Reference
Tax & Compliance
Glossary
Plain-language explanations of 84+ Indian tax, GST, and corporate compliance terms. Search or browse A–Z.
84+
Terms
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A
6 terms
AIS
Annual Information Statement — comprehensive tax data summary generated by the Income Tax Department showing all financial transactions (interest, dividends, property, securities) reported against your PAN for the year.
AO
Assessing Officer — the Income Tax officer assigned to your jurisdiction who processes your tax returns, issues notices, and completes assessments.
AOP
Association of Persons — a group of individuals who join together for a common income-earning purpose; taxed as a separate entity under the Income Tax Act.
ARN
Application Reference Number — a unique reference generated when you apply for GST registration or file certain GST applications on the GSTN portal.
Assessment Year (AY)
The year in which income earned in the previous financial year is assessed and taxed. AY 2025-26 covers income earned in FY 2024-25 (1 Apr 2024 to 31 Mar 2025).
AOA
Articles of Association — the internal rulebook of a company defining management structure, rights of members, voting procedures, and dividend policy.
B
3 terms
BOI
Body of Individuals — a group of individuals who pool resources for income; similar to AOP but members must be individuals only, not artificial persons.
BSR Code
Basic Statistical Return Code — a 7-digit code assigned to every bank branch by RBI; used in TDS challan payment to identify the paying bank branch.
BRN
Business Reference Number — reference number assigned to certain business registrations for tracking purposes across government portals.
C
6 terms
CGST
Central GST — the central government's share of GST levied on intra-state supply of goods and services. Maximum rate is 9% (paired with SGST/UTGST of equal rate).
CIN
Company Identification Number — a 21-digit alphanumeric code assigned by MCA to every registered company. It encodes the listing status, industry, state, year of incorporation, and entity type.
CMP-02
GST form filed to opt into the Composition Scheme at the beginning of a financial year or at the time of initial GST registration. No ITC after opting in.
CSR
Corporate Social Responsibility — mandatory spending of 2% of average net profit for companies meeting certain thresholds (net worth ₹500Cr+, turnover ₹1000Cr+, or net profit ₹5Cr+) under Section 135 of Companies Act.
CA
Chartered Accountant — a professional certified by ICAI to provide accounting, auditing, tax, and financial advisory services. Mandatory signatory for many statutory filings.
CPC
Centralized Processing Centre — the Income Tax Department's automated processing center (Bengaluru) that processes e-filed ITRs and issues refunds and intimations.
D
5 terms
DDT
Dividend Distribution Tax — tax previously paid by companies before distributing dividends. Abolished in Budget 2020; dividends are now taxable in the hands of shareholders at applicable slab rates.
DIN
Director Identification Number — a unique 8-digit number allotted to any person intending to become a director in a company. Mandatory for all company directors; applied via MCA portal.
DTAA
Double Taxation Avoidance Agreement — a bilateral treaty between two countries to prevent the same income from being taxed twice. India has DTAAs with 90+ countries. Taxpayer can choose treaty or domestic law, whichever is more beneficial.
DSC
Digital Signature Certificate — an electronic signature (Class 2 or Class 3) used to authenticate documents filed with MCA, Income Tax portal, and GST portal.
DRC-03
GST form used by a taxpayer to voluntarily pay additional tax, interest, or penalty — either suo-motu or in response to a show-cause notice.
E
3 terms
ESOP
Employee Stock Option Plan — a scheme allowing employees to buy company shares at a predetermined price. Taxed at two stages: as perquisite (at exercise, as difference between FMV and exercise price) and as capital gains (at sale).
E-Way Bill
Electronic Way Bill — a GST compliance document required for movement of goods worth more than ₹50,000 beyond 10 km. Generated on the EWB portal; valid for a distance-based time window.
EVC
Electronic Verification Code — a 10-digit alphanumeric code used to e-verify Income Tax Returns without a DSC. Generated via Aadhaar OTP, net banking, bank ATM, or Demat account.
