Reconciliation Glossary
Plain-language definitions of reconciliation, TDS, GST, NACH, and 50+ terms used by finance teams, CFOs, and CA firms working with Indian financial data.
Annual Return (GSTR-9)
Annual GST compliance return that reconciles all monthly and quarterly returns for a financial year. Filed by September 30 following the financial year end. Discrepancies between GSTR-3B cumulative figures and GSTR-1 output are surfaced here.
Audit Trail
Tamper-proof log of every match decision, override, and variance classification in a reconciliation system. Required for statutory audits under the Companies Act and Income Tax Act. Each entry captures the rule applied, matched values, variance amount, and operator identity.
Bank Reconciliation
The process of matching transactions in a company's cash book against the corresponding entries in a bank statement to verify completeness and accuracy. Every difference must be explained — outstanding cheques, deposits in transit, bank charges, or errors.
Bank Reconciliation Statement (BRS)
Formal document explaining the difference between the cash book balance and the bank statement balance at a period end. Required by statutory auditors as evidence of control over cash balances. Typically prepared monthly and reconciled to zero within 60–90 days.
Blocked ITC [Section 17(5)]
Input Tax Credit that cannot be claimed under Section 17(5) of the CGST Act. Covers motor vehicles used for personal purposes, food and beverages, health and fitness services, membership fees, and goods or services used for construction of immovable property.
Cash Book
The company's internal register recording all bank transactions chronologically, including receipts, payments, and contra entries. The primary internal reference matched against bank statements in bank reconciliation. Maintained in the ERP (SAP, Oracle, Tally) or accounting software.
Chargeback
A reversal of a payment gateway settlement transaction initiated by a customer's issuing bank. Creates a debit in the next settlement cycle, requiring reconciliation against the original transaction and any associated refunds already processed.
DPD (Days Past Due)
Number of days an EMI or NACH debit is overdue after the scheduled due date. Used for NPA classification and provisioning in NBFC and lending reconciliation. RBI mandates specific DPD thresholds for Special Mention Account (SMA) and NPA classification.
E-Invoice (IRN)
An electronically validated invoice registered on the GSTN Invoice Registration Portal (IRP) with a unique Invoice Reference Number (IRN). Mandatory for businesses above the applicable turnover threshold. The IRN becomes the authoritative invoice identifier for GST reconciliation.
ECS (Electronic Clearing Service)
RBI-operated predecessor to NACH for bulk debit and credit mandates. Largely migrated to NACH from 2016 onwards. Legacy ECS mandates require migration reconciliation to map old ECS references to new UMRN identifiers.
Exception
A transaction that the reconciliation engine cannot automatically match and that requires human review, investigation, or write-off. Exceptions are classified by type (unmatched, partially matched, duplicate suspected) and routed to the appropriate workflow.
FEE_DEDUCTION
TransactIG variance code assigned when a payment gateway, bank, or platform has deducted fees (MDR, processing charges, platform commission) before remitting the settlement amount. The matched pair is the gross invoice vs the net receipt, with the fee as the explained variance.
FIFO (First In First Out)
Matching allocation method that applies receipts to the oldest outstanding invoices first. Used in partial payment and advance payment reconciliation to determine which invoices are cleared by a lump-sum receipt.
Form 26AS
Annual tax credit statement available on TRACES, showing all TDS deducted, TCS collected, advance tax paid, and self-assessment tax credited against a PAN for a financial year. The authoritative source for reconciling TDS receivable against actual credits.
Four-Pass Pipeline
TransactIG's progressive matching algorithm that executes four passes in sequence: (1) exact match on reference numbers (UTR/UMRN/IRN), (2) signal-weighted probabilistic match, (3) tolerance-based amount match within configurable thresholds, and (4) many-to-many aggregation for batch payments. Baseline match rate: 51% → 88% after full pipeline.
GST (Goods and Services Tax)
India's unified indirect tax introduced July 1, 2017, replacing VAT, service tax, central excise duty, and other levies. Administered through the GSTN portal. Comprises CGST (Central), SGST (State), and IGST (Inter-state) components. The basis for ITC reconciliation.
GSTIN
15-character GST Identification Number assigned to each GST-registered entity, structured as: 2-digit state code + 10-character PAN + 1-digit entity number + 1-digit Z + 1 check digit. The primary identifier in B2B GST reconciliation between buyers and suppliers.
GSTR-1
Monthly or quarterly outward supply return filed by GST-registered suppliers. Invoice-level data from GSTR-1 auto-populates buyers' GSTR-2A and subsequently GSTR-2B. Mismatches between GSTR-1 filed and actual invoices raised are a primary reconciliation exception.
GSTR-2A
Dynamic ITC ledger auto-populated from suppliers' GSTR-1 filings. Updates in real time as suppliers file or amend. Used for tracking ITC availability throughout the month but not the official basis for claims — GSTR-2B is used for ITC claims.
GSTR-2B
Static, cut-off date ITC statement generated on the 14th of each month, based on GSTR-1 filed by suppliers up to that date. The official basis for ITC claims under Rule 36(4). Unlike GSTR-2A, GSTR-2B does not change after generation.
