Indian Finance Glossary

Comprehensive view of all your financial transactions reported to the Income Tax Department by banks, mutual funds, brokers, etc. Available on the income tax portal — reconcile before filing ITR.

The year in which income earned during the previous Financial Year is assessed and taxed. FY 2025-26 = AY 2026-27.

Profit from sale of a capital asset (stocks, mutual funds, property, gold). Classified as Short-term (STCG) or Long-term (LTCG) based on holding period.

Smoothed annual rate of return over a period. CAGR = (End/Start)^(1/years) - 1.

Annual index notified by CBDT to adjust acquisition cost for inflation when computing LTCG. FY 2001-02 base = 100. Limited use post-Jul-2024 reform.

Inflation-adjusted component of salary, mainly for government and PSU employees. Forms part of basic for PF and gratuity calculations.

Proposed simplification of the Income Tax Act 1961, expected to be operational by FY 2026-27.

Fixed monthly payment for a loan. EMI = P × r × (1+r)^n / ((1+r)^n - 1).

Mandatory retirement scheme for salaried earning above ₹15k basic. 12% employee + 12% employer (split: 3.67% EPF, 8.33% EPS). Current rate 8.25%.

Tax-saving mutual fund eligible for ₹1.5L 80C deduction. 3-year lock-in, equity-heavy. Historical returns 11-13% p.a.

Tax status where contribution, accrual, and withdrawal are all tax-free. PPF, EPF (after 5Y), SSY are EEE.

Interest rate linked to a benchmark (RBI repo via EBLR). Changes with policy rates. Most home loans in India are floating.

Percentage of monthly income consumed by all EMIs. Banks cap at 40-55%. Lower FOIR = higher loan eligibility.

TDS certificate issued by employer to salaried employees, summarising salary paid and tax deducted. Issued by 15 June for the prior FY.

Consolidated tax statement showing all TDS/TCS, advance tax, self-assessment tax credited to your PAN. Reconcile with AIS before ITR filing.

Indirect tax on supply of goods/services in India since July 2017. Slabs: 0%, 0.25%, 3%, 5%, 12%, 18%, 28% (+ cess on luxury goods).

15-digit GST Identification Number. Mandatory for businesses with turnover above ₹40L (₹20L for services, ₹10L for special states).

4% surcharge levied on income tax (after rebate and surcharge). Funds health and education schemes.

Salary component partly exempt from tax under Section 10(13A). Calculated as min of (HRA received, rent - 10% basic, 50/40% basic).

Adjusting purchase cost for inflation using CII to reduce taxable LTCG. Pre-Jul-2024 properties retain indexation choice (20% with vs 12.5% without).

Tax saving from using indexation. Only available for property bought before Jul 23, 2024 (resident individuals/HUFs).

Maximum sum insurer pays in case of total loss of vehicle. Calculated as invoice price minus IRDA-prescribed depreciation.

RBI scheme allowing resident individuals to remit up to USD 250,000/year for permitted purposes (travel, education, investment, gift). 20% TCS above ₹7L threshold.

Loan amount as % of property/asset value. Home loans: max 75-90%. Gold loans: max 75% (RBI cap).

Profit from sale of asset held longer than threshold (1Y for listed equity, 2Y for property/gold). Taxed at 12.5% post-Jul-2024 (most assets).

Cap to ensure income just above 87A threshold doesn't pay disproportionate tax. E.g., new regime: at ₹12.10L income, max tax ≈ ₹10,000 (excess over ₹12L).

Pooled investment vehicle managed by AMC. Categories: equity, debt, hybrid, ETF, index, FoF.

Voluntary retirement scheme. Tier-1 has lock-in to 60. 60% lump sum (tax-free), 40% mandatory annuity. Eligible for 80CCD(1B) extra ₹50k deduction.

Post Office 5-year savings instrument. Currently 7.7%. Eligible for 80C deduction.

10-character alphanumeric ID issued by Income Tax Dept. Mandatory for ITR filing, opening bank account, transactions above ₹50k.

Paying off part or all of loan before scheduled tenure. RBI mandates zero prepayment charges on floating-rate home/personal loans for individuals.

15-year government-backed savings scheme. Currently 7.1%, max ₹1.5L/year, EEE tax status, partial withdrawal allowed from year 7.

SEBI-registered advisor authorised to provide investment advice for a fee. Look for INA-prefixed registration number.

Regulator for real estate developers. Mandatory registration of all projects ≥500 sqm or 8 apartments. Check RERA number before booking.

India's central bank. Sets policy rates (repo, reverse repo), regulates banking, manages currency, foreign exchange.

Income tax section allowing deduction of home loan interest up to ₹2L (self-occupied property). No cap for let-out property (loss capped at ₹2L set-off).

₹1.5L deduction for specified investments: PPF, ELSS, EPF, NSC, ULIP, life premium, principal home loan, SSY, etc. Old regime only.

Health insurance premium deduction. ₹25k for self+family (₹50k if senior citizen). Plus ₹50k for parents above 60. Old regime only.

Extra interest deductions for first-time home buyers (over and above 24(b)). 80EE: ₹50k (small loans pre-2017). 80EEA: ₹1.5L (eligible window 2019-22).

Tax rebate up to ₹60,000 (new regime, income up to ₹12L) or ₹12,500 (old, up to ₹5L). Effectively makes income tax-free at these thresholds.

Tax on stock market trades. Equity delivery: 0.1%, intraday: 0.025%, F&O sell-side: 0.02-0.1%.

Profit from sale of asset held less than threshold. Listed equity: 20% (post-Jul-2024). Property/gold STCG: at slab rate.

Government scheme for girl child below 10. Currently 8.2%, 21-year maturity, 15-year deposit, EEE tax status, ₹1.5L 80C eligible.

Additional tax on tax for high income. 10% (₹50L-1Cr), 15% (₹1Cr-2Cr), 25% (₹2Cr-5Cr). New regime caps at 25% even above ₹5Cr.

Auto-investment of fixed amount in MF every month. Rupee-cost averaging benefit, no minimum lock-in.

Reverse of SIP — auto-withdrawal of fixed amount from MF corpus monthly. Useful for retirees.

Tax collected by seller/remitter. LRS: 20% above ₹7L (general purposes). Recoverable as ITR credit.

Tax deducted by payer before disbursing income (salary, interest, rent, professional fees). Reflected in Form 26AS.

Pure protection life cover for fixed term. Pays death benefit only. Lowest premium for highest cover. Recommended cover: 12-15× annual income.

Annual % of fund AUM charged for management. Direct plans 0.2-0.5%, regular 1-2%. Direct plans give 0.5-1.5% extra return over 20+ years.

Combo of life insurance + market-linked investment. 5-year lock-in. Tax-free if premium ≤₹2.5L/year. Generally inferior to term + MF combo.

Optional contribution above mandatory 12% EPF, up to 100% of basic. Same 8.25% return, 80C eligible. Interest above ₹2.5L employee contribution taxable.

Extended Internal Rate of Return — computes annualised return on irregular cashflows (SIP, SWP, lumpsum mix). Like Excel XIRR function.

Total return on bond if held to maturity, factoring coupon + capital gain/loss + reinvestment. Standard metric for fixed-income comparison.