GST glossary: Defining important terms

Section 2 of the Goods and Services Tax (GST) Act deals with definitions, phrases, and expressions that are necessary to ensure proper implementation and interpretation of the law. Some of the major terms that are beneficial to businesses and consultants are compiled here.

  1. Actionable claim will have the significance assigned to it in section 3 of the Transfer of Property Act, 1882 (4 of 1882), which refers to a claim on any unsecured debt or any beneficial interest in movable property of the claimant.
  2. Address of delivery refers to the address of the recipient of goods and/or services indicated on the tax invoice issued by a taxable person for delivery of such goods and/or services.
  3. Address on record means the address of the recipient as noted in the files of the supplier. This may or may not be the same as the address of delivery.
  4. Adjudicating authority means any authority competent to pass any order or decision relating to the GST Act, but does not include the Central Board of Excise and Customs, the Revisional authority, authority for the advance ruling, appellate authority for an advance ruling, appellate authority, or the appellate tribunal.
  5. Aggregate turnover means the total value of all taxable supplies, exempt supplies, exports of goods and/or services, and interstate supplies of a person having the same PAN, computed on the pan-India basis and excluding taxes. However, the value of inward supplies on which taxation is based on reverse-charge mechanism shall not be admitted.
  6. Appellate tribunal means the Goods and Services Tax Appellate Tribunal set up under section 109.
  7. Application Service Providers (ASPs) are like GST Suvidha Providers (GSPs) but are more wholesome than GSPs. The support provided by ASPs will address most taxpayer compliance difficulties as they work as a liaison between the taxpayers and the GSPs.
  8. Appropriate government refers to the Central Government for IGST, UTGST and CGST, and the State Government for SGST.
  9. Assessment means the determination of tax liability inclusive of self-assessment, re-assessment, provisional assessment, summary assessment, and best judgment assessment.
  10. Capital goods are goods that are capitalized in the books of accounts of the person claiming the credit and are intended to be used during business.
  11. Casual taxable person is a person occasionally undertaking transactions involving the supply of goods and/or services during business, whether as principal, agent or in any other capacity, in a taxable territory where he has no fixed place of business.
  12. CGST is the tax levied under the Central Goods and Services Tax Act, 2016.
  13. Common portal refers to the online GST portal approved by the Central and State Governments, on the recommendation of the council.
  14. Composite supply means a supply consisting of two or more goods and/or services, which are naturally bundled and provided together, one being a principal supply.
  15. Consideration relates to the supply of goods or services involving:
    • Any payment made or to be made, whether in money or kind
    • Monetary value of any act or forbearance, whether or not voluntary

However, the subsidy given by the Central and/or State Governments are not included.

  1. Council refers to the Goods and Services Tax Council set up under Article 279A of the Constitution.
  2. Credit note means a document issued by a taxable person in relation to the tax invoice exceeding the taxable value and/or tax payable in respect of supply, or where the goods supplied are returned by the recipient, or where the services supplied are found to be deficient.
  3. Debit note means a document issued by a taxable person relating to the taxable value and/or tax charged as per the tax invoice when found to be less than the taxable value and/or tax payable in respect of such supply.
  4. Digital signature certificate (DSC) refers to a secure digital key that certifies the identity of the holder, issued by a Certifying Authority (CA). It typically holds information about the identity of the holder. It is the digital equivalent of a handwritten signature.
  5. Electronic commerce means the supply of goods and/or services including digital products over a digital or electronic network.
  6. Exempt supply means supply of any goods and/or services that are not taxable and includes such supply of goods and/or services that attract zero rate of tax or that may be exempt from tax per section 11.
  7. Fixed establishment is a place, other than the place of business, that has a sufficient degree of permanence and suitable structure regarding human and technical resources as to supply/receive/use services for its own
  8. Forward charge means the tax liability of the supplier of goods and/or services to levy the tax on the recipient of the goods and/or services and to remit the same to the credit of the government.
  9. Fund means the Consumer Welfare Fund set up under section 57 by the Central Government.
  10. Goods refers to all types of movable property, including actionable claim, growing crops, grass, and things attached to the land that are agreed to be severed before supply or under a contract of supply. Excludes securities and money.
  11. Goods and Services Tax Network (GSTN) is a non-profit, public-private partnership company. Its main purpose is to provide IT infrastructure and services to Central and State Governments, taxpayers, and other stakeholders to facilitate the implementation of GST.
  12. GST Suvidha Provider (GSP) refers to third-party applications that assist the taxable person in accessing the GST portal in an enriched manner by being more user-friendly and customer-centred.
  13. Harmonized System Nomenclature (HSN) Code is a numeral used to classify goods for taxation purposes provided by the World Customs Organization.
  14. IGST means Integrated Goods and Services Tax Act, 2017. Integrated tax means the IGST levied under IGST Act, 2017.
  15. Input service distributor means an office of the supplier of goods and/or services that receives tax invoices issued under section 31 toward the receipt of input services and issues a prescribed document for distributing the credit of CGST, SGST, UTGST and/or IGST paid for the said services.
  16. Input tax in relation to a regisfixedtered person, means the central tax, state tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes:
    • IGST charged on the import of goods.
    • Tax payable under subsections (3) and (4) of section 9.
    • Tax payable under subsections (3) and (4) of section 5 of the IGST Act.
    • Tax payable under subsections (3) and (4) of section 9 of the respective SGST Act; or
    • Tax payable under subsections (3) and (4) of section 7 of the UTGST Act.

However, it does not include the tax paid under the composition levy.

