Browse 35 essential itr filing terms and definitions used by professionals in India.
Term Index
Every term and its definition, all on this page.
Advance Tax is income tax paid during a financial year before the final tax return is filed. Advance Tax usually applies when total tax liability crosses a prescribed threshold and payment is made in instalments based on estimated income from salary, business, capital gains, or other sources.
Assessment Year is the financial year in which income earned in the preceding financial year is assessed to tax under Indian income tax law. Returns are filed and tax liability is determined during the Assessment Year based on income, deductions, and exemptions from the previous year.
Capital Gains Tax is the tax charged on profit earned when a capital asset such as property, shares, or mutual fund units is sold or transferred. Tax treatment usually depends on the asset type and holding period. Which can classify gains as short term or long term.
Deductible Expenses are business or income-related costs that tax law allows a taxpayer to subtract from gross income when calculating taxable income. A deductible expense usually must be ordinary, necessary, and supported by records, and personal or capital expenses are generally not allowed.
Dividend Distribution Tax is a tax that Indian companies earlier paid to the government when distributing dividends to shareholders. Dividend Distribution Tax was abolished from 1 April 2020, and dividend income is now generally taxed in the hands of shareholders under applicable income tax rules.
Double Taxation Avoidance Agreement is a tax treaty between two countries that sets rules to prevent the same income from being taxed twice. Double Taxation Avoidance Agreement commonly allocates taxing rights and may allow a tax credit, reduced withholding tax, or income exemption.
Exempt Income is income that the Income Tax Act excludes from tax liability under specific provisions. Common examples include certain agricultural income, specified allowances, and receipts from approved investments, though taxpayers may still need to disclose exempt income in an income tax return.
Filing Deadline is the last date allowed by law or regulation for submitting a return, form, or compliance document to the relevant authority. Missing a filing deadline can trigger late fees, interest, loss of certain benefits, or further scrutiny under applicable rules.
Form 16 is a certificate issued by an employer that shows salary paid and tax deducted at source under the Income-tax Act. Form 16 usually contains Part An and Part B, and salaried taxpayers commonly use the details to prepare and verify an income tax return.
Form 26AS is an annual tax credit statement linked to a Permanent Account Number that records tax deducted at source, tax collected at source, advance tax, self-assessment tax, refunds, and certain high-value transactions. Taxpayers commonly use Form 26AS to verify income tax credits before filing an income tax return.
Gross Total Income is the total income computed under all five heads of income before deductions allowed under Chapter VI-An of the Income-tax Act. Gross Total Income includes salary, house property, business or expert income, capital gains, and income from other sources after set-off rules apply.
House Property Income is income taxable under Indian tax law from ownership of a building or attached land that is let out or deemed let out. Tax calculation generally starts from annual value and allows specified deductions. Even when actual rent differs from expected rent.
ITR Forms are the prescribed income tax return forms used in India to report income, deductions, tax liability, and refund claims to the Income Tax Department. Different ITR Forms apply to different taxpayer categories based on income sources, residential status, and the nature of business or profession.
Income Tax Department is the government authority in India that administers direct tax laws, assesses taxable income, and collects income tax under the Ministry of Finance. Income Tax Department also issues PAN, processes tax returns, conducts scrutiny and investigation, and enforces compliance through notices, refunds, and penalties.
Income Tax Slabs are income ranges that determine the rate of tax payable by an individual or other taxpayer under income tax law. Different portions of taxable income may be taxed at different rates under the applicable regime, which makes slab selection important during tax computation.
Indexation is a method that adjusts the purchase price of a capital asset for inflation before calculating taxable gains. In Indian tax practice, indexation usually uses the Cost Inflation Index and can reduce tax on eligible long-term capital gains.
Late Filing Fees are charges imposed when a tax return or required filing is submitted after the legal deadline. In India, late filing fees commonly arise under the Income Tax Act and are separate from interest or penalties that may also apply for delayed payment or noncompliance.
Long-Term Capital Gains refers to profit earned when a capital asset is sold after being held beyond the period defined as long term under tax law. Tax treatment often differs from short-term gains and may allow special rates, indexation benefits, or exemptions for certain assets.
