Yes friends, good morning, good evening, good afternoon,
how are you?
I hope you are doing great.
We should always be like this. We are fighting in life.
We are fighting and trying to understand the concepts.
Friends, this is what we need. This is what we need. Effort
is what matters.
Till now, the things that we have talked about, the things
that we have understood, it was possible because we had put
effort on it.
We had finished the chapter on supply.
We have finished the chapter on supply.
Before that, we have finished the chapter on time of supply.
All these things were possible because we were putting
effort.
I am telling you a small story.
After that, I will start the topic.
In the olden days, people used to attack someone.
They used to come with a spear.
They used to attack with a spear.
After the spear, they invented the bow and arrow.
After the bow and arrow, they invented the swords.
After the swords, they invented the guns.
They invented the rifles.
They invented the cannons.
And today, the era of missiles is going on.
The era of nuclear weapons is going on.
You don't have to do anything.
You just have to put the name of your enemy and his
location.
The bomb will explode there. This is what is going on.
This is what is going on.
You just have to put the name of your enemy and his
location.
The bomb will explode there.
What is happening?
Is this an invention or not?
Is there a refinement in this?
The person who, in the beginning, made a spear just to save
himself, so that he does not get attacked from the front,
he must have made a spear.
At that time, he must have never thought how far it will go.
At that time, he must have never thought that it will
become a nuclear weapon.
At that time, he just made a thing to save himself.
Sir, we are doing the same.
At this time, we don't know from where a person will reach.
No one knows where I will reach and where you will reach.
Right now, we are just trying to understand things.
We are trying to understand things.
We are trying to see what exactly GST was.
What is it?
What are its provisions?
Right now, we are just doing this.
We are in that spear stage.
But from here, taking the benefit of this class, it is
possible that a child will reach from somewhere.
And the one who does not want to do anything, he will sleep
earlier, he will sleep today, he will regret tomorrow, he
will cry tomorrow.
Sir, I am telling you, if you cannot see a path, it is
completely dark.
As far as you can see a light, first go there.
Whatever you can understand, first go there.
You will find the path ahead of that.
If you cannot understand anything, but you can see a spark,
hold on to the direction of that spark and keep walking.
You will find the path ahead of that.
Do not think about it from here.
The one who made the spear did not think 2000 years ago
that he will reach to the nuclear weapon.
When Sachin Tendulkar started playing, or when he started
playing in the streets, he did not think that he will
become the God of Cricket.
No one thinks at that time.
You are studying it now.
Some people will study it and implement it in their
practical life.
They will work at GST places.
Maybe after 10-15 years, where will they go?
No one knows anything.
We are in our 20s.
This is the stage when we can only work hard.
We cannot see the result ahead.
We do not know where we will reach.
Do the invention of that spear.
Nothing else is needed.
The topic is about the reverse charge mechanism.
I have told you about the reverse charge mechanism in the
time of supply.
In reverse charge, everything goes upside down.
What I mean by that is, there is a supplier, who sells a
shirt for Rs.1000.
If the GST is Rs.200, the supplier charges Rs.1200 for the
shirt and Rs.200 for GST.
And that Rs.200 is collected by the supplier and deposited
by the government.
He collects it from you and deposits it to the government.
You are giving the money but he is depositing it.
It is his liability to deposit it.
It is the supplier's liability.
The supplier will have to take the registration in GST.
He will have to file the GST return.
This is the general rule of GST.
The supplier has the liability.
But in some cases, the government shifted the liability to
the receiver.
The good thing that was going on, the government reversed
it.
What I mean by reverse is, the person who will buy the
shirt, the person who will buy the shirt, he has the
responsibility to take the GST registration himself.
The person who will buy the shirt, he has the
responsibility to deposit the GST return.
And the person who will buy the shirt, he has the
responsibility to deposit the Rs.200 tax.
The whole provision has been reversed.
This is called the reverse charge mechanism.
The recipient has the responsibility to do all the things.
The supplier is free from all the responsibilities when the
daughter's father gets married.
