Inventory & GST glossary
The terms that come up when you run stock, buy from suppliers and bill under GST — explained in plain words.
Accounting
Inventory turnover
How many times you sell and replace your stock in a period. It shows whether your working capital is moving or parked on the shelf.
ReadLIFO (last-in-first-out)
A costing rule that charges the most recent purchase price against a sale first. It is not permitted for inventory valuation under Indian accounting standards.
ReadReceivables ageing
A report grouping what customers owe you by how overdue it is, so collection effort goes where the money is oldest and least likely to arrive on its own.
ReadStock ageing
A report grouping inventory by how long it has been held — 0 to 30 days, 31 to 60, and so on — to show which stock is turning and which is sitting.
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GST & compliance
CGST (Central GST)
The central government's half of the GST on a sale made within your own state. It is always charged together with SGST at the same rate.
ReadE-invoice
An invoice reported to the government's registration portal, which returns a reference number and a signed QR code that must be printed on the document.
ReadE-way bill
The electronic document required for moving goods above a notified value, generated on the government portal and carried with the consignment.
ReadGST (Goods and Services Tax)
India's indirect tax on the supply of goods and services, charged as CGST plus SGST within a state and as IGST between states.
ReadGSTIN
The 15-character GST registration number that identifies a business in a particular state. It appears on every tax invoice you issue and receive.
ReadGSTR-1
The return in which a registered business reports its outward supplies — the sales invoices, credit notes and debit notes it issued for the period.
ReadHSN code
The classification code that identifies a product under GST and decides its tax rate. Services use SAC codes instead.
ReadIGST (Integrated GST)
The single GST charged when goods move from one state to another, levied at the full rate instead of a CGST and SGST split.
ReadInput tax credit (ITC)
The GST you paid your suppliers, set off against the GST you collected from your customers, so you pay the government only the difference.
ReadPlace of supply
The location a supply is treated as made in under GST. It decides whether you charge CGST and SGST or IGST.
ReadSGST (State GST)
The state government's half of the GST on a sale made within your own state, charged alongside CGST at the same rate.
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Purchasing
Goods receipt note (GRN)
The record made when a delivery is received and checked, stating what actually arrived against what was ordered.
ReadLead time
The time between placing an order with a supplier and having the goods ready to sell. It is the single biggest input into your reorder point.
ReadPurchase order (PO)
The document you send a supplier to order goods, stating items, quantities, rates and terms. It is what the delivery and the bill are checked against.
ReadReorder point
The stock level at which you place a fresh order, set so that the new stock arrives before the shelf runs empty.
ReadSafety stock
The extra stock you hold above expected demand to cover a demand spike or a late delivery, so a normal surprise does not turn into a stockout.
ReadThree-way match
Checking the purchase order, the goods receipt note and the supplier's invoice against each other before a bill is approved for payment.
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Sales & billing
Credit note
A document a seller issues to reduce the value of an earlier invoice — for a sales return, a rate correction, or a discount agreed after billing.
ReadDebit note
A document that increases the value of an earlier transaction — issued by a seller who under-charged, or raised against a supplier for short or damaged goods.
ReadDelivery challan
The document that accompanies goods moving without a tax invoice — job work, stock transfers, approval sales or goods sent for repair.
ReadTax invoice
The GST document a registered supplier issues for a taxable supply. It carries specified particulars and is what lets the buyer claim input tax credit.
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Stock control
Available to promise (ATP)
The stock you can genuinely commit to a new customer — quantity on hand less what is already reserved for other orders.
ReadBarcode
A printed code that identifies an item when scanned, so the right SKU is picked at billing, receiving and stock taking without typing.
ReadBatch number (lot number)
The code a manufacturer prints on a production run, used to group identical units so you can trace, recall or expire them together.
ReadCycle count
Counting a small part of your stock regularly — a category or a shelf at a time — instead of shutting the shop for one large annual stock take.
ReadDead stock
Goods that have stopped selling and are unlikely to sell at their current price. The cash is spent, the shelf space is taken, and the value only falls.
ReadExpiry date
The last date a product may be sold or used. Stock past this date must be pulled from sale and written off or returned to the supplier.
ReadFEFO (first-expiry-first-out)
A picking rule that sells the batch with the nearest expiry date first, so stock leaves the shelf before it can turn.
ReadFIFO (first-in-first-out)
A stock rule that sells the oldest purchase first, so goods leave in the order they arrived and your cost of sale follows the older price.
ReadSKU (stock keeping unit)
The smallest distinct item you buy, hold and sell as one thing, with its own code. Each size, colour or pack of a product is a separate SKU.
ReadStock transfer
Moving goods between your own locations — shop to godown, branch to branch — recorded as a dispatch at one end and a receipt at the other.
ReadStockout
Running out of an item a customer wanted to buy. The lost sale is rarely recorded anywhere, which is why the cost is usually underestimated.
ReadUnit of measure (UoM)
The unit an item is counted in — piece, box, kilogram, litre, metre. Buying, selling and stock reporting must all resolve to one base unit.
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