Mandatory Audit is a legally required examination of a business entity’s financial records and related compliance by a qualified auditor. Mandatory Audit applies when law or regulation sets audit thresholds or specific entity categories, regardless of whether management voluntarily wants external review.
Non-Resident Indian is an Indian citizen who lives outside India and does not meet the tax residency conditions under Indian law. Non-Resident Indian status affects taxation in India, especially the treatment of foreign income, Indian income, and eligibility for certain banking and investment accounts.
PAN Card is a Permanent Account Number card issued by the Income Tax Department of India as proof of a unique alphanumeric tax identification. PAN Card is commonly required for filing income tax returns and for specified financial transactions that authorities track for tax compliance.
Presumptive Taxation is a tax method that estimates taxable income at a fixed rate or amount instead of requiring detailed profit calculations and full books of account. In India, presumptive taxation is commonly used by eligible small businesses and professionals to simplify compliance under specific conditions.
Provisional Assessment is a temporary tax determination made when the correct value, rate, or liability cannot be finalized at the time of assessment. A taxpayer usually provides security or a bond, and the authority later completes a final assessment after receiving the required information.
Section 80C is a provision of the Income Tax Act, 1961 that allows eligible taxpayers to claim deductions from gross total income for specified investments and expenses. Section 80C commonly covers life insurance premiums, provident fund contributions, tuition fees, and certain principal repayments.
Section 80D is an income tax deduction under Indian law for health insurance premiums and certain preventive health check-up expenses paid for self and specified family members. Section 80D applies only when eligible payments meet legal conditions, and the deduction amount depends on the insured persons and their age.
Self-Assessment Tax is income tax paid by a taxpayer after calculating total tax liability and subtracting taxes already paid through TDS, TCS, advance tax, or reliefs. Self-Assessment Tax is usually paid before filing the income tax return when a balance tax amount remains due.
Short-Term Capital Gains refers to profit earned from selling a capital asset within a relatively short holding period under tax law. In India, the applicable holding period and tax treatment vary by asset type, so shares, property, and debt instruments may follow different rules.
TDS Certificate is an official document issued by a deductor that shows tax deducted at source from a payment and deposited with the government. Common forms include Form 16 for salary and Form 16A for non-salary payments, and taxpayers use the document to verify TDS while filing income tax returns.
Tax Audit is an examination of financial records by a chartered accountant to verify whether income, deductions, and compliance details are correctly reported under tax law. Under Indian tax rules, Tax Audit generally applies when turnover, gross receipts, or profession income crosses prescribed limits.
Tax Deducted at Source is a method of collecting income tax when a payer deducts tax before paying salary, interest, rent, or certain other sums to a recipient. Indian tax law requires deposit of the deducted amount with the government and reporting through prescribed TDS returns.
Tax Evasion is the illegal act of deliberately hiding income, inflating deductions, or falsifying records to reduce tax liability. Tax evasion differs from lawful tax planning because tax evasion involves deception and can lead to penalties, interest, prosecution, and imprisonment under Indian tax law.
Tax Residency Certificate is an official document issued by a country’s tax authority that confirms a person or entity is treated as a tax resident under that country’s laws. Tax Residency Certificate is commonly used to claim benefits under a double taxation avoidance agreement and support lower tax withholding.
Tax Slabs are income ranges to which different income tax rates apply under a tax system. In India, tax liability rises as taxable income enters higher slabs, though rates, exemptions, and rebate rules can differ between the old regime and the new regime.
Turnover Limit is the maximum sales or gross receipts a business can report before a specific tax rule, compliance requirement, or reporting method stops applying. Turnover Limit often determines eligibility for presumptive taxation, audit thresholds, or mandatory registration under Indian tax laws.
Withholding Tax is tax deducted at source from payments such as salary, interest, dividends, royalties, or fees before the recipient receives the amount. Employers, banks, or payers usually remit the deducted sum directly to the tax authority, which helps improve compliance and advance collection.
