GST Glossary for Small Business Owners: Essential GST Terms Explained Simply
- Understand the GST terms used on invoices, returns, registration forms, e-way bills, and GST portal screens.
- Learn the difference between similar concepts such as nil-rated, exempt, and zero-rated supplies.
- Check the current meaning of IMS, GSTR-1A, e-invoicing, the Composition Scheme, and GST TCS.
- Follow the linked BUSY guides when you need a detailed process.
GST affects billing, purchases, movement of goods, tax payments, and return filing. This GST glossary is for business owners, shopkeepers, freelancers, accountants, and beginners who need common GST words explained in simple language.
This glossary intentionally keeps state-specific SGST procedures and sector-specific rate exceptions brief. For these topics, use the detailed BUSY guides linked in the registration, GST rates, invoicing, returns, and e-way bill sections.
Stay GST Compliant with BUSY
Manage GST returns and reconcile tax data from one system.
Where Should You Start?
- Registering a business? Start with GST Registration Terms.
- Choosing an HSN, SAC, or tax rate? Go to GST Rates and Classification.
- Exporting goods or services? See Zero-Rated Supply and LUT.
- Filing returns or checking ITC? Use GST Returns, ITC, and Portal Terms.
- Responding to a notice? Go to GST Notices, Payments, and Disputes.
GST Basics
Core Tax Types
| Term | Simple Meaning |
|---|---|
| GST | Goods and Services Tax is a destination-based indirect tax on the supply of most goods and services in India. It replaced several earlier Central and state indirect taxes. |
| CGST | Central Goods and Services Tax is the Central Government's share of GST on an intrastate supply. On a taxable value of ₹10,000 at 18%, CGST is normally ₹900. |
| SGST | State Goods and Services Tax is the state government's share of GST on an intrastate supply. On the same transaction, SGST is normally ₹900. |
| UTGST | Union Territory Goods and Services Tax applies to intraterritory supplies in Union territories covered by the UTGST framework. |
| IGST | Integrated Goods and Services Tax generally applies to interstate supplies and imports. A Delhi supplier making an interstate sale to a Maharashtra buyer generally charges IGST. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Business Identity and Turnover
| Term | Simple Meaning |
|---|---|
| GSTIN | GST Identification Number is the 15-digit number allotted to a GST registration. One legal person may hold more than one GSTIN. |
| Aggregate Turnover | Aggregate turnover is calculated across India for registrations held under the same PAN. It generally includes taxable supplies, exempt supplies, exports, and interstate supplies, but excludes GST and specified inward supplies taxed under reverse charge. Turnover from branches in different states is combined. |
| Taxable Person | A person who is registered or liable to be registered under the CGST Act. |
| Taxable Supply | A supply of goods or services on which GST is leviable. |
| Output Tax | GST chargeable on taxable outward supplies made by a registered person. It generally excludes tax payable under reverse charge. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
GST Registration Terms
GST Registration Threshold
| Business Situation | General Position |
|---|---|
| Suppliers of services | The general threshold is ₹20 lakh. It is ₹10 lakh in Manipur, Mizoram, Nagaland, and Tripura. |
| Eligible suppliers exclusively dealing in goods | The enhanced threshold may be ₹40 lakh. The threshold is ₹20 lakh in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, and Uttarakhand. |
| Compulsory-registration cases | Registration may be required regardless of turnover under Section 24, subject to notified exemptions. |
| Eligible interstate service suppliers | The applicable turnover exemption may remain available where notification conditions are met. |
| Eligible suppliers through e-commerce operators | Conditional exemptions may apply depending on the type of supply and the applicable notification. |
Business Situation
General Position
Business Situation
General Position
Business Situation
General Position
Business Situation
General Position
Business Situation
General Position
There is no single registration limit that applies to every business. Registration should be assessed after considering the state, supply type, turnover, interstate activity, and e-commerce arrangements.
Registration and Application Terms
| Term | Simple Meaning |
|---|---|
| Voluntary Registration | A person below the applicable threshold may register voluntarily under Section 25(3). Normal GST duties apply after registration. |
| Casual Taxable Person | A person who occasionally makes taxable supplies in a state or Union territory where the person has no fixed place of business. Special registration and advance-tax rules generally apply. |
| Non-Resident Taxable Person | A person based outside India who occasionally makes taxable supplies in India without a fixed place of business or residence here. |
| TRN | Temporary Reference Number generated after Part A of Form GST REG-01. It is used to continue an unfinished registration application. |
| ARN | Application Reference Number generated after an application is submitted. It is used for tracking and correspondence. |
| Principal Place of Business | The main business location within a state where records are normally maintained. |
| Additional Place of Business | Another business location within the same state covered by the registration. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Read the BUSY GST guide for startups and small businesses for a broader registration and compliance overview.
