Glossary
The compliance glossary for Indian SMBs & startups
151 plain-English definitions — GST, TDS and income tax, PF/ESI and labour, ROC/MCA, legal and startup diligence. Each term links to the related calculators and guides.
GST
Registration, returns, input credit and the dues with fixed dates.
- Casual taxable personA casual taxable person occasionally supplies goods or services in a state where they have no fixed place of business (e.g. at an exhibition) and must register and pay an advance tax deposit regardless of turnover.
- CGSTCGST (Central GST) is the central government's share of GST on an intra-state supply, levied alongside an equal SGST.
- Composition schemeThe GST composition scheme lets small taxpayers (turnover up to ₹1.5 crore for goods, ₹50 lakh for services) pay tax at a low flat rate on turnover instead of regular GST, but they cannot claim input tax credit or collect GST from customers.
- E-invoiceE-invoicing is the system of reporting B2B invoices to the government's Invoice Registration Portal to obtain an IRN and QR code; it is mandatory for businesses above the prescribed turnover (currently ₹5 crore).
- E-way billAn e-way bill is an electronic document required for the movement of goods worth more than ₹50,000, generated on the e-way bill portal before transport begins.
- Exempt supplyAn exempt supply is a supply on which no GST is charged and for which no input tax credit can be claimed, unlike a zero-rated supply.
- GSTGST (Goods and Services Tax) is India's unified indirect tax on the supply of goods and services, charged at each stage of the supply chain with credit for tax paid on inputs.
- GST auditA GST audit is the examination of a registered person's records to verify turnover, taxes paid, refunds and input credit; self-certified reconciliation via GSTR-9C applies above ₹5 crore turnover.
- GST interestGST interest is charged at 18% per annum on net tax paid late, computed for the number of days from the due date until payment.
- GST late feeA GST late fee is the per-day charge for filing GSTR-1 or GSTR-3B after the due date — ₹50 per day (₹20 for nil returns), split equally between CGST and SGST, subject to a cap.
- GST refundA GST refund is the return of excess tax paid or accumulated input credit — common for exporters, inverted duty structures and excess balance in the electronic cash ledger.
- GST registrationGST registration is mandatory once turnover crosses the threshold (₹40 lakh for goods, ₹20 lakh for services in most states, lower for special-category states) or on certain triggers like inter-state supply or e-commerce.
- GSTINA GSTIN is the 15-character state-wise registration number assigned to every GST-registered business; it embeds the state code and the entity's PAN.
- GSTR-1GSTR-1 is the monthly or quarterly GST return reporting all outward supplies (sales). It feeds the buyer's auto-drafted GSTR-2B and is the basis for their input credit.
- GSTR-2BGSTR-2B is the auto-drafted, static statement of input tax credit available to a buyer in a period, generated from suppliers' GSTR-1 filings. ITC can generally only be claimed if it appears here.
- GSTR-3BGSTR-3B is the monthly (or quarterly) summary GST return where a taxpayer declares output tax, claims input tax credit, and pays the net GST liability.
- GSTR-9GSTR-9 is the annual GST return consolidating a financial year's outward supplies, input credit and tax paid. It is mandatory above ₹2 crore turnover and optional below.
- GSTR-9CGSTR-9C is the GST reconciliation statement between the annual return (GSTR-9) and the audited financial statements, self-certified and filed by taxpayers above ₹5 crore turnover.
- HSN codeAn HSN code is the standardised numeric code used to classify goods under GST and set the applicable tax rate; the number of digits required depends on turnover.
- IGSTIGST (Integrated GST) is the single GST levied on inter-state supplies and imports, collected by the centre and apportioned with the destination state.
- Input Tax CreditInput Tax Credit (ITC) is the credit a business gets for GST paid on its purchases, which it sets off against GST collected on sales so tax is paid only on value added.
- Nil returnA nil return is a GST return filed for a period with no outward supplies, no tax liability and no ITC claim; it must still be filed to avoid late fees and keep the registration active.
- Place of supplyPlace of supply is the GST rule that determines whether a transaction is intra-state (CGST + SGST) or inter-state (IGST), based on where the goods or services are deemed supplied.
