Glossary

The words that come up when you start or run a business in India, each in two short paragraphs, with the lesson that uses it.

• Bill of supplyThe bill issued instead of a tax invoice when no GST is charged — by a composition dealer, or for exempt goods and services.
• Break-evenThe level of sales at which a business covers all its costs — no profit, no loss.
• Cash flowThe money actually coming into and going out of the business, and when — as opposed to profit on paper.
• Cash on delivery (COD)An online order the customer pays for when it arrives, rather than when they place it.
• CGST, SGST and IGSTThe three parts GST is charged as: central and state halves on a sale within a state, integrated tax on a sale between states.
• CGTMSEA government guarantee that lets a bank lend to a small business without asking for collateral.
• CollateralProperty or assets pledged to a lender, which it can take if the loan is not repaid.
• Composition schemeA simpler GST option for small businesses: tax paid as a share of turnover, with fewer returns and no input tax credit.
• Credit noteA document that reduces the value of an invoice already issued — for a return, a later discount or an overcharge.
• Current accountA bank account meant for business, with no limit on transactions, that keeps business money apart from personal money.
• EPF (provident fund)The Employees' Provident Fund: a retirement savings scheme employer and employee both pay into each month.
• ESIEmployees' State Insurance: health and sickness cover for workers, paid for by employer and employee contributions.
• FranchiseAn arrangement where one business lets another run a branch under its name and system, in return for fees.
• FSSAI registrationThe food safety registration or licence anyone who makes, sells, stores or serves food needs — including from home.
• GeM (Government e-Marketplace)The government's online marketplace, where ministries, departments and public bodies buy goods and services from registered sellers.
• Gross marginWhat is left from a sale after the direct cost of what was sold, before rent, wages and other running costs.
• GST returns (GSTR-1 and GSTR-3B)The regular statements a registered business files: GSTR-1 lists its sales, GSTR-3B sums up and pays the tax.
• GSTINThe 15-character GST identification number a business gets when it registers for GST.
• HSN codeThe number that classifies a product for GST, and decides the rate of tax it carries.
• Input tax credit (ITC)The GST you paid on business purchases, which a registered business can set off against the GST it owes on sales.
• Khata (credit ledger)The running record of what regular customers have bought on credit and still owe.
• LLPLimited liability partnership: partners run the business together, but each one's liability is limited.
• Margin moneyThe part of a project's cost the borrower pays, or a subsidy covers, rather than the bank's loan.
• MSMEMicro, small and medium enterprise: the government's size classes for businesses, set by investment and turnover.
• MUDRA loanCollateral-free loans for non-farm micro businesses, given through banks, NBFCs and microfinance lenders in four tiers.
• Net profitWhat is left after every cost of the business — stock, rent, wages, interest and tax — has been paid.
• OverdraftA bank facility that lets a current account go below zero up to an agreed limit, with interest on what you use.
• Place of supplyWhere, in GST's eyes, a sale happens — which decides whether you charge CGST and SGST or IGST.
• PMEGPThe Prime Minister's Employment Generation Programme: a bank loan for a new unit, with a government subsidy on part of the cost.
• Project reportThe document a loan application rests on: what the business is, what it will cost, and how it will repay.
• Purchase order (PO)The buyer's written order, confirming what they will buy from you, at what price and on what terms.
• QRMPQuarterly Return, Monthly Payment: a GST option that lets smaller businesses file returns quarterly while paying tax monthly.
• QuotationA written offer to supply something at a stated price and on stated terms, before the customer orders.
• SAC codeThe services counterpart of an HSN code: the number that classifies a service for GST.
• Shop and establishment registrationYour state's registration for a shop, office or commercial premises, also called a trade or labour licence.
• Sole proprietorshipA business owned and run by one person, with no separate legal identity from them.
• Stand-Up IndiaA loan scheme for women, SC and ST founders' first ventures. Closed to new loans since 31 March 2025.
• TANTax deduction and collection account number: the number a business needs before it deducts TDS.
• Tax invoiceThe bill a GST-registered business issues for a taxable sale, with the details the law requires on it.
• TDSTax deducted at source: income tax the payer takes off certain payments and deposits with the government on the payee's behalf.
• TrademarkA registered right to a name, logo or mark for particular goods or services, which stops others using it for the same.
• Udyam registrationThe government's free registration for micro, small and medium enterprises, which banks and schemes ask for.
• UPI for businessUnified Payments Interface: instant bank-to-bank payments by QR code or phone number, which most customers now expect to use.
• Working capitalThe money tied up in running the business day to day: stock, money customers owe you, minus what you owe suppliers.