Glossary
The A–Z of compliance.
60 terms, defined the way a business owner speaks — then mapped to the forms, sections, and deadlines they show up in.
60 of 60 terms
A
- Advance TaxAdvance TaxAdvance Tax Advance Tax is the income tax paid in installments during the financial year in which the income is earned, rather than as a lump sum at the year's end. It applies if total tax liability exceeds ₹10,000 [VERIFY].
- AISAISAnnual Information Statement (AIS) The Annual Information Statement is a comprehensive view of a taxpayer’s financial transactions during a year, including interest, dividends, securities transactions, mutual funds, and foreign remittances, expanding beyond what is captured in Form 26AS.
- AOAArticles of AssociationThe AOA is the internal rulebook of a company that governs its day-to-day management, outlines the rights, duties, and powers of directors and shareholders, and dictates procedures for issuing shares, holding meetings, and paying dividends.
- ARNApplication Reference NumberAn Application Reference Number is a unique alphanumeric code assigned to a taxpayer when they submit any application on the GST portal. It serves as proof of submission and allows tracking of the application status until processing is completed.
- Assessment YearAssessment YearAssessment Year (AY) The Assessment Year is the 12-month period starting on April 1 [VERIFY] during which a taxpayer’s income earned in the immediately preceding financial year is evaluated, taxed, and the income tax return is filed.
C
- CIT(A)CIT(A)Commissioner of Income Tax (Appeals) CIT(A) is the first appellate authority under the Income Tax Act. Taxpayers who disagree with an assessment order or penalty imposed by a tax officer can file an appeal here, seeking a fair review and potential relief from the demand. Example A taxpayer receives an assessment order demanding additional tax of ₹5 Lakhs (VERIFY: threshold). Disagreeing with the assessing officer's interpretation, the taxpayer files an appeal with the CIT(A) within the stipulated time limit (VERIFY: 30 days). When it matters in practice It is crucial when taxpayers face unjustified tax demands or penalties, providing a formal mechanism to challenge adverse orders before escalating to higher tribunals. Related terms - ITAT - Assessment Order - Appeal Related Service Income Tax Advisory
- Composition SchemeComposition SchemeGST Composition Scheme The Composition Scheme is a simplified tax mechanism under GST designed for small taxpayers. It allows them to pay taxes at a fixed, lower percentage of their turnover and significantly reduces compliance burdens like filing detailed monthly returns. Example A small retail shop owner with an annual turnover of ₹80 Lakhs opts for the scheme. Instead of standard GST, they pay a flat tax rate (VERIFY: 1% of turnover) and file a simple quarterly statement rather than monthly returns. When it matters in practice Ideal for small businesses with turnover below the limit (VERIFY: ₹1.5 Crores) seeking low compliance costs, though it restricts them from claiming Input Tax Credit or making inter-state sales. Related terms - Regular GST Scheme - Input Tax Credit - Turn-over Limit Related Service GST Registration
D
- DINDINDirector Identification Number A Director Identification Number (DIN) is a unique, lifetime, 8-digit numeric identifier allotted by the Central Government to any individual intending to be a director in an Indian company. It is mandatory for appointment as a director.
- DRC-01DRC-01Summary of Show Cause Notice DRC-01 is a summary form issued electronically along with a detailed Show Cause Notice (SCN) under GST. It specifies the tax, interest, and penalty demanded, serving as a formal communication requiring the taxpayer to explain why the demand shouldn't be finalized. Example A business receives an SCN for short payment of GST. Accompanying it is form DRC-01 detailing the exact tax deficit of ₹50,000, interest of ₹5,000, and a penalty (VERIFY: 10% or ₹10,000, whichever is higher), prompting a formal reply. When it matters in practice It marks the formal initiation of recovery proceedings. Taxpayers must respond within the given timeframe (VERIFY: 30 days) to contest the demand and avoid unilateral recovery actions. Related terms - SCN - DRC-01A - GST Assessment Related Service GST Notice Management
- DSCDSCDigital Signature Certificate A Digital Signature Certificate (DSC) is a secure digital key issued by recognized Certifying Authorities to validate and certify the identity of the person holding it. It is the electronic equivalent of a physical signature, used for online filings.
