Glossary · 157 terms
Taxation
All taxation terms in the EquitiesIndia.com glossary — plain-English definitions written for Indian retail investors.
Advance Ruling(AAR)
An Advance Ruling under the Income Tax Act, 1961 is a binding written decision issued by the Authority for Advance Rulings (AAR) — or its successor, the Board for Advance Rulings set up in 2021 — to a non-resident (or certain resident) applicant on the tax implications of a prospective transaction before it is executed, providing certainty and eliminating tax disputes.
Advance Tax(Advance Income Tax)
Advance Tax is the income tax payable in instalments during the financial year itself — rather than as a lump sum at the time of filing — mandated under Section 208 of the Income Tax Act when estimated tax liability for the year exceeds ₹10,000.
Advance Tax Due Dates(advance tax schedule)
Advance tax is income tax paid in instalments during the financial year based on estimated income, with four prescribed due dates: 15 June (15%), 15 September (45%), 15 December (75%), and 15 March (100%) of the estimated annual tax liability.
Advance Tax for Stock Traders(advance tax F&O traders)
Advance tax for stock traders refers to the quarterly prepayment of estimated income tax on trading profits — including intraday, F&O, and short-term capital gains — by September 15, December 15, and March 15 of the financial year under Sections 208 and 211 of the Income Tax Act, with shortfalls attracting interest under Sections 234B and 234C on the unpaid tax amount.
Agricultural Income — Section 10(1)(Section 10(1))
Agricultural income, as defined under Section 2(1A) of the Income Tax Act, 1961, is exempt from central income tax under Section 10(1), but it is included for rate purposes in computing the tax on non-agricultural income of individuals and HUFs through the partial integration mechanism.
Angel Tax(Sec 56(2)(viib))
Angel Tax refers to the provision under Section 56(2)(viib) of the Income Tax Act, 1961 that treated premium received by closely-held companies issuing shares above fair market value as 'income from other sources' and taxed it in the hands of the company — a provision that generated significant controversy in the startup ecosystem and was ultimately abolished by Budget 2024.
Annual Information Statement(AIS)
The Annual Information Statement (AIS) is a comprehensive statement introduced by the Income Tax Department in November 2021 that consolidates all financial information reported about a taxpayer from multiple sources — including securities transactions, mutual fund redemptions, dividend credits, and foreign remittances — enabling pre-filling and verification for ITR filing.
Annual Information Statement — Detailed(AIS income tax)
The Annual Information Statement (AIS) is a comprehensive statement available on the income tax e-Filing portal that consolidates financial information reported by third parties about a taxpayer — including SFT filers, banks, employers, and registrars — and allows taxpayers to confirm, deny, or modify reported information.
Appellate Process (Income Tax)(CIT(A) appeal)
The income tax appellate process in India provides a four-tier hierarchy for disputing tax demands or assessments — starting with the Commissioner of Income Tax (Appeals) [CIT(A)], followed by the Income Tax Appellate Tribunal (ITAT), then the respective High Court on questions of law, and finally the Supreme Court of India — with the Faceless Appeal Scheme (2020) fundamentally restructuring the first-tier appeal process.
Assessment Year(AY)
The Assessment Year (AY) is the 12-month period from April 1 to March 31 during which income earned in the preceding Financial Year is assessed and taxed; for example, income earned in FY 2024-25 (April 2024 to March 2025) is assessed in AY 2025-26.
Audit Requirement for Stock Traders(Section 44AB audit traders)
The income tax audit requirement for stock traders under Section 44AB is triggered when a trader's business turnover — computed on a specific basis for trading activities — exceeds Rs 10 crore (digital transactions) or Rs 1 crore (cash transactions) in a financial year, or when a trader opts out of the presumptive taxation scheme under Section 44AD with income below 8% of turnover.
Belated Return (Section 139(4))(late ITR filing)
A belated return under Section 139(4) is an income tax return filed after the original due date but before 31 December of the relevant assessment year, carrying penal interest under Section 234A and a late filing fee under Section 234F.
Buyback Tax(Share Buyback Tax)
Buyback Tax is the tax levied on share buybacks conducted by Indian companies; Budget 2024 shifted the tax incidence from the company (which previously paid a 20% buyback tax under Section 115QA) to shareholders, who now pay capital gains tax on buyback proceeds received.
Capital Gains(Capital Gains Tax)
Capital Gains is the profit arising from the transfer of a capital asset — such as shares, mutual fund units, real estate, gold, or bonds — and is classified as long-term or short-term under the Income Tax Act, 1961 based on the holding period of the asset.
Capital Gains Account Scheme (CGAS)(CGAS deposit)
The Capital Gains Account Scheme (CGAS), 1988 is a government-notified deposit scheme that allows taxpayers to park long-term capital gains from the sale of a property or specified asset in a designated bank account before the due date of filing income tax returns, preserving the exemption under Sections 54, 54B, 54F, or 54EC while the replacement asset is being acquired or constructed.
Carry Forward of Losses(Carry-Forward Loss)
Carry forward of losses allows taxpayers to transport unabsorbed capital losses from the current financial year to subsequent years under Section 74, where they can be set off against future capital gains — LTCL for up to 8 years against LTCG only, and STCL for up to 8 years against both STCG and LTCG.
Cess(Health and Education Cess)
Cess is a 4% surcharge on income tax and surcharge (Health and Education Cess) levied on all taxpayers under the Finance Act, applicable universally regardless of income level, and not shared with state governments unlike regular taxes.
Clubbing of Income — Section 64(Section 64)
Section 64 of the Income Tax Act, 1961 requires certain income earned by a spouse, minor child, or daughter-in-law from assets or businesses transferred by the taxpayer to be included in (clubbed with) the taxpayer's own income, to prevent tax avoidance through income diversion.
Compliance Portal — Income Tax(income tax compliance portal)
The Income Tax Compliance Portal is an online facility within the e-Filing portal that consolidates outstanding tax demands, pending e-proceedings notices, and compliance-related queries issued by the Income Tax Department, enabling taxpayers to respond electronically without visiting tax offices.
Cost Inflation Index(CII)
The Cost Inflation Index (CII) is a government-notified index used to adjust the purchase price of a capital asset for inflation, thereby reducing the taxable capital gain under the indexation method available for specified long-term assets under Section 48 of the Income Tax Act.
