Glossary: the terms the guides use
Each term here is explained in the words and figures the guides use. The figures come from Pocket's own engine when the page is built, as in the guides, and under each term are the guides and calculators that use it. In a guide or a calculator the first use of a term links here.
- 80CSection 80C
Up to ₹1,50,000 a year of EPF, PPF, ELSS, life insurance premiums and some other savings comes off your income in the old regime. The new regime allows none.
Used in Old vs new tax regime, worked through, HRA exemption, worked through, 80D: health insurance, by whom a policy covers, 80C and ELSS within the ₹1.5 lakh limit, From CTC to take-home pay, worked through, NPS and 80CCD(1B), worked through, PPF over 15 years, worked through, Old vs new tax regime calculator
- 80DSection 80D
Health insurance premiums come off your income in the old regime: up to ₹25,000 for you, your spouse and children, and ₹25,000 more for your parents. Each limit is ₹50,000 where someone covered is 60 or over.
Used in Old vs new tax regime, worked through, 80D: health insurance, by whom a policy covers, Old vs new tax regime calculator
- Advance tax
Tax on income that TDS does not cover, paid during the year in four instalments: by 15 June, 15 September, 15 December and 15 March, 15%, 45%, 75% and all of it. It applies only when the year's tax less TDS is ₹10,000 or more.
- AvalanchePaying off loans, highest rate first
Pay every debt's minimum and put the rest of the month's budget on the debt with the highest rate, rolling a cleared debt's payment on to the next.
Used in Paying off loans: snowball and avalanche, worked through
- CASConsolidated Account Statement
A password-protected PDF from CAMS or KFintech that lists every mutual fund you hold across fund houses. The detailed one has every transaction.
Used in How to work out your net worth in India, Track your mutual funds from a CAMS or KFintech statement
- CessHealth and education cess
4% of the tax and surcharge, in both regimes.
Used in Old vs new tax regime, worked through, HRA exemption, worked through, 80D: health insurance, by whom a policy covers, 80C and ELSS within the ₹1.5 lakh limit, Capital gains on mutual funds and shares, worked through, The ₹1.25 lakh LTCG room, worked through, Advance tax: the dates and the amounts, From CTC to take-home pay, worked through, NPS and 80CCD(1B), worked through, Old vs new tax regime calculator
- CTCCost to company
Everything an employer spends on you, including its PF contribution and gratuity, which are not paid to you each month.
- ELSSEquity-linked savings scheme
An equity mutual fund whose units count toward the 80C limit and are locked in for three years from each investment. A gain on it is a long-term capital gain: 12.5% on what is above ₹1,25,000 in the year.
Used in Old vs new tax regime, worked through, 80C and ELSS within the ₹1.5 lakh limit, Old vs new tax regime calculator
- Emergency fund
Money set aside for essential spending, counted in months of it. Pocket's target is 6 months.
- EPFEmployees' Provident Fund
12% of basic pay from you and 12% from your employer go in each month. The balance earns the interest rate EPFO declares each year.
Used in How to work out your net worth in India, Old vs new tax regime, worked through, 80C and ELSS within the ₹1.5 lakh limit, From CTC to take-home pay, worked through, How your EPF grows, PPF over 15 years, worked through, Old vs new tax regime calculator, Net worth calculator
- Financial-independence year
The first year in which the corpus, projected with the SIP and its step-up, reaches the corpus that year's spending needs. With the SIP and the need both growing, it can come before the retirement date the plan was made for.
Used in How much you need to retire, and the year you reach it
- HRAHouse rent allowance
The part of your pay meant for rent. In the old regime the exempt part is the least of three figures: the HRA received, the rent paid less 10% of basic, and 50% or 40% of basic by city.
Used in Old vs new tax regime, worked through, HRA exemption, worked through, From CTC to take-home pay, worked through, Old vs new tax regime calculator
- LTCGLong-term capital gains
The gain on listed shares or equity funds held for more than 12 months. The first ₹1,25,000 a year is tax-free. The rest is taxed at 12.5%, plus cess.
- Marginal relief
A limit on the extra tax just above a threshold: it is held to at most the income above it. Above the new regime's ₹12,00,000 rebate limit the tax is at most the income above ₹12,00,000. The surcharge's thresholds work the same way.
Used in Old vs new tax regime, worked through, From CTC to take-home pay, worked through, Old vs new tax regime calculator
The value of one unit of a mutual fund on a day. A statement's closing units at its NAV come to the market value it states.
