Glossary

Digital Wallet
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A virtual platform that stores payment information, such as credit and debit cards, enabling users to make electronic transactions.

Micro, Small, and Medium Enterprises (MSME)
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Businesses classified by the Indian government based on their investment in plant, machinery, and equipment, receiving various benefits and support.

Indian Financial System Code (IFSC)
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A unique, 11-digit alphanumeric code used to identify bank branches for electronic funds transfers in India.

Prompt Corrective Action (PCA)
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A regulatory framework used by the RBI to monitor and take corrective actions for weak banks, ensuring financial stability.

Financial Stability and Development Council (FSDC)
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An apex body in India responsible for financial sector development, stability, and coordination among financial regulators.

Bank for International Settlements (BIS)
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An international financial institution that fosters cooperation among central banks and provides financial stability recommendations.

Reserve Bank of India (RBI)
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The central bank of India, responsible for formulating monetary policy, regulating the financial system, and ensuring financial stability.

Prime Lending Rate (PLR)
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The interest rate charged by banks to their most creditworthy customers, often used as a reference rate for other loans.

Marginal Cost of Funds Based Lending Rate (MCLR)
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An internal reference rate used by banks to determine interest rates on loans, based on the marginal cost of funds and other factors.

Base Rate
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The minimum interest rate set by the Reserve Bank of India, below which banks cannot lend to customers, except under specific circumstances.

Statutory Liquidity Ratio (SLR)
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The minimum percentage of a bank's total deposits that must be held in liquid assets, such as cash, gold, or government securities.

Cash Reserve Ratio (CRR)
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The minimum percentage of a bank's total deposits that must be held as reserves with the central bank (Reserve Bank of India).

Credit Rating
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An assessment of an individual's or entity's creditworthiness, based on their financial history and ability to repay debt.

Small Savings Schemes
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Government-backed savings programs, such as PPF, KVP, and SSY, offering secure investment options with tax benefits.

Bank Guarantee
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A financial guarantee provided by a bank on behalf of a customer, ensuring payment or performance of a contractual obligation.

Automatic Investment Plan (AIP)
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An investment strategy that automatically invests a fixed amount in a specific investment vehicle, such as mutual funds, at regular intervals.

Trading Account
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An account used by investors to buy and sell securities in the stock market, linked to a Demat account for settlement purposes.

Public Provident Fund (PPF)
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A long-term, government-backed savings scheme in India, offering tax benefits and a fixed return on investment.

Demat Account
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An account used to hold shares and securities in electronic format, enabling investors to trade in the stock market without physical certificates.

Recurring Deposit (RD)
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A type of savings instrument where customers deposit a fixed amount every month for a predetermined period, earning interest.

Fixed Deposit (FD)
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A type of savings instrument where funds are deposited for a fixed term, offering higher interest rates than regular savings accounts.

Nomination Facility
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A service offered by banks and financial institutions, allowing account holders to nominate a person to receive their assets in the event of their death.

Deposit Insurance and Credit Guarantee Corporation (DICGC)
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A subsidiary of the Reserve Bank of India, providing insurance for bank deposits up to a certain limit.

Cheque Truncation System (CTS)
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An electronic system that enables faster clearing of cheques by transmitting images and data, rather than physical cheques.

Unified Payments Interface (UPI)
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A real-time payment system in India, enabling multiple bank accounts into a single mobile application for seamless transactions.

Immediate Payment Service (IMPS)
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A real-time, interbank electronic funds transfer service in India, available 24/7 for transferring money instantly.

National Electronic Funds Transfer (NEFT)
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A nationwide electronic funds transfer system in India, enabling the transfer of funds between banks and financial institutions.

Real Time Gross Settlement (RTGS)
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A high-value, electronic funds transfer system in India, enabling real-time settlement of transactions between banks.

Bank Passbook
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A physical or electronic record provided by a bank, detailing transactions and balances for a specific account.

Overdraft Facility
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A service that allows account holders to withdraw more money than they have in their account, up to a pre-set limit.

Customer Information File (CIF)
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A unique identifier assigned by banks to each customer, containing personal, financial, and account-related information.