F
8 terms
FEMA
Foreign Exchange Management Act — the primary law regulating foreign exchange transactions, FDI, NRI investments, and cross-border remittances in India. Violations are civil offences (unlike older FERA).
FCRA
Foreign Contribution Regulation Act — governs receipt of foreign donations by NGOs and non-profits. Prior FCRA registration required; annual returns mandatory. Violations attract severe penalties.
FDI
Foreign Direct Investment — investment by foreign entities or individuals into Indian businesses. Governed by FEMA and DPIIT policies. Two routes: Automatic (no government approval) and Approval (sectoral clearance required).
Form 15CA/CB
Forms required for remittance of payments outside India. Form 15CA is an online declaration by the remitter; Form 15CB is a CA certificate required for remittances above ₹5 lakh per transaction (or where DTAA applies).
Form 16
TDS certificate issued by an employer to employee showing gross salary paid and TDS deducted. Part A is downloaded from TRACES; Part B (breakup of salary and deductions) is prepared by the employer.
Form 26QB
TDS payment form for deduction at source on immovable property purchases above ₹50 lakh. Buyer is the deductor (1% TDS). Filed online; Form 16B is the TDS certificate issued to seller.
Form 26AS
Consolidated annual tax statement showing TDS/TCS deducted, advance tax paid, self-assessment tax, refunds, and high-value transactions linked to your PAN.
FY
Financial Year — the fiscal period in India runs from 1 April to 31 March. FY 2025-26 runs from 1 April 2025 to 31 March 2026.
G
7 terms
GST
Goods and Services Tax — India's unified destination-based indirect tax that replaced VAT, Service Tax, Excise Duty, and 12+ other taxes. Four main rates: 5%, 12%, 18%, 28%. Implemented 1 July 2017.
GSTIN
GST Identification Number — a 15-digit unique number for every GST-registered taxpayer. Format: 2-digit state code + 10-digit PAN + 3 characters (entity number, Z, and check digit).
GSTR-1
Monthly or quarterly GST return for outward supplies (sales invoices). Filed by the 11th of the following month (monthly) or 13th (QRMP scheme quarterly).
GSTR-2B
Auto-drafted ITC statement generated monthly from suppliers' GSTR-1 data. Shows eligible and ineligible ITC — key document for ITC reconciliation before filing GSTR-3B.
GSTR-3B
Monthly summary return for GST liability payment and ITC claim. Filed by the 20th/22nd/24th of the following month depending on state category.
GSTR-9
Annual GST return consolidating the full year's outward supplies, inward supplies, and ITC. Filed by 31 December following the financial year. Mandatory above ₹2Cr turnover.
GSTN
Goods and Services Tax Network — the non-government, private company that built and manages the IT infrastructure for the GST system in India.
H
3 terms
HRA
House Rent Allowance — a salary component exempt from tax under Section 10(13A). Exempt amount = lowest of: actual HRA received, 50% of basic (metro) or 40% (non-metro), or actual rent minus 10% of basic salary.
HSN
Harmonized System of Nomenclature — an internationally recognized 4/6/8-digit code system to classify goods for GST and customs. 4 digits mandatory above ₹5Cr turnover; 6 digits for exports.
HUF
Hindu Undivided Family — a unique tax entity under Indian law, comprising a common ancestor and all lineal descendants. Has its own PAN, can hold assets, earn income, and claim a separate basic exemption limit.
I
5 terms
ITC
Input Tax Credit — the GST mechanism allowing businesses to offset GST paid on purchases (inputs) against GST collected on sales (output), eliminating the cascading tax effect. Subject to conditions under Section 16-17.
ITR
Income Tax Return — the annual form filed to report income, deductions, and tax liability. Forms: ITR-1 (Sahaj — salaried), ITR-2 (capital gains/multiple income), ITR-3 (business/profession), ITR-4 (Sugam — presumptive), ITR-5 (firms/LLPs), ITR-6 (companies), ITR-7 (trusts/NGOs).
IGST
Integrated GST — GST levied on inter-state supply of goods and services. Collected by the central government and shared between the centre and destination state. Eliminates origin-based tax cascading.