- QRMP schemeQRMP lets taxpayers with turnover up to ₹5 crore file GSTR-1 and GSTR-3B quarterly while paying tax monthly via a challan, reducing return-filing frequency.
- Reverse Charge MechanismUnder the Reverse Charge Mechanism (RCM), the recipient — not the supplier — pays GST directly to the government, for specified goods, services, or purchases from unregistered suppliers.
- SAC codeA SAC (Services Accounting Code) classifies services under GST, analogous to the HSN code used for goods, and determines the applicable GST rate.
- SGSTSGST (State GST) is the state government's share of GST on an intra-state supply, charged together with an equal CGST.
- Zero-rated supplyA zero-rated supply is an export or a supply to an SEZ that is taxed at 0% GST while still allowing the supplier to claim input tax credit or a refund.
TDS & income tax
Withholding, advance tax, returns and the interest sections.
- Advance taxAdvance tax is income tax paid in instalments during the financial year, rather than as a lump sum at year-end, required when the total tax liability for the year exceeds ₹10,000.
- AISThe Annual Information Statement (AIS) is a comprehensive statement of a taxpayer's financial transactions (TDS, interest, dividends, securities, etc.) reported to the income-tax department, used to pre-fill and cross-check the ITR.
- AMTAlternate Minimum Tax (AMT) is the equivalent of MAT for non-corporate taxpayers (LLPs, individuals claiming certain deductions), ensuring a minimum tax on adjusted total income.
- Form 16Form 16 is the annual TDS certificate an employer issues to each employee, summarising salary paid and tax deducted; it is the basis for filing the salary income tax return.
- Form 16AForm 16A is the quarterly TDS certificate for non-salary payments (e.g. professional fees, rent), issued by the deductor to the payee from the TRACES portal.
- Form 24QForm 24Q is the quarterly TDS return for tax deducted from salaries under section 192, reporting salary details and the tax withheld for each employee.
- Form 26ASForm 26AS is a consolidated annual tax statement showing TDS/TCS credited, advance and self-assessment tax paid, and high-value transactions, viewable on TRACES.
- Form 26QForm 26Q is the quarterly TDS return for tax deducted on payments other than salary to residents — such as contractor fees, professional fees, rent and interest.
- Form 27QForm 27Q is the quarterly TDS return for tax deducted on payments to non-residents, such as interest, royalty or fees for technical services.
- Income Tax ReturnAn Income Tax Return (ITR) is the annual statement of income, deductions and taxes filed with the income-tax department; the form and due date depend on the taxpayer type and whether an audit applies.
- Lower deduction certificateA lower deduction certificate (under section 197) lets a payee apply to the assessing officer for TDS to be deducted at a lower or nil rate when their actual tax liability is lower than the standard TDS.
- MATMinimum Alternate Tax (MAT) ensures profitable companies pay a minimum tax on their book profits even when deductions reduce their normal tax to near zero; MAT credit can be carried forward.
- PANA PAN (Permanent Account Number) is the 10-character alphanumeric identity issued by the income-tax department, required for tax filings, high-value transactions and as the basis of the GSTIN.
- Presumptive taxation (44AD)Section 44AD lets eligible small businesses (turnover up to ₹2–3 crore) declare income at a presumptive 8% of turnover (6% for digital receipts) without maintaining detailed books or an audit.
- Presumptive taxation (44ADA)Section 44ADA lets eligible professionals (gross receipts up to ₹50–75 lakh) declare income at a presumptive 50% of receipts, simplifying compliance for individual professionals.
- Section 201 interestSection 201(1A) charges interest for TDS defaults: 1% per month for late deduction and 1.5% per month for tax deducted but deposited late.
- Section 234A interestSection 234A charges 1% per month simple interest on unpaid tax for filing the income tax return after the due date, from the due date until the return is filed.
- Section 234B interestSection 234B charges 1% per month simple interest for not paying at least 90% of the assessed tax as advance tax, computed from 1 April of the assessment year until payment.
- Section 234C interestSection 234C charges 1% per month interest for deferring or underpaying any advance-tax instalment, computed instalment-by-instalment against the prescribed cumulative percentages.
- Section 234E feeSection 234E levies a late-filing fee of ₹200 per day for filing a TDS/TCS return after the due date, capped at the amount of TDS deductible.