Crypto Taxation India(Cryptocurrency Tax India)
Virtual digital assets including cryptocurrencies are taxed at a flat thirty percent rate under Section 115BBH of the Income Tax Act, with a one-percent TDS on transfers above specified thresholds, no deduction allowed for losses against other income, and no set-off between different VDAs.
DDT (Dividend Distribution Tax)(DDT)
Dividend Distribution Tax (DDT) was a tax levied on companies and mutual funds in India on dividends distributed to shareholders and unitholders respectively; it was abolished effective April 1, 2020, after which dividends became fully taxable in the hands of recipients at their applicable income tax slab rates.
Deemed Income in Income Tax(Notional Income)
Deemed income refers to amounts that the Income Tax Act treats as taxable income even though they may not represent actual cash receipts — common examples include notional rent under Section 23, stamp-duty value under Section 50C, and gifts under Section 56(2).
Deemed Let Out Property(deemed rental income)
A deemed let out property under Section 23(4) of the Income Tax Act, 1961 refers to a residential property — beyond the two self-occupied properties allowed under Section 23(2) — that is not actually rented out but is treated as if let out for tax purposes, with the owner required to pay tax on its notional rental income.
Defective Return (Section 139(9))(139(9) notice)
A return of income is treated as defective under Section 139(9) when it fails to meet prescribed conditions — such as missing annexures, unsigned returns, or mismatched tax payments — and the assessee is given 15 days to rectify the defect, failing which the return is treated as invalid.
Demand Notice (Section 156)(Section 156 notice)
A demand notice under Section 156 is issued by the Assessing Officer to a taxpayer when any tax, interest, penalty, fine, or other sum is determined as payable following an assessment, requiring payment within 30 days of service of the notice.
Dividend Tax(Dividend Income Tax)
Dividend Tax refers to the income tax payable by shareholders on dividend income received from Indian companies, re-classified as taxable income in the hands of recipients following the abolition of the Dividend Distribution Tax (DDT) by Budget 2020.
Double Taxation(DTAA)
Double taxation occurs when the same income or profit is taxed in two different jurisdictions — or twice within the same jurisdiction — with India addressing this both domestically (e.g., DDT repeal, buyback tax reforms) and internationally through a network of Double Taxation Avoidance Agreements (DTAAs) with over 90 countries.
DTAA (Double Tax Avoidance Agreement)(Double Tax Avoidance Treaty)
A Double Tax Avoidance Agreement (DTAA) is a bilateral treaty entered into by India under Section 90 of the Income Tax Act, 1961 with another country to allocate taxing rights over various categories of income and prevent the same income from being taxed twice — once in India and once in the country of the taxpayer's residence.
E-Assessment Centre (National) — NeAC(National e-Assessment Centre)
The National e-Assessment Centre (NeAC) is the apex entity established by CBDT under the Faceless Assessment Scheme to serve as the sole point of contact between taxpayers and the income tax department during faceless assessment proceedings, coordinating Assessment, Verification, Technical, and Review Units across Regional e-Assessment Centres.
E-Verification of Income Tax Return(ITR e-verification)
E-Verification is the electronic process by which a taxpayer validates their filed income tax return with the Income Tax Department without requiring a physical signature, using methods such as Aadhaar OTP, net banking, digital signature certificate, or bank account/demat account-based EVC.
EPF vs VPF vs PPF Comparison(Provident Fund Comparison)
EPF, VPF, and PPF are three provident fund instruments governed by distinct regulators and rules — the EPFO administers EPF and VPF, while PPF falls under the National Small Savings Fund — and while all three offer tax-efficient, government-backed fixed-income accumulation, they differ meaningfully in eligibility, contribution limits, interest rates, liquidity, and withdrawal rules.
Equalisation Levy(Google Tax)
Equalisation Levy is a direct tax introduced in India by the Finance Act 2016, levied on specified digital services and online advertisement payments made to non-resident service providers who do not have a permanent establishment in India — initially at 6% on online advertisement payments, later expanded at 2% on e-commerce supply or services.
Equalisation Levy — Detailed Analysis(digital services tax India)
The Equalisation Levy is a withholding-based tax imposed under the Finance Act 2016 (and expanded by the Finance Act 2020) on payments made to non-resident digital service providers: a 6% levy on online advertising and related digital services paid to non-residents, and a 2% levy on e-commerce supplies and services by non-resident operators — a measure designed to tax the digital economy ahead of global consensus on Pillar One solutions.
F&O Trading as Business Income(Derivatives Trading Tax)
Income from trading in Futures and Options is classified as non-speculative business income under Indian tax law, requiring the trader to file ITR-3, maintain books of account, and undergo a mandatory tax audit if turnover exceeds specified thresholds.
Faceless Assessment(Faceless Assessment Scheme)
Faceless Assessment is a technology-driven income tax scrutiny process introduced under Section 144B of the Income Tax Act, 1961 through the Faceless Assessment Scheme 2019 and expanded significantly in 2020, under which income tax cases are assessed through a central computer-based system without any direct interface between the taxpayer and the assessing officer.
Faceless Assessment Scheme(faceless e-assessment)
The Faceless Assessment Scheme, launched under Section 144B of the Income Tax Act by CBDT in August 2020, eliminates direct interaction between taxpayers and Assessing Officers by randomly allocating cases across assessment units nationally and conducting the entire assessment process through a digital portal.
Financial Year(FY)
The Financial Year (FY) in India runs from April 1 to March 31 and is the accounting period in which income is earned, investments are made, and transactions occur for the purpose of income tax computation under the Income Tax Act, 1961.
Form 15CA and Form 15CB(Form 15CA)
Form 15CA is an online declaration filed by the remitter of a foreign payment to the Income Tax Department, and Form 15CB is a certificate issued by a Chartered Accountant confirming that the applicable taxes have been paid or deducted, together forming the compliance framework for overseas remittances under Section 195.
Form 16 vs Form 16A(TDS certificate)
Form 16 is the TDS certificate issued by an employer to an employee for tax deducted on salary income under Section 192, while Form 16A is the TDS certificate issued for non-salary payments such as interest, professional fees, and rent under sections such as 194A, 194J, and 194I.