GST Rates and Classification
HSN, SAC, and GST Rates
| Term | Simple Meaning |
|---|---|
| HSN Code | Harmonised System of Nomenclature code used to classify goods. The product description and applicable conditions must be checked along with the code. |
| SAC Code | Services Accounting Code used to classify services under GST. |
| GST Rate | The percentage of GST applicable after considering classification and the conditions in the relevant rate notification. Product value, use, packaging, or recipient type may affect the result. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
GST Rate Structure After the 2025 Reform
Following the 56th GST Council meeting, the revised rate structure uses:
- A 5% merit rate
- An 18% standard rate
- A special 40% demerit rate for selected goods and services
Most rate changes took effect on 22 September 2025. From 1 February 2026, bidi is taxed at 18%, while pan masala, cigarettes, tobacco products other than bidi, and specified nicotine-based inhalation products are taxed at 40%. The applicable classification and notification conditions should still be checked for each product.
Nil-Rated, Exempt, and Zero-Rated Supplies
| Term | Output GST Treatment | ITC Position |
|---|---|---|
| Nil-Rated Supply | The notified GST rate is nil. | Related ITC is generally restricted or reversed. |
| Exempt Supply | GST is not charged because the supply is nil-rated, wholly exempt, or non-taxable. | Related ITC is generally restricted or reversed. |
| Zero-Rated Supply | Special treatment applies to exports and supplies to an SEZ unit or developer for authorised operations. | Eligible ITC or refund may remain available, subject to conditions. |
Term
Output GST Treatment
ITC Position
Term
Output GST Treatment
ITC Position
Term
Output GST Treatment
ITC Position
A nil-rated supply falls within the legal definition of exempt supply. Zero-rated supply is a separate concept under Section 16 of the IGST Act.
GST Invoices and Documents
Sales Documents
| Term | Simple Meaning |
|---|---|
| Tax Invoice | A document issued for a taxable supply where Section 31 and the invoice rules require it. It contains prescribed supplier, recipient, value, classification, and tax details. |
| Bill of Supply | A document generally issued by a composition taxpayer or for an exempt supply where GST cannot be collected separately. |
| Credit Note | A document used to reduce the value or tax charged on an earlier invoice where Section 34 conditions are met, such as for returned goods. |
| Debit Note | A document used when the original invoice understated the taxable value or tax. |
| Receipt Voucher | A document issued when an advance is received in a case where GST invoice rules require it. |
| Refund Voucher | A document issued when an advance is returned because the proposed supply does not take place and no tax invoice is issued. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Read the BUSY GST invoicing guide for the prescribed invoice fields and documentation rules.
E-Invoice, IRN, and IRP
| Term | Simple Meaning |
|---|---|
| E-Invoice | An invoice created in the supplier's accounting system and reported in the prescribed format to an authorised Invoice Registration Portal. |
| IRN | Invoice Reference Number generated after successful e-invoice registration. |
| IRP | Invoice Registration Portal that validates reported data and returns the IRN and signed QR code. |
| Signed QR Code | A digitally signed QR code returned by the IRP containing key invoice information. |
| E-Invoice Cancellation | An IRN can be cancelled on the IRP within 24 hours of generation, provided no active e-way bill is linked to it. Individual invoice fields cannot be amended on the IRP. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Simple Meaning
Notification No. 10/2023-Central Tax reduced the e-invoice threshold to aggregate turnover exceeding ₹5 crore from 1 August 2023, subject to notified exclusions. The threshold test considers relevant financial years from 2017-18 onwards.
Taxpayers with annual aggregate turnover of ₹10 crore or more must report covered invoices, credit notes, and debit notes within 30 days of the document date. This restriction has applied since 1 April 2025.
Read the BUSY guide to Invoice Reference Number s for the generation and cancellation process.
E-Way Bill
An e-way bill is an electronic document used for the movement of goods under Rule 138. The commonly applied national threshold is a consignment value exceeding ₹50,000, but exceptions and state-specific intrastate rules may apply.
Before generation, check the consignment value, reason for movement, nature of goods, transport details, distance, and relevant state rules.