- Self-assessment taxSelf-assessment tax is the balance income tax (with any 234A/B/C interest) a taxpayer pays themselves before filing the return, after accounting for TDS and advance tax.
- TANA TAN is the 10-character alphanumeric number every person who deducts or collects tax at source must obtain and quote on all TDS/TCS returns, payments and certificates.
- TCSTCS (Tax Collected at Source) is tax collected by a seller from the buyer on specified transactions (e.g. scrap, certain high-value sales) and deposited with the government.
- TDSTDS (Tax Deducted at Source) is income tax withheld by the payer at the time of certain payments — salary, contractor fees, rent, professional fees — and deposited with the government on the payee's behalf.
- TDS on salary (192)Section 192 requires employers to deduct TDS on salary each month based on the employee's estimated annual income and chosen tax regime, reconciled in Form 24Q and Form 16.
- TDS returnA TDS return is the quarterly statement of tax deducted and deposited, filed in forms 24Q (salary), 26Q (other resident payments) or 27Q (non-resident payments).
- TDS u/s 194CSection 194C requires TDS on payments to contractors and sub-contractors — typically 1% (individuals/HUF) or 2% (others) — above the per-payment and annual thresholds.
- TDS u/s 194JSection 194J requires TDS on professional or technical fees, royalty and director's remuneration — generally 10% (2% for technical services) above ₹30,000 per year.
- TDS u/s 194QSection 194Q requires buyers with turnover above ₹10 crore to deduct 0.1% TDS on purchases of goods from a resident seller exceeding ₹50 lakh in a year.
- TRACESTRACES is the income-tax department's portal where deductors file corrections and download TDS certificates (Form 16/16A) and where taxpayers view their Form 26AS.
Payroll & labour
PF, ESI, professional tax and the wage-code basics.
- Code on WagesThe Code on Wages, 2019 consolidates four wage-related laws (minimum wages, payment of wages, bonus and equal remuneration) into a single code with a uniform definition of 'wages'.
- ECRThe Electronic Challan cum Return (ECR) is the monthly PF return filed on the EPFO portal that reports member-wise wages and contributions and generates the payment challan.
- EPFOThe EPFO (Employees' Provident Fund Organisation) is the statutory body that administers the PF, pension and insurance schemes for organised-sector employees in India.
- ESIESI (Employees' State Insurance) is a health-insurance and social-security scheme for employees earning up to ₹21,000 a month, funded by employer (3.25%) and employee (0.75%) contributions.
- ESI contribution periodESI runs on two fixed contribution periods — April to September and October to March — with corresponding benefit periods; an employee whose wages cross the limit mid-period continues to contribute until the period ends.
- ESI contribution rateThe ESI contribution rate is 0.75% of gross wages from the employee and 3.25% from the employer, applicable to employees earning up to ₹21,000 per month.
- ESI due dateThe ESI due date is the 15th of the month following the wage month, by which the contribution must be deposited; delay attracts interest and may bar the related employer benefits.
- ESICThe ESIC (Employees' State Insurance Corporation) is the statutory body that administers the ESI scheme, managing contributions and medical and cash benefits to insured workers.
- Form 3A (PF)Form 3A is the annual PF contribution card showing month-wise contributions for each member during the financial year, supporting the annual return.
- Form 6A (PF)Form 6A is the consolidated annual PF statement of contributions for all members of an establishment for the year, filed with the regional PF office.
- GratuityGratuity is a lump-sum payment to an employee on leaving after at least five years of continuous service, payable by establishments with 10 or more employees under the Payment of Gratuity Act.
- Labour Welfare FundThe Labour Welfare Fund (LWF) is a state-administered fund financed by small periodic contributions from employer and employee to fund worker welfare; applicability, rates and frequency vary by state.
- Minimum wagesMinimum wages are the lowest legally permissible wage rates fixed by central and state governments for scheduled employments, varying by state, skill level and industry.
- Payment of Bonus ActThe Payment of Bonus Act requires eligible establishments to pay an annual statutory bonus (between 8.33% and 20% of wages) to employees earning up to the wage ceiling.
- Payroll compliancePayroll compliance is the set of obligations triggered by employing people — TDS on salary, PF, ESI, professional tax and labour-welfare contributions — each with its own return and due date.
