Indian Personal Finance Glossary
64 essential tax, investment and loan terms — explained in plain English with links to our calculators where it helps.
A
AY (Assessment Year)
The year following the financial year in which income is assessed. Income earned in FY 2025-26 is assessed in AY 2026-27.
Advance Tax
Tax paid in instalments during the financial year if your annual tax liability exceeds ₹10,000. Due dates: 15 Jun (15%), 15 Sep (45%), 15 Dec (75%), 15 Mar (100%).
AIS (Annual Information Statement)
A comprehensive statement from the Income Tax Department showing your income, TDS, dividends, mutual fund transactions, savings interest, property purchases, and foreign remittances for a year.
Amortisation Schedule
Month-by-month break-up of EMI into principal and interest. Early EMIs are mostly interest, later EMIs mostly principal.
Open calculator →Annuity
A regular series of payments. NPS uses 40%+ of corpus to buy an annuity that pays monthly pension.
B
Basic Salary
Fixed cash component of CTC (usually 40-50%). PF, gratuity and HRA % are calculated on Basic.
Open calculator →Belated Return
An ITR filed after the original due date (31 Jul for individuals). Attracts a late fee under Section 234F (₹5,000; ₹1,000 if income under ₹5L) and loses the right to carry-forward losses.
C
Capital Gains
Profit on sale of capital asset. Equity LTCG above ₹1.25L taxed at 12.5%; STCG on equity at 20%.
Open calculator →CTC
Cost to Company — total annual cost of employing you. Take-home is much lower after PF, professional tax and income tax.
Compounding
Earning interest on interest. The single most important driver of long-term wealth.
Open calculator →Cess
4% Health and Education Cess levied on the final income tax + surcharge. Applies to both old and new tax regimes.
CAGR
Compound Annual Growth Rate — the smoothed annual return that would have produced the same result as your actual (usually volatile) returns over the same period.
D
Direct Plan (Mutual Fund)
A mutual fund plan you buy directly from the AMC (not through a broker/distributor). Saves 0.5-1% per year in expense ratio vs Regular plan. Recommended default.
Debt Fund
Mutual fund that invests in bonds/debentures/T-bills. Since Apr 2023, gains taxed at slab rates (no indexation) regardless of holding period.
DDT (Dividend Distribution Tax)
Abolished from FY 2020-21. Dividends are now taxable in the hands of investors at their slab rate, with 10% TDS above ₹10,000/year (Sec 194).
E
ELSS
Equity Linked Saving Scheme — tax-saving equity mutual fund with 3-year lock-in. Counts under ₹1.5L 80C limit.
Open calculator →EMI
Equated Monthly Instalment — fixed payment combining principal + interest on a loan.
Open calculator →EPF
Employees' Provident Fund — 12% of Basic from both employee and employer. Currently 8.25% (FY 2025-26).
F
Fiscal Drag
Phenomenon where inflation pushes you into higher tax brackets even though real income hasn't risen.
FY (Financial Year)
April 1 to March 31 in India. FY 2025-26 means April 2025 to March 2026.
Form 16
TDS certificate issued by your employer showing salary paid and tax deducted for the year. Part A: TDS summary. Part B: detailed salary break-up. Issued by 15 Jun each year.
Form 26AS
Tax credit statement showing all TDS deducted on your income and tax deposited on your PAN. Downloadable from the TRACES portal.
Form 15G / 15H
Self-declarations to avoid TDS deduction on interest if your total income is below the taxable limit. 15G for under-60; 15H for 60+.
G
GST
Goods and Services Tax — slabs 5/12/18/28%. CGST + SGST intra-state; IGST inter-state.
Open calculator →H
HRA
House Rent Allowance — partly exempt under Section 10(13A) in the old regime if you pay rent.
Open calculator →HUF (Hindu Undivided Family)
A separate tax entity comprising members of a Hindu family. Has its own PAN, files its own return, and enjoys separate basic exemption + 80C limits.
I
Income Tax Slabs (Budget 2025)
New regime: 0% up to ₹4L, 5% ₹4-8L, 10% ₹8-12L, 15% ₹12-16L, 20% ₹16-20L, 25% ₹20-24L, 30% above ₹24L. Zero tax up to ₹12L via ₹60k rebate.
Open calculator →Inflation
Annual rise in price level. India's long-term average is ~6%. Erodes real returns on FD and savings.
Open calculator →ITR (Income Tax Return)
Annual return filed with the Income Tax Department. Forms range from ITR-1 (Sahaj, salaried under ₹50L) to ITR-7 (trusts, political parties).