  1. Input tax credit means the credit of input tax.
  2. Intrastate supply of goods means the supply of goods during intrastate trade or commerce regarding subsection (1) of section 8 of IGST Act, 2017.
  3. Intrastate supply of services means the supply of services during intrastate trade or commerce regarding subsection (2) of section 8 of IGST Act, 2017.
  4. Invoice shall have the meaning as assigned to “Tax Invoice” as under section 31.
  5. Inward supply refers to the receipt of goods and/or services, whether by purchase, acquisition, or any other means, and with or without any consideration.
  6. Job work means undertaking any treatment or process by a person on goods belonging to another registered taxable person.
  7. Local authority means:
    • Panchayat as defined in clause (d) of Article 243 of the Constitution
    • Municipality as specified in clause (e) of Article 243P of the Constitution
    • A municipal committee, a zilla parishad, a district board, and any other authority legally entitled to or entrusted by the Central or any State Government with the control or management of a municipal or local fund
    • Cantonment board as defined in section 3 of the Cantonments Act, 2006 (41 of 2006)
    • Regional council or a district council formed under the Sixth Schedule to the Constitution
    • Development board formed under Article 371 of the Constitution
    • Regional council formed under Article 371A of the Constitution
  8. Market value refers to the full amount that a recipient of supply would pay to obtain the goods and/or services of like kind and quality at or about the same time and at the same commercial level, where the recipient and supplier are not related.
  9. Mixed supply means two or more individual supplies of goods and/or services made together by a taxable person for a single price where such supply does not form a composite supply.
  10. Non-resident taxable person is someone who occasionally undertakes transactions involving the supply of goods and/or services, whether as principal or agent, or in any other capacity, but with no fixed place of business in India.
  11. Output tax means the CGST/SGST on taxable supply of goods and/or services made by a taxable person or by his agent. Excludes tax payable on a reverse-charge basis.
  12. Outward supply refers to the supply of goods and/or services, whether by sale, transfer, barter, exchange, licence, rental, lease, or disposal, or any other means made or agreed to be made during business.
  13. Person includes:
    • An individual
    • A Hindu undivided family
    • A company
    • A firm
    • A Limited Liability Partnership
    • An association of persons or a body of individuals, whether incorporated or not, in India or outside India
    • Any corporation set up by or under any Central, State, or Provincial Act or a government company as defined in section 2(45) of the Companies Act, 2013 (18 of 2013)
    • A body corporate incorporated by or under the laws of a country outside India
    • A cooperative society registered under any law relating to cooperative societies
    • A local authority
    • Central government or a State government.
    • Society as defined under the Societies Registration Act, 1860 (21 of 1860)
    • A trust
    • Every artificial juridical person, not falling within any of the preceding sub-clauses
  14. Place of business includes:
    • A place from where the business is ordinarily carried on, including a warehouse, a godown, or any other place where a taxable person stores his goods, or provides or receives goods and/or services
    • A place where a taxable person keeps his books of account
    • A place where a taxable person is engaged in business through an agent
  15. Principal means a person on whose behalf an agent carries on the business of supply or receipt of goods and/or services.
  16. Principal place of business means the location of business specified as the principal place of business in the certificate of registration.
  17. Principal supply means the supply of goods and/or services that form the significant element of a composite supply and any other related supply being ancillary.
  18. Recipient of supply of goods and/or services means:
    • Where the consideration is payable, the person liable to pay that consideration.
    • Where no consideration is payable, the person to whom the goods and/or services are delivered/rendered or made available.

Includes an agent working on behalf of the recipient in relation to the goods and/or services provided.

  1. Registered importer refers to the importer registered per the provisions of Central Excise Rules, 2002.
  2. Related persons include:
    • Officers or directors of one another's business
    • Legally recognised partners in business
    • The employer and the employee
    • Someone who directly or indirectly owns, controls, or holds 25 percent or more of the outstanding voting stock or shares of both
    • One of them directly or indirectly controls the other
    • A third person directly or indirectly controls both
    • Together they directly or indirectly control a third person
    • They are members of the same family
  3. Removal in relation to goods means:
    • Dispatch of the goods for delivery by the supplier or by any other person acting on behalf of such supplier
    • Collection of the goods by the recipient or by any other person acting on behalf of such recipient
  4. Return refers to any return prescribed or required to be furnished.
  5. Reverse charge means the tax liability on the recipient of the supply of goods and/or services instead of the supplier of such goods and/or services.
  6. Securities shall mean as per subsection (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).
  7. Services means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.
  8. SGST means the State Goods and Services Tax Act, 2017. State tax means the tax imposed under SGST Act, 2017.
  9. Supplier signifies the person providing the said goods and/or services and shall include an agent acting as such on behalf of such supplier about the goods and/or services provided.
  10. Supply includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, lease, or disposal made or agreed to be made for a consideration by a person in the course of business and also includes import of services for a consideration whether or not in the course of business.
  11. Taxable person is an individual who carries on any business at any place in any state of India and who is registered or required to be registered under GST.
  12. Turnover in a state or in Union Territory means the aggregate value of all taxable supplies, exempt supplies, exports of goods and/or services made within a state or Union Territory by a taxable person and interstate supplies of goods and/or services made from the state or Union Territory excluding taxes. Like aggregate turnover, the value of inward supplies on which taxation is based on reverse-charge mechanism shall not be admitted.
  13. Usual place of residence means:
    • In the case of an individual, the place where he ordinarily resides
    • In other cases, the place where the person is incorporated or otherwise legally constituted
  14. Zero-rated supply, as per section 16 of IGST Act, 2017, means supply of any goods and/or services including:
    • export of goods or services or both; or
    • supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

This whitepaper is authored by Vatsal Bhandari.

Avalara is an Application Service Provider (ASP) partner with licensed GST Suvidha Providers (GSPs). We offer India GST, a GST compliance solution in the cloud for multistate returns preparation and filing. To learn more about how Avalara can help you with GST automation, contact us through http://avalara.com/in/products/gst-returns-filing

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