Glossary

A 6 terms

Activity-based costing

A costing method that assigns overheads to products or customers according to the activities they use, such as machine set-ups, inspections or orders handled, instead of spreading them evenly. Where this applies →

Advance tax

Income tax paid during the year instead of at the end. Businesses pay it in four instalments: 15% of the estimated tax by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March. Where this applies →

Aggregate turnover

The measure of turnover that GST uses, taken across all registrations under one PAN. GST limits such as those for e-invoicing and GSTR-9C are tested against it. Where this applies →

AIS (Annual Information Statement)

The Income Tax Department's record of financial information reported about a PAN, such as interest, dividends, securities transactions and TDS. It is wider than Form 26AS. From tax year 2026-27 the annual information statement is Form 168. Where this applies →

AOC-4

The form a company uses to file its financial statements with the Registrar of Companies, within 30 days of the annual general meeting. Where this applies →

Assessment year (AY)

Under the Income-tax Act, 1961, the year that follows the financial year and in which that year's income is assessed; for example, income of financial year (FY) 2025-26 is assessed in assessment year (AY) 2026-27. From 1 April 2026 the Income-tax Act, 2025 uses a single “tax year” instead. Where this applies →

B 1 term

Break-even point

The level of sales at which total contribution equals fixed costs, so there is neither profit nor loss. Every sale above it adds to profit. Where this applies →

C 14 terms

CAS (Cost Accounting Standards)

Standards issued by the Institute of Cost Accountants of India on how each element of cost is measured and presented. Companies covered by the cost records rules must follow them when maintaining cost records. Where this applies →

CAS-4

The Cost Accounting Standard on the cost of production for captive consumption. A CAS-4 certificate is commonly used to value goods supplied to related units for GST. Where this applies →

Cash conversion cycle (also: cash cycle)

The number of days cash is tied up between paying suppliers and collecting from customers: debtor days plus inventory days minus creditor days. Where this applies →

CETA (Central Excise Tariff Act)

The 1985 Act whose tariff headings the cost records rules use to identify covered products, so the heading of your product decides whether it is covered. Where this applies →

Contribution

Selling price minus variable cost. It is what each sale contributes towards fixed costs and then profit. Where this applies →

Contribution margin

Contribution as a percentage of the selling price. A 40% contribution margin means ₹40 of every ₹100 of sales is left after variable costs. Where this applies →

Cost audit

An audit of a company's cost records by a Cost Accountant in practice, required under Section 148 of the Companies Act, 2013 when the turnover thresholds in the Companies (Cost Records and Audit) Rules, 2014 are met. Where this applies →

Cost records

Records of the cost of materials, labour, overheads and other items for covered products or services, kept with the particulars set out in Form CRA-1 by companies covered under the Companies (Cost Records and Audit) Rules, 2014. Where this applies →

CRA-1

The form that sets out the particulars to be kept in cost records: materials, employee costs, utilities, overheads and other cost items for each covered product. Where this applies →

CRA-2

The form a company files with the Central Government to report the appointment of its cost auditor. Where this applies →

CRA-3

The format of the cost audit report, which the cost auditor submits to the company's Board. Where this applies →

CRA-4

The form a company uses to file the cost audit report with the Central Government, in XBRL format. Where this applies →

Creditor days

How long a business takes to pay its suppliers: trade payables divided by cost of goods sold (or purchases), multiplied by 365. Where this applies →

CSR (corporate social responsibility)

The duty of larger companies, under Section 135 of the Companies Act, 2013, to spend on specified social activities. It applies to companies with net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more. Where this applies →

D 3 terms

Debtor days

How long customers take to pay: trade receivables divided by sales, multiplied by 365. Where this applies →

DIR-3 KYC

The know-your-customer (KYC) filing that a person holding a Director Identification Number (DIN) makes with the Ministry of Corporate Affairs to keep the DIN active. Where this applies →

Drawing power

The amount a business can actually draw on its working-capital limit in a month. The bank works it out from paid-for stock and recent debtors, less its margin, and it can be lower than the sanctioned limit. Where this applies →

E 1 term

E-invoicing

Reporting business-to-business (B2B) invoices to the GST Invoice Registration Portal, which returns an Invoice Reference Number (IRN). It applies once aggregate turnover has exceeded ₹5 crore in any financial year since FY 2017-18. Where this applies →

F 17 terms

Financial year (FY)

The 12 months from 1 April to 31 March. FY 2025-26 runs from 1 April 2025 to 31 March 2026. Under the Income-tax Act, 2025 the financial year in which income is earned is called the tax year. Where this applies →

Fixed cost

A cost that stays the same whatever the volume of sales in a period, such as rent, salaries and interest. Where this applies →

Form 26

The tax audit report under the Income-tax Act, 2025, used from tax year 2026-27. It replaces Forms 3CA, 3CB and 3CD. Where this applies →

