Reference
Finance, GST and TDS glossary
54 terms, defined in plain English and kept up to date with the law — including the GST rate changes of September 2025 and the Income-tax Act, 2025.
Roles & services
- Virtual CFO (VCFO)
- An experienced finance head who works for a business part of the month, mostly remotely, instead of as a full-time employee. The work is forward-looking: cash forecasting, budgets, margins, and preparing for lenders and investors. Virtual CFO services →
- Fractional CFO
- Another name for the same engagement as a virtual or part-time CFO, stressing that you buy a fraction of a senior person’s time. An interim CFO is different: a full-time stand-in for a limited period. What it costs →
- Outsourced accounting
- An external team running the day-to-day accounting function — entries, reconciliations, payables, receivables and the month-end close — usually inside the client’s own accounting software, instead of the business employing accountants for it. Outsourced vs in-house →
- Bookkeeping
- Recording a business’s transactions accurately and on time: sales, purchases, expenses, receipts and payments, with the bank reconciled. It is the foundation that accounting, reporting and tax all rely on. Bookkeeping services →
- Chartered accountant (CA)
- A member of the Institute of Chartered Accountants of India. Certain work — statutory and tax audits, many certifications and attest reports — can only be done by a CA in practice. A virtual CFO complements a CA rather than replacing one. Virtual CFO vs CA →
Accounting & reporting
- Accrual accounting
- Recording income when it is earned and expenses when they are incurred, whether or not cash has moved. Companies in India must keep their books on an accrual basis. The alternative, cash accounting, records only money in and out, and hides what is owed to and by the business.
- Accounts payable (AP)
- What the business owes its suppliers for goods and services already received. Managing AP well means paying on the agreed terms — not early, not late — and catching duplicate or incorrect bills before they are paid. AP and AR outsourcing →
- Accounts receivable (AR)
- What customers owe the business for sales already made. Its age matters as much as its size: a receivable 120 days old is far less likely to be collected than one 30 days old. AP and AR outsourcing →
- Balance sheet
- A statement of what the business owns (assets), what it owes (liabilities) and the owners’ stake (equity) on a single date. Where the profit and loss account shows a period’s performance, the balance sheet shows the position at its end.
- Bank reconciliation
- Matching every entry in the bank account against the books, and explaining each difference — cheques not yet cleared, bank charges not yet booked, receipts not yet allocated. Done monthly, it is the first control that catches errors and fraud. How to do it monthly →
- Budget vs actual
- A monthly comparison of what the business planned to earn and spend with what actually happened, with the reasons for each material difference. The reasons are the useful part; the red numbers alone change nothing.
- Chart of accounts
- The list of ledger accounts the business records transactions into. A well-designed chart of accounts is what makes it possible to report margin by product, branch or channel without rebuilding the numbers by hand every month.
- Deferred revenue
- Money received for goods or services not yet delivered, such as an annual subscription paid in advance. It sits as a liability and is recognised as revenue month by month as the service is delivered.
- EBITDA
- Earnings before interest, tax, depreciation and amortisation: operating profit with financing costs, tax and non-cash charges stripped out. Lenders and investors use it to compare operating performance, but it is not cash — it ignores working capital and capital spending.
- Gross margin
- Revenue minus the direct cost of producing what was sold, as a percentage of revenue. A company-wide figure averages good lines with bad ones; split by product, client or channel, it shows where the money is actually made. Gross margin analysis →
- MIS report
- Management information system report: the monthly pack of numbers management uses to run the business — P&L against budget, cash, receivables, margins and the handful of operating metrics that matter. Unlike statutory accounts, its format is whatever helps decisions. MIS format for SMEs →
- Month-end close
- The process of finalising a month’s books: recording everything that belongs to the period, reconciling every account, posting accruals and depreciation, and producing statements that tie. A fast, reliable close is what makes monthly reporting possible. Month-end close checklist →
- Profit and loss statement (P&L)
- The statement of income and expenses for a period, ending in net profit or loss. It shows performance, not cash: a business can be profitable on its P&L and still run out of money. How to read a P&L →
- Trial balance
- A list of every ledger account and its balance at a date, in which total debits equal total credits. A balanced trial balance proves the arithmetic, not the accuracy — a wrong entry posted to both sides still balances.
- Variance analysis
- Explaining the difference between planned and actual results, split into its causes — price, volume, mix or cost. It turns a budget from a document into a management tool.
Cash & working capital
- 13-week cash flow forecast
- A rolling, week-by-week forecast of cash in and out for the next quarter, updated weekly. Short enough to be accurate, long enough to act on, it shows which week gets tight while there is still time to do something about it. Build one →
- Break-even point
- The sales volume at which revenue exactly covers fixed and variable costs, so profit is zero. It equals fixed costs divided by contribution margin per unit. Break-even calculator →
- Burn rate
- How much cash a business uses each month. Gross burn is total monthly cash spending; net burn is spending minus cash coming in. Net burn is the one that sets your runway. Runway and burn calculator →
- Cash conversion cycle (CCC)
- The number of days between paying for inventory and collecting cash from the customer: inventory days plus debtor days minus creditor days. The shorter it is, the less working capital growth consumes. Working capital calculator →
- Cash runway
- How many months the business can operate at its current net burn before cash runs out: cash in hand divided by monthly net burn. Runway calculator →
- Contribution margin
- Revenue minus variable costs — what each sale contributes towards fixed costs and profit. It is the right number for pricing, discounting and channel decisions because it ignores costs that don’t change with volume.
- Creditor days (DPO)
- Days payable outstanding: the average number of days the business takes to pay its suppliers. Under the MSMED Act, payments to micro and small enterprises fall due within 15 days, or up to 45 days where a longer period is agreed in writing.
