GST & Invoicing Glossary

SAC Code

SAC (Services Accounting Code) is a classification system under India’s GST regime used to categorize services for tax purposes.

HSN Code

HSN (Harmonized System of Nomenclature) is an internationally standardized system of codes used to classify traded goods for GST and customs purposes.

GSTIN

GSTIN (Goods and Services Tax Identification Number) is the unique 15-digit registration number assigned to every business registered under India’s GST law.

CGST, SGST & IGST

CGST, SGST, and IGST are the three components of India’s GST — CGST and SGST apply to intra-state sales (split between center and state), while IGST applies to inter-state sales.

Input Tax Credit (ITC)

Input Tax Credit (ITC) lets a GST-registered business reduce its GST liability by the amount of GST it already paid on business purchases and expenses.

Reverse Charge Mechanism (RCM)

Under the Reverse Charge Mechanism (RCM), the buyer of a service — rather than the seller — is responsible for paying GST directly to the government.

Zero-Rated Supply

A zero-rated supply is a sale — such as an export of services — on which GST is charged at 0%, while the seller can still claim input tax credit on related expenses.

GST Invoice Format

A GST invoice format is the set of mandatory fields — GSTIN, invoice number, SAC/HSN code, tax breakup, and more — that a tax invoice must include to be valid under Indian GST law.

Proforma Invoice

A proforma invoice is a preliminary bill sent before work begins or goods are delivered, outlining expected costs — it is not a demand for payment and has no legal invoice status under GST.

Credit Note

A credit note is a document issued by a seller to reduce the amount owed on a previously issued invoice — commonly used for refunds, discounts, or returned goods/services.

Debit Note

A debit note is a document issued to increase the amount owed on a previously issued invoice — for example, when additional charges are added after the original invoice was sent.

Invoice Numbering

Invoice numbering is the sequential, unique numbering system a business must follow for its invoices under GST rules — typically a consecutive series, unique per financial year.

E-Invoicing

E-invoicing is a GST system where invoices above a certain turnover threshold must be electronically reported to the government and assigned a unique Invoice Reference Number (IRN) before being considered valid.

IRN (Invoice Reference Number)

An IRN is the unique 64-character hash generated by the Invoice Registration Portal (IRP) for a covered e-invoice, confirming that the invoice has been registered on the e-invoicing system.

E-Way Bill

An e-way bill is an electronic document required for the movement of goods worth more than a specified value, generated through the GST e-way bill portal.

LUT (Letter of Undertaking)

An LUT (Letter of Undertaking) lets GST-registered exporters — including freelancers billing international clients — supply services without paying IGST upfront, instead of claiming a refund later.

Presumptive Taxation (Section 44ADA)

Section 44ADA lets eligible professionals — including many freelancers — declare 50% of their gross receipts as taxable income, without maintaining detailed books of account.

TDS on Professional Fees (Section 194J)

Section 194J requires clients paying for professional or technical services to deduct TDS (Tax Deducted at Source) before paying a freelancer or consultant, typically at 10% (or 2% for certain technical services).

MSME 45-Day Payment Rule

Under the MSMED Act, a buyer purchasing from a registered micro or small enterprise must pay within 45 days (or the agreed term, if shorter) — with mandatory compounded interest for late payment.