Business and GST words, in plain language

A

• Advance receipt

  Money received from a customer before the goods or services are supplied, to be set against a later invoice.

• Ageing

  Sorting what customers owe, or what you owe suppliers, by how long each amount has been due.

B

• B2B and B2C

  Whether a sale is made to a registered business or to a consumer or other unregistered buyer.

• B2CS

  The GSTR-1 table that summarises sales to unregistered buyers by rate and state, without listing each invoice.

• Balance sheet

  A statement of what a business owns and owes at a date, with the owner's capital as the difference.

• Bank reconciliation

  Matching the bank account in your books with the bank statement and explaining every difference.

• Batch number

  A code that identifies goods made or received together, so a lot can be traced, sold in order or recalled.

• Bill of supply

  The document issued in place of a tax invoice for exempt goods or services, or by a composition dealer.

• BOM

  The list of materials and quantities needed to make one unit of a product.

C

• Cash flow

  The money that comes into and goes out of the business over a period.

• CGST

  The central government's share of GST on a sale within one state, charged alongside SGST.

• Composition scheme

  A simpler GST option for small businesses that pay a fixed low rate on turnover and cannot charge GST or claim credit.

• Credit days

  The number of days a customer is allowed between the invoice and payment, also called the credit period.

• Credit limit

  The highest amount a customer may owe at any time before new credit sales are held.

• Credit note

  A document a seller issues to reduce the value or tax of an invoice already raised, such as for returns or a lower rate.

D

• Dead stock

  Items that have not sold or been used for a long period and are unlikely to sell at full price.

• Debit note

  A document a seller issues to increase the value or tax of an invoice already raised.

• Delivery challan

  A document that goes with goods moved without a sale, such as to a job worker, or on approval.

• DPDP Act

  India's law on how businesses collect, use, store and protect people's personal data in digital form.

E

• E-invoice

  A B2B invoice reported to a government Invoice Registration Portal, which returns an IRN and a signed QR code.

• E-way bill

  An electronic document generated on the government portal before goods worth more than ₹50,000 are moved.

F

• FIFO

  A stock method that assumes the oldest stock is sold or used first, for both physical issue and valuation.

• Financial year

  India's accounting and tax year, from 1 April to 31 March.

G

• Goods received note

  The record of what arrived from a supplier, by line, including what was rejected or short.

• Gross margin

  Sales minus the cost of the goods sold, shown as an amount or as a percentage of sales.

• GSTIN

  The 15-character number given to every business registered under GST, one for each state it is registered in.

• GSTR-1

  The GST return that lists every sale for the period, invoice by invoice for B2B and summarised for B2C.

• GSTR-2B

  The monthly statement of input tax credit available to a business, built from its suppliers' returns.

• GSTR-3B

  The monthly or quarterly GST summary return in which a business reports its tax, claims credit and pays the balance.

H

• HSN code

  The number that classifies goods for GST and customs, printed against each item on a tax invoice.

I

• IGST

  The single GST charged on sales between states, on imports, and on exports and SEZ supplies.

• Input tax credit

  The GST you paid on business purchases, which you set off against the GST you collect on sales.

J

• Job work

  Processing done by one business on goods that belong to another, which pays a job charge and keeps ownership.

L

• Landed cost

  The full cost of goods by the time they reach your godown: price plus freight, duties and other charges.

• Ledger

  The running record of every entry for one account, such as a customer, a supplier, a bank or an expense head.

• LUT

  A yearly undertaking filed on the GST portal that lets a business export without paying IGST.

M

• Markup

  The amount added to cost to arrive at the selling price, usually expressed as a percentage of cost.

• MRP

  The highest price, inclusive of all taxes, at which a pre-packaged product may be sold to a consumer in India.

• MSME

  Businesses classed as micro, small or medium by their investment in plant and machinery and their turnover.

P

• PAN

  The 10-character income tax number issued to every taxpayer, which also forms the middle of a GSTIN.

• Payables

  Money the business owes its suppliers for goods or services already received, also called creditors.

• Petty cash

  A small float of cash kept for day-to-day expenses such as tea, courier, local transport and small repairs.

• Place of supply

  The state where a supply is treated as made for GST, which decides whether CGST and SGST or IGST applies.

• Profit and loss statement

  The statement of income and expenses for a period, which shows whether the business made a profit.

• Purchase order

  The buyer's written order to a supplier, with items, quantities, rates, delivery date and payment terms.

R

• Receipt voucher

  The document issued when an advance is received, as required under GST, before any invoice exists.

• Receivables

  Money customers owe the business for goods or services already supplied, also called debtors.

• Reorder level

  The stock quantity at which a fresh order should be placed so that the item does not run out.

• Reverse charge

  A GST rule under which the buyer, in place of the seller, pays the tax to the government.

S

• SAC code

  The six-digit code that classifies a service for GST, the services counterpart of the HSN code.

• SGST

  The state government's share of GST on a sale within that state, charged in equal measure with CGST.

• Stock valuation

  Putting a money value on the goods on hand at a date, usually at the lower of cost and net realisable value.

T

• Tax invoice

  The invoice a GST-registered business issues for a taxable sale, with the details the law requires.

• TCS

  Tax that a seller or marketplace collects from the buyer, or from the seller's payout, and deposits with the government.

• TDS

  Tax that the payer cuts from certain payments and deposits with the government on behalf of the person being paid.

• Three-way match

  Checking a supplier's bill against the purchase order and the goods received before it is paid.

U

• Udhaar

  Goods or services given on credit, to be paid later, as recorded in a shop's khata or a trader's book.

• Udyam registration

  The free online registration that gives a micro, small or medium enterprise its Udyam number and certificate.

• UPI

  India's real-time payment system that moves money between bank accounts using a phone, a UPI ID or a QR code.

W

• Working capital

  The money tied up in running the business day to day: stock and receivables, less what is owed to suppliers.