Financial Glossary

Income or turnover limits beyond which mandatory tax audit is required.

Additional insurance benefit providing extra payout if death occurs due to accident.

Detailed breakdown showing monthly EMI split between principal and interest throughout the loan tenure.

Annual Percentage Rate including all loan costs like interest, processing fees, and other charges.

Strategic distribution of investments across different asset classes like equity, debt, and gold.

Annual Information Statement - Comprehensive statement of financial transactions reported to tax authorities.

Quarterly tax payments made during the year for income not subject to TDS.

Yearly charge levied by credit card companies for card membership and associated benefits.

Payment breakdown showing principal and interest components for each EMI over loan tenure.

Assets Under Management - Total market value of assets managed by a mutual fund or investment company.

Regular income payments from an insurance product, typically used for retirement income.

Asset Management Company that creates and manages mutual fund schemes for investors.

Systematic records of business transactions required for tax compliance and audit purposes.

Moving an existing loan from one lender to another for better terms or lower interest rates.

BSE SmallCap Index - Benchmark index tracking small-cap companies listed on BSE.

Legacy benchmark used by banks for loan pricing before MCLR was introduced in 2016.

The study of psychological influences on investor behavior and its impact on financial decisions.

Insurance add-on providing lump sum payment upon diagnosis of specified critical illnesses.

Percentage of death claims settled by an insurance company out of total claims received.

Secured loan for purchasing vehicles where the vehicle serves as collateral for the borrowed amount.

Central registry where security interests created on property are recorded to prevent fraud.

Certificate confirming construction completion as per approved plan.

Credit score ranging from 300-900 indicating creditworthiness based on credit history.

Additional tax levied for specific purposes - currently 4% Health and Education Cess on total tax.

The process where investment earnings generate their own earnings over time, leading to exponential growth.

A payment card that allows borrowing money from bank up to a predetermined limit for purchases.

The maximum amount a cardholder can borrow on their credit card at any given time.

The ratio of current credit card balances to total available credit limits, expressed as percentage.

A percentage of the purchase amount credited back to the credit card account or as statement credit.

Compound Annual Growth Rate - The mean annual growth rate assuming single investment and single withdrawal.

One-time charge to switch loan benchmark (MCLR to EBLR) or reduce spread to current rates.

Debt mutual funds investing primarily in bonds issued by corporations and companies.

Mutual funds that invest in commodity-related securities or commodity derivatives for inflation hedging.

Complete assessment of borrower's creditworthiness including score, history, and financial behavior.

The total accumulated value of an investment portfolio or fund at any given time.

Investment strategy focused on protecting the original investment amount rather than maximizing growth.

Fixed deposits issued by companies and NBFCs offering higher interest rates than bank FDs but carrying credit risk.

The risk that a borrower or issuer may default on interest payments or principal repayment.

Professional assessment of an issuer's ability to repay debt obligations, expressed through standardized rating scales.

Days Past Due - Number of days a credit account is overdue.

Two versions of mutual funds - Direct plans have lower costs, Regular plans include distributor commission.

Investment strategy of spreading money across various assets to reduce overall portfolio risk.

Debt mutual funds that invest based on specific duration targets to match interest rate sensitivity.

The process of systematically spending down accumulated wealth during retirement to fund living expenses.

The decline in investment value from peak to trough, or the process of making systematic withdrawals from investments.

Deposit Insurance and Credit Guarantee Corporation that insures bank deposits up to ₹5 lakhs per depositor per bank.

Comprehensive investigation and analysis of an investment opportunity to assess risks and verify claims.

Double Taxation Avoidance Agreement between countries to prevent double taxation of income.

Special residency rule for Indian citizens with income >₹15L who aren't liable to tax elsewhere.

True annual cost of borrowing calculated on reducing outstanding balance, also known as EIR or reducing balance rate.

Equity Linked Savings Scheme - Tax-saving mutual funds with 3-year lock-in period under Section 80C.

External Benchmark Lending Rate - Loan rates linked to an external benchmark like repo or T-bill.

Effective Interest Rate - True annual cost on a reducing-balance loan after fees.

Certificate from registrar showing registered transactions on a property over a period.

Equated Monthly Installment - Fixed monthly payment for loans comprising principal and interest.

Employees' Provident Fund - Mandatory retirement savings with employer matching contribution.

A reserve of easily accessible money set aside for unexpected expenses or financial emergencies.

Employee Stock Option Plan - A benefit plan giving employees the right to buy company shares at a predetermined exercise price.

The act of purchasing ESOP shares by paying the exercise price, triggering perquisite tax liability.

Exempt-Exempt-Taxable: Tax structure where contributions and growth are exempt but withdrawals are taxable.

Exempt-Exempt-Exempt: Tax structure where contributions, growth, and withdrawals are all tax-free.

Specialized loan for funding education expenses with tax benefits and flexible repayment options.

Financial derivatives that allow trading based on future price movements of underlying assets.

Interest calculation method where interest is charged on the full original principal throughout the loan tenure.

