Home › Glossary
Billing & GST Glossary for Shopkeepers
Half the difficulty with billing and GST is vocabulary. These are the terms that turn up on a shop's documents and in conversations with a CA, explained the way they would be explained across a counter.
Why the words matter
A shopkeeper who knows the difference between an invoice and a delivery challan, or between a credit note and a cancelled bill, makes fewer expensive mistakes than one who does not — not because the definitions are interesting, but because those distinctions decide what is legal, what is claimable and what will hold up when a bill is questioned two years later.
Terms a shop deals with
| Term | What it means |
|---|---|
| Udhaar khata | The credit ledger — a running account per party of what they have taken and what they have paid, with the balance outstanding. |
| Ageing | How old each outstanding balance is, usually grouped as 0-30, 30-60, 60-90 and over 90 days. Age predicts recovery better than amount does. |
| Delivery challan | The document that travels with goods and records what physically moved — quantity, destination, vehicle and receiver. Not a sale document. |
| Proforma invoice | A document that looks like an invoice but is issued before the sale, usually so a buyer can release an advance. It is not a tax invoice. |
| Credit note | The correct way to reduce an already-issued invoice — a return, a rate correction, a shortage. Not an erasure of the original bill. |
| HSN code | The classification code for an item under GST. It decides the rate and is what the return reports against. |
| CGST / SGST | The two halves of GST on a sale within your own state, split equally between the centre and the state. |
| IGST | The single combined tax applied instead of CGST and SGST when the buyer is in another state. |
| Input credit | The GST you paid on purchases, set off against the GST you collected on sales. Only available for invoices your supplier actually reported. |
| GSTR-1 | The monthly return of outward supplies — everything you sold, with buyer GSTINs and HSN summary. |
| GSTR-3B | The monthly summary return of outward tax and input credit, and where the tax is actually paid. |
| GSTR-2B | The statement of input credit available to you, built from what your suppliers reported. Reconciling against it is how missing credit gets found. |
| E-way bill | The document required for moving goods over a value threshold, carrying the vehicle number and journey details. |
| E-invoice / IRN | An invoice reported to the government portal at the time of issue, which returns a reference number and QR code to print on it. |
| Landed cost | What stock actually cost you — the supplier invoice plus freight, loading and any shortage. The figure your selling rate should be set from. |
| Opening balance | What a party owed you on the day you started using the software, entered once so the ledger continues rather than starting at zero. |
| Credit limit | The maximum you are prepared to have outstanding against a party, warned at billing time before material leaves. |
| Multi-unit billing | Holding a unit and a conversion per item, so steel bills in kg, cement in bags and tiles in boxes on the same invoice. |
| Party statement | A dated list of every bill, payment and adjustment for one party over a period, with the closing balance. What you send instead of a demand. |
| Composition scheme | A simplified GST scheme with a flat rate and limited returns, available below a turnover threshold, but with no input credit and restrictions on inter-state sales. |
Frequently asked questions
What is the difference between an invoice and a challan?
A challan records goods physically moving; an invoice records the sale and the tax. Site supply usually needs both, and here they are linked.
When do I use a credit note instead of cancelling a bill?
When the original sale happened but the amount changes — a return, a shortage, a rate correction. Cancelling is only for a bill that should never have existed.
What is landed cost and why does it matter?
The supplier invoice plus freight and loading. It is what the stock really cost you, and pricing off the invoice value alone is how bulk lines quietly stop making money.
What does ageing tell me that a total does not?
How likely the money is to come back. Three lakh outstanding for ninety days is a different problem from three lakh outstanding for fifteen.
More
Start Free Today
Set up in two minutes. No card required. Leave whenever you like — your data always stays yours.