GST, Tax & Payroll Glossary for Indian SMBs

Last updated: 27 June 2026

Indian tax and payroll law is full of jargon that trips up even experienced business owners. This glossary cuts through the noise: each term gets a clean one-sentence definition, a plain-English explanation, and the numbers that actually matter — sourced from CBIC, GSTN, Income Tax Department, EPFO, ESIC, and the Ministry of MSME.

Definitions reflect the current law as of June 2026, including the GST 2.0 rate rationalization (effective 22 September 2025), Budget 2025 income-tax changes, and the four Labour Codes (effective 21 November 2025).

GST Terms

Term	Quick meaning
GSTIN	Your 15-digit GST identification number
HSN Code	8-digit goods classification code
SAC Code	6-digit services classification code
GSTR-1	Monthly/quarterly return for outward supplies
GSTR-3B	Monthly summary return + tax payment
GSTR-2B	Auto-drafted Input Tax Credit statement
Input Tax Credit (ITC)	GST paid on purchases set off against tax owed on sales
Reverse Charge Mechanism (RCM)	Buyer pays GST instead of the seller
E-Invoice (IRN)	Government-authenticated invoice with a unique reference number
E-Way Bill	Electronic permit for moving goods worth over ₹50,000
Place of Supply	Rule that determines which state's GST applies
Composition Scheme	Simplified GST for small businesses up to ₹1.5 crore turnover

Income Tax & TDS Terms

Term	Quick meaning
TDS	Tax deducted at source on payments
TCS	Tax collected at source by sellers
Advance Tax	Income tax paid in four instalments during the year

Payroll Terms

Term	Quick meaning
EPF	Employees' Provident Fund — 12% + 12% retirement savings
ESI	Employees' State Insurance — health cover for wages ≤ ₹21,000
Professional Tax	State-level tax on employment income, max ₹2,500/year
Gratuity	Lump-sum exit payment after 5 years of service

Accounting & MSME Terms

Term	Quick meaning
Udyam Registration	Free MSME certificate from the Ministry of MSME
Section 43B(h)	Income-tax rule: pay Micro/Small suppliers within 45 days or lose the deduction
Trial Balance	Worksheet checking that debits equal credits
Balance Sheet	Snapshot of assets, liabilities and equity on a given date
Depreciation	Systematic write-down of an asset's cost over its useful life

General information, not professional advice. Verify on the official portal for your case. Reviewed by a Chartered Accountant; last updated 27 June 2026.