Quoted rate applied on full principal for full tenure, understating true cost versus EIR.

Time deposit offered by banks with fixed tenure and guaranteed returns.

Fixed Obligation to Income Ratio - Percentage of monthly income going towards fixed obligations like EMIs.

Annual tax statement showing all TDS deducted, advance tax paid, and other tax-related transactions.

Fair Market Value - The price at which shares would trade between willing buyers and sellers in an open market.

Mutual fund that invests in units of another mutual fund (master fund) to provide exposure to foreign markets.

Fixed Obligation to Income Ratio - percentage of monthly income going towards EMI payments.

Self-declaration form used by non-senior citizens to avoid TDS deduction when total income is below exemption limit.

Self-declaration form used by senior citizens (60+) to avoid TDS deduction when total income is below exemption limit.

Goods and Services Tax - Unified indirect tax system replacing multiple state and central taxes.

Exchange-traded funds that track gold prices by holding physical gold or gold futures.

Investment strategy that automatically reduces risk exposure as you approach your financial goal date.

Debt mutual funds that invest exclusively in government securities with zero credit risk.

House Rent Allowance - Tax-exempt salary component for employees paying house rent.

Insurance coverage that pays for medical expenses incurred due to illness, accident, or hospitalization.

Additional benefits that can be attached to a base life insurance policy for extra protection.

Infrastructure Investment Trust - Vehicle that owns operating infrastructure assets.

Mutual fund that tracks a market index like Nifty 50 with low costs and broad diversification.

The rate at which prices of goods and services increase, reducing purchasing power over time.

The grace period during which no interest is charged on credit card purchases if full payment is made.

India Volatility Index - Measures expected volatility of Nifty 50 index over next 30 days.

The difference between intended execution price and actual execution price due to market liquidity constraints.

Kisan Vikas Patra - Government scheme that doubles investment in approximately 115 months.

Kisan Vikas Patra - Small savings instrument that aims to double money in a stated period.

Loan Against Property - Secured loan using property as collateral for personal or business needs.

Long Term Capital Gains - Tax on profits from assets held for more than specified period.

Loan to Value Ratio - Percentage of asset value that the lender will finance through the loan.

Leave Travel Allowance - Tax-exempt allowance for domestic travel expenses during leave period.

The ease and speed with which an investment can be converted to cash without significant price impact.

Long Term Capital Gains - Profit from sale of capital assets held for longer periods, taxed at preferential rates.

Liberalized Remittance Scheme - RBI scheme allowing residents to remit up to $250,000 per year abroad.

Long Term Capital Gains - Tax on profits from selling equity investments held over one year.

A single large payment of money, as opposed to regular installments.

Companies with large market capitalization, typically the top 100 companies by market cap in India.

The tendency to increase spending proportionally with income growth, reducing savings rate.

The psychological tendency where losses feel more painful than equivalent gains feel pleasurable.

Daily settlement of gains and losses in derivatives trading based on closing prices.

Monthly Income Scheme - Post office product providing fixed monthly income with 5-year tenure.

Post Office Monthly Income Scheme - Fixed monthly payout on a 5-year deposit.

Investment vehicle pooling money from many investors to buy securities like stocks and bonds.

Marginal Cost of Funds based Lending Rate - Internal benchmark used by banks for loan pricing.

The smallest amount that must be paid by the due date to keep the credit card account in good standing.

Equity mutual funds that invest across large-cap, mid-cap, and small-cap stocks without strict allocation limits.

Debt mutual funds investing in securities with 3-7 year maturity for moderate duration exposure.

Companies with medium market capitalization, typically ranked 101-250 by market cap in India.

The strategy of making investment decisions based on predictions of future market movements.

National Savings Certificate - 5-year government savings scheme with tax benefits under Section 80C.

Non-Resident External account for foreign income, repatriable with tax-free interest in India.

Non-Resident Ordinary account for Indian income, taxable with limited repatriation.

National Pension System - Government-sponsored retirement savings scheme with additional tax benefits.

National Savings Certificate - 5-year government savings scheme with tax benefits under 80C.

Net Asset Value - Per unit price of mutual fund calculated by dividing total assets by units.

No Objection Certificate - Document confirming loan closure and property lien release.

India's benchmark stock market index comprising 50 largest and most liquid Indian companies.

2018 liquidity crisis in Non-Banking Financial Companies following IL&FS defaults.

Document from local authority certifying a building is fit for occupation.

Linked savings account where balance reduces home loan interest calculation.

A simplified tax scheme where profits are presumed as a percentage of turnover, avoiding detailed bookkeeping.

Government-backed savings and investment products offered through India Post with guaranteed returns.

Public Provident Fund - 15-year tax-free investment scheme with EEE tax status.

Early repayment of loan principal before the scheduled tenure, either partially or fully.

Upfront charges paid to the lender for processing and approving a loan application.

Simplified tax scheme for small businesses with presumed profit rates under sections 44AD/44ADA.

The amount paid periodically to keep an insurance policy active and in force.

