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Important GST Terms

In this article, we will list out all the important GST terms that are used by the taxpayer frequently. Moreover, these GST terms will help you to know the basics of GST too.

List of Important GST Terms

i. Goods and Services Taxpayer Identification Number (GSTIN)

Goods and Services Taxpayer Identification Number

(GSTIN) is the combination of unique letters and number that is allotted to every registered person under GST. GSTIN is of 15 characters that are based on the PAN of the business or taxpayer.

ii. B to B Transaction

B to B or Business to business transaction is a type of transaction that takes place between the two registered businesses.

iii. B to C Transaction

B to C or Business to Customer transaction is a type of transaction that takes place either between the two registered persons or registered taxable persons and unregistered persons.

iv. Integrated Goods and Services Tax (IGST)

Integrated Goods and Services Tax (IGST) is the type of tax that is applicable whenever there is an inter-state movement of goods or services or both. The IGST rate stays the same for the supplied goods or/and services. However, the revenue generated from such supply is bifurcated between the Central Government and the state of supply.

v. Central Goods and Services Tax (CGST)

Central Goods and Services Tax (CGST) is the type of tax that is applicable whenever there is an intra-state supply of goods or services or both. This component of GST is collected by the central government.

vi. State Goods and Services Tax (SGST) or Union Territory Goods and Services Tax (UTGST)

State Goods and Services Tax (SGST) or Union Territory Goods and Services Tax (UTGST) is the type of tax that is applicable whenever there is an intra-state supply of goods or services or both. This component of GST is collected by the state government or Union Territory.

vii. Harmonized System of Nomenclature (HSN)

The Harmonized System of Nomenclature (HSN) is the code that is adopted by the CBEC and GST Council to identify the type of goods supplied under GST. HSN Code can be 8 digits long (mandatory for exports) but the goods delivered can also be identified by using only 2 digits too. However, the length of the HSN Code depends on the nature of the sale or the turnover of the business.

viii. Service Accounting Code (SAC)

Service Accounting Code (SAC) are the codes that are adopted by the CBEC and GST Council of India to identify the type of service rendered under GST. SAC is quite similar to the nomenclature that was there in the Service Tax regime.

ix. Input Tax Credit (ITC)

Input Tax Credit (ITC) is a mechanism under GST where the tax paid on the input can be reduced against the tax paid on the output.

x. Reverse Charge Mechanism (RCM)

Reverse Charge Mechanism (RCM) is a mechanism under GST where the recipient of the goods or service or both is required to make the payment of GST instead of the supplier. One of the most common examples is when the supplier is not registered then in such case RCM will be applicable.