GSTR-3B
Monthly summary return filed by GST taxpayers declaring total outward supplies, ITC availed, and net tax liability. Reconciled against GSTR-1 (outward supply accuracy) and GSTR-2B (ITC eligibility). Discrepancies trigger GST notices.
IGST (Integrated GST)
GST levied on inter-state supply of goods or services and on imports. Collected by the Centre and apportioned between the Centre and the destination state after reconciliation. Cross-state ITC claims involve complex IGST-CGST-SGST offset rules.
IRN (Invoice Reference Number)
64-character unique hash assigned by the Invoice Registration Portal (IRP) to each validated e-invoice. The IRN becomes the authoritative invoice identifier linking the supplier's books, the buyer's GSTR-2B, and the payment UTR in reconciliation.
ITC (Input Tax Credit)
The mechanism allowing GST-registered businesses to reduce their GST liability on outputs by the GST paid on inputs, input services, and capital goods. Subject to conditions: supplier must have filed GSTR-1, tax must be paid to government, and invoice must appear in GSTR-2B.
ITC Reversal
Mandatory reversal of previously claimed ITC under Rules 42 and 43 (common inputs used for exempt supplies), when suppliers fail to pay tax within 180 days of invoice date, or when goods are written off or destroyed. Reconciliation must track reversal obligations.
Mandate (NACH)
An authorization executed by a customer, allowing their bank to debit a specified amount (fixed or maximum) on a recurring schedule for a defined period. Each mandate is identified by a UMRN. Mandate verification and activation is a prerequisite for NACH batch reconciliation.
Matching Engine
The automated algorithm that compares transactions from two or more data sources using configurable rules to classify each transaction as matched, partially matched, or unmatched. TransactIG's engine uses signal weights (UTR: 0.40, amount: 0.25) and runs in O(n × 50) time.
MDR (Merchant Discount Rate)
Processing fee charged by payment gateways and acquiring banks as a percentage of each transaction value. Deducted before settlement. Varies by payment mode (UPI: 0%, debit card: 0.4–0.9%, credit card: 1.5–2%). MDR must be reconciled against the gateway's settlement statement.
MT940
SWIFT-standard structured bank statement format used by Indian banks (HDFC, ICICI, SBI, Axis, Kotak) for delivering electronic account statements. Each transaction carries structured fields for date, amount, reference, and narration. The standard format for automated bank feed ingestion.
Multi-Entity Reconciliation
Reconciliation spanning multiple legal entities, branches, cost centres, or GST registrations under a common group. Requires entity-level segregation before matching and consolidation after. Common in conglomerates, hospital chains, hotel groups, and multi-state retailers.
NACH (National Automated Clearing House)
NPCI-operated infrastructure for processing bulk recurring debit and credit transactions, replacing ECS. Operates on a T+1 settlement cycle. Used for EMI collections, insurance premiums, SIP investments, and utility bill payments. Each mandate carries a unique UMRN.
Netting
The process of offsetting debits and credits between two parties to arrive at a single net payable or receivable. Common in payment gateway settlements (where refunds reduce the gross settlement), intercompany reconciliation, and commission-based business models.
NEFT (National Electronic Funds Transfer)
RBI-operated batch payment system settling transactions in half-hourly cycles, 24×7. Each transfer carries a 22-character UTR number. One of the primary payment rails whose UTR is used as the high-confidence matching signal in bank and TDS reconciliation.
Outstanding Entry
A transaction present in one data source (e.g., company cash book) but absent in the other (e.g., bank statement) that has not yet cleared. Outstanding entries are legitimate timing differences — outstanding cheques, deposits in transit — and must be cleared within expected settlement windows.
PAN (Permanent Account Number)
10-character alphanumeric tax identifier issued by the Income Tax Department, structured as 5 letters + 4 digits + 1 letter. The primary linkage key in TDS reconciliation: the deductor's PAN appears on Form 26AS and the payee's TDS receivable ledger must match the credits there.
PARTIAL_PAYMENT
TransactIG variance code assigned when the amount received is less than the invoice amount without a known deduction reason (i.e., not FEE_DEDUCTION or TAX_DEDUCTION). Triggers a workflow to confirm whether the balance will be paid or requires credit note / write-off.
PENALTY_OR_INTEREST
TransactIG variance code for late payment charges, penal interest under Income Tax Section 234B/234C, GST penalties, or NACH penal fees included within a remittance amount. Enables separation of principal payment from associated statutory charges.
Point of Sale (POS)
Physical card terminal or digital checkout generating payment transactions that must be reconciled against bank credits and gateway settlements. POS reconciliation involves matching daily batch totals to bank T+1 credits, net of MDR deductions.
Reconciliation
The accounting process of ensuring two independent sets of records agree. Each difference is identified, classified by cause, and either resolved (error corrected, timing difference acknowledged) or written off with documented justification. The foundation of financial control and audit readiness.
Return Code (NACH)
NACH system code explaining why a direct debit instruction was returned by the destination bank. Key codes: 01 (Insufficient Funds), 05 (Stop Payment by Account Holder), 20 (Account Frozen), 25 (Mandate Cancelled / Expired), 27 (Account Closed). Used to classify NACH exceptions and trigger lender workflows.