- PF contribution rateThe standard PF contribution rate is 12% of basic wages each from employer and employee; the employer's share splits between the pension scheme (8.33%) and PF.
- PF due dateThe PF due date is the 15th of the month following the wage month, by which both contributions must be deposited and the ECR filed; late deposit attracts interest (12% p.a.) and damages.
- Professional taxProfessional tax is a state-level tax on salaries and professions, deducted by employers and paid to the state; rates, slabs and due dates vary by state and it is not levied in every state.
- Provident Fund (PF)Provident Fund (EPF) is a retirement-savings scheme where employer and employee each contribute 12% of basic wages; it is mandatory for establishments with 20 or more employees.
- Shops & Establishment ActThe Shops and Establishment Act is a state law regulating working hours, leave, holidays and conditions of employment; most commercial establishments must register under their state's Act soon after starting operations.
- UANThe Universal Account Number (UAN) is a permanent 12-digit number assigned to each PF member that links all their PF accounts across employers.
ROC / MCA
Company and LLP filings, registers and director compliance.
- ACTIVE (INC-22A)INC-22A (ACTIVE) is the form for tagging a company's verified registered office and KYC details with the MCA; non-filing marks the company 'ACTIVE-non-compliant'.
- ADT-1ADT-1 is the MCA form notifying the ROC of the appointment of a statutory auditor, filed within 15 days of the AGM at which the auditor is appointed.
- AGMThe Annual General Meeting (AGM) is the yearly shareholders' meeting at which a company adopts its accounts; it must be held within six months of the financial year-end (by 30 September).
- Annual return (company)A company's annual return (MGT-7/7A) is the yearly snapshot of its shareholders, directors and capital structure filed with the ROC, distinct from its financial statements (AOC-4).
- AOC-4AOC-4 is the annual MCA form through which a company files its audited financial statements with the ROC, due within 30 days of the AGM.
- Board meetingA board meeting is a meeting of a company's directors; a company must hold a minimum number each year (generally four, with a maximum gap of 120 days) and record minutes.
- CINThe Corporate Identity Number (CIN) is the unique 21-character number assigned to every company on incorporation, encoding its listing status, industry, state, year and registration number.
- DINThe Director Identification Number (DIN) is the unique number every company director must hold; it must be kept active through annual DIR-3 KYC.
- DIR-3 KYCDIR-3 KYC is the annual KYC filing every director with a DIN must complete; missing it deactivates the DIN and attracts a ₹5,000 reactivation fee.
- DPT-3DPT-3 is the annual MCA return in which a company reports its deposits and outstanding loans not treated as deposits as at 31 March, due by 30 June.
- Financial statementsFinancial statements are a company's balance sheet, profit-and-loss account, cash-flow statement and notes; once audited and adopted at the AGM they are filed with the ROC in AOC-4.
- INC-20AINC-20A is the declaration of commencement of business a newly incorporated company must file within 180 days of incorporation, before it can begin operations or borrow.
- Jurisdictional ROCThe jurisdictional ROC is the state or regional Registrar of Companies office with which a company or LLP is registered and to which it submits its filings.
- LLPA Limited Liability Partnership (LLP) is a hybrid business form combining a partnership's flexibility with limited liability; it files Form 11 and Form 8 annually with the ROC.
- LLP Form 11LLP Form 11 is the annual return of an LLP, reporting partners and changes during the year, due by 30 May each year.
- LLP Form 8LLP Form 8 is the Statement of Account and Solvency of an LLP, declaring its financial position and solvency, due by 30 October each year.
- MCAThe Ministry of Corporate Affairs (MCA) administers the Companies Act and the LLP Act through its portal (MCA21), where company and LLP filings are submitted.
- MGT-7MGT-7 is the annual return of a company filed with the ROC, capturing shareholding, directors and changes during the year, due within 60 days of the AGM.
- MGT-7AMGT-7A is the abridged annual return for One Person Companies (OPCs) and small companies, a simplified version of MGT-7.
- MSME Form 1MSME Form 1 is the half-yearly MCA return reporting outstanding payments to micro and small enterprise suppliers beyond 45 days, due in April and October.
