GST glossary
GST terms explained simply
25 common GST terms — from CGST and ITC to GSTR-1 and e-invoicing — defined in plain English for Indian shop owners, freelancers, and traders.
25 terms
- Bill of Supply Invoicing
- A document issued instead of a tax invoice when GST cannot be charged — for example by a composition dealer or for exempt supplies. It does not show a tax amount.
- CGSTCentral GST Tax types
- The portion of GST on an intra-state supply that goes to the central government. On an 18% intra-state sale, CGST is 9%.
- Compensation Cess Tax types
- An additional levy on certain luxury and demerit goods (such as cars, tobacco, and aerated drinks) over and above the applicable GST rate.
- Composition Scheme Compliance
- A simplified scheme for small taxpayers below a turnover threshold to pay GST at a fixed lower rate on turnover, with reduced compliance — but without the ability to claim input tax credit.
- E-Invoice Invoicing
- An invoice reported to the government's Invoice Registration Portal (IRP), which returns a unique IRN and a signed QR code. It is mandatory above notified turnover thresholds.
- E-Way Bill Compliance
- An electronic document required for moving goods above a notified value, generated on the e-way bill portal and carrying details of the consignment, supplier, and transporter.
- Exempt Supply Basics
- A supply that is wholly exempt from GST by notification. Input tax credit cannot be claimed on inputs used to make exempt supplies.
- GSTGoods and Services Tax Basics
- A single indirect tax levied on the supply of goods and services across India, introduced on 1 July 2017. It replaced multiple central and state taxes such as VAT, service tax, and excise duty.
- GSTINGST Identification Number Basics
- A unique 15-character number assigned to every registered taxpayer: a 2-digit state code, the 10-character PAN, an entity code, a default letter, and a checksum character (e.g. 27AAAAA0000A1Z5).
- GSTR-1 Returns
- The monthly or quarterly return reporting all outward supplies (sales). It feeds the buyer's input tax credit via the auto-drafted statements.
- GSTR-2B Returns
- An auto-drafted, static statement of input tax credit available to a buyer for a period, generated from suppliers' filings. It is the basis for ITC reconciliation.
- GSTR-3B Returns
- A summary return where a taxpayer declares total outward supplies, input tax credit claimed, and pays the net GST liability for the period.
- GSTR-9 Returns
- The annual return that consolidates a financial year's monthly or quarterly returns, filed by eligible regular taxpayers.
- HSN CodeHarmonized System of Nomenclature Invoicing
- A standardised numeric code that classifies goods for taxation. The number of digits required on an invoice depends on your turnover.
- IGSTIntegrated GST Tax types
- The single GST charged on inter-state supplies and imports, collected by the centre and later shared with the destination state. IGST equals CGST + SGST for the same rate.
- Input Tax CreditITC Compliance
- The credit a business can claim for GST already paid on purchases, set off against GST collected on sales — so tax is effectively paid only on value added.
- Nil-Rated Supply Basics
- A supply that attracts a 0% GST rate under the tariff. It is distinct from exempt and non-GST supplies, though all result in no tax being charged.
- Place of Supply Compliance
- The location that determines whether a supply is intra-state (CGST + SGST) or inter-state (IGST). It drives which tax applies on an invoice.
- Reverse Charge MechanismRCM Compliance
- A mechanism where the recipient of goods or services pays GST directly to the government instead of the supplier, for certain notified supplies.
- Reverse GST Invoicing
- The calculation that extracts the taxable value from a GST-inclusive total — for example finding ₹10,000 base from ₹11,800 at 18% GST.
- SAC CodeServices Accounting Code Invoicing
- The classification code for services under GST, equivalent to HSN for goods. Service invoices carry the relevant SAC code.
- SGSTState GST Tax types
- The portion of GST on an intra-state supply that goes to the state government. It always equals the CGST amount on the same invoice.
- Tax Invoice Invoicing
- The GST-compliant invoice a registered supplier issues for a taxable supply, showing GSTIN, HSN/SAC, taxable value, and the CGST/SGST or IGST breakup.
- UTGSTUnion Territory GST Tax types
- The equivalent of SGST for supplies within a union territory without its own legislature, such as Chandigarh or Lakshadweep.
- Zero-Rated Supply Basics
- Exports and supplies to SEZs, taxed at 0% but with the benefit of claiming input tax credit or a refund — unlike exempt supplies.
Put these terms into practice
PocketGST turns GST concepts into real invoices — correct CGST/SGST or IGST split, HSN/SAC codes, and GSTR-1/3B helper reports, all offline.
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