GST Definitions List: Key Terms Every Taxpayer Should Know

Definitions [Section 2]

Actionable Claims 

Actionable claims are treated as goods under GST law; however, GST is applicable only on specified actionable claims. All other actionable claims are generally not liable to GST.

An actionable claim is essentially a contingent asset, meaning a claim or right that may or may not result in actual receipt of money or benefit in the future.

Examples of Specified Actionable Claims (Taxable under GST)

• Betting
• Gambling
• Lottery
• Online money gaming
• Casino activities
• Horse racing 

Examples of Other Actionable Claims (Generally Not Taxable under GST)

• Unsecured debts
• Pending litigations or claims in court
• Insurance claims receivable
• Claims arising from contractual disputes

Agent

An agent is a person who acts or carries on business on behalf of another person, known as the principal. An agent may be known by different names depending on the nature of work performed, such as:

• Factor
• Broker
• Commission Agent
• Arhatia
• Del-Credere Agent
• Any other mercantile or business agent

These persons facilitate transactions or represent the principal in business dealings and are treated as agents irrespective of the title used.

Principal

A principal is a person on whose behalf an agent acts or carries on business activities. In other words, the agent represents the principal in business transactions and dealings.

Aggregate Turnover

Aggregate Turnover includes the following:

1. All Outward Supplies Included

The following supplies are included in Aggregate Turnover, whether they are:

Intra-State or Inter-State supplies

• Taxable supplies
• Exempt supplies
• Non-taxable supplies
• Export supplies
• Supplies covered under Forward Charge or Reverse Charge Mechanism (RCM)

Important: Only outward supplies are included. Anything that is not considered a supply under GST is excluded. Example: Transfer of goods to a job worker is not included.

2. Inward Supplies Not Included

Inward supplies, whether under:

• Normal Charge Mechanism (NCM), or Forward Charge Mechanism (FCM)
• Reverse Charge Mechanism (RCM),

are not included in Aggregate Turnover.

3. Treatment of Taxes

• GST and Compensation Cess → Not included in turnover value
• Earlier taxes such as:
• Excise Duty
• VAT
• CST

     → Included in turnover value

4. Clubbing of Turnover

For calculating Aggregate Turnover, the turnover of all business places having the same PAN across India is clubbed together.

Exempt Supply

Exempt Supply includes the following three categories of supplies:

1. Wholly Exempt Supplies - Supplies that are fully exempt from GST by virtue of an exemption notification issued under the GST law.
2. Nil-Rated Supplies - Supplies taxable at a GST rate of 0%.
3. Non-Taxable Supplies - Supplies that are outside the scope of GST, such as:
• Five specified petroleum products; and
• Alcoholic liquor for human consumption.

Important Note:

• Input Tax Credit (ITC) is not available in respect of exempt supplies.
• Zero-Rated Supplies (e.g., exports and supplies to SEZs) are not treated as exempt supplies. Therefore, ITC is available in respect of zero-rated supplies.

Agriculturist

An Agriculturist means an Individual or a Hindu Undivided Family (HUF) engaged in the cultivation of land either directly or under personal supervision. It includes:

1. Active Cultivation - Cultivation carried out: 
• by the individual’s own labour; or 
• by the labour of family members. 
2. Passive Cultivation - Cultivation carried out: 
• through servants employed on wages; or 
• through hired labour, provided such cultivation is under the personal supervision of the individual or any member of the family.

Family

• Unconditional Members: Spouse and children shall always be considered part of the family.
• Conditional Members: Parents, grandparents, brothers, and sisters shall be considered part of the family only if they are wholly or mainly dependent on the said person.

Authorised Bank

Means a bank or branch of a bank authorised by the Government to collect tax or any other amount under the Act.

Board

Means the Central Board of Indirect Taxes and Customs (CBIC). 

Business

Means any trade, commerce, manufacture, profession, vocation, adventure, wager, or any other similar activity carried out for consideration, whether or not for pecuniary benefit.

Capital Goods

• Means goods which are used or intended to be used in the course or furtherance of business; and
• The value of such goods is capitalised in the books of account of the recipient.

Inputs:

• Means goods which are used or intended to be used in the course or furtherance of business; and
• Which are not covered under the definition of capital goods, i.e., goods treated as revenue expenditure.