- Paid-up capitalPaid-up capital is the amount shareholders have actually paid for the shares issued to them — the portion of subscribed capital received by the company.
- ROCThe ROC (Registrar of Companies) is the MCA authority that registers companies and LLPs and maintains their statutory filings; every company files its annual returns and forms with its jurisdictional ROC.
- Share capitalShare capital is the funding a company raises by issuing shares; it is described as authorised (the ceiling), issued, subscribed and paid-up capital.
- Significant Beneficial OwnerA Significant Beneficial Owner (SBO) is an individual who ultimately owns or controls a company beyond a prescribed threshold; companies report SBOs to the MCA in Form BEN-2.
- Statutory auditorA statutory auditor is the independent chartered accountant a company appoints to audit its financial statements as required by the Companies Act; the appointment is notified via ADT-1.
- Struck offA company is 'struck off' when the ROC removes its name from the register — often for failing to file annual returns or commence business — after which it ceases to legally exist unless restored.
Legal & contracts
Agreements, stamping, notices and statutory registers.
- Arbitration clauseAn arbitration clause is a contract provision under which disputes are resolved by private arbitration under the Arbitration and Conciliation Act, rather than in court.
- Board resolutionA board resolution is a formal decision passed by a company's board of directors, recorded in the minutes and often required to authorise banking, contracts or statutory filings.
- ContractA contract is a legally enforceable agreement between parties, valid under the Indian Contract Act when it has offer, acceptance, lawful consideration, capacity and free consent.
- Employment agreementAn employment agreement is the contract setting out an employee's role, compensation, notice period, confidentiality and IP terms, and the conditions of their employment.
- Force majeureA force majeure clause excuses a party from performing its contractual obligations when extraordinary events beyond its control (natural disasters, war, pandemics) make performance impossible.
- Founders' agreementA founders' agreement is the contract among a startup's founders covering equity split, roles, vesting, decision-making and what happens if a founder leaves.
- IndemnityAn indemnity is a contractual promise by one party to compensate the other for specified losses or liabilities, commonly used to allocate risk in commercial and investment agreements.
- IP assignmentAn IP assignment is a clause or agreement transferring intellectual property created by an employee, contractor or founder to the company, critical for protecting a startup's core assets.
- Legal noticeA legal notice is a formal written communication asserting a claim or demand before litigation; it states the grievance, the relief sought and a deadline to comply.
- Master Service AgreementA Master Service Agreement (MSA) sets the overarching commercial and legal terms between two parties, under which specific engagements are documented in individual statements of work.
- Non-Disclosure AgreementA Non-Disclosure Agreement (NDA) is a contract under which parties agree to keep shared confidential information secret and limit its use to a defined purpose.
- Notice periodA notice period is the advance notice a party must give before terminating a contract or employment, defined in the agreement or by applicable labour law.
- Power of attorneyA power of attorney is a legal instrument authorising one person to act on another's behalf for specified matters; it may be general or limited and often requires stamping and notarisation.
- Privacy policyA privacy policy is the public statement of how an organisation collects, uses, stores and shares personal data; it is a key compliance document under India's data-protection regime.
- Stamp dutyStamp duty is a state tax paid on certain instruments (agreements, share transfers, property deeds); an inadequately stamped document may be inadmissible as evidence until duty and penalty are paid.
- Statement of WorkA Statement of Work (SOW) is a document under a Master Service Agreement that defines the scope, deliverables, timeline and fees for a specific engagement.
- Statutory registersStatutory registers are the records a company must maintain under the Companies Act — such as registers of members, directors, charges and related-party contracts — and keep available for inspection.
- Terms of serviceTerms of service are the contractual terms governing how users may use a product or website, covering acceptable use, liability, payment and termination.
Startup & diligence
Cap table, funding and the documents buyers ask for.
- Angel taxAngel tax refers to income tax on the premium at which an unlisted company issues shares above fair market value; DPIIT-recognised startups can claim exemption on qualifying investments.
- Cap tableA cap table is the record of who owns what in a company — founders, investors, ESOP pool — showing each holder's shares, class and ownership percentage.
- CliffA cliff is the minimum period (commonly one year) that must pass before any equity or options begin to vest; leaving before the cliff means nothing is earned.