Form 26AS(Annual Tax Statement)
Form 26AS is the consolidated tax credit statement maintained by the Income Tax Department that reflects all TDS deducted, TCS collected, advance tax paid, and self-assessment tax paid against a taxpayer's PAN for a given financial year.
GAAR (General Anti-Avoidance Rule)(General Anti-Avoidance Rule)
GAAR (General Anti-Avoidance Rule) was a set of provisions under Chapter X-A of the Income Tax Act (Sections 95 to 102) that empowered Indian tax authorities to disregard, recharacterise, or restructure transactions or arrangements that were entered into primarily for the purpose of obtaining a tax benefit, even if they were technically legal under the letter of the tax laws.
Gift of Listed Shares(Share Gift Tax)
Listed shares received as a gift are taxable in the hands of the recipient under Section 56(2)(x) of the Income Tax Act if the fair market value exceeds fifty thousand rupees in a financial year, unless the gift is from a specified relative, on marriage, or under a will.
Grandfathering (LTCG)(LTCG Grandfathering)
Grandfathering in the LTCG context refers to the protection of unrealised long-term capital gains on listed equities and equity mutual funds that accrued up to January 31, 2018 — the day before the LTCG tax was reintroduced by Budget 2018 — with gains up to that date deemed tax-free.
GST Input Tax Credit(ITC GST)
Input Tax Credit (ITC) under GST allows a registered business to set off the GST paid on purchases (inputs) against the GST collected on sales (output liability), thereby ensuring the tax effectively falls only on value addition.
GST on Brokerage and Charges(GST on Trading)
Goods and Services Tax (GST) at 18% is levied on brokerage, transaction charges, depository participant charges, and certain other fees in the securities trading ecosystem, making GST a visible cost item in every contract note issued to investors and a deductible expense from capital gains or business income depending on the taxpayer's trading classification.
GST on Financial Services(GST financial services)
Goods and Services Tax (GST) applies to a range of financial services in India at the standard rate of 18%, covering brokerage commissions, insurance premiums on non-life policies, mutual fund distributor commissions, and advisory fees, though certain core banking services such as interest income on loans and deposits are exempt.
House Rent Allowance (HRA) Calculation(HRA exemption)
House Rent Allowance (HRA) is a component of a salaried employee's compensation structure that is partially or fully exempt from income tax under Section 10(13A) of the Income Tax Act, 1961, with the exempt amount determined as the minimum of three prescribed values — actual HRA received, rent paid minus 10% of basic salary, and 50% or 40% of basic salary depending on the city of residence.
HRA Exemption(House Rent Allowance)
HRA (House Rent Allowance) exemption was a provision under Section 10(13A) of the Income Tax Act that allowed salaried employees receiving HRA from their employer to claim a partial or full exemption from income tax on that allowance, subject to a formula-based calculation.
Income from House Property — GAV, NAV, and Deductions(house property income tax)
Income from house property is a head of income under the Income Tax Act, 1961 that taxes the notional or actual rental income from owned properties, computed after deducting municipal taxes paid (to arrive at Net Annual Value) and applying a flat 30% standard deduction and actual home loan interest under Section 24.
Income Tax Appellate Tribunal (ITAT)(ITAT)
The Income Tax Appellate Tribunal (ITAT) is a quasi-judicial appellate body established under Section 252 of the Income Tax Act, 1961 to hear second-level appeals against orders of the Commissioner of Income Tax (Appeals) or Principal Commissioner in income tax matters — and its decisions are final on questions of fact, with further appeals to High Courts lying only on substantial questions of law.
Income Tax Refund Process(ITR refund)
The income tax refund process covers the sequence of steps from return filing to CPC processing, intimation under Section 143(1), refund issuance via ECS, and the applicability of interest on delayed refunds under Section 234D of the Income Tax Act, 1961.
Income Tax Return Overview (All Forms)(ITR Forms)
The Income Tax Return (ITR) system in India comprises seven distinct forms — ITR-1 through ITR-7 — each designed for a specific category of taxpayer based on income sources, residential status, income quantum, and entity type, with the selection of the wrong form rendering the return defective.
Indexation(Indexed Cost)
Indexation is a method of adjusting the purchase cost of a capital asset upward for inflation using the Cost Inflation Index, thereby reducing the taxable long-term capital gain and the resulting tax liability under Section 48 of the Income Tax Act.
Inheritance of Shares(Share Inheritance Tax)
When listed shares are inherited through a will or succession, there is no tax liability at the time of inheritance; the inherited shares retain the original cost of acquisition paid by the previous owner, and the holding period includes the deceased's period of ownership for computing long-term capital gains.
Interest Under Sections 234A, 234B and 234C(234A 234B 234C)
Sections 234A, 234B, and 234C of the Income Tax Act, 1961 impose penal interest for late filing of the income tax return, shortfall in advance tax payment relative to assessed tax, and deferment of advance tax instalments respectively, each charged at 1% per month on the deficit amount.
Intraday Trading Tax Treatment(Intraday Tax India)
Profits from intraday equity trading — buying and selling shares on the same day without taking delivery — are classified as speculative business income under the Income Tax Act and taxed at the applicable income tax slab rate, with strict set-off and carry-forward restrictions.
ITR Filing Due Dates(ITR due date India)
Income Tax Return (ITR) filing due dates in India are specified under Section 139 of the Income Tax Act, with the primary deadline of July 31 for non-audited individuals and HUFs, October 31 for taxpayers subject to tax audit under Section 44AB, and November 30 for those required to furnish transfer pricing reports — with belated and revised returns carrying separate timelines and fee implications.
ITR-2(Income Tax Return Form 2)
ITR-2 is the income tax return form applicable to individuals and HUFs who have capital gains income, foreign assets, or more than one house property, but who do not have income from business or profession.
Leave Travel Allowance (LTA)(LTA exemption)
Leave Travel Allowance (LTA) is an employer-provided allowance that covers an employee's travel expenses for a journey within India undertaken with or without family, exempt from income tax under Section 10(5) of the Income Tax Act, 1961, subject to the block period rule — only two journeys in any block of four calendar years are eligible for exemption.
LTCG(Long-Term Capital Gains)
Long-Term Capital Gains (LTCG) is the profit earned from the transfer of a capital asset held for more than the prescribed holding period — 12 months for listed equities and equity mutual funds — and is taxed at 12.5% (post-Budget 2024) above an annual exemption threshold of ₹1.25 lakh.
