Indian tax glossary

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A

Advance tax. Income tax paid in instalments during the year instead of all at the end, when your tax isn’t fully covered by TDS. Interest applies if you pay too little or too late.

AIS (Annual Information Statement). A statement on the income tax portal showing what banks, employers and others have reported about you: salary, interest, dividends, share sales and tax deducted. Check it before you file.

Assessment year (AY). Under the old Income-tax Act, 1961, the year after you earn income, when it is taxed. Income earned in 2025-26 (April 2025 to March 2026) is filed for AY 2026-27. See tax year.

B

Basic exemption limit. The income up to which you pay no tax: ₹4,00,000 in the new regime, and ₹2,50,000 in the old regime for people under 60. Above it you usually have to file a return. Try What do I need to file?

Belated return. A return filed after the due date. For income earned in 2025-26 it can be filed until 31 December 2026, with a late fee. See ITR forms.

C

Capital gain. Profit from selling a capital asset such as shares, mutual funds, property or gold. Whether it is short-term or long-term depends on how long you held it. See capital gains.

Cess. An extra 4% health and education cess added on top of income tax and surcharge.

CTC (cost to company). Everything an employer spends on you in a year, including its own PF and gratuity share. Your take-home pay is lower. See the CTC breakup calculator.

D

Deduction. An amount you can subtract from income before tax is worked out, such as 80C investments or 80D health insurance. Most are only available in the old regime. See deductions.

E

E-way bill. An electronic document generated on the GST portal for moving goods above a set value.

EPF (Employees’ Provident Fund). Retirement savings where you and your employer each pay a share of your basic pay every month. See the PF and ESI calculator.

ESI (Employees’ State Insurance). Health and sickness insurance for lower-paid employees, funded by small employee and employer contributions.

F

Financial year (FY). 1 April to 31 March. Indian income tax, GST and company accounts all run on it.

Form 16. The certificate your employer gives you each year showing your salary and the tax (TDS) it deducted. The Income-tax Act, 2025 renumbers many forms, so newer certificates may carry a different number Needs review.

G

GST (Goods and Services Tax). The tax on supplies of goods and services, split into CGST and SGST within a state, and IGST between states. See the GST calculator.

GSTIN. Your 15-character GST registration number. The first two digits are the state code and the next ten are your PAN. See GST registration.

H

HRA (house rent allowance). Part of salary paid towards rent. Part of it can be tax-free in the old regime. See the HRA calculator.

HSN / SAC code. Codes that classify goods (HSN) and services (SAC) on GST invoices and returns.

HUF (Hindu Undivided Family). A family treated as a separate taxpayer, with its own PAN and return.

I

Input tax credit (ITC). GST you paid on business purchases that you can set off against GST you collect on sales.

ITR (income tax return). The form you file each year to report income and tax. There are seven, ITR-1 to ITR-7. See which ITR form.

N

New regime / old regime. Two ways to work out income tax. The new regime is the default, with lower slab rates and few deductions. The old regime has higher rates but allows deductions like 80C and HRA. See tax regimes.

O

Old regime. See new regime / old regime.

P

PAN (Permanent Account Number). Your 10-character tax ID, needed to file returns, open bank accounts and for large transactions. See PAN.

Presumptive taxation. A simpler scheme (44AD, 44ADA, 44AE under the old Act) where small businesses and professionals declare income as a fixed share of turnover or receipts instead of keeping full accounts.

Profession tax. A small state tax on salaries and professions, deducted by employers in states that levy it. See the profession tax calculator.

R

Rebate (87A). A reduction in tax for residents with income up to a set limit, which can bring tax to nil.

Refund. Tax paid or deducted beyond what you owe, returned after you file your return.

Residential status. Whether you are resident, not ordinarily resident or non-resident for a year, based on days spent in India. It decides which income India taxes. See residential status.

Reverse charge (RCM). A GST rule where the buyer, not the seller, pays the tax on certain supplies.

S

Slab. A band of income taxed at one rate. Income tax rises slab by slab. See the income tax calculator.

Standard deduction. A flat amount salaried people and pensioners can subtract from salary: ₹75,000 in the new regime and ₹50,000 in the old regime.

Surcharge. Extra tax on high incomes, worked out as a percentage of income tax.

T

TAN (Tax Deduction and Collection Account Number). A 10-character number anyone deducting or collecting tax at source must have and quote. See TAN.

Tax year. Under the Income-tax Act, 2025 (from 1 April 2026), the year you earn income is simply the “tax year”. Income from April 2026 to March 2027 is tax year 2026-27, replacing the old “previous year” and “assessment year” pair.

TCS (tax collected at source). Tax a seller collects from the buyer on certain sales, such as some foreign remittances.

TDS (tax deducted at source). Tax taken out of a payment, such as salary, interest or rent, before you receive it, and paid to the government in your name.

U

Udyam registration. Free registration for micro, small and medium businesses that gives access to MSME benefits. See Udyam.

Updated return (ITR-U). A return filed to add income you missed, within a set window after the year, with extra tax. See ITR forms.