- Convertible noteA convertible note is a short-term debt instrument that converts into equity at a future financing round, typically with a discount or valuation cap and accruing interest.
- Data roomA data room is the secure, organised repository of documents a company shares with investors or acquirers during diligence — financials, contracts, cap table, compliance filings and IP records.
- Down roundA down round is a financing round priced at a lower valuation than the previous round, which dilutes existing shareholders and can trigger anti-dilution protections.
- DPIIT recognitionDPIIT recognition is the certificate from the Department for Promotion of Industry and Internal Trade that qualifies an eligible startup for tax holidays, angel-tax exemption and other benefits.
- Due diligenceDue diligence is the investigation a buyer, investor or lender runs before a transaction to verify a company's financial, legal, tax and compliance position — and a clean compliance trail makes it faster and cheaper.
- Equity dilutionEquity dilution is the reduction in existing shareholders' ownership percentage when a company issues new shares, for example in a funding round or on ESOP exercise.
- ESOPAn ESOP (Employee Stock Option Plan) is a scheme granting employees the right to buy company shares at a fixed price after vesting, used to attract and retain talent.
- Preference sharesPreference shares carry priority over ordinary equity for dividends and on liquidation; investors commonly hold convertible preference shares with negotiated rights.
- SAFEA SAFE (Simple Agreement for Future Equity) is an investment instrument giving an investor the right to equity in a future priced round, without setting a valuation or accruing interest now.
- Share Subscription AgreementA Share Subscription Agreement (SSA) is the contract under which an investor agrees to subscribe to new shares of a company at the agreed price and conditions.
- Shareholders' AgreementA Shareholders' Agreement (SHA) governs the relationship among a company's shareholders — board rights, transfer restrictions, reserved matters, anti-dilution and exit terms.
- Startup India registrationStartup India registration is recognition under the government's Startup India initiative that unlocks benefits such as self-certification on certain labour and environmental laws.
- Term sheetA term sheet is the (mostly non-binding) document setting out the key commercial terms of a proposed investment — valuation, amount, instrument and investor rights — before definitive agreements are drafted.
- ValuationValuation is the agreed worth of a company used to price an investment; the pre-money valuation plus new investment equals the post-money valuation that sets investor ownership.
- VestingVesting is the schedule over which a founder's or employee's equity or options are earned over time, so unvested shares are forfeited if they leave early.
Compliance metrics
How readiness, evidence and penalty exposure are measured.
- ApplicabilityApplicability is the determination of which statutory obligations apply to a specific company, decided by a deterministic engine from its profile (entity type, turnover, headcount, GST status, state).
- Compliance bucketA compliance bucket is one of the categories ComplianceStack groups obligations into — Tax, Payroll & labour, Corporate/ROC and Legal — so tasks map cleanly to the people who own them.
- Compliance calendarA compliance calendar is the consolidated schedule of every applicable filing and payment with its due date, owner and status — viewable by time, bucket, owner or risk.
- Compliance health scoreA compliance health score is a single summary number for how compliant a company is — derived from on-time filings, evidence completion, open notices and overdue items — so leadership can answer 'are we clean?' at a glance.
- Diligence readinessDiligence readiness measures how prepared a company is for investor or buyer due diligence — whether its filings, payment proofs and statutory documents are complete and instantly producible.
- Evidence completion rateThe evidence completion rate is the percentage of compliance tasks closed with a linked document (or an explicit waiver) rather than just marked done — the core metric ComplianceStack optimises for.
- Filing statusFiling status is where a compliance task sits in its lifecycle — not started, documents requested, with advisor, filed/paid, or evidence uploaded — and whether a notice has been received.
- Overdue taskAn overdue task is a compliance item whose statutory due date has passed without being filed, paid or evidenced; overdue items drive penalty exposure and lower the health score.
- Penalty exposurePenalty exposure is the estimated rupee value of late fees, interest and penalties accruing on overdue or missed compliance items — a quantified view of the risk of inaction.
- Statutory due dateA statutory due date is the legally fixed deadline for a filing or payment; ComplianceStack computes it from each rule's declarative timeline so it shifts correctly with the period.
Put it into practice
ComplianceStack turns these obligations into your applicable calendar — what's due, who owns it, and the evidence that it's done. Your first health check is free.