Glossary of Tax Terms

A comprehensive statement available on the Income Tax e-Filing portal that shows all financial transactions reported to the Income Tax Department about you — covering salary, interest income, dividends, property sales, securities transactions, GST turnover, foreign remittances, and more. Introduced in 2021, it replaced and expanded upon Form 26AS. Your filed return should reconcile with your AIS. Mismatch with AIS is a common trigger for scrutiny notices.

The Income Tax Officer empowered to assess your return and issue notices under the Income Tax Act. Under the faceless assessment scheme, the identity of the AO is not disclosed to the taxpayer — all communication is through the National Faceless Assessment Centre (NFAC).

Under the Income Tax Act, 1961, the year in which income earned in the Previous Year is assessed and taxed. For example, income earned in Financial Year 2024-25 (April 2024 to March 2025) is assessed in AY 2025-26. Under the Income Tax Act, 2025, this concept is replaced by the unified "Tax Year."

The process by which the Income Tax Department examines your return and determines the tax payable. Assessments can be: (i) Summary/Intimation u/s 143(1); (ii) Scrutiny Assessment u/s 143(3); (iii) Best Judgment Assessment u/s 144; (iv) Income Escaping Assessment (Reassessment) u/s 147.

Tax paid in installments during the financial year in which income is earned, rather than as a lump sum at the end. Due in four installments: 15% by 15 June, 45% by 15 September, 75% by 15 December, and 100% by 15 March. Failure to pay advance tax correctly results in interest under Sections 234B and 234C.

The right to challenge an unfavorable order before a higher authority. Under the Income Tax Act, the appellate hierarchy is: (1) CIT(Appeals) → (2) ITAT (Income Tax Appellate Tribunal) → (3) High Court → (4) Supreme Court. Under the 2025 Act, the first level is still CIT(A) / NFAC Appeals Unit under Section 356.

The form in which a scrutiny notice is issued under Section 61 of the CGST Act, asking the taxpayer to explain discrepancies in filed returns. Response is filed in Form ASMT-11.

The response form filed by a taxpayer on the GST portal to reply to an ASMT-10 scrutiny notice. Must include a reconciliation statement explaining the discrepancy.

The automated system used by the Income Tax Department to select returns for scrutiny assessment. CASS flags returns based on risk parameters — high cash deposits, unusual deductions, significant year-on-year variation, mismatch with AIS data, etc. Selection through CASS does not mean fraud is suspected.

The apex body that administers direct taxes in India under the Department of Revenue, Ministry of Finance. CBDT issues circulars, notifications, and instructions that govern tax administration. These have legal standing and are binding on tax officers.

The payment challan used to pay Income Tax directly — for self-assessment tax, advance tax, and tax on demand. Available on the NSDL portal and the income tax e-filing portal.

The first appellate authority in the Income Tax hierarchy. Appeals against assessment orders, scrutiny orders, and demand notices are filed before the CIT(A) within 30 days of the order. Under the faceless appeals scheme, these proceedings are conducted online.

A formal application seeking permission to file a reply, return, or appeal after the prescribed deadline has passed. The authority has discretion to condone the delay if "sufficient cause" is shown. This is not guaranteed — always try to meet deadlines rather than relying on condonation.

A taxpayer who has opted for the composition scheme — a simplified tax payment scheme with a flat rate on turnover, available to eligible businesses with turnover below ₹1.5 crore (₹75 lakh for some states). Composition taxpayers cannot claim ITC and cannot issue GST invoices to their buyers.

A unique computer-generated number that appears on every notice, order, or letter issued by the Income Tax Department through the official portal. You can verify the authenticity of any notice by checking its DIN on the e-Filing portal. A notice without a valid, verifiable DIN should be treated as potentially fraudulent.

A panel of senior tax officers that can be approached by foreign companies and transfer pricing cases where draft assessment orders are adverse. The DRP must now issue directions stating the points of determination, decisions arrived at, and reasons — a new requirement under the IT Act 2025 (Section 286).

The formal Show Cause Notice issued for demand of tax, interest, and penalty under Sections 73 or 74 of the CGST Act. Response is filed in Form DRC-06.

A pre-notice communication issued before the formal DRC-01. Gives the taxpayer an opportunity to pay the ascertained liability voluntarily and avoid formal proceedings. Under Section 73, payment at this stage attracts zero penalty.