Input Services:

• Means any service used or intended to be used in the course or furtherance of business.

Important Note:

GST paid on capital goods, inputs, and input services is available as Input Tax Credit (ITC) to the recipient, subject to the provisions of the Act.

Casual Taxable Person

A Casual Taxable Person (CTP) is a person who:

• Occasionally undertakes transactions involving the supply of goods or services,
• In the course or furtherance of business,
• In a State or Union Territory where they do not have a fixed place of business.

Examples

• A trader participating in an exhibition in another State
• A temporary stall owner at fairs or events
• Seasonal businesses operating temporarily in another State

Important Points about Casual Taxable Person

1. Registration Requirement - A Casual Taxable Person must obtain GST registration at least 5 days before commencing business.
2. Advance Deposit of GST - The applicant is required to deposit the estimated net GST liability in advance for the period during which registration is sought.
3. Validity of Registration
• Initial validity: 90 days
• Extension possible for a further 90 days
• Maximum validity: 180 days

Non-Resident Taxable Person (NRTP)

A Non-Resident Taxable Person is any individual or business entity who occasionally undertakes transactions of supply of goods or services in India, in the course of business, but does not have a fixed place of business or residence in India.

Key Compliance Points

• Advance Registration Requirement: Must apply for GST registration at least 5 days before commencing business activities in India.
• Advance Tax Deposit: Estimated GST liability must also be paid at least 5 days in advance at the time of registration.
• Validity of Registration: Registration is granted for a short duration of 90 days, and it can be extended for another 90 days, making the total possible period 180 days (90 + 90 days).

Common Portal

• The Common Portal is owned and operated by GSTN (Goods and Services Tax Network). 
• GSTN is a Section 8 company under the Companies Act, 2013, meaning it is a not-for-profit organization.
• Both the Central Government and State Governments fund GSTN jointly.
• GSTN provides the GST common online portal for use by:
• Government authorities
• Taxpayers

Services Provided by GSTN

The GSTN portal facilitates key GST functions such as:

• GST registration
• Filing of GST returns
• Payment of GST
• Processing and distribution of IGST
• Other GST-related compliance services

Consideration

Consideration refers to anything received in return for the supply of goods or services, whether in monetary or non-monetary form. It applies to both active and passive supplies of goods or services. Any such value received is treated as consideration. Government subsidies are excluded and do not form part of consideration. Security deposits are generally not considered as consideration. However, if a security deposit is later adjusted against rent or any other payment, it will be treated as consideration to that extent.

Recipient:

• In case of paid supplies, the recipient is the person who is liable to pay the consideration.
• In case of free supplies, the recipient is the person to whom the goods are delivered or services are rendered.
• The term recipient also includes an agent acting on behalf of such person.

Debit Note/ Supplementary Invoice

1. A Debit Note is a document issued when there is under-invoicing, such as:
• Charging a lower value of supply, or
• Charging a lower rate of tax, etc.
2. A debit note increases the value of the original invoice.
3. It also increases the tax liability of the supplier in the electronic liability register, when the debit note is reported in the subsequent GSTR-1.
4. It increases the input tax credit (ITC) of the recipient, as reflected in GSTR-2B.

Credit Note

1. A Credit Note is issued in cases of over-invoicing, such as:
• Charging a higher value of supply, or
• Charging a higher rate of tax, or
• Under-supply of goods/services, or
• Sales return of goods/services.
2. A credit note is used to adjust or correct the excess amount charged.

Important Points (Credit Note)

1. In GST, a credit note issued by the supplier is valid for tax adjustment. If issued by the recipient, it has no GST effect unless accepted by the supplier.
2. A credit note reduces the value of the original invoice.
3. It also reduces the supplier’s tax liability in the electronic liability register, when reported in the next GSTR-1.
4. It reduces the recipient’s input tax credit (ITC) as reflected in GSTR-2B.

E-Liability Register / E-Credit Ledger / E-Cash Ledger

When a person obtains GST registration, the GST portal automatically opens three electronic ledgers for that registered person.

1. E-Liability Register

• It shows the tax liability of the registered person under GST and other related laws.
• It is updated based on outward supplies declared in GSTR-1.
• It reflects the amount of GST payable by the taxpayer.

