Glossary
Indian trade, scheme & rebate glossary
The vocabulary of Indian channel trade — schemes, claims, rebates and GST — defined in plain English. If a term trips up your claims or settlement conversations, it is probably here.
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33 terms, defined
- Primary sales
- Sales from a manufacturer to its distributors — the “sell-in” to the channel.
- Secondary sales
- What a distributor sells onward to the next tier (retailers or sub-dealers) — the sell-through, not just what the distributor bought.
- QPS (Quantity Purchase Scheme)
- A scheme rewarding the quantity or value a partner purchases in a period, usually at slab rates that rise with volume — settled after the period against actual purchases, typically by credit note.
- TOD (Turnover Discount)
- An annual or periodic discount earned on total purchase turnover, usually slabbed and settled by credit note after period close. No statute defines it — the agreement governs everything, including whether it was pre-agreed (which decides its GST credit-note route).
- DB (Distributor) margin
- The distributor’s trading margin — the difference between their buying price and selling price to the next tier, before scheme income and before the cost of unclaimed schemes. The published “margin” usually means this base number alone.
- Secondary scheme
- A trade scheme that rewards secondary sales (the distributor’s sell-through) rather than primary purchases.
- Scheme leakage
- The share of a trade-promotion or scheme budget lost to over-claims, duplicate claims, unclaimed accruals, manual errors and slow reconciliation.
- Trade promotion / trade spend
- The budget a manufacturer spends on channel incentives — schemes, rebates and discounts — to drive sales through the channel.
- Rebate
- An amount credited back to a channel partner for meeting agreed conditions such as volume, value or growth — usually settled after the sale.
- FOC (free-of-cost) scheme
- A scheme that rewards purchases with free goods (for example, buy 10 get 1 free) instead of a cash rebate.
- Slab scheme / volume slab
- A tiered scheme where the rate depends on the band (slab) the volume reaches; once a slab is reached, its rate typically applies to the whole volume.
- Stepped scheme
- A marginal scheme where each band’s rate applies only to the volume that falls within that band, then the bands are summed.
- Tiered scheme
- A scheme where the rate comes from the tier a partner is assigned to (for example Gold or Silver), rather than from volume alone.
- Super-stockist
- A channel tier that buys from the manufacturer and supplies distributors — common where direct distributor reach is limited.
- C&F agent (CFA)
- A carrying-and-forwarding agent that holds and forwards a manufacturer’s stock to distributors — common in pharma and FMCG.
- Distributor / stockist
- A channel partner that buys from the manufacturer (or super-stockist / CFA) and sells onward to retailers.
- Chargeback
- A claim a partner raises to recover an agreed amount — a rebate, scheme payout or price difference claimed back from you.
- Billback
- Often used interchangeably with chargeback for a claim you receive; on a special-pricing agreement it can specifically mean a periodic claim (versus a per-deal one).
- Deduction / debit note
- An amount a customer takes off an invoice (a debit note), which you then reconcile and either accept, dispute or write off.
- Credit note
- A document that reduces an amount owed; a GST (Section 34) credit note also adjusts the supplier’s output tax.
- Section 34 (CGST Act)
- The GST provision under which a supplier issues a tax-bearing credit or debit note for a post-sale adjustment.
- Rule 53(1A) (CGST Rules)
- The rule that specifies the particulars a GST credit or debit note must carry to be valid.
- ITC reversal
- The input-tax-credit reversal a recipient must make when a supplier issues a credit note that reduces tax.
- GSTIN
- The 15-character GST Identification Number of a registered taxpayer.
- HSN code
- The Harmonised System of Nomenclature code that classifies goods for GST.
- Place of supply
- The rule that decides whether a supply is intra-state (CGST + SGST) or inter-state (IGST).
- Accrual
- The running liability a manufacturer books for a scheme or rebate as it is earned, before it is claimed and settled.
- Settlement
- Paying out or crediting what has been earned and claimed — typically via a credit note.
- Reconciliation
- Checking a partner’s claim against the agreement and the underlying transactions, and resolving the differences.
- Special pricing agreement (SPA) / ship-and-debit
- An arrangement where a partner sells at an agreed special price and claims the difference back from the vendor.
- Stock / price protection
- Recovery of the value lost when a manufacturer cuts the price of stock a distributor still holds.
- Net-net margin
- What is left of gross sales after all trade spend — rebates, schemes, deductions and allowances — is taken off.
- Claim reversal
- Reversing a previously posted or settled claim (for example when it is cancelled), with an offsetting entry rather than a deletion.
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