E
- e-Invoicee-InvoiceElectronic Invoice An e-Invoice is a digitally authenticated B2B tax invoice registered on the Invoice Registration Portal (IRP). It generates a unique Invoice Reference Number (IRN) and a QR code, ensuring invoice standardisation, eliminating data entry errors, and curbing tax evasion. Example A supplier with an annual turnover exceeding the threshold (VERIFY: ₹5 Crores) issues an invoice to a corporate client. They must upload it to the IRP to get an IRN before sending it to the buyer. When it matters in practice Mandatory for businesses crossing the turnover limit; failure to issue an e-invoice when applicable renders the invoice invalid, preventing the buyer from claiming Input Tax Credit and attracting penalties (VERIFY: ₹10,000 or 100% of tax, whichever is higher). Related terms - e-Way Bill - IRN - GST INVOICE Related Service GST Compliance
- e-Way Bille-Way BillElectronic Way Bill An e-Way Bill is a mandatory digital document generated on the GST portal for the movement of goods exceeding a specific value. It ensures transparency, tracks the transport of commodities, and helps authorities prevent tax evasion during transit. Example A manufacturer in Maharashtra dispatches electronics worth ₹60,000 to Gujarat. Before the truck leaves, they generate an e-Way Bill on the portal since the consignment value exceeds the interstate limit (VERIFY: ₹50,000). When it matters in practice It is vital during logistics and transportation; moving goods without a valid e-Way Bill can result in the seizure of goods and significant penalties (VERIFY: 200% of tax payable). Related terms - e-Invoice - Consignment - GST Related Service GST Advisory
- EVCEVCElectronic Verification Code An Electronic Verification Code (EVC) is a 10-digit alphanumeric code sent to a taxpayer's registered mobile number and email ID, used to electronically verify Income Tax Returns and other forms without needing a physical signature or Digital Signature Certificate.
- Exempt SupplyExempt SupplyExempt Supply An exempt supply under GST is a supply of goods or services that attracts a nil rate of tax or is wholly exempt from tax. Importantly, businesses cannot claim Input Tax Credit on inputs used for exempt supplies.
F
- FCRAForeign Contribution (Regulation) Act, 2010FCRA registration is a mandatory compliance for Indian NGOs, trusts, and associations to legally receive and utilize foreign donations or contributions, ensuring these funds do not adversely affect the national interest.
- Form 16Form 16Certificate of Tax Deducted at Source on Salary Form 16 is a certificate issued by an employer to an employee, summarizing the salary paid and the Tax Deducted at Source (TDS) deposited with the Income Tax Department on the employee's behalf during a specific financial year.
- Form 16AForm 16ACertificate of Tax Deducted at Source on Income other than Salary Form 16A is a TDS certificate issued by a deductor for tax deducted on incomes other than salary, such as interest earned on fixed deposits, rent receipts, insurance commissions, or professional fees paid to contractors.
- Form 26ASForm 26ASForm 26AS (Annual Tax Statement) Form 26AS is a consolidated annual tax statement that records all taxes deducted at source (TDS), taxes collected at source (TCS), advance taxes paid, and high-value transactions associated with a taxpayer's PAN.
G
- GSTINGoods and Services Tax Identification NumberA Goods and Services Tax Identification Number is a unique 15-digit alphanumeric identifier assigned to every registered taxpayer under the GST regime in India, replacing the old system of multiple registration numbers.
- GSTR-1GSTR-1Goods and Services Tax Return 1 GSTR-1 is a monthly or quarterly return filed by regular GST-registered taxpayers detailing all outward supplies (sales) of goods and services. It forms the basis for the recipient's Input Tax Credit (ITC) as the declared invoices automatically populate the buyer's GSTR-2B.
- GSTR-3BGSTR-3BGoods and Services Tax Return 3B GSTR-3B is a self-declared summary GST return filed monthly or quarterly, consolidating total sales, ITC claimed, and the net tax payable. It is the form through which a taxpayer actually pays the final GST liability to the government for the given tax period.
- GSTR-9GSTR-9Goods and Services Tax Return 9 GSTR-9 is the annual return mandated for regular GST-registered taxpayers, consolidating all monthly or quarterly returns (GSTR-1 and GSTR-3B) filed during the financial year. It serves as a comprehensive annual reconciliation of outward supplies, inward supplies, taxes paid, and ITC claimed.
- GSTR-9CGSTR-9CGoods and Services Tax Return 9C GSTR-9C is a self-certified reconciliation statement matching the gross turnover declared in the GST annual return (GSTR-9) with the audited annual financial statements. It highlights discrepancies between the financial accounts and GST filings, detailing the reasons for any un-reconciled differences.
H
I
- IECImporter Exporter CodeAn Importer Exporter Code is a crucial ten-digit business identification number issued by the Directorate General of Foreign Trade (DGFT) that is mandatory for anyone looking to start an import or export business in India.
