Income Tax Return: Key Terms That You Should Know Before Filing ITR

As the Income Tax Returns (ITR) filing process for the financial year 2024-25 (Assessment Year 2025-26) has started, taxpayers across India are preparing to fulfil their financial obligations.  Whether you’re filing your return for the first time or regularly, understanding the key tax terms is important for accurate filing and avoiding penalties.

Here are the key terms taxpayers should be familiar with before filing their ITR:

An Income Tax Return is a form used by taxpayers to declare their income, deductions and taxes paid to the Income Tax Department. Filing your ITR is mandatory if your income exceeds the prescribed limit in a financial year, helping the government determine your tax liability or refund. The Income Tax Department has already notified multiple forms for AY 2025-26 and taxpayers need to choose the right ITR form, as applicable.

The Assessment Year is the year immediately following the financial year in which your income is assessed and taxed. For example, income earned from April 1, 2024, to March 31, 2025, will be assessed in the Assessment Year 2025–26.

The financial year, or fiscal year, refers to the 12-month period during which you earn the income being reported, starting on April 1 and ending on March 31 of the following year. For example, for ITR filing, Financial Year 2024–25 covers income earned between April 1, 2024, and March 31, 2025.

A 10-character alphanumeric identifier issued by the Income Tax Department, PAN is mandatory for filing your ITR and helps track all tax-related transactions.

This is the total income you earn from all sources — such as salary, house property, capital gains, business or profession and other sources — before applying any deductions under various sections of the Income Tax Act, 1961, like Section 80C and Section 24(b), among others.

Deductions are specific amounts you can subtract from your gross total income. They reduce your taxable income. Popular deductions include Section 80C investments (like PPF, ELSS, life insurance), Section 80D for health insurance and Section 24 for home loan interest payments.

This refers to income that is not subject to tax under the Income-tax Act, such as agricultural income (within limits), certain allowances like HRA or LTA and dividends from specified companies.

Taxable income is your income after subtracting eligible deductions and exemptions from your gross total income.

It’s a consolidated tax statement showing details of TDS, TCS and advance tax paid during the financial year. Accessible through the income tax e-filing portal, it helps taxpayers verify their tax credits before filing returns.

It’s a certificate issued by the employer to the salaried taxpayers. Form 16 contains the details of the salary paid and tax deducted at source (TDS) during the financial year. It is an important document for salaried individuals when filing their income tax returns.

TDS is tax deducted by your employer or other payers before paying you for certain types of income. It is a prepayment of your tax liability. The details are reflected in your Form 26AS.

This is the remaining tax you owe on your assessed income after deducting TDS and advance tax, which must be paid before filing your income tax return.

Tax paid in instalments during the financial year, applicable mainly to non-salaried income sources like business or interest income.

This is the amount returned to you when your total tax payments exceed your actual tax liability. You can claim it by filing your ITR, and the refund is credited to your bank account after the income tax department processes your return.

This is the process of confirming that the information in your ITR is accurate and authentic. After filing, you must verify your return using methods like Aadhaar OTP, net banking, or by sending a signed ITR-V form to the Centralised Processing Centre (CPC) in Bengaluru.

With the ITR filing window now open for FY 2024-25 (AY 2025-26), understanding these key tax terms will make the filing process easier and more accurate. These key income tax terms help you comply with tax regulations and ensure you don’t miss out on eligible deductions.

It’s important to note that the deadline to file ITR for FY 2024-25 is July 31, 2025, for the taxpayers who don’t need their accounts to be audited.