Tax Glossary - Complete Guide to Key Tax Terms in India

Some of the basic tax terms that you must know are mentioned below:

1. Income Tax Return (ITR): A document or form that businesses and individuals fill out to inform the government about the amount of money that was made in a financial year is the ITR. Depending on the amount of money that has been made, taxes must be paid. Deductions and earnings must be considered when taxes are paid.

1. Tax-Savings Investments: Individuals can invest in various tax savings schemes to lower the amount of tax that must be paid. Some examples of several tax savings schemes are tax-saving fixed deposits and Public Provident Fund (PPF).
2. Tax Slabs: Depending on the amount of money that an individual makes in a year, the tax slab he/she will fall under will vary. Higher taxes must be paid in case the income increases.
3. Tax Exemptions: No tax needs to be paid for certain forms of income. Some examples of tax exemptions are scholarships, allowances, certain investments, etc.
4. Tax Deductions: Certain investments can be made or special expenses can be subtracted from the income so less tax can be paid. Some examples of tax deductions are donations, home loan interest, medical expenses, etc.
5. Tax Audits: The government does tax audits to ensure that expenses and income have been reported correctly. In case of any mistakes, penalties may be levied.
6. Section 80C: Investing in schemes that comes Section 80C of the Income Tax Act, will help in saving tax. Up to Rs.1.5 lakh can be reduced by investing in these schemes.
7. Self-Assessment Tax: Any extra tax that is voluntarily paid post the considerations of advance tax and deductions is self-assessment tax.
8. Advance Tax: A system where taxes are calculated and paid in instalments over the course of the year in EMIs is called Advance Tax. Businesses, professionals, and individuals can pay Advance Tax.
9. Surcharge: An added fee that is paid apart from the regular tax is surcharge. Surcharge is applicable on rental income, interest income, dividends, capital gains, and for individuals who make a high income.
10. Form 16: A certificate that is issued to the employee by the employer is Form 16. Salary details that are earned by the employee in a financial year are mentioned on Form 16. TDS details are also mentioned on the form.
11. Form 26AS: Vital information that are related to taxes are mentioned on Form 26AS.
12. Tax Deduction at Source (TDS): A part of the tax that the government directly collects from your income is TDS. The employer will deduct the TDS and provide it to the government.
13. Assessment Year: The year in which your income is evaluated or checked by the government to know how much tax that needs to be paid is called Assessment Year (AY). In case the income has been earned for the year 2023, the AY will be 2024-2025.
14. Net Taxable Income: The money that is left after deduction of exemptions and expenses is the net taxable income. The net taxable income is considered when tax is calculated.
15. Gross Total Income: The income that is earned before any deductions or exemptions are considered is called gross total income. Rent, business income, and salary are part of the gross total income.