The response form filed in reply to a DRC-01A, used to either accept the liability and provide payment details or contest the computation with a detailed explanation.

The form filed on the GST portal as a response to a DRC-01 Show Cause Notice.

The section on the Income Tax e-Filing portal (incometax.gov.in) where all notices, queries, and proceedings are displayed and through which replies must be filed. Path: e-File → e-Proceedings OR Pending Actions → e-Proceedings.

Income that was assessable in a previous year but was not included in the assessment — either because no return was filed, the income was under-reported, or the deduction/exemption claimed was incorrect. This is the trigger for reassessment proceedings under Section 147/148.

An assessment or order passed by the Assessing Officer without hearing the taxpayer — typically because the taxpayer failed to respond to the notice or failed to appear on the scheduled hearing date. Ex-parte orders are almost always unfavorable. They can be challenged in appeal, but it is always better to respond to the underlying notice.

An electronic document required for movement of goods above ₹50,000 in value. Generated on the e-way bill portal. Non-compliance with e-way bill requirements can trigger inspection, detention, and penalty under Section 129 of the CGST Act.

A ledger maintained on the GST portal showing the balance of tax paid in cash (through challan). Funds in this ledger can be used to pay tax liabilities, interest, and penalties.

A ledger maintained on the GST portal showing the balance of Input Tax Credit (ITC) available. Balances arise from GSTR-2B reflecting suppliers' filings. Used to set off output tax liability.

The system under which all assessment proceedings are conducted electronically through the Income Tax portal, with no physical interaction between the taxpayer and the Assessing Officer. Under the Income Tax Act, 2025, faceless assessment is a statutory right under Section 275 (previously Section 144B of the 1961 Act — an administrative scheme).

The 12-month period from 1 April to 31 March in which income is earned. Under the 1961 Act, this is the "Previous Year." Under the Income Tax Act, 2025, the "Previous Year" and "Assessment Year" distinction is abolished, and the Financial Year is now called the "Tax Year."

A TDS certificate issued by your employer showing the salary paid and tax deducted at source during the financial year. It is divided into Part A (TDS details) and Part B (breakup of income and deductions). Essential for filing ITR and responding to salary-related notices.

A consolidated tax credit statement showing all tax deducted at source (TDS), tax collected at source (TCS), advance tax paid, and self-assessment tax paid against your PAN. Now supplemented by the AIS (Annual Information Statement), which is more comprehensive.

The monthly or quarterly return filed by a registered taxpayer declaring all outward supplies (sales) made during the period. The basis for your buyer's ITC claims through GSTR-2B.

An auto-populated, dynamic statement showing all ITC available based on suppliers' GSTR-1 filings. Unlike GSTR-2B, it changes as suppliers amend or file their returns late.

A static, system-generated ITC statement available on a fixed date each month, showing the ITC available to you based on suppliers' GSTR-1 and GSTR-5/6 filings for that period. This is the benchmark document for all ITC claims and the starting point for any ITC mismatch reconciliation.

The monthly or quarterly return through which tax is actually paid. Declared summary figures for outward supplies, ITC claimed, and net tax payable. Mismatch between GSTR-1 and GSTR-3B is a major trigger for ASMT-10 notices.

The annual GST return filed by regular taxpayers reconciling all transactions of the financial year. Mandatory for businesses with annual turnover above ₹2 crore.

The reconciliation statement (previously a certified statement from a CA/CMA, now self-certified for businesses below ₹5 crore) reconciling the GSTR-9 with the audited financial statements.

The form filed by a taxpayer declaring income, deductions, and taxes paid for a financial year. Different ITR forms apply to different categories of taxpayers (ITR-1 to ITR-7). Under the IT Act 2025, revised and simplified forms have been notified.

A special return under Section 139(8A) [new Section 263(6)] that allows taxpayers to update previously filed returns and pay additional tax with interest. Under the IT Act 2025, the window for filing ITR-U has been extended from 24 months to 48 months from the end of the Tax Year.

The second tier of appellate authority in the Income Tax hierarchy. Appeals from orders of the CIT(A) lie before the ITAT. ITAT is an independent quasi-judicial body and its decisions are binding on AOs and CIT(A)s.

The mechanism that allows a registered taxpayer to claim credit for the GST paid on purchases (inputs) and set it off against the GST liability on sales (output tax). The foundation of the GST system's value-addition principle. ITC claims are validated against GSTR-2B.