MAT (Minimum Alternate Tax)(MAT)
Minimum Alternate Tax (MAT) was a provision under Section 115JB of the Income Tax Act that ensured companies with large book profits did not escape income tax liability by availing deductions and exemptions, requiring them to pay a minimum tax of 15 percent (plus applicable surcharge and cess) on their book profits if this exceeded their regular income tax liability.
New Tax Regime(New Income Tax Regime)
The New Tax Regime, introduced by Budget 2020 under Section 115BAC and made the default regime from AY 2024-25, offers lower slab rates — including zero tax up to ₹3 lakh and a 30% peak rate above ₹15 lakh — in exchange for foregoing most deductions and exemptions including Section 80C and 80D.
New Tax Regime vs Old Regime (Quantitative Breakeven)(new vs old tax regime India)
The quantitative breakeven analysis between India's new tax regime (lower slab rates, no deductions) and the old tax regime (higher slab rates, multiple deductions) identifies the total deduction threshold at which an individual's tax liability is identical under both regimes — with deductions below the breakeven favouring the new regime and deductions above it favouring the old regime.
Non-Speculative Business Income(F&O Income Tax)
Non-speculative business income under the Income Tax Act, 1961 refers to profits from trading activities that are not classified as speculative under Section 43(5) — most notably, income from equity F&O (futures and options) trading and commodity derivatives on recognised exchanges — taxed at the applicable income tax slab rate with more favourable loss set-off rules.
Notice Under Section 148 (Reassessment)(Section 148 notice)
A notice under Section 148 of the Income Tax Act initiates reassessment proceedings where the assessing officer has reason to believe that income chargeable to tax has escaped assessment — subject to specific time limits of three years for escaped income below Rs 50 lakh and ten years for amounts above Rs 50 lakh — with the Supreme Court's 2021 ruling in Union of India v. Ashish Agarwal significantly restricting the scope and procedure for such notices.
NPS Tax Benefits (Comprehensive)(NPS Deduction)
The National Pension System (NPS) offers a multi-layered tax benefit framework spanning three distinct sections of the Income Tax Act — 80CCD(1) for own contributions within the 80C basket, 80CCD(1B) for an exclusive additional Rs 50,000 deduction, and 80CCD(2) for employer contributions — making it one of the most tax-efficient long-term retirement savings instruments available to Indian taxpayers.
NRI Taxation(Non-Resident Indian Taxation)
NRI Taxation refers to the income tax treatment of Non-Resident Indians under the Income Tax Act, 1961, where only India-sourced income (capital gains on Indian securities, rental income, interest from Indian accounts) is taxable in India, often subject to higher TDS rates and DTAA benefits.
Old Regime vs New Tax Regime(old vs new regime)
The old and new income tax regimes offer different slab structures and deduction eligibilities; the optimal choice depends on the level of permissible deductions a taxpayer can legitimately claim, with a break-even analysis determining which regime results in lower tax outgo.
PAN(Permanent Account Number)
Permanent Account Number (PAN) is a 10-character alphanumeric identifier issued by the Income Tax Department under Section 139A of the Income Tax Act, serving as the universal identifier for all financial and tax transactions in India.
Perquisites Tax(Perk Tax)
Perquisites are non-cash benefits provided by an employer to an employee in addition to salary; they are taxable under Section 17(2) of the Income Tax Act, with their value determined according to prescribed valuation rules under Rule 3.
Presumptive Taxation (Section 44AD)(Sec 44AD)
Section 44AD of the Income Tax Act, 1961 allows eligible small businesses — with gross receipts not exceeding ₹3 crore (or ₹2 crore if cash receipts exceed 5% of total) — to declare income at a presumptive rate of 8% of turnover (6% for digital receipts), exempting them from maintaining detailed books of accounts and from tax audit requirements.
Professional Tax(PT Tax)
Professional tax is a state-level levy on the income of individuals engaged in employment, professions, trades, or callings; it is capped at ₹2,500 per year and is fully deductible from gross salary income under Section 16(iii) of the Income Tax Act.
Prosecution under Income Tax (Section 276C)(276C)
Section 276C provides for criminal prosecution of a taxpayer who wilfully attempts to evade tax, with imprisonment of rigorous nature ranging from three months to seven years along with a fine, distinguishing wilful evasion from mere avoidance or inadvertent non-compliance.
Rectification under Section 154(Section 154 application)
Section 154 allows the income tax department or a taxpayer to rectify any mistake apparent from the record in an intimation, order, or notice issued under the Act, addressing clerical errors and CPC processing mistakes without requiring a full reassessment.
Revised Return — Detailed Strategy(revised ITR strategy)
A revised income tax return under Section 139(5) allows a taxpayer to correct mistakes in an originally filed return — including missed deductions, incorrect income reporting, wrongly classified capital gains, or omitted income — before December 31 of the assessment year or before the assessment is completed, with strategic implications for set-off positions, refund claims, and assessment risk management.
Revised Return (Section 139(5))(revised ITR)
A revised return under Section 139(5) allows a taxpayer to correct any omission or wrong statement made in an originally filed return, and can be filed before 31 December of the relevant assessment year or before completion of assessment, whichever is earlier.
RNOR (Resident but Not Ordinarily Resident)(Resident but Not Ordinarily Resident)
RNOR (Resident but Not Ordinarily Resident) is a special residential status under Section 6(6) of the Income Tax Act, 1961, applicable to individuals who have recently returned to India after a long absence abroad — under which only Indian-sourced income and income received in India is taxable, with foreign income remaining exempt for two to three financial years.
Scrutiny Assessment (Section 143(3))(143(3) assessment)
A scrutiny assessment under Section 143(3) is a detailed examination of a taxpayer's return and underlying records by the Assessing Officer, triggered by a notice under Section 143(2), aimed at verifying the correctness of income declared and taxes paid.
Section 10(10) — Gratuity Exemption(Section 10(10))
Section 10(10) of the Income Tax Act, 1961 exempts gratuity received by an employee from income tax up to specified limits, with the exemption ceiling for non-government employees covered under the Payment of Gratuity Act enhanced to Rs 20 lakh.
Section 10(10AA) — Leave Encashment Exemption(Section 10(10AA))
Section 10(10AA) of the Income Tax Act, 1961 exempts leave encashment received by an employee at the time of retirement or superannuation from income tax, with the ceiling for non-government employees enhanced to Rs 25 lakh by the Finance Act 2023.
