Indian Personal Finance Glossary
40 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.
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 →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 →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.
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 →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 →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Period during which an investment cannot be withdrawn.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 →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 →R
Rebate (87A)
Tax credit that reduces tax payable. Budget 2025: ₹60,000 under new regime up to ₹12L income.
Open calculator →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).
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.
X
XIRR
Extended Internal Rate of Return — annualised return when cash flows happen at irregular intervals.