Read the BUSY e-way bill guide for generation, validity, and exception rules.
GST Supply and Tax Liability Terms
| Term | Simple Meaning |
|---|---|
| Supply | The taxable event under GST. It broadly covers specified forms of sale, transfer, barter, exchange, licence, rental, lease, or disposal made in business, along with certain supplies made without consideration. |
| Place of Supply | The location treated as the destination of a transaction. It helps determine whether CGST and SGST, CGST and UTGST, or IGST applies. |
| Location of Supplier | The legally relevant location of the supplier under the applicable GST provisions. |
| Time of Supply | The point at which GST liability arises. Different rules apply to goods, services, reverse charge, vouchers, and changes in tax rates. |
| Value of Supply | The amount on which GST is calculated after applying Section 15 and the valuation rules. |
| Composite Supply | Two or more naturally bundled supplies made together in the ordinary course of business, with one principal supply. Goods supplied with normal packing and transport may qualify. |
| Principal Supply | The main component that gives a composite supply its essential character. |
| Mixed Supply | Independent supplies sold together for one price when they are not naturally bundled. The highest applicable GST rate generally applies. A festive hamper of unrelated products may qualify. |
| Reverse Charge Mechanism | A system under which the recipient pays GST instead of the supplier in specified cases, such as certain legal services received by a business. |
| Forward Charge | The normal mechanism under which the supplier charges and pays GST. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Simple Meaning
Term
Simple Meaning
GST Returns, ITC, and Portal Terms
Input Tax Credit
| Term | Simple Meaning |
|---|---|
| Input Tax Credit | Credit of eligible GST paid on business purchases, input services, and capital goods. It can be used against output tax in the prescribed manner. |
| Blocked Credit | ITC that Section 17(5) does not permit even though GST was paid. |
| ITC Reversal | Credit that must be reduced or repaid when prescribed conditions are not met. |
| ITC Reclaim | Credit claimed again after the reason for an earlier reversal is resolved, where the law permits it. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Read the BUSY guide to ITC eligibility and blocked credits for detailed examples.
GST Returns and Statements
| Term | Simple Meaning |
|---|---|
| GSTR-1 | Monthly or quarterly statement containing details of outward supplies. |
| GSTR-1A | Optional form used once to add or amend records for the same tax period after GSTR-1 and before GSTR-3B. |
| GSTR-2B | Auto-drafted ITC statement based on supplier documents and other prescribed information. It may be recomputed after certain IMS actions, but an entry does not establish ITC eligibility by itself. |
| GSTR-3B | Summary return used to declare tax liability, ITC, reversals, and tax payment. Most normal taxpayers file monthly, while eligible QRMP taxpayers file quarterly. |
| GSTR-9 | Annual return applicable to specified regular taxpayers, subject to taxpayer category and exemptions notified for the relevant year. |
| GSTR-4 | Annual return generally filed by composition taxpayers. |
| CMP-08 | Quarterly statement-cum-challan used by composition taxpayers to declare and pay self-assessed tax. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Before the current GSTR-1A facility became available, errors or missed records in a filed GSTR-1 generally had to be corrected through GSTR-1 of a later tax period. GSTR-1A now allows taxpayers to correct or add records for the same tax period before filing GSTR-3B.
Read the BUSY guides to GSTR-1 , GSTR-2B , and GSTR-3B for detailed guidance.
QRMP and IFF
| Term | Simple Meaning |
|---|---|
| QRMP Scheme | Quarterly Return Monthly Payment Scheme allows eligible taxpayers with turnover up to ₹5 crore to file GSTR-1 and GSTR-3B quarterly while paying tax monthly. |
| IFF | Invoice Furnishing Facility allows QRMP taxpayers to upload eligible B2B invoices for the first two months of a quarter. It is optional. |
Term
Simple Meaning
Term
Simple Meaning
Invoice Management System
The Invoice Management System allows recipients to review eligible inward documents.
| IMS Action | General Effect |
|---|---|
| Accept | The document is treated as accepted for the relevant GSTR-2B process. |
| Reject | The document does not form part of accepted ITC for that period. The supplier may need to correct it. |
| Pending | The document is deferred where this option is available. |
| No action | The document is treated as deemed accepted. |
IMS Action
General Effect
IMS Action
General Effect
IMS Action
General Effect
IMS Action
General Effect
IMS has operated from the October 2024 return period. If an action is taken or changed after draft GSTR-2B generation, GSTR-2B must be recomputed before filing GSTR-3B.