Know Your Customer (KYC)
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A regulatory requirement for banks and financial institutions to verify the identity of customers and prevent illegal activities.

Sweep-In Facility
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A feature that links a savings account to a fixed deposit, automatically transferring excess funds to earn higher interest.

Foreign Currency Non-Resident (FCNR) Account
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A type of NRI account that holds foreign currency deposits, protecting against exchange rate fluctuations.

Non-Resident External (NRE) Account
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A type of NRI account used to hold and manage foreign income in India, allowing for tax-free interest and repatriation of funds.

Non-Resident Ordinary (NRO) Account
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A type of NRI account used to manage income earned in India, such as rent or dividends, and subject to Indian tax laws.

Joint Account
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A bank account shared by two or more individuals, allowing all parties to deposit, withdraw, and manage funds.

Non-Resident Indian (NRI) Account
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A bank account specifically designed for Indian citizens living abroad, offering various types of accounts and services.

Savings Account
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A deposit account held at a bank or financial institution, allowing customers to save money and earn interest.

Zero Balance Account
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A type of savings account that doesn't require a minimum balance, allowing customers to maintain the account with no balance.

Current Account
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A deposit account designed for businesses and individuals with frequent transactions, offering limited or no interest.

Form ITR-V
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An acknowledgement form generated after e-filing an income tax return, which must be verified to complete the process.

Dividend Distribution Tax (DDT)
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A tax levied on dividends paid by a company to its shareholders, abolished in India as of April 1, 2020.

Kisan Vikas Patra (KVP)
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A government-backed savings scheme in India, offering a fixed return on investment with no tax benefits.

Pay As You Earn (PAYE)
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A system where employers withhold income tax and other statutory deductions from employees' salaries and remit them to the government.

Tax Refund
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A reimbursement of taxes paid by a taxpayer when the actual tax liability is less than the taxes paid during the financial year.

Transfer Pricing
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The price at which goods or services are exchanged between related entities within a multinational corporation, subject to tax regulations.

Tax Holiday
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A temporary reduction or suspension of taxes granted by the government to encourage investment or economic activity.

Form 49AA
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The application form used by foreign citizens or entities to apply for a Permanent Account Number (PAN) in India.

Form 49A
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The application form used by Indian citizens or entities to apply for a Permanent Account Number (PAN).

Income Declaration Scheme (IDS)
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A voluntary scheme allowing taxpayers to declare previously undisclosed income and pay a penalty to avoid prosecution.

Tax Credit
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An amount that can be offset against a taxpayer's tax liability, typically for specific expenses or investments.

Minimum Alternate Tax (MAT)
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A tax levied on companies in India that pay little or no tax due to exemptions, deductions, or incentives.

Form 16A
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A certificate issued by a deductor, providing details of tax deducted at source (TDS) for income other than salary.

Tax Deduction Account Number (TAN)
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A 10-digit alphanumeric number issued to individuals or entities responsible for deducting or collecting tax at source.

Tax Bracket
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Income ranges that are taxed at different rates under a progressive tax system, such as the one in place in India.

Tax-Free Bonds
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Bonds issued by government-backed entities, offering interest income exempt from income tax.

Form 24Q
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A quarterly statement filed by employers in India, detailing tax deducted at source (TDS) from employees' salaries.

Capital Loss
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The loss incurred when a capital asset, such as an investment or real estate, is sold for a lower price than its purchase price.

High Net Worth Individual (HNI)
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A person with significant investable assets, typically used by financial institutions to classify wealthy clients.

Tax Residency Certificate (TRC)
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A document issued by the tax authorities of a country, certifying an individual's or entity's tax residency status for claiming tax treaty benefits.

Double Taxation Avoidance Agreement (DTAA)
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A tax treaty between two countries to avoid taxing the same income twice and to prevent tax evasion.

Sukanya Samriddhi Yojana (SSY)
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A government-backed savings scheme for the girl child, offering tax benefits and a secure, fixed return on investment.

Form 10E
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A form used to claim relief for salary arrears or advance salary under Section 89(1) of the Income Tax Act.

Tax Identification Number (TIN)
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A unique number assigned to taxpayers for identification and tracking purposes, often used in the context of business entities.

