments through the financial year rather than in one lump sum at filing time - required once your estimated tax liability after TDS crosses a set threshold. Indian Taxation
• Assessment Year vs. Financial Year The financial year is when you actually earn the income (April to March); the assessment year is the following year, when that income is assessed and taxed - a distinction that trips up a lot of first-time filers. Indian Taxation
• Belated Return A belated return is an income tax return filed after the original deadline has passed - still possible up to a later cutoff, but with a late fee and reduced ability to carry forward certain losses. Indian Taxation
• Cess & Surcharge Cess is an additional levy on your total tax (currently a Health and Education Cess) applied to nearly everyone; surcharge is an extra charge that only kicks in for higher income levels, on top of the base tax and cess. Indian Taxation
• Clubbing of Income Clubbing of income rules add certain income earned by a spouse, minor child, or specific related party back to your own income for tax purposes, in specific situations designed to prevent income being artificially shifted to a lower-taxed family member. Indian Taxation
• Form 15G / Form 15H Form 15G and 15H let eligible taxpayers whose total income is below the taxable threshold declare this to a bank, so TDS isn't deducted on interest income in the first place - avoiding the need to claim it back later as a refund. Indian Taxation
• Form 16 Form 16 is the annual certificate your employer issues showing your salary, deductions claimed, and TDS deducted through the year - the single most useful document for filing a salaried employee's return. Indian Taxation
• Form 26AS / AIS Form 26AS and the Annual Information Statement (AIS) are the tax department's own record of your TDS, income, and financial transactions - checking your return against both before filing catches most mismatches that would otherwise trigger a notice. Indian Taxation
• Gross vs. Taxable Income Gross income is everything you earned before any deductions or exemptions; taxable income is what's left after subtracting all applicable deductions - tax is calculated only on the taxable figure, not the gross one. Indian Taxation
• HRA Exemption HRA exemption reduces the taxable portion of your House Rent Allowance if you pay rent - calculated as the lowest of three specific amounts, not simply the full HRA received. Indian Taxation
• Indexation Indexation adjusts an asset's purchase price upward for inflation before calculating capital gains tax, reducing the taxable gain - but it was withdrawn for most asset classes in the July 2024 Budget, with a narrower option retained specifically for certain real estate purchases made before that date. Indian Taxation
• ITR Forms Explained Different ITR forms suit different income situations - ITR-1 for simple salaried cases, ITR-2 and beyond for capital gains, multiple properties, or business income - and filing the wrong one is a common, avoidable mistake. Indian Taxation
• PAN Card PAN (Permanent Account Number) is a unique 10-character identifier used across nearly every financial transaction in India - it's how the tax department links your income, investments, and TDS together under one identity. Indian Taxation
• Perquisites Perquisites (perks) are non-cash benefits provided by an employer - rent-free accommodation, a company car, stock options - that carry a taxable value of their own, on top of your regular salary. Indian Taxation
• Presumptive Taxation Presumptive taxation lets eligible small businesses and professionals pay tax on a flat, assumed percentage of turnover or receipts, instead of calculating actual profit after every expense - simpler to file, at the cost of losing itemized expense deductions. Indian Taxation
• Section 87A Rebate The 87A rebate effectively zeroes out tax liability for incomes below a set threshold - currently far more generous under the new regime than the old one, which is a major reason the new regime works out better for many lower and middle incomes. Indian Taxation
• Standard Deduction Standard deduction is a flat amount subtracted from salary income before tax is calculated, with no receipts or proof required - one of the few deductions available under both the old and new tax regimes. Indian Taxation
• TAN (Tax Deduction Account Number) TAN is a number required by anyone who deducts TDS on behalf of others - an employer or a business, for instance - distinct from PAN, which identifies you as a taxpayer yourself. Indian Taxation
• TDS (Tax Deducted at Source) TDS is tax collected upfront by whoever pays you - an employer, bank, or property buyer - and deposited directly with the government on your behalf, before you ever receive the full amount. Indian Taxation