Form 26AS

The annual tax statement for a PAN showing tax deducted or collected at source, advance tax and self-assessment tax paid, and certain other transactions. From tax year 2026-27 it is replaced by Form 168. Where this applies →

Form 121

The declaration a payee gives so that tax is not deducted, under Section 393(6) of the Income-tax Act, 2025. It replaces Forms 15G and 15H. A fresh declaration is collected each year. Where this applies →

Form 128

The form for a certificate of lower or nil deduction of tax under Section 395 of the Income-tax Act, 2025. It replaces Form 13. Where this applies →

Form 130

The TDS certificate for salary under the Income-tax Act, 2025. It replaces Form 16. Where this applies →

Form 131

The TDS certificate for payments other than salary under the Income-tax Act, 2025. It replaces Form 16A. Where this applies →

Form 132

The TDS certificate that a person who pays tax through Form 141, such as a buyer of property, gives to the payee. Where this applies →

Form 133

The TCS certificate under the Income-tax Act, 2025. It replaces Form 27D. Where this applies →

Form 138

The quarterly TDS statement for salary under the Income-tax Act, 2025. It replaces Form 24Q. It is due by 31 July, 31 October, 31 January and 31 May. Where this applies →

Form 140

The quarterly TDS statement for payments other than salary to residents under the Income-tax Act, 2025. It replaces Form 26Q. Where this applies →

Form 141

The challan-cum-statement with which a person who does not need a TAN deducts, pays and reports TDS in one step from the PAN login, within 30 days from the end of the month of deduction. It is used, for example, by a buyer of property. Where this applies →

Form 143

The quarterly TCS statement under the Income-tax Act, 2025. It replaces Form 27EQ. Where this applies →

Form 144

The quarterly TDS statement for payments to non-residents under the Income-tax Act, 2025. It replaces Form 27Q. Where this applies →

Form 168

The annual information statement under the Income-tax Act, 2025, showing TDS, TCS and other information reported for a PAN. It replaces Form 26AS and AIS from tax year 2026-27. Where this applies →

Form MSME-1 (also: MSME Form 1)

A half-yearly return in which specified companies report amounts due to micro and small enterprises for more than 45 days. It is due by 30 April and 31 October. Where this applies →

G 6 terms

GACAP (Generally Accepted Cost Accounting Principles)

Principles issued by the Institute of Cost Accountants of India. Cost records are kept following these principles and the Cost Accounting Standards. Where this applies →

GSTR-1

The GST return that reports a business's outward supplies (sales). Monthly filers file it by the 11th of the following month. Where this applies →

GSTR-2B

An auto-drafted statement of the input tax credit available to a business, built from its suppliers' filed returns. It is the starting point for claiming ITC each month. Where this applies →

GSTR-3B

The summary GST return in which a business reports its tax liability and input tax credit and pays the tax due. Where this applies →

GSTR-9

The GST annual return, due by 31 December after the end of the financial year. Where this applies →

GSTR-9C

The self-certified reconciliation statement between the GST annual return and the audited financial statements, filed with GSTR-9 by businesses with aggregate turnover above ₹5 crore. Where this applies →

H 1 term

HUF (Hindu undivided family)

A family that the Income-tax Act treats as a taxpayer in its own right, separate from its members, with its own PAN. Where this applies →

I 5 terms

IMS (Invoice Management System)

The system on the GST portal where a buyer accepts, rejects or keeps pending the invoices uploaded by its suppliers before they flow into GSTR-2B. Where this applies →

Internal audit

A review of a business's processes and controls, carried out during the year. Section 138 of the Companies Act, 2013 requires it for listed companies and for other companies above specified turnover, capital or borrowing thresholds. Where this applies →

Inventory days

How long stock is held before it is sold: inventory divided by cost of goods sold, multiplied by 365. Where this applies →

IRN (Invoice Reference Number)

The number the GST Invoice Registration Portal gives to each e-invoice. Without a valid IRN, the document is not a valid invoice for businesses covered by e-invoicing. Where this applies →

ITC (input tax credit)

The GST paid on purchases, which a registered business can set off against the GST it collects on sales, subject to conditions and time limits. Where this applies →

J 1 term

Job work

Processing done on goods that belong to someone else, such as dyeing fabric or machining castings. The owner sends the material without charging GST, and the job worker charges GST on the processing charge only. Where this applies →

L 2 terms

LLP Form 8

The statement of accounts and solvency of a limited liability partnership, due by 30 October. Where this applies →

LLP Form 11

The annual return of a limited liability partnership, due by 30 May. Where this applies →

M 8 terms

Margin (also: profit margin)

Profit as a percentage of the selling price. It is not the same as markup: a 25% markup on cost is a 20% margin. Where this applies →

Margin of safety

How far sales can fall before a business reaches its break-even point, usually shown as a percentage of expected sales. Where this applies →