Wealth Tax
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A tax imposed on the net wealth of an individual, based on the market value of their assets minus their liabilities.

Gift Tax
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A tax levied on the transfer of assets or money to another person without receiving something of equal value in return.

Tax Withholding
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The practice of deducting taxes from an individual's or entity's income as it is earned, rather than collecting it later.

Tax Relief
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A reduction in tax liability granted by the government under certain conditions, such as natural disasters or economic hardship.

Tax Compliance
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The act of adhering to tax laws, regulations, and requirements, including filing accurate and timely tax returns.

Indirect Tax
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A tax collected by an intermediary, such as a retailer, and passed on to the government, such as GST or sales tax.

Direct Tax
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A tax paid directly by an individual or entity to the government, such as income tax or corporate tax.

Tax Notice
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A communication from the Income Tax Department, requesting additional information or clarification on a taxpayer's filed return.

Tax Audit
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An examination of an individual's or entity's tax returns by the Income Tax Department to ensure accuracy and compliance.

Form 60
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A declaration form submitted by individuals who do not have a PAN card, when entering into certain financial transactions.

Cost Inflation Index (CII)
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An index used to account for inflation when calculating long-term capital gains tax on the sale of certain assets.

Tax Avoidance
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The use of legal methods to minimize tax liability, such as taking advantage of tax deductions and exemptions.

Tax Evasion
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The illegal act of not paying taxes owed, through methods such as underreporting income or hiding assets.

Tax Exempt Investments
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Investment vehicles that generate income not subject to income tax, such as certain government bonds or schemes.

Assessment Year (AY)
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The 12-month period following the financial year, during which income earned in the previous financial year is assessed for tax purposes.

Financial Year (FY)
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A 12-month period used for financial reporting and budgeting, running from April 1st to March 31st in India.

Taxable Income
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The portion of an individual's or entity's income subject to income tax after accounting for deductions and exemptions.

National Pension System (NPS)
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A government-sponsored pension scheme that allows individuals to make contributions towards their retirement fund.

Employee Provident Fund Organization (EPFO)
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The government body responsible for regulating and overseeing the Employee Provident Fund scheme in India.

Form 15G/15H
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Declarations submitted by individuals to banks or financial institutions, requesting non-deduction of TDS on interest income.

Income Tax Return (ITR)
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The forms used to file tax returns, declaring an individual's or entity's income, deductions, and tax payable or refundable.

Form 12B
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A statement of income and tax deductions provided by a new employee to their employer, to ensure accurate TDS calculation.

Professional Tax
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A tax levied by some state governments in India on individuals earning a salary or practicing a profession.

Senior Citizen Savings Scheme (SCSS)
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A government-backed savings scheme for senior citizens, offering tax benefits and a secure, fixed return on investment.

Mutual Funds
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A type of investment vehicle where multiple investors pool their money, managed by a professional fund manager.

Equity-Linked Savings Scheme (ELSS)
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A type of tax-saving mutual fund, offering tax benefits under Section 80C of the Income Tax Act.

Systematic Investment Plan (SIP)
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A method of investing in mutual funds by making equal, periodic investments over a specified period.

Aadhaar Card
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A unique identification number issued by the Indian government to residents, linked to biometric and demographic data.

Tax Collected at Source (TCS)
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A method of collecting tax on certain transactions, collected by the seller from the buyer at the time of sale.

Tax Deducted at Source (TDS)
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A method of collecting income tax by deducting it from the income earned, at the time of payment.

Permanent Account Number (PAN)
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A unique, 10-digit alphanumeric identifier, issued to taxpayers in India by the Income Tax Department.

Capital Gains Tax
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A tax on the profit made from the sale of capital assets, such as stocks, real estate, or other investments.

Goods and Services Tax (GST)
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A comprehensive, indirect tax levied on the manufacture, sale, and consumption of goods and services in India.

Section 10(14)
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A section of the Income Tax Act that allows exemptions for certain allowances and benefits received by an employee.

Section 80D
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A section of the Income Tax Act that allows deductions for premium payments made towards health insurance policies.