Used in How to work out your net worth in India, Track your mutual funds from a CAMS or KFintech statement
- Net worth
What you own minus what you owe: bank balances and fixed deposits, shares and mutual funds at today's prices, EPF, PPF and NPS, and gold or property at a value you choose, less every loan and card balance. Each figure needs a date.
Used in How to work out your net worth in India, How your EPF grows, PPF over 15 years, worked through, Net worth calculator
- NPSNational Pension System
A retirement account you pay into until retirement. Up to ₹50,000 a year of your own contribution, beyond 80C, comes off your income in the old regime under 80CCD(1B).
Used in How to work out your net worth in India, 80C and ELSS within the ₹1.5 lakh limit, NPS and 80CCD(1B), worked through, Old vs new tax regime calculator, Net worth calculator
- PPFPublic Provident Fund
A 15-year savings account at a bank or post office. It takes ₹500 to ₹1,50,000 a financial year, at an interest rate the government sets each quarter.
Used in How to work out your net worth in India, Old vs new tax regime, worked through, 80C and ELSS within the ₹1.5 lakh limit, How your EPF grows, PPF over 15 years, worked through, Old vs new tax regime calculator, Net worth calculator
- RebateRebate under section 87A
No tax at all on taxable income up to ₹12,00,000 in the new regime, and up to ₹5,00,000 in the old. With the standard deduction, a salary of up to ₹12,75,000 pays no tax in the new regime.
Used in Old vs new tax regime, worked through, From CTC to take-home pay, worked through, Old vs new tax regime calculator
- Runway
The months the emergency fund pays your essential spending with no income: the fund divided by a month's essential spending.
- SIPSystematic investment plan
A fixed amount put into a mutual fund on the same day each month.
Used in Track your mutual funds from a CAMS or KFintech statement, 80C and ELSS within the ₹1.5 lakh limit, NPS and 80CCD(1B), worked through, Step-up vs flat SIP, worked through, The cost of starting a SIP late, worked through, How much you need to retire, and the year you reach it, The SIP a goal needs, worked through, SIP calculator
- SnowballPaying off loans, smallest balance first
Pay every debt's minimum and put the rest of the month's budget on the debt with the smallest balance, rolling a cleared debt's payment on to the next.
Used in Paying off loans: snowball and avalanche, worked through
- Standard deduction
A flat amount taken off a salary before tax: ₹75,000 in the new regime, ₹50,000 in the old.
Used in Old vs new tax regime, worked through, HRA exemption, worked through, 80D: health insurance, by whom a policy covers, From CTC to take-home pay, worked through, NPS and 80CCD(1B), worked through, Old vs new tax regime calculator
- Step-up SIP
A SIP whose amount is raised by a fixed percentage once a year, so that it keeps pace with pay rises. A 10% step-up on ₹10,000 a month makes it ₹11,000 a month in the second year, ₹12,100 in the third, and so on.
Used in Step-up vs flat SIP, worked through, The cost of starting a SIP late, worked through, How much you need to retire, and the year you reach it, The SIP a goal needs, worked through, SIP calculator
- Surcharge
An addition to the tax on taxable income above ₹50 lakh: 10% of the tax, 15% above ₹1 crore and 25% above ₹2 crore in both regimes. Above ₹5 crore it is 37% in the old regime and still 25% in the new. Marginal relief keeps the extra tax above each threshold to at most the income above it.
Used in Old vs new tax regime, worked through, Capital gains on mutual funds and shares, worked through, Old vs new tax regime calculator
- TDSTax deducted at source
Income tax taken off your pay by your employer each month: a twelfth of the year's tax on the salary. It counts toward the year's tax, so only what TDS does not cover is left to pay.
Used in Old vs new tax regime, worked through, HRA exemption, worked through, 80C and ELSS within the ₹1.5 lakh limit, Advance tax: the dates and the amounts, From CTC to take-home pay, worked through, Old vs new tax regime calculator
- Withdrawal rate
The share of the corpus taken out in the first year of retirement, and then increased with inflation. 4% is a rule of thumb for the 'safe-withdrawal' rate, not a guarantee.
Used in How much you need to retire, and the year you reach it
- XIRRExtended internal rate of return
The annualised, money-weighted rate of return on a portfolio, counting each dated purchase on its own date. Pocket shows it once money has been invested for about six months.
Used in Track your mutual funds from a CAMS or KFintech statement
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