Electronic Ledgers
| Term | Simple Meaning |
|---|---|
| Electronic Cash Ledger | Records money deposited for payment of tax, interest, penalty, fee, or other amounts. |
| Electronic Credit Ledger | Records eligible ITC available to the taxpayer. |
| Electronic Liability Register | Records tax, interest, late fee, penalty, and other liabilities payable. |
| Offset Liability | The process of using eligible cash and credit balances to discharge GST liability. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Small Taxpayer, Export, and E-Commerce Terms
Composition Scheme
| Rule | General Position |
|---|---|
| Eligible suppliers of goods | The preceding-year aggregate turnover limit is generally ₹1.5 crore. A ₹75 lakh limit applies in specified states. |
| Eligible service providers | A separate scheme under Section 10(2A) is available up to ₹50 lakh at 6%, subject to conditions. |
| GST collection | A composition taxpayer cannot collect GST separately from customers. |
| Input Tax Credit | ITC cannot be claimed. |
| Document issued | A bill of supply is generally issued instead of a tax invoice. |
| Payment and return | Tax is generally paid quarterly through CMP-08, and GSTR-4 is filed annually. |
Rule
General Position
Rule
General Position
Rule
General Position
Rule
General Position
Rule
General Position
Rule
General Position
Read the BUSY Composition Scheme guide before opting for the scheme because eligibility is tested at the PAN level.
Other Common Terms
| Term | Simple Meaning |
|---|---|
| Input Service Distributor | An office that receives invoices for common input services and distributes eligible ITC to other registrations under the same PAN in the prescribed manner. |
| LUT | Letter of Undertaking allows eligible exporters to make zero-rated supplies without payment of IGST, subject to conditions. |
| TDS Under GST | Specified government and notified entities deduct GST TDS at 2% when the taxable contract value exceeds ₹2.5 lakh and other conditions are met. |
| TCS Under GST | A covered e-commerce operator collects tax at source on the net value of taxable supplies where Section 52 applies. |
| E-Commerce Operator | A person that owns, operates, or manages a digital or electronic platform for electronic commerce. |
| Net Value of Taxable Supplies | The value used to calculate GST TCS after adjusting covered supplies and specified returns. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
The combined GST TCS rate has been 0.5% since 10 July 2024:
- 0.25% CGST plus 0.25% SGST or UTGST on intrastate supplies
- 0.5% IGST on interstate supplies
The change was notified through Notification No. 15/2024-Central Tax , Notification No. 01/2024-Union Territory Tax, and Notification No. 01/2024-Integrated Tax . Corresponding state notifications apply to the SGST component.
GST Notices, Payments, and Disputes
| Term | Simple Meaning |
|---|---|
| Show Cause Notice | A formal notice stating the department's allegations and asking why proposed tax, interest, or penalty should not be imposed. |
| DRC-01 | Electronic summary of a show cause notice. It is not the final adjudication order. |
| DRC-03 | Form used to inform the department about a voluntary payment or payment against a notice or statement, depending on the proceeding. |
| DRC-07 | Electronic summary of an adjudication order. The order may be treated as a recovery notice under Rule 142. |
| Late Fee | Amount charged for delayed filing where the GST law provides for it. It is different from a penalty. |
| Interest | Amount payable for delayed tax payment or specified ITC-related defaults. |
| Penalty | A separate monetary consequence imposed for specified defaults or offences. |
| Advance Ruling | A ruling on specified GST questions relating to an activity being undertaken or proposed by the applicant. |
| Adjudication Order | The formal decision issued by the proper officer after considering the notice and taxpayer's response. |
| Appeal | The statutory process used to challenge an appealable GST decision within the prescribed time. |
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
Term
Simple Meaning
A portal summary should be read with the detailed notice or order because it may not contain the complete facts, legal grounds, and calculations.
How Accounting Software Supports GST Compliance
Accounting software can automate configured tax calculations, GST invoices, e-invoice and e-way bill data, ledgers, and return reports. Correct output still depends on accurate master data, classifications, and transaction entries.
More than 6,00,000 businesses across India use BUSY for accounting, billing, GST compliance, invoicing, e-way bills, and inventory management. Businesses can explore BUSY accounting software to manage billing, records, returns, and reconciliation from one system.
Conclusion
Use these GST terms to understand the language used in routine business records and processes. For unusual transactions or decisions with a material tax impact, confirm the treatment under the current law or seek professional advice.