ISD
Input Service Distributor — a GST-registered entity (typically HO) that receives input service invoices on behalf of its branches and distributes ITC to branch GSTINs proportionally.
IT Act
Income Tax Act, 1961 — the primary statute governing income tax in India. Contains provisions for income computation, deductions (Chapter VI-A), TDS (Chapter XVII-B), and penalties.
L
3 terms
LLP
Limited Liability Partnership — a hybrid structure combining a partnership's flexibility with limited liability for partners. Governed by LLP Act 2008; registered with MCA. Tax rate: 30% + surcharge.
LUT
Letter of Undertaking — a declaration filed by exporters on the GST portal (Form RFD-11) to export goods/services without paying IGST, instead claiming refund of accumulated ITC.
LTC
Leave Travel Concession — an allowance for travel costs of an employee and family members in India during leave. Exempt from tax under Section 10(5) for 2 journeys in a 4-year block period.
M
4 terms
MAT
Minimum Alternate Tax — ensures companies paying zero or minimal regular tax (via exemptions) pay at least 15% of book profits under Section 115JB. MAT credit can be carried forward for 15 years.
MCA
Ministry of Corporate Affairs — the central government body regulating companies and LLPs in India through the Registrar of Companies (ROC). Portal: mca.gov.in
MOA
Memorandum of Association — the charter/founding document of a company defining its name, registered office state, main objects, ancillary objects, and authorized capital.
MSME
Micro, Small and Medium Enterprise — businesses classified by investment in plant & machinery and turnover thresholds. Benefit from priority credit, lower compliance burden, and government procurement quotas.
N
5 terms
NEFT/RTGS
National Electronic Funds Transfer / Real-Time Gross Settlement — RBI-governed payment systems for electronic fund transfers. Used for tax payments, vendor payments; transactions appear in bank statements used for tax scrutiny.
NRI
Non-Resident Indian — an Indian citizen residing outside India for 182+ days in a financial year. Subject to tax only on India-sourced income; foreign income generally not taxable in India.
NRO Account
Non-Resident Ordinary Account — a rupee account for NRIs holding income earned in India (rent, dividends, pension). Interest is fully taxable; repatriation capped at USD 1 million per year.
NRE Account
Non-Resident External Account — a rupee account for NRIs parking foreign income. Principal and interest are fully repatriable; interest is exempt from income tax in India.
NPS
National Pension System — a government-regulated retirement savings scheme. Contributions qualify for deduction: ₹1.5L under Sec 80C + additional ₹50,000 under Sec 80CCD(1B).
O
2 terms
OPC
One Person Company — a company formed by a single individual as both member and nominee (introduced by Companies Act 2013). Must convert to Pvt Ltd if paid-up capital exceeds ₹50L or turnover exceeds ₹2Cr.
OTS
One-Time Settlement — a scheme where a borrower negotiates with a lender to settle an outstanding loan for a lump-sum amount less than the full outstanding, to resolve NPA.
P
4 terms
PAN
Permanent Account Number — a 10-character alphanumeric code (format: AAAAA1111A) issued by the Income Tax Department to all taxpayers. Mandatory for bank accounts, investments, property transactions, and most financial dealings above ₹50,000.
PMT-06
GST payment challan used by Composition Scheme taxpayers to pay their quarterly CGST + SGST liability by the 18th of the month following the quarter end.
PMLA
Prevention of Money Laundering Act — the primary anti-money laundering law. Requires financial institutions and certain professionals (CAs, CSs) to maintain KYC records and report suspicious transactions.
PPF
Public Provident Fund — a government-backed long-term savings scheme with 15-year maturity. Contributions up to ₹1.5L per year qualify for deduction under Section 80C. Interest and maturity proceeds are tax-free (EEE status).
Q
1 term
QRMP
Quarterly Return Monthly Payment — a GST scheme for small taxpayers (annual turnover ≤₹5Cr) to file GSTR-1 quarterly while paying estimated GST monthly via the Fixed Sum Method or Self-Assessment method using PMT-06.