2. E-Credit Ledger (Electronic Credit Ledger)

• It shows the Input Tax Credit (ITC) available to the registered person.
• It is updated when ITC is earned from inward supplies and reflected in GSTR-2B.
• ITC can be used to pay output tax liability.

3. E-Cash Ledger

• It shows the cash balance available with the registered person on the GST portal.
• It is updated when the taxpayer deposits cash (through challan).
• It is used to pay GST liability when ITC is insufficient.

India (Meaning under GST Context)

India includes:

1. Land mass of India
2. Territorial waters of India, extending up to 12 nautical miles from the baseline, including:
• Sea surface
• Sea bed (bottom)
• Airspace above territorial waters
3. Deemed India (Oil Rigs): Oil rigs located in the Exclusive Economic Zone (EEZ) or Continental Shelf are treated as part of India for GST purposes.

Important Notes

Such deemed areas (oil rigs) are treated as part of “Other Territory”, i.e., they are considered similar to a Union Territory for GST applicability.

Inward Supply

Inward supply refers to any supply of goods or services received by a recipient, whether free of cost or for consideration. It includes all forms of procurement such as purchase, acquisition, or receipt in any manner. In simple terms, any goods or services taken in by a person or business are treated as inward supply.

Input Tax

Input Tax refers to the GST charged or payable on inward supplies of goods or services received by a registered person. It includes tax paid under both the forward charge mechanism and the reverse charge mechanism.

It also includes IGST levied on the import of goods by the Customs Department. However, tax paid by a composition dealer at prescribed rates such as 1%, 5%, or 6% is not treated as input tax.

Input Tax Credit

Input Tax Credit (ITC) refers to the credit available for the Input Tax paid on inward supplies of goods or services. This credit can be utilized to reduce the output tax liability, subject to the conditions and provisions of the GST law.

Outward Supply

Outward supply refers to any supply of goods or services made by a supplier, including sale, transfer, barter, exchange, lease, or disposal. It covers supplies made with or without consideration, provided they are made in the course or furtherance of business.

Output Tax

Output Tax refers to the GST liability charged on outward supplies of goods or services made by a registered supplier under the provisions of the Act.

Important Notes

In cases where tax is payable by the recipient under the Reverse Charge Mechanism (RCM) on inward supplies, such tax is treated as Input Tax for the recipient.

Job Work (Section 24 concept)

Job work refers to any treatment or process carried out by a job worker on goods that belong to another person (the principal).

Key Points / GST Treatment

1. Movement of goods to and from job worker
• Sending goods to a job worker is not treated as a supply under GST.
• Similarly, the return of goods from the job worker after processing is also not a supply.
2. Supply from job worker’s premises
• If the principal supplies goods directly from the job worker’s premises after processing, it is treated as a supply by the principal.
3. Taxability of job worker’s activity
• The services provided by the job worker (i.e., processing/treatment of goods) are treated as a supply of services.
• Therefore, GST is applicable on the job worker’s charges, payable by the job worker.
• Exception: Certain agriculture-related job work activities may be exempt.

Money (Definition under GST concept)

“Money” includes legal tender in India or any foreign currency, as well as instruments that represent money such as:

• Cheques
• Promissory notes
• Bills of exchange
• Drafts
• Pay orders
• Traveller’s cheques
• Money orders

In simple terms, money refers to mediums of exchange where the face value equals the market value and is used for payment or settlement of obligations.

Key Point 

Outdated or demonetised currency is not considered “money” under GST, as it no longer holds legal tender status.

Taxable Supply

A taxable supply is a supply of goods or services that satisfies the following three conditions:

• It involves goods and/or services
• It is a supply under GST law
• It is chargeable to GST (i.e., not exempt)

In simple words, A taxable supply is any supply of goods or services that is within the scope of GST and on which tax is applicable.

Non-Taxable Supply

A non-taxable supply is a supply of goods or services that satisfies the following conditions:

• It involves goods and/or services
• It is a supply under GST law
• It is not leviable to GST (i.e., no tax is applicable)

In Simple words, A non-taxable supply is a supply of goods or services that falls outside GST taxation and is not charged to tax.

Taxable Territory

It refers to the geographical area to which the provisions of a particular tax law apply and within which tax is levied.