The requirement to reverse (give back) ITC already credited, typically when: goods/services are used for non-business or exempt purposes; payment to supplier is not made within 180 days; credit notes are received from suppliers; ITC was wrongly availed. Reversal is reported in Table 4(B) of GSTR-3B.

The centralised unit through which all faceless assessment proceedings are administered. Under the faceless scheme, all notices are issued by NFAC and all replies are received by NFAC — even though the underlying assessment may be assigned to an AO in a different city.

The GST charged on sales/services provided. Collected from buyers and deposited with the government (after netting off ITC). Declared in GSTR-1 and paid through GSTR-3B.

A 10-character alphanumeric identifier issued by the Income Tax Department to every taxpayer. All Income Tax notices are issued to and must be responded by the registered PAN holder. Misquoting the PAN in any notice reply is a serious error.

A senior officer in the Income Tax hierarchy above the Commissioner. Under the reassessment provisions, the PCIT (or CIT) must grant approval before a notice under Section 148 can be issued — a mandatory safeguard against arbitrary reopening.

Under the Income Tax Act, 1961, the financial year in which income is earned (as distinct from the Assessment Year in which it is taxed). Abolished under the IT Act 2025 — replaced by the unified "Tax Year."

A key concept in GST that determines whether a transaction is interstate (IGST) or intrastate (CGST + SGST). Incorrect determination of place of supply is a common trigger for GST notices alleging wrong tax payment.

A scheme for taxpayers with turnover up to ₹5 crore where GSTR-3B is filed quarterly but tax is paid monthly through fixed sum payments or self-assessment. Introduced to reduce compliance burden.

A mechanism to correct apparent mistakes in an order passed by the Income Tax Department — errors in computation, incorrect data entry, etc. The taxpayer can file a rectification application within 4 years of the order date. The AO can also rectify suo motu within the same period.

The response form filed by an applicant to reply to an REG-03 notice seeking additional information during the GST registration process.

The Show Cause Notice issued before cancellation of GST registration under Section 29(2) of the CGST Act. Response deadline: 7 working days in Form REG-18.

The response form filed on the GST portal to reply to a REG-17 cancellation notice.

A provision under which the recipient of goods/services — rather than the supplier — is liable to pay GST. Applicable in specified categories (e.g., import of services, purchase from unregistered dealers in certain cases). Non-compliance with RCM is a common audit finding.

A detailed assessment conducted when the AO examines the income, deductions, and claims in a filed return. Conducted through the faceless scheme via the e-Proceedings portal.

A direction from the appellate authority (CIT(A) or ITAT) or the AO that suspends the recovery of a tax demand during the pendency of an appeal. Standard practice is to pay 20% of the disputed demand as a pre-condition for stay (per CBDT instruction). A formal stay application must be filed separately from the appeal.

A formal notice asking the recipient to explain why a proposed action — demand, penalty, cancellation — should not be taken against them. Requires a detailed, documented reply within the specified time. Failure to respond results in an ex-parte order.

The provision governing demand proceedings in non-fraud, non-suppression cases. Penalties significantly reduced or waived for early payment. Three-year limitation period from due date of annual return.

The provision governing demand proceedings where fraud, suppression, or willful misstatement is alleged. 100% mandatory penalty. Five-year limitation period. Respond with extra caution and preferably with professional assistance.

The unified 12-month period (1 April to 31 March) introduced by the Income Tax Act, 2025, replacing the dual concept of "Previous Year" and "Assessment Year" under the 1961 Act. All assessments, notices, and appeals from Tax Year 2026-27 onwards will reference the Tax Year.

Tax deducted by the payer at the time of making specified payments — salary, interest, rent, professional fees, etc. The deducted amount is credited against the recipient's tax liability. TDS details appear in Form 26AS and AIS.

A consolidated view of the information in the AIS, showing processed values after feedback submitted by the taxpayer. Used alongside AIS to reconcile your return with data available with the department.

The point in time at which a supply is treated as having been made under GST — determining when tax becomes payable and in which return period it should be declared. Mismatch between Time of Supply and return period of declaration is a common trigger for GSTR-1 vs GSTR-3B mismatch notices.

Supplies that are taxed at 0% — primarily exports of goods and services, and supplies to Special Economic Zones (SEZs). The supplier can claim a refund of ITC on inputs used for zero-rated supplies even though no output tax is collected.