Financial Glossary

Income Tax Act section allowing up to ₹1.5 lakh deduction from taxable income across PPF, ELSS, EPF, NSC, life insurance, home loan principal, and more.

Extra ₹50,000 tax deduction over and above the ₹1.5L 80C cap — exclusively for voluntary NPS Tier 1 contributions in the old tax regime.

Health insurance premium deduction — ₹25K for self/spouse/kids, ₹50K if any covered is 60+, plus a separate ₹25K-50K for parents.

Income tax paid in four quarterly installments through the financial year — required if annual liability after TDS exceeds ₹10,000.

Compound Annual Growth Rate — the constant annual rate at which an investment would have grown from start value to end value.

Three-digit credit score (300-900) from TransUnion CIBIL — banks use it as the first filter for loan and credit card approval. Above 750 is good.

Interest calculated on the principal plus accumulated interest — the engine behind long-term wealth creation.

Flat 4% surcharge on income tax + any surcharge — applied across all slabs to fund health and education programmes.

Equated Monthly Instalment — the fixed monthly amount you pay your lender to repay a loan over its tenure.

Employees' Provident Fund — mandatory salary-linked retirement scheme with 12% employee + 12% employer contribution and current 8.25% interest.

Fixed Obligation to Income Ratio — the percentage of your net monthly income going towards all EMIs combined. Banks cap this at 40-55%.

The official annual statement showing all TDS deducted on your PAN — the master record for claiming TDS credit when filing ITR.

Goods and Services Tax — unified indirect tax replacing VAT, service tax, excise, etc. Five slabs: 0%, 5%, 12%, 18%, 28%.

House Rent Allowance — salary component exempt from income tax under Section 10(13A), available only in the old regime.

Adjusting the purchase cost for inflation using the Cost Inflation Index (CII) to reduce taxable capital gain — removed for new acquisitions post-July 2024.

Long-Term Capital Gains on listed equity / equity mutual funds — taxed at 12.5% above ₹1.25 lakh annual exemption per FY.

Long-Term Capital Gains on real estate held over 24 months — taxed at 12.5% without indexation (post-July 2024).

Loan-to-Value ratio — the percentage of property value a bank will fund. Capped at 75-80% for home loans, 60-70% for LAP.

India's default income tax regime since FY 2023-24 — lower slabs (5%/10%/15%/20%/30%) but no 80C, 80D, HRA, or home loan deductions.

National Pension System — a market-linked retirement scheme with equity exposure up to 75% and an extra ₹50K tax deduction.

Original income tax regime with higher slab rates (5%/20%/30%) but full access to 80C, 80D, HRA, and home loan interest deductions.

Public Provident Fund — a 15-year government-backed savings scheme with tax-free interest and EEE tax treatment.

Mental shortcut for compound growth — divide 72 by your annual return rate to estimate years to double your money. Most accurate for rates from 6% to 10%.

Tax rebate that makes total income tax zero for taxable income up to ₹7 lakh in the new regime or ₹5 lakh in the old regime, for resident individuals.

Systematic Investment Plan — fixed monthly investments into a mutual fund that build wealth via rupee-cost averaging and compounding.

State-level tax on property registration, typically 5-8% of property value (Tamil Nadu highest at 11%). Paid in cash; not financed by the home loan.

Short-Term Capital Gains on equity sold within 12 months of purchase — taxed at flat 20% (post-July 2024).

Additional tax on tax for high-income earners — 10% above ₹50L, 15% above ₹1cr, 25% above ₹2cr, 37% above ₹5cr (old regime only).

Tax Deducted at Source — income tax that the payer deducts from your payment and remits to the government on your behalf.

Extended Internal Rate of Return — the annualised return on a series of investments and withdrawals made on different dates. The honest metric for SIP returns.