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.
Cancellation Variance
Reconciliation variance arising when an OTA cancels a booking but the corresponding refund or settlement reversal does not appear in the same period as the original disbursement. The cancellation can hit a future settlement, leaving an unexplained negative line item that must be linked back to the original booking. Common cause of OTA-side reconciliation gaps for hotels operating on weekly settlement cycles.
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.
MINIBAR_LATE_POST
Hotel reconciliation variance code for a charge posted to the guest folio after check-out and after the night audit close — most commonly a minibar consumption that the housekeeping team logged late. Creates a settled-folio-with-extra-charge variance that must be either billed to the guest's credit card on file or written off. Native to the hotel reconciliation taxonomy alongside settled-but-uncharged and unposted F&B.
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.
Net Realised Revenue (NRR)
The revenue actually received in the bank account after every layer of deduction — commission, GST on commission, TDS, TCS, refunds, and penalties — has been applied. For a hotel chain processing 1,500+ reservations per month across 6–10 OTA channels, NRR can lag gross folio revenue by 18–30%. Reconciliation closes the gap by classifying each deduction so the variance against gross revenue is explained, not merely written off.
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.
OTA Settlement Cycle
The elapsed period between an Online Travel Agency (MakeMyTrip, Goibibo, Booking.com, Agoda, Expedia) capturing payment from a guest and remitting the net amount to the hotel. Domestic OTAs typically settle T+7 to T+14 (weekly batched), foreign OTAs T+14 to T+21. The settlement is net of commission, GST, and TDS — never matches the gross folio without disaggregation.
OTA Commission Rate
The percentage of gross room revenue retained by an Online Travel Agency as compensation for distribution. Indian OTAs typically charge 15–25%: MakeMyTrip and Goibibo at the lower end, Booking.com and Agoda toward the higher end. OYO operates a distinct revenue-share model rather than commission-only. The commission is itself an inward supply to the hotel attracting 18% GST, claimable as ITC subject to Section 16 conditions.
OTA Parity Dispute
Conflict between the room rate published on the hotel's direct-booking website and the rate listed on a third-party OTA. Most OTA contracts include a parity clause requiring rate equivalence. A parity breach can trigger contractual penalties or temporary suspension. Detected through periodic rate-comparison audits via the channel manager (SiteMinder, STAAH, RateGain) against OTA inventory.
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.
Platform Settlement File
The structured file delivered by an OTA, food aggregator, or e-commerce platform to a merchant alongside each settlement disbursement. Lists every booking or order, the gross value, deductions (commission, TDS, TCS, refunds, penalties), and the net contribution to the bulk credit. Distinct from the bank statement's single-line NEFT credit — the settlement file is the disaggregation source for matching.
PMS-to-Bank Reconciliation
Hotel reconciliation discipline of matching the Property Management System (Opera, IDS Next, eZee, Hotelogix) folio register against the bank credit feed and the OTA settlement files. Captures the chain: booking → folio → check-out → invoice → settlement (or virtual card charge) → bank credit. Exception classes include MINIBAR_LATE_POST, settled-but-uncharged, partial folio, and unposted F&B charge.
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.
Restaurant Aggregator Commission
The percentage retained by Zomato, Swiggy, Magicpin, or Dunzo on each restaurant order. Typical range 25–35% depending on the restaurant tier, exclusivity contract, and ad-spend tier. Aggregator commission attracts 18% GST as an inward supply to the restaurant; whether the restaurant can claim ITC depends on whether Section 9(5) of the CGST Act applies to that supply chain.
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.
Section 393(1)(f) TDS on Commission
Sub-clause of Section 393 of the Income Tax Act 2025 covering TDS on commission and brokerage payments at 5% — replaces legacy Section 194H from April 1, 2026, with payment code 1007. Hotels deduct under this sub-clause when paying domestic OTAs (MakeMyTrip, Goibibo, Yatra, OYO) commission on bookings. Reconciliation requires matching against the OTA's Form 168 by PAN, payment code, and quarter.
Section 413 TDS on Foreign Payments
Section of the Income Tax Act 2025 governing TDS on payments to non-residents — replaces legacy Section 195 from April 1, 2026. Applies when Indian hotels pay foreign OTAs (Booking.com Netherlands, Agoda Singapore, Expedia US/UK) commission. Rate determined by the lower of the DTAA treaty rate or Act rate, with Form 15CA/CB documentation required. Cross-era cases (deductions before April 1) remain under Section 195.
Settlement Sidecar File
A companion file to the platform settlement that enumerates every line item in a bulk settlement at order or booking level. Amazon, Flipkart, Meesho, MakeMyTrip, and Booking.com all provide sidecar files. Without sidecar parsing, a single bulk NEFT covering thousands of orders cannot be reconciled at line-item level, leaving the entire settlement as one unresolved variance against the OMS or PMS.
Section 9(5) Aggregator GST Liability
Provision in Section 9(5) of the CGST Act 2017 that shifts GST liability to the e-commerce operator (Zomato, Swiggy, Urban Company, Ola, Uber) for specified services. Effective from January 1, 2022 for restaurant services through aggregators. The restaurant cannot claim ITC on inward supplies attributable to such supplies because it is not the supplier of record for GST. Unchanged by the new Income Tax Act 2025 — GST is separate legislation.
Section 52 TCS (CGST Act)
Tax Collected at Source under Section 52 of the CGST Act — 1% on net taxable supplies made through e-commerce operators. Distinct from TCS under Section 206C of the Income Tax Act (which moves to Section 394 + payment codes 1071+ from April 2026). Section 52 is GST law and remains unchanged. The aggregator collects, files Form GSTR-8, and the credit appears in the seller's GST electronic cash ledger — not Form 26AS.
Section 393(1)(j) Payment Code 1010
Sub-clause of Section 393 covering TDS on payments by e-commerce operators to participants — replaces legacy Section 194O from April 1, 2026. Rate 1% on gross transaction value (including GST component). The numeric payment code 1010 is the primary identifier on challan ITNS 281, Form 168, and Form 131. Applies when Zomato, Swiggy, Amazon, Flipkart, Meesho deduct from their participant sellers and restaurants.
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 — every UTR is globally unique, which makes it the primary join key against bank statement entries.
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.
Virtual Card Payment (Hotels)
Payment model used by Booking.com, Agoda, and Expedia where the OTA issues a single-use virtual credit card at the time of booking, charged at the property at check-in. Settlement timing differs from net-settlement model — the property charges the VCC into its own merchant acquirer, who settles separately from the OTA's NEFT cycle. Reconciliation must link the VCC charge to the original booking regardless of which settlement period carries the merchant credit.
See these concepts applied in production
TransactIG automates reconciliation across all the patterns defined in this glossary — configured to your industry in 2–4 weeks.