Section 10(10BC) Disaster Relief Compensation Exemption(Disaster Compensation Tax Exemption)
Section 10(10BC) exempts any amount received or receivable by an individual or legal heir from the Central or State Government, or a local authority, as compensation on account of a disaster.
Section 10(10D) — Life Insurance Maturity Exemption(Section 10(10D))
Section 10(10D) of the Income Tax Act, 1961 provides an exemption from income tax for amounts received under a life insurance policy, including any bonus, subject to certain conditions regarding the premium-to-sum-assured ratio, with significant changes introduced from 1 April 2023.
Section 10(14) Special Allowances(Special Allowance Exemption)
Section 10(14) of the Income Tax Act exempts certain special allowances paid by employers to employees, to the extent they are actually spent for the purpose for which they are granted, subject to prescribed limits under Rules 2BB.
Section 10(38)(Sec 10(38))
Section 10(38) of the Income Tax Act, 1961 provided a full exemption on long-term capital gains arising from the transfer of listed equity shares and equity-oriented mutual fund units on which Securities Transaction Tax had been paid — an exemption that was withdrawn by the Finance Act 2018 effective April 1, 2018.
Section 111A(Sec 111A)
Section 111A of the Income Tax Act, 1961 prescribes a flat tax rate on short-term capital gains arising from the transfer of listed equity shares, equity-oriented mutual fund units, and units of business trusts on which STT has been paid — revised to 20% by the Finance (No. 2) Act, 2024 effective July 23, 2024.
Section 112(Sec 112)
Section 112 of the Income Tax Act, 1961 governs the taxation of long-term capital gains on assets not covered by Section 112A — including unlisted shares, debt instruments, gold, immovable property, and foreign assets — at a flat rate of 20% with the benefit of indexation, or 10% without indexation at the taxpayer's option.
Section 112A(Sec 112A)
Section 112A of the Income Tax Act, 1961 taxes long-term capital gains arising from the transfer of listed equity shares, equity-oriented mutual fund units, and units of a business trust at 12.5% on gains exceeding ₹1.25 lakh per financial year, without the benefit of indexation — the provision introduced by Finance Act 2018 following the withdrawal of the Section 10(38) exemption.
Section 115AD — FPI Taxation(Section 115AD)
Section 115AD of the Income Tax Act, 1961 prescribes the special tax rates applicable to income of Foreign Portfolio Investors (FPIs) from securities listed on Indian stock exchanges, including dividends, interest, and capital gains, while also allowing treaty rate benefits where applicable.
Section 115BAA — New Corporate Tax Rate(115BAA)
Section 115BAA of the Income Tax Act, 1961 introduced a concessional corporate tax rate of 22% for domestic companies that chose to forgo specified deductions and incentives, effective from assessment year 2020-21 onwards.
Section 115BAB — Manufacturing Company Tax Rate(115BAB)
Section 115BAB provides a concessional income tax rate of 15% for new domestic manufacturing companies incorporated on or after 1 October 2019 that commenced manufacturing before 31 March 2024 (extended to 31 March 2027 by Finance Act 2023), subject to strict eligibility conditions.
Section 194N – TDS on Cash Withdrawal(194N TDS)
Section 194N mandates that banks, co-operative societies, and post offices deduct TDS when aggregate cash withdrawals from an account exceed ₹1 crore in a financial year, with a higher rate applicable to persons who have not filed income tax returns.
Section 194Q — TDS on Purchase of Goods(194Q TDS)
Section 194Q of the Income Tax Act, 1961 requires a buyer whose total sales, gross receipts, or turnover exceeds Rs. 10 crore in the preceding financial year to deduct TDS at 0.1% on purchase of goods from a resident seller if the aggregate purchase value from that seller exceeds Rs. 50 lakh in a financial year.
Section 206AB — Higher TDS for Specified Non-Filers(206AB higher TDS)
Section 206AB of the Income Tax Act, 1961 mandates that TDS be deducted at a higher rate for a specified person who has not filed income tax returns for the two preceding years in which TDS/TCS was deductible, and whose aggregate TDS/TCS in each of those years exceeded Rs. 50,000.
Section 206CCA — Higher TCS for Specified Non-Filers(206CCA TCS)
Section 206CCA of the Income Tax Act, 1961 requires a collector to collect tax at a higher rate from a specified person — a non-filer who had aggregate TDS/TCS exceeding Rs. 50,000 in each of the preceding two years — under provisions of Tax Collected at Source.
Section 24(b) — Home Loan Interest Deduction(home loan interest deduction)
Section 24(b) of the Income Tax Act, 1961 allows the deduction of interest paid on a loan taken for the purchase, construction, repair, or renovation of a house property, with a ceiling of Rs 2 lakh per year for self-occupied properties and an unlimited deduction for let-out properties, subject to the overall loss set-off rules.
Section 269SS and Section 269T(269SS)
Sections 269SS and 269T of the Income Tax Act prohibit accepting (269SS) or repaying (269T) loans, deposits, or specified sums in cash exceeding ₹20,000 in a single transaction, with violations attracting a penalty equal to 100% of the amount involved.
Section 54EC(Sec 54EC)
Section 54EC of the Income Tax Act, 1961 allows exemption from long-term capital gains tax on the transfer of any long-term capital asset — including land, buildings, and unlisted shares — if the net consideration is invested in specified capital gains bonds issued by NHAI or REC within six months of the transfer, up to a maximum of ₹50 lakh per financial year.
Section 54F(Sec 54F)
Section 54F of the Income Tax Act, 1961 provides an exemption from long-term capital gains tax on the transfer of any long-term capital asset other than a residential house, provided the net consideration is invested in the purchase or construction of a new residential property — with the exemption being proportional to the amount reinvested.
Section 54GB Capital Gains on Eligible Startup Investment(54GB Exemption)
Section 54GB exempts long-term capital gains arising from the sale of a residential property if the net consideration is invested in equity shares of an eligible startup or small/medium enterprise, subject to lock-in conditions.
Section 56(2)(x) — Gift Taxation(Section 56(2)(x))
Section 56(2)(x) of the Income Tax Act, 1961 brings gifts received by any person — in cash, kind, or as immovable property — above specified thresholds into the tax net as income from other sources, subject to certain exemptions for gifts from relatives or on specified occasions.