- ITATITATIncome Tax Appellate Tribunal ITAT is the second appellate authority under direct tax laws in India. It functions as an independent fact-finding body that hears appeals against orders passed by the CIT(A), offering taxpayers and the tax department a final recourse on factual disputes. Example If the CIT(A) rules against a taxpayer upholding a tax addition, the taxpayer can further appeal to the ITAT within a specific timeframe (VERIFY: 60 days) to contest the CIT(A)'s decision based on the facts of the case. When it matters in practice ITAT appeals are essential for high-stake tax disputes where factual interpretation is contested, as its decisions on facts are final and binding on both parties. Related terms - CIT(A) - High Court Appeal - Tax Assessment Related Service Litigation Support
- ITCInput Tax CreditInput Tax Credit allows businesses to reduce the tax they have already paid on purchases from the tax they owe on their sales. It prevents the cascading effect of taxes, ensuring tax is only paid on the value added.
- ITR-1ITR-1Income Tax Return Form 1 (Sahaj) ITR-1 (Sahaj) is a simplified tax return form used by resident individuals whose total income up to ₹50 Lakhs comes primarily from salary/pension, one house property, and other basic sources like interest or agricultural income (up to ₹5,000).
- ITR-2ITR-2Income Tax Return Form 2 ITR-2 is the income tax return form for individuals and HUFs not earning income from business or profession. It covers income from salary, multiple house properties, capital gains, foreign assets, and other sources, providing a comprehensive declaration for non-business taxpayers.
- ITR-3ITR-3Income Tax Return Form 3 ITR-3 is the tax return form for individuals and HUFs generating income from a proprietary business or profession. It encompasses all heads of income, including business profits, salary, house property, and capital gains, requiring detailed financial statements and audit compliance.
- ITR-4ITR-4Income Tax Return Form 4 (Sugam) ITR-4 is a simplified tax form for individuals, HUFs, and partnership firms opting for the presumptive taxation scheme. It allows eligible taxpayers to declare income at a prescribed percentage of their gross receipts, eliminating the need to maintain detailed books of accounts.
- ITR-5ITR-5Income Tax Return Form 5 ITR-5 is the mandatory income tax return form for Partnership Firms, LLPs, Association of Persons (AOPs), and Body of Individuals (BOIs). It requires comprehensive reporting of business income, partner remuneration, interest on capital, and adherence to specific corporate tax regulations.
- ITR-6ITR-6Income Tax Return Form 6 ITR-6 is the dedicated tax return form for all companies registered under the Companies Act, excluding those claiming exemption under Section 11 (charitable/religious trusts). It necessitates detailed corporate financial disclosures, balance sheets, and compliance with the Minimum Alternate Tax (MAT).
- ITR-7ITR-7Income Tax Return Form 7 ITR-7 is the income tax return form specifically designed for persons including companies required to furnish return under sections 139(4A), 139(4B), 139(4C), or 139(4D). It primarily serves charitable trusts, political parties, research associations, and educational institutions claiming tax exemptions.
L
- LLPLimited Liability PartnershipAn LLP is a hybrid corporate business vehicle that combines the flexible internal management of a traditional partnership with the limited liability protection of a company, safeguarding partners' personal assets from business debts.
- LUTLetter of UndertakingA Letter of Undertaking is a document filed by an exporter to export goods or services without paying Integrated Goods and Services Tax (IGST). It acts as a commitment that export rules will be followed.
M
- MCAMCAMinistry of Corporate Affairs The Ministry of Corporate Affairs (MCA) is an Indian government portal and regulatory body responsible for regulating corporate affairs through the Companies Act, 2013 and the Limited Liability Partnership Act, 2008, overseeing company incorporation, compliance, and governance.
- MOAMemorandum of AssociationThe MOA is the foundational charter document of a company that defines its core identity, states its primary business objectives, outlines its authorized capital, and establishes the limits of its operations in relation to the outside world.
N
P
- Partnership FirmPartnership FirmA Partnership Firm is a business structure where two or more individuals agree to share the profits and losses of a business carried on by all or any of them acting for all, with each partner holding unlimited personal liability.
- Place of SupplyPlace of SupplyPlace of Supply Place of Supply is a crucial legal concept under GST that determines the jurisdiction where a transaction is deemed to have occurred. It dictates whether a transaction is intra-state or inter-state, thereby deciding if CGST/SGST or IGST applies. Example A consultant based in Delhi provides training services to a client's team located in Mumbai. The Place of Supply is determined as Maharashtra (Mumbai), making it an inter-state service subject to IGST (VERIFY: 18% rate). When it matters in practice Determining the correct place of supply is essential for charging the right type of tax on invoices. Mistakes can lead to paying the wrong tax, requiring a refund claim and a fresh payment of the correct tax. Related terms - IGST - CGST/SGST - Location of Supplier Related Service GST Advisory
- Previous YearPrevious YearPrevious Year (PY) The Previous Year is the financial year immediately preceding the Assessment Year. It is the 12-month period during which the income is actually earned by the taxpayer.
