10 Budget terms you should know

EEE (exempt, exempt, exempt): EEE stands for exempt, exempt, exempt. Under the EEE model, the investment you make is exempt denoting the first 'E' and the interest is also exempt denoting the second 'E', and the withdrawal of investment is also exempt denoting the third 'E'. Instances for this model are investment in Public Provident Fund, Employee Provident Fund etc.

EET (exempt, exempt, tax): EET stands for exempt, exempt, tax. Under the EET model, the initial investment and its accumulation in the form of interest/returns are exempt, but the withdrawal of investment is taxed denoting the third 'T - Tax'. Instances for this model are investment in pension plans.

Exemption: Any income which does not form part of the taxable income of the tax payer.

Capital Asset: Capital asset means property of any kind held by any person whether or not the same is connected with his business or profession. Stock -in-trade, consumable stores and raw materials held for business purposes, personal effects , agricultural land in India,  certain Bonds are not capital assets. However, personal effects does not include jewellery, archaeological collections, drawings,  paintings, sculptures or any work of art.

Short Term Capital Assets: A capital asset held by a person for a period not more than thirty six months preceeding the date of transfer.  In case of capital asset being shares, listed securities, specified mutual fund units, zero coupon bonds, the period of holding shall be twelve months instead of thirty six months.

Capital Gains: Any profit or gain arising from the sale/ transfer of a capital asset.

Assessment Year: Assessment Year (AY) is year subsequent to the previous year with reference to which income of the previous year is assessed and subject to tax at prescribed rates.  For instance, for Previous Year (PY) 2014-15 the AY is 2015-16.

Financial Year: Financial year starts from 1st April and ends on 31st March of the succeeding year.

Previous Year: This is the financial year immediately preceeding the assessment year. Usually, the previous year starts from April 1 and ends on March 31. Whenever a new business or new source of income begins during a year, the previous year shall be the period beginning from the date the new business/source came into existence and ends on immediate March 31. Income earned during the previous year is chargeable to tax in the assessment year.

Assessee: A person who is liable to pay any tax or any other sum of money under the Income Tax Act.