Section 80C(80C deduction)
Section 80C of the Income Tax Act, 1961 allows individual taxpayers and HUFs to claim a deduction of up to ₹1.5 lakh per financial year on specified investments and expenditures, including ELSS mutual funds, PPF, EPF, life insurance premiums, and home loan principal repayment.
Section 80C Instruments — Comprehensive Overview(80C deduction)
Section 80C of the Income Tax Act, 1961 permitted a deduction of up to Rs 1.5 lakh per financial year from gross total income for investments and expenditures across a wide range of specified instruments including life insurance premiums, PPF, EPF, ELSS, NSC, tax-saving FDs, home loan principal repayment, and children's tuition fees, making it the most widely used deduction in individual tax planning.
Section 80CCD(80CCD(1))
Section 80CCD of the Income Tax Act provided a deduction for contributions made to the National Pension System (NPS), with distinct sub-sections governing employee contributions, employer contributions, and the additional self-contribution window of up to Rs 50,000 per year.
Section 80D(80D deduction)
Section 80D of the Income Tax Act, 1961 provides a deduction on health insurance premiums paid for self, family, and parents — up to ₹25,000 for self and family, and an additional ₹25,000 (₹50,000 for senior citizens) for parents — available only under the Old Tax Regime.
Section 80DDB Medical Treatment Deduction(80DDB Deduction)
Section 80DDB allows a deduction of up to ₹40,000 (₹1 lakh for senior citizens) for expenses incurred on medical treatment of specified diseases for self or dependants, subject to certification requirements.
Section 80E (Education Loan)(Sec 80E)
Section 80E of the Income Tax Act, 1961 allows individuals to claim a deduction on the interest paid on a loan taken from a financial institution or approved charitable institution for the purpose of pursuing higher education — with no upper limit on the deduction amount and a benefit period of eight consecutive years from the year of commencement of repayment.
Section 80EE and 80EEA — First-Time Homebuyer Interest Deduction(80EE deduction)
Sections 80EE and 80EEA of the Income Tax Act, 1961 provided additional deductions on home loan interest to first-time homebuyers over and above the Rs 2 lakh ceiling under Section 24(b), subject to loan sanction dates, property value limits, and the condition that the taxpayer did not own any other residential property on the date of loan sanction.
Section 80G (Donations)(Sec 80G)
Section 80G of the Income Tax Act, 1961 provides deductions on donations made to specified funds, charitable institutions, and government entities — with eligible donations qualifying for either a 100% or 50% deduction, subject in certain cases to a qualifying limit of 10% of the donor's adjusted gross total income.
Section 80GG (Rent without HRA)(Sec 80GG)
Section 80GG of the Income Tax Act, 1961 allows a deduction on rent paid by taxpayers who do not receive House Rent Allowance (HRA) as part of their salary — the deduction being the least of: rent paid minus 10% of adjusted total income, 25% of total income, or ₹5,000 per month (₹60,000 per year).
Section 80RRB Royalty on Patents(80RRB Deduction)
Section 80RRB allows a deduction of up to ₹3 lakh on royalty income received by an Indian resident patentee for a patent registered under the Patents Act 1970, subject to conditions on residency and registration.
Section 80TTA(Savings Account Interest Deduction)
Section 80TTA of the Income Tax Act allowed individuals (other than senior citizens) and Hindu Undivided Families (HUFs) to claim a deduction of up to Rs 10,000 per year on interest earned from savings accounts held with banks, post offices, or co-operative societies.
Section 80TTB(Senior Citizen Interest Deduction)
Section 80TTB of the Income Tax Act provided senior citizens aged 60 years and above with a deduction of up to Rs 50,000 per year on interest income from savings accounts, fixed deposits, and recurring deposits with banks, post offices, and co-operative societies.
Section 80U Disability Deduction(80U Deduction)
Section 80U provides a flat deduction to an individual taxpayer who is certified as a person with disability — ₹75,000 for disability of 40% or more, and ₹1.25 lakh for severe disability of 80% or more.
Section 87A Rebate(87A rebate)
Section 87A of the Income Tax Act provides a tax rebate to resident individuals whose total income does not exceed a specified threshold, effectively reducing their tax liability to zero up to a defined limit.
Section 87A Rebate and Capital Gains(87A rebate capital gains)
Section 87A of the Income Tax Act provides a tax rebate to resident individuals with total income up to Rs 7 lakh under the new tax regime (Rs 5 lakh under the old), effectively making their entire tax liability zero — however, a significant controversy arose from FY2023-24 onwards regarding whether this rebate can be applied against special-rate capital gains taxes, with ITAT rulings and CBDT clarifications creating conflicting guidance.
Securities Transaction Tax(STT)
Securities Transaction Tax (STT) is a transaction-level tax levied at source on the purchase or sale of equity shares, equity mutual fund units, derivatives, and other specified securities traded on recognised Indian stock exchanges, with rates varying by instrument type and whether the transaction is delivery-based or otherwise.
Securities Transaction Tax (Impact on Returns)(STT Impact)
Securities Transaction Tax (STT) is a transaction-based levy on the purchase and sale of specified securities traded on recognised Indian stock exchanges, and while each individual rate appears modest — ranging from 0.001% to 0.1% — its compounding effect on active traders and high-turnover strategies constitutes a meaningful drag on gross returns that must be explicitly factored into performance analysis.
Set-Off of Losses(Tax Loss Harvesting)
Set-off of losses is the mechanism under Sections 70–74 of the Income Tax Act allowing taxpayers to reduce taxable income or capital gains in the current year by netting eligible losses incurred in the same financial year against eligible gains.
Settlement Commission(ITSC)
The Income Tax Settlement Commission (ITSC) was a quasi-judicial body under Chapter XIX-A (Sections 245A to 245M) of the Income Tax Act, 1961 that allowed taxpayers to disclose additional income not reported earlier, pay taxes on such undisclosed income, and obtain immunity from prosecution and penalty — a mechanism that was discontinued from February 1, 2021 by the Finance Act 2021.
Speculative Income(Speculative Business Income)
Speculative income under the Income Tax Act, 1961 refers to profits and gains from speculative transactions — defined under Section 43(5) as contracts for the purchase or sale of commodities including stocks where the contract is settled otherwise than by actual delivery — and is taxed as business income at the applicable slab rate.
