Tax Glossary – Tachotax-US

Tax Glossary

Some of the terminology of taxation can be difficult to understand. the purpose of this glossary is to understand this terminology to those whose do not work with tax issues every day.


A


ACQUISITION - Buying of controlling interest in a firm through tender or share market.

ALLOWANCE - Deductions made in income taxes, gifts and inheritance taxes, and other forms of taxes while computing.

ASSESSMENT - Process of calculating the tax due.

ADVANCE TAX - Income tax should be paid in advance of a lump sum. Also, refer to pay as you earn tax. The advance tax is generated by exempting the TDS due to the income.

ASSETS - A capital expenditure that holds on to a resource to carry a business for a long duration.

B


BENEFICIARY - A person who receives benefits from resulting acts like trust property or insurance policy.

C


CAPITAL GAIN- Capital gains are the profits acquired after selling assets like property, land, gold, etc. In India, it is referred to as income taxes.

CAPITAL LOSS- The loss faced by selling capital assets.

CAPITAL ASSET - Capital asset maybe jewelry, rural agriculture, or land, other than stock in trade is a capital asset.

CLUBBING OF INCOME - Including other person's income with the taxpayer while calculating the total tax.

CASH CREDITS - Money received by a taxpayer without its knowledge of explanation.

CREDIT - Money deducted from the actual acquired tax. It aims at benefiting special groups.

COST - Purchase price paid for property or the value of the exchange for which property is given.

D

DEDUCTION -Value which is paid from a property or exchange of property.

DEPENDENT - A relative of the taxpayer whom the payer provides half of the support.

DEPRECIATION - An annual deduction on an asset.

DEBENTURE -A long term financial instrument by a company with a promise of fixed interest to the investor.

DIVIDEND - Company earning paid to the shareholders based on the shares they hold.

DEFAULT - The occurrence of events that are defined by the parties under a contract.

DISTRIBUTION - The payment of cash or property value to a shareholder by a corporation.

DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) - A trey signed by India with other countries so that taxpayers should not pay double taxes on their income.

DISABILITY - All disabilities that include mental illness, hearing impairment, blindness, etc.

DONATION - Cash provided to another person without any value in return.

E

E-FILE - The group of taxes paid by people that includes business, estates, trusts, and charity.

ENTITY- A person or group of people that pays taxes. Types of tax entities include individuals, businesses, estates, trusts, and charitable organisations.

EXEMPTION - Status that doesn't come under taxation.

ENTERTAINER - Income of a professional entertainer e.g. a musician, actor or other artiste, or sportsman is, in many cases, treated differently from income of persons carrying on other independent profession.

EQUITY -  The value of the business after all settlements or the investment in the business and the total worth of the property difference.

EXPENSES -Occurrence of events decided by parties with a contract.

ENTERTAINMENT ALLOWANCE - Payment of cash by to a shareholder by a corporation.

EMPLOYER -An organisation that hires employees and offers wages, salary to them in exchange for work.

F

FEE - It is charged by the central o local government for a particular service. They are not considered taxes.

FAMILY PENSION - Monthly amount payable to the family members after the death of the issued employer. 

G

GROSS INCOME - Sources of income excluding the income. They are the initial calculation of taxes before adjustments and deductions.

GIFT RECEIVED - Sum of money received by an individual without any consideration.

GRATUITY - A loyalty benefit offered to an employer for his or her services to an organisation for more than five years. They are paid in cash, cheque, or demand draft.

GAIN - The difference between the original investment price and money received after selling.

GOVERNMENT HOSPITAL - Hospitals run by the central or local government for the treatments of government employees and their family members.

H

HOUSE PROPERTY - Property or mortgages that are owned for own residential purpose.

HOUSE RENT ALLOWANCE(HRA) - Salary given to the employee for his rented accommodation.

I

INCOME - Money earned in cash by an individual.

INTEREST INCOME - Money earned from investment in bank accounts, issued bonds, etc.

INVESTMENT INCOME - Money received for profitable investments. They are in the form of interest or dividends.

IMMOVABLE PROPERTY - Real property consist of land, houses, and buildings.

INFRASTRUCTURE - Public facilities that are established in cities. Like roads, hotels, bridges, etc.

INHERITANCE - Personal property received by the successors.

J

K


L

LEVY - Amount collected by legal authority or compulsion. Ex: Tax

LOCAL TAX - Local taxes are paid to the lower level of government apart from Central and Federal Government.

LISTED SECURITIES - Securities mentioned on Recognised Stock Exchange.

