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Tax Glossary

Understand key tax terms and concepts with our comprehensive glossary. Clear definitions to help you navigate the world of taxation.

Assessment Year (AY)

The year following the financial year in which income earned during the financial year is assessed and taxed. For example, income earned in FY 2025-26 is assessed in AY 2026-27.

Advance Tax

Income tax paid in instalments during the financial year instead of a lump sum at the end. Applicable when total tax liability exceeds ₹10,000 in a financial year.

AIS (Annual Information Statement)

A comprehensive statement showing all financial transactions reported by various entities to the Income Tax Department, including interest, dividends, property sales, and TDS details.

AMT (Alternate Minimum Tax)

A minimum tax levied on non-corporate taxpayers whose income exceeds the exemption limit, ensuring they pay a minimum percentage of tax on their adjusted total income.

Capital Gains

Profit earned from the sale of a capital asset such as property, stocks, or mutual funds. Classified as short-term or long-term depending on the holding period.

Deduction under 80C

A tax deduction available under Section 80C of the Income Tax Act for investments and expenses such as PPF, ELSS, life insurance premiums, and tuition fees, up to ₹1.5 lakh per year.

DTAA (Double Taxation Avoidance Agreement)

An agreement between two countries to prevent individuals or businesses from being taxed twice on the same income in both countries.

Due Date

The last date prescribed by the Income Tax Department for filing income tax returns or making tax payments. For individuals, the due date is usually July 31 of the assessment year.

E-verification

The process of electronically verifying an income tax return using methods such as Aadhaar OTP, net banking, EVC, or digital signature, completing the filing process.

Exemption

An amount that is excluded from taxable income. Common exemptions include HRA, LTA, agricultural income, and income from certain specified investments under Section 10.

Fiscal Year

The 12-month period used by the government for financial reporting and tax purposes in India, running from April 1 to March 31 of the following year.

Form 16

A certificate issued by an employer to employees detailing the salary paid, TDS deducted, and other allowances. It is essential for filing income tax returns for salaried individuals.

Form 26AS

A consolidated tax statement available on the Income Tax portal showing TDS deducted, advance tax paid, and self-assessment tax credited against a taxpayer's PAN.

Gross Total Income

The total income from all sources — salary, house property, business/profession, capital gains, and other sources — before claiming any deductions under Chapter VI-A.

GST (Goods and Services Tax)

A comprehensive indirect tax levied on the supply of goods and services across India. It subsumes multiple central and state taxes into a single tax system.

HRA Exemption

House Rent Allowance exemption under Section 10(13A) allows salaried individuals to claim exemption on rent paid, subject to certain conditions based on salary, rent paid, and city of residence.

HSN Code (Harmonized System of Nomenclature)

A standardized system of names and numbers used to classify traded products under GST. It facilitates uniform classification and taxation of goods across countries.

Income Tax

A direct tax levied by the central government on the income earned by individuals, HUFs, firms, and companies during a financial year, as per the Income Tax Act, 1961.

Input Tax Credit (ITC)

A mechanism under GST that allows businesses to reduce the tax payable on output supplies by claiming credit for the GST paid on input purchases and expenses.

Interest under 234A / 234B / 234C

Penal interest levied for late filing of return (234A), non-payment or short payment of advance tax (234B), and deferment of advance tax instalments (234C) under the Income Tax Act.

ITR (Income Tax Return)

A form used to declare income, deductions, and tax liability to the Income Tax Department. Different ITR forms (ITR-1 to ITR-7) apply based on income type and taxpayer category.

MAT (Minimum Alternative Tax)

A provision under the Income Tax Act ensuring that companies with book profits but low taxable income pay a minimum percentage of tax on their book profits.

PAN Card (Permanent Account Number)

A unique 10-digit alphanumeric identifier issued by the Income Tax Department. It is mandatory for filing returns, high-value transactions, and tax payments.

Penalty

A financial penalty imposed by tax authorities for non-compliance such as late filing, incorrect reporting, underreporting of income, or failure to maintain proper records.

Refund

Amount repaid by the Income Tax Department when the total tax paid (through TDS, advance tax, etc.) exceeds the actual tax liability for a financial year.

SAC Code (Services Accounting Code)

A unique code assigned to each service under GST for classification and taxation purposes. SAC codes are used for determining the GST rate applicable to various services.

Self-Assessment Tax

Tax paid by a taxpayer after computing their own income and tax liability before filing the return. It covers any remaining tax after accounting for TDS and advance tax payments.

SFT (Statement of Financial Transactions)

Reports filed by specified entities (banks, financial institutions, etc.) with the Income Tax Department detailing high-value financial transactions undertaken by a taxpayer.

TCS (Tax Collected at Source)

Tax collected by a seller from the buyer at the time of sale of certain specified goods. The seller then deposits this tax with the government on behalf of the buyer.

TDS (Tax Deducted at Source)

A mechanism where the payer deducts tax at the source before making payments such as salary, interest, rent, or professional fees and deposits it with the government.

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