Tax on employment benefits valued in money, including ESOP exercise gains and RSU vesting, taxed as salary income.

Unsecured loan based on income and credit score, requiring no collateral.

Loan interest calculation method where interest is charged only on the outstanding principal amount.

Real Estate Investment Trust - Vehicle that owns and operates income-producing real estate.

Real Estate Regulatory Authority - Regulator for real estate projects and promoters in India.

Deposit where you invest a fixed amount monthly for a fixed term at a fixed rate.

Periodic adjustment of portfolio to maintain target asset allocation by buying/selling assets.

Repo Linked Lending Rate - External benchmark for loan interest rates linked to RBI repo rate.

Points earned on credit card spending that can be redeemed for cash, gifts, or statement credits.

Restricted Stock Units - Company shares granted to employees that vest over time and are taxed as salary when vested.

Rate at which RBI lends money to commercial banks against government securities as collateral.

Periodic adjustment of loan interest rates based on changes in the underlying benchmark rate.

Resident but Not Ordinarily Resident - special tax status with limited global income taxation.

Income tax provision allowing presumptive taxation for eligible businesses with turnover up to ₹2 crore.

Interest charged for delay in payment of advance tax and shortfall in advance tax payments.

The guaranteed amount paid by insurance company to beneficiaries upon policyholder's death.

Financial metric indicating insurance company's ability to meet long-term obligations and pay claims.

Income tax provision making life insurance death benefits tax-free for beneficiaries.

Senior Citizen Savings Scheme - Specialized post office product for retirees with quarterly income.

Sukanya Samriddhi Yojana - Government scheme for girl child education with highest post office returns.

Tax deduction up to ₹50,000 on interest income available exclusively for senior citizens.

Bank facility that moves surplus from savings to linked short FDs and back for liquidity.

Capital gains exemption on sale of residential house if reinvested in another residential house within timelines.

Exemption on long-term capital gains from non-house assets if net consideration invested in a residential house.

Exemption on long-term capital gains by investing in specified bonds within timeline and limits.

Presumptive taxation scheme for eligible businesses where income is presumed at a percentage of turnover.

Presumptive taxation for certain professionals with income presumed at 50% of gross receipts.

Tax deduction provision allowing up to ₹1.5 lakh deduction for specified investments and expenses.

Systematic Investment Plan - Regular investment method in mutual funds for rupee cost averaging.

Short Term Capital Gains - Tax on profits from assets held for shorter than specified period.

Systematic Transfer Plan - Regular transfer of money from one mutual fund to another.

Sovereign Gold Bonds - Government securities denominated in gold issued by RBI.

Additional tax on high-income earners - varies from 10% to 37% based on income level.

Tax deduction for home loan interest paid - up to ₹2 lakhs for self-occupied property.

The guaranteed amount that insurance company pays to beneficiaries upon policyholder's death or maturity.

Short Term Capital Gains - Profit from sale of capital assets held for short periods, taxed at higher rates.

Systematic Withdrawal Plan - Regular withdrawal of fixed amounts from mutual fund investments.

Short Term Capital Gains - Tax on profits from selling equity investments held for one year or less.

Additional margin charged by banks over the benchmark rate to determine your final loan interest rate.

Additional ₹50,000 tax deduction for NPS contributions beyond 80C limits.

The risk that poor investment returns occur near or during your goal date, severely impacting your outcome.

Debt mutual funds investing in securities with 1-3 year maturity to minimize interest rate risk.

Companies with small market capitalization, typically ranked 251+ by market cap in India.

Loan backed by collateral such as property, gold, or fixed deposits to reduce lender risk.

A SIP strategy where investment amount increases by a fixed percentage annually, typically 8-12%.

The risk that poor investment returns early in retirement can permanently impair a portfolio despite good later returns.

For F&O taxation, the sum of absolute profits and losses from all trades during the financial year.

Document provided by brokers showing calculated turnover for F&O trades as per tax requirements.

Pure life insurance providing high coverage at low cost with no investment component.

Additional loan taken over an existing home loan at competitive rates.

Tax Deducted at Source - Tax collected by the payer before making payment to the payee.

Pure life insurance providing high coverage at low cost for a specific term without investment component.

Tax Deducted at Source - Tax withheld by employers on salary and perquisites, including ESOP/RSU income.

Shortening the loan repayment period through prepayments while keeping EMI constant.

Additional borrowing against existing home loan collateral at attractive interest rates.

Legal status determining which country has the right to tax an individual's worldwide income.

Unique Transaction Reference - 22-digit code for NEFT/RTGS transactions.

Loan provided without collateral, based purely on borrower's creditworthiness and income.

The process by which employees earn rights to ESOPs or RSUs over time, typically following a predefined schedule.

Insurance benefit that waives future premium payments upon disability or critical illness.

The percentage of retirement portfolio withdrawn annually to fund living expenses.

The retirement period when you systematically withdraw money from your accumulated wealth to fund living expenses.

Extended Internal Rate of Return - Annualized return calculation method that accounts for timing of irregular cash flows.