Knowledge Center

Personal finance, explained in plain English - no jargon, no fluff. Every guide is dated so you know it's current, and every one ends with a way to ask Laalaji about your own numbers.

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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