Markup

Profit as a percentage of cost. A ₹100 cost with a 25% markup gives a ₹125 price. Where this applies →

MFCA (material flow cost accounting)

A method that follows material by weight through each step of a process and gives lost material its full share of material, energy and processing cost, as well as the cost of disposal. Where this applies →

MGT-7

The form a company uses to file its annual return with the Registrar of Companies, within 60 days of the annual general meeting. Small companies and one-person companies use MGT-7A. Where this applies →

Micro, small and medium enterprises (MSME; also: micro enterprise, small enterprise, medium enterprise)

From 1 April 2025, a micro enterprise has investment in plant and machinery or equipment up to ₹2.5 crore and turnover up to ₹10 crore; a small enterprise, up to ₹25 crore and ₹100 crore; a medium enterprise, up to ₹125 crore and ₹500 crore. Both limits must be met. Where this applies →

MIS (management information system)

The regular reports that show owners and managers how the business is doing, such as sales, margins, costs, cash and budget against actual. Where this applies →

MSMED Act

The Micro, Small and Medium Enterprises Development Act, 2006. Sections 15 and 16 set the time limits for paying micro and small suppliers and the interest on late payment. Where this applies →

O 1 term

Overhead absorption

Spreading indirect costs, such as factory rent and supervision, over products using a fair basis such as machine hours or labour hours. Where this applies →

P 2 terms

PAN (Permanent Account Number)

The ten-character number the Income Tax Department gives each taxpayer. Returns, tax payments and the tax deducted from a person are all recorded against it. Where this applies →

Presumptive taxation

Schemes under which eligible small businesses and professionals declare income at a set percentage of turnover or receipts instead of keeping full books for tax purposes, within turnover limits. Where this applies →

Q 1 term

QRMP (Quarterly Return, Monthly Payment)

A GST scheme for businesses with aggregate turnover up to ₹5 crore, which file returns quarterly but pay tax monthly. Where this applies →

R 1 term

Rule 37BA

A rule under the Income-tax Rules, 1962 providing that credit for TDS is given for the assessment year for which the related income is assessable. From tax year 2026-27 the corresponding rule is Rule 203 of the Income-tax Rules, 2026. Where this applies →

S 3 terms

Section 43B(h)

The provision of the Income-tax Act, 1961 under which an amount owed to a micro or small enterprise and paid after the time allowed by the MSMED Act is deductible only in the year it is actually paid. From tax year 2026-27 the corresponding provision is Section 37(2)(g) of the Income-tax Act, 2025. Where this applies →

Small company

A private company with paid-up capital up to ₹10 crore and turnover up to ₹100 crore (limits from 1 December 2025), other than holding, subsidiary, Section 8 and special-Act companies. Small companies have lighter compliance. Where this applies →

Standard costing

Setting expected costs for each product in advance and comparing them with actual costs, so that the differences (variances) can be investigated. Where this applies →

T 6 terms

TAN (tax deduction and collection account number)

The number a person who deducts or collects tax at source obtains from the Income Tax Department. TDS and TCS are paid and reported under it. Where this applies →

Tax audit

An audit of a business's accounts for income tax, required when business turnover exceeds ₹1 crore, or ₹10 crore where cash receipts are within 5% of total receipts and cash payments are within 5% of total payments. For a profession it is required when gross receipts exceed ₹50 lakh. Where this applies →

Tax year

Under the Income-tax Act, 2025, the financial year in which income is earned. It replaces the separate “previous year” and “assessment year” from tax year 2026-27. Where this applies →

TCS (tax collected at source)

Tax a seller collects from the buyer on specified sales and deposits with the government. Where this applies →

TDS (tax deducted at source)

Tax a payer deducts from specified payments, such as professional fees, rent or contract payments, and deposits with the government on the payee's behalf. Where this applies →

TReDS (Trade Receivables Discounting System)

Platforms authorised by the Reserve Bank of India on which a supplier's invoice is accepted by the buyer and discounted by a financier, so that the supplier is paid early while the buyer pays on the due date. Where this applies →

U 1 term

Udyam (also: Udyam registration, Udyam portal)

The government portal on which micro, small and medium enterprises register. The Udyam certificate shows the enterprise's classification. Where this applies →

V 2 terms

Variable cost

A cost that rises and falls with the volume produced or sold, such as materials, packing and sales commission. Where this applies →

Variance (also: variance analysis)

The difference between a standard or budgeted figure and the actual figure, analysed to find out why it arose. Where this applies →

W 1 term

Working capital

The money tied up in running the business day to day: mainly debtors plus inventory, less creditors. Where this applies →

X 1 term

XBRL (eXtensible Business Reporting Language)

A machine-readable format for financial reports. Specified companies must file their financial statements in XBRL, and every cost audit report is filed in XBRL. Where this applies →

Definitions are simplified for general understanding. They are not professional advice. Checked: October 2026