R
4 terms
RNOR
Resident but Not Ordinarily Resident — a transitional residential status applicable to returning NRIs (typically for 2 years). Only India-sourced income and income received in India is taxable; foreign income is generally exempt.
ROC
Registrar of Companies — the government authority under MCA responsible for registering companies/LLPs, maintaining statutory records, and enforcing the Companies Act in each state/UT jurisdiction.
RCM
Reverse Charge Mechanism — a GST provision shifting tax liability from the supplier to the recipient. Applicable on specified goods/services (e.g., legal services from advocate, GTA, imports) and on unregistered supplier transactions above threshold.
RBI
Reserve Bank of India — India's central bank. Regulates banking, monetary policy, foreign exchange (under FEMA), and payment systems. Issues guidelines on NRI accounts, FCNR deposits, and ECBs.
S
5 terms
SAC
Service Accounting Code — a 6-digit code used to classify services under GST (analogous to HSN for goods). Mandatory on invoices for taxpayers with turnover above ₹5L. Determines applicable GST rate.
SGST
State GST — the state government's share of GST on intra-state supply of goods and services. Maximum 9%; rate always equal to CGST for the same supply.
STT
Securities Transaction Tax — a tax on purchase/sale of equity shares (0.1%), equity mutual funds (0.001% on redemption), futures (0.0125%), and options (0.0625% on premium) on recognized Indian exchanges.
Sec 80C
Section 80C — the most-used deduction provision allowing up to ₹1.5L deduction for investments in PPF, ELSS, NSC, 5-year FD, LIC premium, EPF contribution, home loan principal, and children's tuition fees.
SFT
Statement of Financial Transactions (formerly AIR) — high-value transaction reporting by banks, mutual funds, registrars, and companies to the Income Tax Department. Visible in Form 26AS / AIS.
T
4 terms
TAN
Tax Deduction Account Number — a 10-digit alphanumeric code (format: AAAA11111A) required by any entity responsible for deducting or collecting TDS/TCS. Obtained via Form 49B; quoted on all TDS returns and certificates.
TCS
Tax Collected at Source — tax collected by the seller from the buyer at the time of sale of specified goods (Section 206C) or on foreign remittances under LRS above ₹7L. Different from TDS which is deducted, not collected.
TDS
Tax Deducted at Source — tax deducted by the payer at the time of payment (salary, rent, interest, professional fees, etc.). Deposited with government; reflected in deductee's Form 26AS and Form 16/16A.
TRACES
TDS Reconciliation Analysis and Correction Enabling System — the Income Tax Department's portal for TDS compliance: filing TDS returns, downloading Form 16/16A/26AS, submitting corrections, and tracking TDS defaults.
U
2 terms
UTGST
Union Territory GST — GST levied by Union Territories without a legislature (Chandigarh, Dadra & Nagar Haveli, Daman & Diu, Lakshadweep, Ladakh) on intra-UT supply. Equivalent to SGST for states.
Udyam
Udyam Registration — the official MSME registration portal (udyamregistration.gov.in) for micro, small, and medium enterprises. Replaced Udyog Aadhaar. Aadhaar-based; generates Udyam Registration Number (URN).
V
2 terms
VDA
Virtual Digital Asset — cryptocurrency, NFTs, and other digital tokens as defined under Section 2(47A) of the Income Tax Act. Taxed at flat 30% on gains; 1% TDS under Section 194S on transfers above ₹10,000.
VPF
Voluntary Provident Fund — voluntary contribution to EPF above the mandatory 12% of basic salary. Earns the same interest rate as EPF (8.25% for FY 2024-25); contributions qualify under Section 80C.
W
2 terms
WDV
Written Down Value — a depreciation method where assets are depreciated at a fixed percentage on the reducing balance each year. Used in the Income Tax Act (different from SLM used in Companies Act).
WHT
Withholding Tax — the international equivalent of TDS; tax withheld at source on payments to non-residents (dividends, royalties, interest). Rate governed by domestic law or applicable DTAA, whichever is beneficial.