Speculative vs Non-Speculative Income — F&O Classification(F&O non-speculative income)
Under Section 43(5) of the Income Tax Act, 1961, futures and options (F&O) transactions conducted on a recognised stock exchange are explicitly classified as non-speculative business income, while intraday equity trading (where no delivery of shares takes place) constitutes speculative business income, with distinct tax and loss set-off implications for each.
Stamp Duty and Registration as Cost of Acquisition — Section 55(stamp duty capital gains)
Section 55 of the Income Tax Act, 1961 specifies the cost of acquisition and improvement for various capital assets, and under its provisions, stamp duty and registration charges paid at the time of acquiring a property are includible in the cost of acquisition for the purpose of computing capital gains on a subsequent sale.
Stamp Duty on Securities(securities stamp duty)
Stamp duty on securities transactions is a state-level levy on the transfer of shares, debentures, and other instruments, which was rationalised into a uniform national framework effective 1 July 2020 under amendments to the Indian Stamp Act, 1899, with rates now collected centrally and shared with states.
Stamp Duty on Securities (Central Uniform Rate)(Stamp Duty Shares)
Following the 2020 amendment to the Indian Stamp Act, 1899, a uniform central stamp duty framework replaced the earlier fragmented state-wise stamp duty regime on securities transactions, with rates of 0.015% on delivery trades and 0.003% on intraday and derivatives trades, collected by exchanges and remitted to the state governments based on the buyer's state of residence.
Standard Deduction(Standard Deduction on Salary)
Standard deduction is a flat deduction from gross salary income available to all salaried individuals and pensioners under the Income Tax Act, reintroduced in India from FY 2018-19 to replace the earlier transport allowance and medical reimbursement exemptions.
STCG(Short-Term Capital Gains)
Short-Term Capital Gains (STCG) is the profit on transfer of a capital asset held for less than the prescribed holding period; for listed equities and equity funds subject to STT, Budget 2024 revised the STCG tax rate to 20% effective July 23, 2024.
STT(Securities Transaction Tax)
Securities Transaction Tax (STT) is a direct tax levied on transactions in listed securities on recognised Indian stock exchanges, introduced by the Finance Act 2004 and currently applicable at rates ranging from 0.001% to 0.02% depending on the instrument and transaction type.
Surcharge(Income Tax Surcharge)
Surcharge is an additional levy imposed on income tax (not on income) payable by individuals with income exceeding specified thresholds — ranging from 10% (income ₹50 lakh–₹1 crore) to 25% (income above ₹5 crore under the New Tax Regime) — effectively increasing the tax burden for higher-income taxpayers.
Tax Audit (Section 44AB)(44AB audit)
Section 44AB of the Income Tax Act mandates a tax audit by a Chartered Accountant for businesses and professionals whose turnover or gross receipts exceed prescribed thresholds, with the audit report to be furnished by a specified due date.
Tax Collected at Source on Shares — Section 206C(1H)(TCS on shares 206C)
Section 206C(1H) of the Income Tax Act requires sellers of goods — including shares — with aggregate sales receipts exceeding Rs 10 crore in the preceding financial year to collect Tax Collected at Source (TCS) at 0.1% from buyers at the time of receipt of consideration exceeding Rs 50 lakh from a single buyer in a financial year, creating compliance obligations for high-volume share sellers not otherwise covered by TDS provisions.
Tax Deduction and Collection Account Number (TAN)(TAN number)
Tax Deduction and Collection Account Number (TAN) is a 10-digit alphanumeric identifier issued under Section 203A of the Income Tax Act, 1961 to every person required to deduct or collect tax at source, and is mandatory on all TDS/TCS returns, challans, and certificates.
Tax Exemption vs Tax Deduction(Exemption vs Deduction)
A tax exemption excludes a specific income or receipt from the total income before it reaches the computation stage, whereas a tax deduction reduces the gross total income after it has been computed, both ultimately lowering the taxable income but through different mechanisms.
Tax Harvesting(Tax Loss Harvesting)
Tax harvesting is a portfolio management technique where investors strategically book capital gains or losses before the end of a financial year to either utilise the annual LTCG exemption, reset the cost of acquisition at current prices, or set off losses against taxable gains — thereby legally reducing the overall capital gains tax liability.
Tax Implications of ESOPs(ESOP taxation India)
Employee Stock Option Plans (ESOPs) are taxed twice under the Indian income tax framework — first as a perquisite under Section 17(2)(vi) when shares are allotted upon exercise (taxed as salary), and second as capital gains when the shares are subsequently sold, creating a double-taxation effect on the value created during the vesting period.
Tax on Bonus Shares(Bonus Share Taxation)
Under Indian income tax law, bonus shares issued by a company carry a cost of acquisition of zero in the hands of the shareholder — a rule codified in Section 55(2)(AA) of the Income Tax Act — meaning the entire sale proceeds on disposal of bonus shares are treated as capital gains, with the holding period and applicable tax rate determined by the share type and tenure.
Tax on Buyback of Shares — Post October 2024 Deemed Dividend Treatment(buyback tax 2024)
Effective 1 October 2024, the Finance (No. 2) Act 2024 abolished the company-level buyback tax under Section 115QA and instead treated buyback proceeds received by shareholders as deemed dividends under Section 2(22)(f), taxable in the hands of shareholders at applicable slab rates, while allowing shareholders to claim the cost of shares as a capital loss.
Tax on ESOP Exercise and Sale(ESOP Tax India)
Employee Stock Option Plan (ESOP) taxation in India operates in two distinct stages: the first at the point of exercise when the difference between fair market value and exercise price is taxed as a perquisite under the head of salaries, and the second at the point of eventual sale when capital gains tax applies on appreciation from the exercise FMV to the sale price.
Tax on Stock Splits(Share Split Tax)
A stock split is not a taxable event in India — no capital gains arise at the time of the split — but the cost of acquisition and the number of shares held are adjusted proportionately, ensuring that the total cost base remains unchanged while the per-share cost is reduced and the share count is increased in the same ratio as the split.