IGST / CGST / SGST
Components of GST. Intra-state sale: CGST (Central) + SGST (State), each at half the rate. Inter-state sale: IGST (full rate).
L
LTCG
Long-Term Capital Gains — equity held over 1 year, debt MF held over 2 years (post-Apr 2023 — no indexation). Equity LTCG: 12.5% on gains above ₹1.25L.
Open calculator →Lock-in
Period during which an investment cannot be withdrawn. PPF 15Y, ELSS 3Y, NPS until 60, SCSS 5Y.
M
Marginal Relief
Special provision under new regime above ₹12L taxable income — your tax cannot exceed the income amount above ₹12L.
N
NPS
National Pension System — pension scheme with extra ₹50k deduction under 80CCD(1B). 60% lump-sum + 40% annuity at age 60.
Open calculator →New Tax Regime
Default since FY 2023-24. Lower slabs, ₹75k standard deduction, but most exemptions (80C, HRA) are removed.
Open calculator →NRE / NRO Account
NRE (Non-Resident External): for repatriable foreign income, tax-free interest. NRO (Non-Resident Ordinary): for Indian income, interest taxable, limited repatriation.
O
Old Tax Regime
Older system retained as an option. Higher slabs but allows 80C ₹1.5L, 80D, HRA, home loan interest etc.
Open calculator →P
PPF
Public Provident Fund — 15-year sovereign-backed scheme at 7.1% (Q1 FY 2026-27). EEE tax status.
Open calculator →Presumptive Taxation (44AD / 44ADA)
Simplified tax scheme. 44AD: businesses declare 8% of turnover as income (6% for digital receipts). 44ADA: professionals declare 50% of gross receipts as income. Turnover cap: ₹75L (raised in Budget 2023 from ₹50L).
R
Rebate (87A)
Tax credit that reduces tax payable. Budget 2025: ₹60,000 under new regime up to ₹12L income.
Open calculator →Revised Return
An updated ITR filed to correct errors in the original. Can be filed till 31 Dec of the assessment year. Reference the original ITR acknowledgement number.
S
Section 80C
₹1.5 lakh deduction under old regime — PPF, ELSS, EPF, life insurance premium, home loan principal, NSC, SSY, tuition fees.
Section 80D
Health insurance premium deduction — ₹25k self + ₹25-50k parents (old regime only).
Section 24(b)
Home loan interest deduction — up to ₹2 lakh on self-occupied property (old regime).
SCSS
Senior Citizen Savings Scheme — 5-year scheme for 60+ at 8.2% with quarterly interest payouts.
Open calculator →SSY
Sukanya Samriddhi Yojana — girl child savings at 8.2%. Tax-free maturity, qualifies for 80C.
Open calculator →Standard Deduction
Flat deduction from salary. ₹75,000 (new regime, Budget 2024); ₹50,000 (old regime).
Surcharge
Additional tax on incomes above ₹50L (10%), ₹1Cr (15%), ₹2Cr (25%), ₹5Cr (37% — old; 25% capped under new).
Section 24(b)
Home loan interest deduction — up to ₹2 lakh on self-occupied property under old regime. No limit for let-out property (loss capped at ₹2L against other income).
Section 194 series
TDS provisions. 194A (interest), 194C (contracts), 194H (commission), 194-I (rent), 194-IB (rent by individual), 194J (professional fees), 194 (dividend).
SEBI
Securities and Exchange Board of India — regulates mutual funds, brokers, exchanges, and investment advisers.
SWP
Systematic Withdrawal Plan — fixed monthly withdrawal from a mutual fund corpus.
Open calculator →T
TDS
Tax Deducted at Source — withholding tax. Common: 194J (10% on professional fees), 194-I (10% on rent of building).
Open calculator →Tax Slab
Income range with a fixed tax rate. Progressive — higher slabs pay higher rates only on the portion above threshold.
TCS (Tax Collected at Source)
Tax collected by seller from buyer on specified transactions — LRS foreign remittances above ₹7L (20%), overseas tour packages, motor vehicles above ₹10L, etc.
Term Insurance
Pure life insurance — pays a sum assured if you die during the policy term, no maturity payout otherwise. Cheapest, most useful protection product.
U
ULIP
Unit-Linked Insurance Plan — insurance + investment combo. High charges in the early years; usually inferior to buying pure term + separate mutual funds. LTCG on premiums > ₹2.5L/year now taxable.
UTGST
Union Territory GST — the equivalent of SGST for union territories (Chandigarh, Andaman, Lakshadweep, D&D-DNH, Ladakh).
X
XIRR
Extended Internal Rate of Return — annualised return when cash flows happen at irregular intervals.