Although it is recommended to seek an expert’s advice – a chartered accountant or an income tax expert – before you click ‘submit’ on the income tax e-filing portal, it is not unusual to do everything on your own. This is quite prevalent among young salaried professionals or freelancers to stick to DIY while they examine their annual income and tax liability.
Here we list out ten key terms that are too important for taxpayers to be ignored.
Filing ITR 2025: 10 key terms to know
I. Gross Income: As the name suggests, this term refers to the total income earned during the year, including money earned in the form of salary, freelance assignments, rental income, sale of shares, prize money, etc. A lot of calculations go into it before the tax component can be computed on it.
II. Deductions: After gross income is calculated, taxpayers are entitled to deduct the sum allowed as legitimate deductions as per the I-T Act. This can be allowed under various provisions, such as 80C or 80D for investing in PPF and health insurance, respectively.
III. Exemptions: Unlike deductions, exemptions refer to the income which are not taxable. For example, interest on PPF or agricultural income.
IV. Rebate: This refers to the sum waived off from the total tax on account of certain purposes. One example of a rebate is section 87A (rebate), which is allowed upto ₹25,000 for those taxpayers who are earning less than ₹7 lakh under the new tax regime.
V. Capital gains: This refers to the income earned on account of the sale of an asset, including property, gold, or securities. Capital gain could be short-term or long-term based on the tenure of the holding period of the asset.
VI. ITR form: Another term that taxpayers must be aware of is the ITR form. There are different ITR forms for different categories of taxpayers, such as salaried, business persons, and freelancers.
VII. New Tax Regime (NTR): Currently, the income tax department allows taxpayers to file their tax returns under one of the two regimes: old and new. As the name suggests, old has been around for a long time, and the latest regime is referred to as ‘new tax regime’ since 2020-21 when it was first introduced.
The old regime has higher tax rates but a larger number of deductions, whereas the new regime has lower rates of tax but without those deductions.
VIII. Cess: The Government of India levies a 4 percent cess on total tax (which includes surcharge) to fund health and education.
IX. TDS (Tax deducted at source): Typically, employers deduct tax during the year while disbursing salary to employees. This tax paid in advance is shown as TDS in the Annual Information Statement (AIS).
X. Total Tax payable: Finally, after all the deductions and rebates are deducted, and cess is added, the figure that is reflected is known as the total tax payable. Notably, it may be zero or negative (which leads to a tax refund) when it is already paid in advance in the form of TDS.
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