Example: Under the CGST Act, 2017, the taxable territory extends to the entire territory of India, meaning GST is applicable across all States and Union Territories (except where specifically excluded, if any under the Act).

Non-Taxable Territory

It refers to any geographical area that lies outside the taxable territory of a tax law, where the provisions of that law do not apply.

Example: Under the CGST Act, 2017, any place outside India is considered a non-taxable territory, meaning GST provisions are not applicable there.

State

The term “State” has the meaning assigned to it in the Constitution of India and the relevant tax law provisions. It generally includes all the States of India.

Important Note: The detailed definition and scope of “State” have already been discussed in the earlier Blog.

Union Territory

The term “Union Territory” refers to the administrative divisions of India that are directly governed by the Central Government, as defined under the Constitution of India and applicable laws.

Other Territory

It refers to any place that does not fall within the definition of a State or Union Territory under the law. For example: Installations such as oil rigs located in the Exclusive Economic Zone (EEZ) are treated as “other territory” for tax purposes.

Person

Person includes an individual and any entity recognized in law, such as a Hindu Undivided Family (HUF), company, firm, Limited Liability Partnership (LLP), Association of Persons (AOP), or Body of Individuals (BOI), whether incorporated in India or outside India. It also includes corporations (such as the Life Insurance Corporation of India), foreign body corporates, government departments, societies, trusts, and any other artificial juridical person recognized under applicable law.

If you want, I can also convert it into a more formal “legal definition clause” style or simplify it further for a form or policy document.

Principal Business Place

The location specified in the registration certificate as the “Principal Business Place,” such as the Head Office or Corporate Office, from which the primary business activities are controlled or managed.

If you want, I can also align it with GST-style terminology or make it more legally formal.

Principal Supply

In a composite supply, the supply that constitutes the predominant element is called the “Principal Supply.”

Important Note:

The classification of a composite supply is determined by its principal supply.

Quarter

A quarter refers to a period of three consecutive months, namely:

1. January, February, and March
2. April, May, and June
3. July, August, and September
4. October, November, and December

Registered Person

A person who is registered under the GST law is called a “Registered Person.” However, a person who holds a Unique Identification Number (UIN) for the purpose of claiming refund of taxes on inward supplies (e.g., embassies and specified agencies) shall not be treated as a Registered Person under GST.

Removal

“Removal” means the dispatch of goods by the supplier or the collection of goods by the recipient.

Return

“Return” refers to any statement or form required to be furnished under GST law, including periodic returns (such as GSTR-3B), annual returns (such as GSTR-9 and GSTR-9A), and final return (GSTR-10).

Reverse Charge Mechanism (RCM)

Under the Reverse Charge Mechanism, the liability to pay tax is shifted from the supplier to the recipient of goods or services. In such cases, the recipient is directly liable to pay the tax to the Government instead of the supplier.

Supplier

A “Supplier” refers to the person supplying goods or services. It also includes:

• An agent acting on behalf of the supplier; and
• The organiser of specified actionable claims, to the extent applicable under GST law.

Tax Period

“Tax Period” means the period for which a return is required to be furnished under GST law.

Turnover in a State

“Turnover in a State” shall be calculated in the same manner as “Aggregate Turnover,” but with reference to a specific State as the geographical area of operation. Example: If Mr. A has business premises in Uttar Pradesh (UP) and Madhya Pradesh (MP), the turnover in each State will be computed separately as follows:

• From UP premises: 
• UP to UP = ₹5 lakhs 
• UP to Haryana (HR) = ₹6 lakhs 
• From MP premises: 
• MP to MP = ₹7 lakhs 
• MP to Rajasthan (RJ) = ₹8 lakhs

Valid Return

A “Valid Return” means a return (such as GSTR-3B) furnished along with full payment of tax as self-assessed by the taxpayer.

Online Gaming

“Online Gaming” includes online money gaming and any other type of game played over the internet.

Key Points:

Online money gaming is treated as an actionable claim and is therefore classified as “goods”. However, other types of online games are classified as “services”.

Online Money Gaming

“Online Money Gaming” means an online game in which players pay or deposit money or money’s worth (such as cryptocurrency), with the expectation of winning, irrespective of whether such activity is legal or illegal.

Specified Actionable Claims

“Specified Actionable Claims” include betting, gambling, lottery, online money gaming, casino activities, and horse racing.