ROUNDING
TransactIG variance code for differences of less than one paisa (₹0.01) arising from rounding conventions between the ERP and the bank or payment gateway. Treated as matched in practice; flagged for reporting but not escalated for investigation.
RTGS (Real Time Gross Settlement)
RBI's high-value payment system settling each transaction individually in real time, used for amounts above ₹2 lakh. Each transfer carries a 22-character UTR. RTGS UTRs are used as the primary exact-match signal in enterprise bank reconciliation (signal weight: 0.40).
Rule 36(4)
GST rule limiting provisional ITC claims to the ITC available in GSTR-2B. Buyers can claim ITC only on invoices that appear in GSTR-2B — additional provisional ITC is no longer permitted. Reconciliation must ensure all claimed ITC is backed by GSTR-2B entries.
Section 194C (TDS on Contractors)
TDS provision requiring payers to deduct tax before making payments to resident contractors and subcontractors. Rate: 1% for individuals/HUF, 2% for companies. Applicable on single payments above ₹30,000 or aggregate above ₹1 lakh in a financial year.
Section 194J (TDS on Professionals)
TDS provision requiring 10% deduction on payments for professional services, technical services, directors' fees (non-salary), and royalties. Reduced to 2% for technical services (non-professional). One of the most common TDS sections in IT and consulting services reconciliation.
Settlement (Payment Gateway)
The periodic net payout from a payment gateway to a merchant, after netting MDR fees, GST on MDR, TCS deductions, and refunds from gross collections. Settlement cycles vary: Razorpay and Cashfree settle T+1; PayU and some banks settle T+2 or weekly.
SFTP (Secure File Transfer Protocol)
Standard delivery mechanism for bank statement files, ERP exports, and payment gateway settlement reports in automated reconciliation. Most Indian banks deliver MT940 and CSV statements via scheduled SFTP drops. TransactIG supports SFTP, S3, and direct API ingestion.
Signal Weight
Numerical confidence score assigned by TransactIG's matching engine to each data field used for matching. UTR: 0.40 (highest — unique identifier), amount: 0.25, date: 0.15, narration token: 0.12, reference substring: 0.08. Combined signal score determines match candidate ranking.
TAX_DEDUCTION
TransactIG variance code assigned when the variance between expected and received amounts is attributable to TDS, GST TDS, or other statutory deduction at source. Resolved by matching the net receipt to the gross invoice minus the applicable tax deduction rate.
TCS (Tax Collected at Source — GST)
Tax collected by e-commerce operators under Section 52 of the CGST Act at 1% (0.5% CGST + 0.5% SGST/IGST) on the net taxable value of supplies made through their marketplace. Deducted before settlement to sellers; claimable as ITC by sellers in GSTR-2B.
TDS (Tax Deducted at Source)
Withholding tax mechanism under the Income Tax Act where the payer deducts a specified percentage from payments to residents or non-residents and deposits it to the government via TRACES challan. The payee claims this deduction as advance tax credit from Form 26AS.
Tolerance Band
Configurable matching parameter that allows two amounts to be treated as a match if their difference falls within a defined absolute value (e.g., ≤ ₹5) or percentage threshold (e.g., ≤ 0.5%). Prevents rounding and minor fee differences from creating false exceptions.
TRACES (TDS Reconciliation Analysis and Correction Enabling System)
CBDT portal for filing TDS returns (24Q, 26Q, 27Q, 27EQ), issuing Form 16/16A certificates, downloading Form 26AS, and processing TDS correction statements. The authoritative source for TDS credit reconciliation. TDS challan payments must be linked to valid PAN-TAN pairs on TRACES.
UMRN (Unique Mandate Reference Number)
20-character NPCI-assigned alphanumeric identifier assigned to each registered NACH mandate. The primary matching key in NACH reconciliation: each debit instruction and return carries the UMRN, linking it to the customer record, loan account, and expected debit schedule.
UNEXPLAINED
TransactIG variance code for variances that do not match any known classification pattern (not FEE_DEDUCTION, TAX_DEDUCTION, ROUNDING, PARTIAL_PAYMENT, or PENALTY_OR_INTEREST). Triggers escalation to senior finance staff for manual investigation and root-cause analysis.
UTR (Unique Transaction Reference)
22-character alphanumeric identifier assigned to each NEFT and RTGS transaction. Structured as: bank code (8 chars) + year (2) + month (2) + sequence (10). The highest-confidence matching signal in bank reconciliation (signal weight: 0.40 in TransactIG's engine). Each UTR is globally unique.
Variance
The monetary or classification difference between a transaction's expected value (per company books or invoice) and its actual value (per bank statement, gateway settlement, or statutory record) after reconciliation matching. Variances must be classified, not just flagged.
Variance Code
Typed classification label assigned by the reconciliation engine to every unmatched or partially matched transaction. TransactIG's taxonomy: FEE_DEDUCTION, TAX_DEDUCTION, ROUNDING, PARTIAL_PAYMENT, PENALTY_OR_INTEREST, UNEXPLAINED. Enables root-cause dashboards instead of raw exception dumps.
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