- Private Limited CompanyPrivate Limited CompanyA Private Limited Company is a privately held business entity offering limited liability to its shareholders, restricting public share transfers, and providing a scalable corporate structure that is highly preferred by startups raising external venture capital.
- ProprietorshipSole ProprietorshipA Sole Proprietorship is an unincorporated business owned, managed, and controlled by a single individual, where there is no legal distinction between the owner and the business entity, making the owner personally liable for all business debts.
R
- RCMReverse Charge MechanismReverse Charge Mechanism is a scenario under GST where the recipient of the goods or services is liable to pay the tax directly to the government instead of the supplier, shifting the typical tax liability.
- Reverse ChargeReverse ChargeReverse Charge Mechanism (RCM) Under the Reverse Charge Mechanism, the liability to pay GST is shifted from the supplier of goods or services to the recipient. This ensures tax collection where the supplier is unregistered or provides specified services.
- ROCROCRegistrar of Companies The Registrar of Companies (ROC) is an office under the Ministry of Corporate Affairs (MCA) that handles the administration of companies and LLPs in a specific state or jurisdiction, including their registration, compliance tracking, and striking off.
S
- SACSACServices Accounting Code SAC is a standardized classification system used in India to identify, categorize, and levy GST on services. By providing a uniform code, it ensures accurate tax application and simplifies the process of filing returns and invoicing for businesses. Example An IT consultancy uses the SAC 998313 for Information Technology consulting and support services. This code dictates the applicable GST rate (VERIFY: 18%) when they invoice their clients. When it matters in practice Choosing the correct SAC is vital for issuing valid tax invoices, applying the proper GST rate, and preventing disputes with tax authorities during audits. Related terms - HSN Code - GST - e-Invoice Related Service GST Returns
- SCNSCNShow Cause Notice A Show Cause Notice is a formal legal document issued by an authority demanding an individual or business to explain or justify why a proposed action, such as a tax demand, penalty, or license cancellation, should not be executed against them. Example The GST department issues an SCN to a company for claiming excess Input Tax Credit, demanding an explanation and supporting documents within a deadline (VERIFY: 30 days) to avoid a proposed penalty of ₹1 Lakh (VERIFY: penalty amount). When it matters in practice Receiving an SCN requires immediate attention and professional drafting of a reply, as failure to respond adequately leads to the confirmation of the proposed tax demand or penalty. Related terms - DRC-01 - Assessment - Adjudication Related Service Tax Litigation
- Section 8 CompanySection 8 Company (under Companies Act, 2013)A Section 8 Company is a non-profit corporate entity established to promote commerce, art, science, sports, education, research, social welfare, or charity, where all profits must be reinvested to achieve its objectives, and no dividends are paid to members.
- Self-Assessment TaxSelf-Assessment TaxSelf-Assessment Tax Self-Assessment Tax is the remaining balance of income tax paid by a taxpayer after deducting TDS and Advance Tax from their total tax liability, usually paid at the time of filing the return.
- SPICe+SPICe+Simplified Proforma for Incorporating Company Electronically Plus SPICe+ is an integrated web form introduced by the MCA offering multiple services for company incorporation in India, including name reservation, DIN allotment, incorporation, PAN, TAN, EPFO, ESIC, Profession Tax, and bank account opening in a single application.
T
- TANTax Deduction and Collection Account NumberTax Deduction and Collection Account Number is a unique ten-digit alphanumeric number issued by the Income Tax Department to individuals or businesses who are responsible for deducting or collecting tax at source on behalf of the government.
- TCSTax Collected at SourceTax Collected at Source is an income tax mechanism where the seller collects an additional amount as tax from the buyer at the time of sale of specific goods (like vehicles, scrap, or timber) and deposits it with the government.
- TDSTax Deducted at SourceTax Deducted at Source is a mechanism where a person making specified payments (like salary, rent, or commission) must deduct a certain percentage of tax before paying the balance to the receiver, remitting the tax to the government.
- TISTISTaxpayer Information Summary (TIS) The Taxpayer Information Summary is a simplified, category-wise summary of a taxpayer's financial information derived from the Annual Information Statement (AIS). It aggregates values to assist in easy tax return filing.
- TRACESTRACESTDS Reconciliation Analysis and Correction Enabling System TRACES is a web-based portal of the Income Tax Department that provides comprehensive facilities for the administration, reconciliation, and correction of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) returns.
Z
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- 12ASection 12A of the Income Tax Act, 196112A registration is a one-time tax exemption granted to trusts, NGOs, and Section 8 companies, exempting their surplus income from income tax, provided the funds are used for charitable or religious purposes as defined in the law.
- 80GSection 80G of the Income Tax Act, 196180G registration allows donors who contribute to registered NGOs and charitable trusts to claim a tax deduction on their donations, encouraging philanthropy by reducing the donor's overall taxable income.