- Debtor days (DSO)
- Days sales outstanding: the average number of days customers take to pay. Rising debtor days are often the first sign of a cash problem, well before it shows in the bank balance.
- Inventory days (DIO)
- Days inventory outstanding: how long stock sits, on average, before it is sold. Every extra day is cash tied up on a shelf.
- Margin of safety
- How far sales can fall before the business reaches break-even, as a percentage of current sales. A thin margin of safety means a small drop in volume wipes out profit.
- Working capital
- Current assets minus current liabilities — in practice, inventory plus receivables minus payables. It is the cash the day-to-day operation needs, and it grows with sales whether you plan for it or not. Working capital calculator →
GST
- CGST, SGST and IGST
- The three heads GST is charged under. A supply within one state is taxed as central GST plus state GST in equal halves; a supply between states is taxed as integrated GST at the full rate. The total tax is the same either way. GST calculator →
- E-invoicing (IRN)
- Reporting B2B invoices to the government’s Invoice Registration Portal, which returns an invoice reference number and QR code. It is mandatory for businesses whose turnover has exceeded ₹5 crore in any year since 2017-18.
- E-way bill
- An electronic document required before moving goods worth more than ₹50,000 in a consignment, generated on the e-way bill portal with details of the goods, the parties and the transporter. Some states set different limits for movement within the state.
- GST rates
- Since 22 September 2025 the main rates are 0%, 5%, 18% and 40%, with 40% reserved for a short list of luxury and sin goods. The earlier 12% and 28% slabs were abolished, and a few special rates remain, such as 3% on gold. GST calculator →
- GSTIN
- The 15-character GST identification number: a two-digit state code, the holder’s PAN, an entity number, the letter Z by default and a check digit. The check digit means most typing errors can be caught instantly. GSTIN validator →
- GSTR-1
- The return of outward supplies — every sale invoice, credit note and debit note — filed by the 11th of the following month, or quarterly by the 13th under the QRMP scheme. Your customers’ input credit depends on it.
- GSTR-2B
- An auto-drafted, fixed monthly statement of the input tax credit available to you, built from what your suppliers reported. Reconciling your purchase register to GSTR-2B before filing is the single most important GST control. GSTR-2B reconciliation →
- GSTR-3B
- The monthly summary return in which you declare sales, claim input credit and pay the net tax, due by the 20th of the following month for monthly filers. Late filing attracts a daily late fee and interest. Late fee calculator →
- GSTR-9
- The annual GST return summarising the year’s monthly returns, due by 31 December after the financial year ends. It is optional below ₹2 crore of turnover, and a reconciliation statement (GSTR-9C) is added above ₹5 crore.
- HSN and SAC codes
- Classification codes for goods (HSN) and services (SAC) that determine the GST rate and must be shown on tax invoices. The number of digits required depends on your turnover.
- Input tax credit (ITC)
- Credit for the GST you paid on business purchases, set off against the GST you owe on sales. It needs a valid tax invoice, receipt of the goods or services, and the supplier having reported the invoice so it appears in your GSTR-2B.
- Letter of Undertaking (LUT)
- A yearly declaration filed on the GST portal that lets a business export goods or services without paying IGST upfront, instead of paying and claiming a refund. It must be renewed for each financial year.
- Place of supply
- The location a supply is treated as made in for GST purposes. It decides whether you charge CGST and SGST or IGST, and getting it wrong means paying the tax again under the right head.
- QRMP scheme
- Quarterly Return Monthly Payment: an option for businesses with turnover up to ₹5 crore to file GSTR-1 and GSTR-3B quarterly while still paying tax monthly.
- Reverse charge mechanism (RCM)
- For certain notified supplies — such as legal services from an advocate or some goods transport services — the recipient pays the GST instead of the supplier. The tax paid under reverse charge can usually be claimed back as input credit.
- TCS under GST
- Tax collected at source by e-commerce operators on the net value of sales made through their platform. It appears on the seller’s GST portal and becomes usable for paying GST once the seller accepts it. E-commerce accounting →
TDS
- TDS (tax deducted at source)
- Income tax the payer withholds from certain payments — to contractors, professionals, landlords and others — and deposits with the government against the payee’s PAN. The payee claims it as a credit against their own tax. TDS calculator →
- Section 393
- The section of the Income-tax Act, 2025 that consolidates the old 194-series of TDS sections (194C, 194J, 194I and the rest) from 1 April 2026. The rates and thresholds for common payments carried over; the section references on challans and statements changed. What changed in 2026 →
- TAN
- Tax deduction and collection account number: the 10-character number every business must hold before deducting TDS, and quote on every TDS payment, statement and certificate.
- TDS statements (Forms 138, 140, 144)
- The quarterly TDS returns: Form 138 for salaries, Form 140 for other payments to residents and Form 144 for payments to non-residents. They replaced Forms 24Q, 26Q and 27Q from tax year 2026-27, with the same due dates. Due date calendar →
- TDS certificate (Form 131)
- The certificate a deductor issues to the payee showing the tax deducted and deposited on non-salary payments. It replaced Form 16A; Form 130 replaced Form 16 for salaries.
- Tax credit statement (Form 168)
- The annual statement of tax deducted or collected against a PAN, as reported by deductors, formerly Form 26AS. Reconciling it to your books is how you make sure every rupee deducted is claimed.
- Lower deduction certificate
- A certificate the payee obtains from the income-tax department authorising the payer to deduct TDS at a lower rate, or not at all. The payer must apply the certificate only within its amount and validity.
General information, not advice. Tax definitions reflect the law as at September 2026 and change with each Budget and GST Council meeting. Confirm anything material for your own situation before you act on it.
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