Tax Planning Calendar (India)(ITax Calendar India)
A Tax Planning Calendar for Indian salaried investors and traders maps the key income tax compliance deadlines and optimisation actions across the April-to-March financial year, enabling proactive rather than reactive decisions on advance tax payments, investment declarations, Form 15G/15H submissions, and year-end capital gains management.
Tax Planning vs Tax Avoidance vs Tax Evasion(tax planning India)
Tax planning, tax avoidance, and tax evasion represent three distinct approaches to minimising tax burden — tax planning is the legitimate use of statutory provisions within the spirit of the law, tax avoidance exploits technical loopholes contrary to legislative intent (legal but contestable), and tax evasion is the illegal concealment of income or misrepresentation of facts, carrying criminal prosecution risk under Indian law.
Tax Regime Selection Framework(New vs Old Regime Framework)
The Tax Regime Selection Framework is a structured decision process that helps Indian individual taxpayers determine whether the new concessional tax regime under Section 115BAC or the old regime with its deductions and exemptions results in a lower net tax outflow, anchored by the calculation of a breakeven deduction level above or below which one regime dominates.
Tax Residency Certificate(TRC)
A Tax Residency Certificate (TRC) is an official document issued by the tax authority of a foreign country or by the Indian government, certifying that the holder is a tax resident of that country in the relevant period — a mandatory requirement under Section 90(4) of the Income Tax Act for any non-resident seeking to claim Double Tax Avoidance Agreement benefits in India.
Tax Saving Investment Comparison(80C Investment Comparison)
Tax Saving Investment Comparison under Section 80C ranks and evaluates the fifteen-plus eligible instruments — from ELSS to PPF to life insurance premium — across the dimensions of post-tax return potential, lock-in period, liquidity profile, and risk level, enabling an informed allocation of the Rs 1.5 lakh annual deduction limit.
Tax Selling Season (March)
Tax Selling Season in India referred to the elevated equity selling activity that historically occurred in March — the final month of the Indian financial year (April-March) — as investors realised capital losses to offset capital gains before the fiscal year closed, a pattern distinct from the December tax-loss harvesting common in calendar-year markets.
TCS on Foreign Remittance — Section 206C(1G)(Section 206C(1G))
Section 206C(1G) of the Income Tax Act, 1961 mandates collection of Tax Collected at Source (TCS) by authorised dealers on foreign remittances under the Liberalised Remittance Scheme and on sale of overseas tour programme packages, with rates varying by purpose and enhanced significantly from 1 October 2023.
TDS(Tax Deducted at Source)
Tax Deducted at Source (TDS) is a mechanism under the Income Tax Act, 1961 where the payer deducts a specified percentage of tax before making payments for salary, interest, dividends, rent, professional fees, and other specified incomes, and remits it directly to the government on behalf of the recipient.
Transfer Pricing(TP)
Transfer pricing in the Indian income tax context refers to the rules under Sections 92 to 92F of the Income Tax Act, 1961 that govern the pricing of transactions between related international parties (and, since 2012, certain domestic related-party transactions), requiring that such prices be set at arm's length to prevent profit shifting and tax base erosion.
Turnover Calculation for F&O Traders — Section 44AD Applicability(F&O turnover tax)
For futures and options (F&O) traders, turnover for income tax purposes is computed as the sum of absolute profits and losses from each settled F&O contract, not the notional value of trades, and this figure determines whether the trader must undergo a tax audit under Section 44AB and whether Section 44AD presumptive taxation is applicable.
Updated Return — Section 139(8A)(ITR-U)
Section 139(8A) of the Income Tax Act, 1961 permits any person to file an Updated Return of income for a particular assessment year within 24 months from the end of the relevant assessment year, subject to payment of an additional tax and certain eligibility restrictions.
Vivad se Vishwas 2.0 (2024)(VSV 2.0)
Vivad se Vishwas 2.0 is the direct tax dispute resolution scheme announced in Union Budget 2024-25 and operationalised by the Finance (No. 2) Act, 2024, allowing taxpayers with pending appeals before CIT(A), ITAT, High Courts, and the Supreme Court to settle tax disputes by paying a specified amount of disputed tax with full waiver of interest and penalty.
Vivad se Vishwas Scheme(VsV Scheme)
Vivad se Vishwas (meaning 'Trust over Dispute') is a direct tax dispute resolution scheme introduced by the Government of India — first in 2020 (Direct Tax Vivad se Vishwas Act, 2020) and relaunched in 2024 — allowing taxpayers with pending income tax appeals to settle disputes by paying a specified percentage of the disputed tax demand, thereby extinguishing the penalty and interest liability.
Voluntary Provident Fund Tax Treatment(VPF Tax)
Voluntary Provident Fund (VPF) allows salaried employees to contribute above the mandatory 12% EPF limit, with contributions up to ₹2.5 lakh per year in aggregate (across EPF and VPF) earning tax-free interest post-Budget 2021.
Wash Sale(Wash Sale Rule India)
A wash sale refers to the practice of selling a security at a loss and repurchasing the same or substantially identical security shortly before or after the sale — primarily to realise a tax loss while maintaining the portfolio position; unlike the United States where wash sale rules under IRC Section 1091 disallow such losses, India has no wash sale prohibition, making the strategy legally permissible for Indian taxpayers.
Wealth Tax (Abolished)(Wealth Tax Act 1957)
Wealth Tax was a direct tax levied annually on the net wealth of individuals, Hindu Undivided Families (HUFs), and companies above a specified threshold under the Wealth Tax Act, 1957, before it was abolished with effect from Assessment Year 2016-17 and replaced by a higher surcharge on super-rich taxpayers.
Wealth Tax (Abolished)(Wealth Tax India)
Wealth Tax was a direct tax levied annually on the net wealth of individuals, HUFs, and companies in India under the Wealth Tax Act, 1957, until it was abolished with effect from Assessment Year 2016-17 by the Finance Act 2015, with the government replacing the revenue loss through a 2% surcharge on incomes exceeding Rs 1 crore.
Withholding Tax on FPI — Section 196D(FPI withholding tax India)
Section 196D of the Income Tax Act governs the withholding tax on income earned by Foreign Portfolio Investors (FPIs) from Indian securities — prescribing a 20% TDS rate on dividend income and specifying the tax treatment of capital gains and interest income — with DTAA treaty benefits available to FPIs from treaty countries that can modify the applicable withholding rate through Form 10F and tax residency certificate submissions.