LONG TERM CAPITAL ASSET - Capital asset held for more than 36 months by an individual.

LIFE INSURANCE PREMIUM - Insurance against life security in the name of the person the policy is issued.

M

MUTUAL FUND - Investment companies earn money from investments and shareholders, bonds, or money markets.

MUNICIPAL TAXES - They are regulated by the local government, the tax is assessed and levied as a deduction.

MEDICAL AUTHORITY - Medical or institution notified by the concerned government.

N

NON-RESIDENT- A person who stays in an outside country for work and business purposes. They must file a state income tax return.

O

OWNERSHIP - Person who owns the legal authority of property and receives income for the same.

P

PRINCIPAL - The primary value that has to be repaid at maturity excluding the interest.

PERQUISITES - Benefits received by a person as a result of his or her positions and are over the salary or wage.

PENALTIES - Late charges included in the tax bills.

PREMIUM - It is the amount paid as an option. They are paid more than the face amount.

PREVIOUS YEAR - The year in which the income is earned. It begins on 1st April of every year.

PAN - Permanent Account Number (PAN), a unique ten-digit number issued by the government to every individual.

PROFITS IN LIEU OF SALARY - Additional payments received by the employee instead of a salary. They are also taxable and should be mentioned under the income tax returns.

PERSON WITH DISABILITY - A person with 80% disability. They can avail of a deduction of Rs 1,25,000.

POLITICAL PARTY - A party that is registered under Section 29A of the representation of people's interests.

Q


R

REBATE - A specific portion returned to the seller by the buyer on the purchase of goods in a certain quantity.

REFUND (OF TAX) - Amount refunded to the taxpayer.

REMUNERATION - Income and fringe received by an employee for services contributed.

RECOGNIZED PROVIDENT FUND - A fund established under a scheme framed under the Employees provident fund Act 1952. It is looked after by the Chief Commissioner or Commissioner.

RECORD DATE - A fixed date to receive dividend or income. It is maintained by the company or the Mutual fund or UTI.

RESIDENT - A person eligible for tax in a country, state because of the domicile of residence.

S

SCHOLARSHIP - Money rewarded in education. They are paid for tuition, books, and supplies. 

STANDARD DEDUCTION -Certain amounts that can be deducted instead of claiming itemised deductions.

SECURITIES - Relevant documents provided for the sake of evidence in a company or capital that holds legal rights.

SELF-OCCUPIED PROPERTY - Property owned by an individual for personal purposes.

SECURITY TRANSACTION TAX (STT)- Tax levies on buying and selling of securities on a stock exchange.

STAMP DUTY VALUE - Value adopted by a state government for stamp duty.

SELF-ASSESSMENT - Tax declares based on his assessment for the calculation of tax due. The tax authorities check for validation. 

SOURCE OF INCOME - The sources from which money can be earned by an individual.

STOCK -Shares representing ownership in company or organisation.

SURCHARGE - Additional amount charges with the default charges.

SENIOR CITIZEN - An individual in India more than 60 years of above.

T

TAX LIABILITY - The total taxes an individual holds.

TAX RATE - The percentage owed as tax.

TAXABLE INCOME - The adjusted income minimised by all applicable exemptions credits and deductions.

TRUST - A legal agreement hold and control by a person and that runs according to his or her instruction.

TAX RELIEF -The process includes reducing taxes without regard to a certain way it is achieved.

TRANSACTION - Activities in banks that includes deposits, withdrawal, interest payment, etc.

TRANSACTION TAXES -Taxes uses certain kinds of objects like sales tax, transfer tax, etc.

TAX ON EMPLOYMENT - The money paid to the government based on employment or profession.

TUITION FEES - All types of fee payment included in school and colleges.

U

UNLISTED SECURITIES - The financial instrument that is not traded any of the stock exchange but through over the counter market.

UNEXPLAINED INVESTMENTS - The investment which is not mentioned in the book of accounts. If it is mentioned by an individual that can not be explained then, it may be deemed to be the income of the assesses of such financial year.

UNEXPLAINED MONEY - In the financial year if an assesses owned any money, bullion, jewellery which are not recorded in the book. If it is maintained without any explanation then, it may be deemed to be the income of the assesses of such financial year.

UNEXPLAINED EXPENDITURE - A assesses has sustained expenditure without any explanation then, it may be deemed to be the income of the assesses for such fiscal year. 

V

W

WILL - A legal document act as a key vehicle of transfer of death.

X

Y

Z