Understanding tax and compliance terminology helps you make better financial decisions. Here's our plain-language guide to the most important terms.
AIS — Annual Information Statement
A comprehensive summary of all your financial transactions as reported to the IT Department by banks, employers, and mutual funds. Available on the IT portal. Must be checked before filing your ITR to avoid mismatch notices.
Advance Tax
Tax paid in advance when estimated liability exceeds ₹10,000. Payable in 4 instalments: June 15 (15%), September 15 (45%), December 15 (75%), March 15 (100%). Missing instalments attracts interest under Section 234B and 234C.
Assessment Year (AY)
The year in which income earned in the previous financial year is assessed for tax. Income earned in FY 2025-26 (April 2025–March 2026) is assessed in AY 2026-27.
DTAA — Double Tax Avoidance Agreement
A bilateral treaty between India and another country preventing the same income from being taxed twice. NRIs can claim DTAA benefits to reduce India tax liability. India has DTAA with UAE, USA, UK, Singapore, Canada, and 80+ countries.
Form 16
TDS certificate issued by employer to employee showing total salary paid and tax deducted. Part A = TDS deposit details; Part B = salary breakup & deductions. Essential for ITR filing.
Form 26AS
Consolidated annual tax credit statement showing all TDS deducted on your behalf, advance tax paid, and self-assessment tax. Available on IT portal. Must match your ITR data to avoid 143(1) mismatch notices.
ITC — Input Tax Credit
Under GST, credit for GST paid on purchases and business expenses. ITC reduces your GST payable. Must be claimed before the due date of the September return of the following year or it lapses permanently.
Section 80C
Allows deduction up to ₹1.5 lakh for: PPF, ELSS mutual funds, life insurance premiums, NSC, 5-year FDs, home loan principal repayment, and children's tuition fees. Only available under the old tax regime.
TDS — Tax Deducted at Source
Tax deducted by the payer when making payments. Employer deducts on salary (Section 192); banks on interest above threshold (Section 194A). Reflected in Form 26AS and can be claimed as credit.
Section 148 Notice
Issued when the Assessing Officer believes income escaped assessment in a previous year. Can go back 3–10 years. Requires immediate professional response — a reassessment can cover multiple years and lead to significant demands.
Capital Gains
Profit from selling a capital asset (property, shares, mutual funds, gold). STCG if held below the specified period; LTCG if held longer. LTCG on equity above ₹1.25 lakh taxed at 12.5% from FY 2024-25.
ITR-U — Updated Return
Under Section 139(8A), allows taxpayers to file or correct their ITR up to 2 years after the end of the relevant AY. Attracts 25% additional tax if filed within 1 year, or 50% if filed after 1 year.
DPIIT Recognition
Certification from the Department for Promotion of Industry and Internal Trade granting a startup access to tax exemptions, faster IP filing, and government scheme benefits under Startup India.
FCRA — Foreign Contribution Regulation Act
Governs receipt of foreign donations by NGOs, trusts and associations in India. Registration must be renewed every 5 years; non-compliance can lead to permanent cancellation.
FEMA — Foreign Exchange Management Act
The law governing foreign exchange transactions, FDI, ODI and ECB in India. Administered by RBI. Violations are civil offences carrying penalties up to three times the contravened amount.
NCLT — National Company Law Tribunal
The quasi-judicial body handling corporate disputes, insolvency (IBC) proceedings, mergers, and winding-up petitions under the Companies Act, 2013. Appeals from NCLT go to NCLAT.
NBFC — Non-Banking Financial Company
A company providing banking-like financial services (loans, investments) without holding a banking licence. Requires RBI Certificate of Registration under Section 45-IA of the RBI Act.
Trademark Class
One of 45 categories under the Nice Classification system used to register trademarks for specific goods or services. A single brand may need registration across multiple classes for full protection.