He is free from his responsibilities.
This is the point of the reverse charge mechanism.
There are two such cases.
The government has made two sections.
The government has simply told you which goods or services
when you supply, the liability goes to the receiver.
This is the first case.
The government has already told you that you sell these
things or provide these services, then you will fall into
the reverse charge mechanism.
The receiver will be liable to pay the tax.
The second government has told you that if you are a
registered person and you buy goods from an unregistered
person,
What am I saying?
You have registered in GST.
You are a businessman.
You live in GST and work within the GST.
You have registered.
What does a businessman do?
He purchases goods and sells them.
If you are purchasing goods from an unregistered person who
is not registered in GST, if you are purchasing goods from
an unregistered person, then it is your responsibility that
you will pay the tax on the purchase.
That person will not pay the tax.
How will he pay the tax?
He has not even registered.
In a way, the government is discouraging those people who
do not register to not buy goods from them.
Because you are being burdened for no reason.
You are purchasing goods.
You will show the details of the purchase
It is better to purchase goods from a person who has
registered in GST.
Go and directly pay the GST.
He will pay the tax.
You are being burdened for no reason.
The government is discouraging such people.
If an unregistered person has not registered in GST, let's
say a poor person sets up a stall.
There are many such businessmen who get raw material from
places where they set up stalls.
The stall owner has not registered in GST.
He is a poor person.
Will he pay the GST?
Will he go to the compliance office?
Will he have to go to the compliance office?
He is an unregistered person.
And I am a businessman where I am an unregistered person
selling my goods on the radio.
The government has lost its revenue because I am purchasing
from that person.
He is an unregistered person.
When he is unregistered, there will be no GST.
The government was losing its revenue.
The revenue that was supposed to come, it is your matter.
You are purchasing from an unregistered person.
The tax that was supposed to be paid, you pay it.
This is the point of the reverse charge mechanism.
Let's try to understand it one by one.
What does it say?
Reverse charge mechanism.
Reverse charge means the liability to pay the tax is on the
receiver of, recipient of supply of goods or services
instead of the supplier.
of notified category of goods.
GST being indirect tax, this principle holds good for GST.
In normal case, the liability to deposit the GST and
undertake the compliance, the normal liability that is on
the supplier, which he can recover from the receiver, from
the customer GST. But he has to deposit it himself.
But what happens in reverse charge? This liability shifts
to the customer.
There are two points in reverse charge.
First scenario says, in
case of supply of specified category of goods and services.
If a registered person also supplies goods and services,
then also provisions will be imposed on the buyer.
There are some such goods and services.
So, they are specified here.
In second scenario, if you buy goods from an unregistered
person, there are some specified category of goods and
services.
If you buy from an unregistered person, then you, and if
you are registered, then the liability is imposed on you.
Let us try to see, what happens in reverse charge.
In reverse charge,
the carriers like 500 countries may tell you that this is
lost and that this is unregistered.
They won't tell us that these goods are missing and
nationally sealed.
So, you have to witness this in reverse charge. Now, we
have 100 business buildings and suntan houses, 300 business
buildings.
You start paying your tax.
The majority of them have either gas stations, or utility
companies.
What are the goods? Cash unit, Bidi wrapper leaves, tobacco
leaves, raw cotton, agricultural silk yarn, silk thread,
all these things are there, used vehicles are there.
So if you supply, you are the supplier, you have taken the
registration and you are supplying to any person, then it
will be the responsibility of that person that he should
directly deposit the tax on it to the government and
directly show it in his return.
And let's start the discussion about services.
What are the services?
Even if a registered person is providing services, the
supplier is registered but still it is not his
responsibility.
Even if the supplier is registered but still he is
receiving the services, he will directly deposit the tax to
the government.
First of all, goods transport agency, whose job is the
transportation of goods.
For example, you must have seen those small tempo trucks.
What are they?
They are responsible for goods transport. If one item is
stuck in it, they move it from here to there.
Truck drivers are responsible for the transportation of
goods.
They run in all the companies, all the factories.
So now the goods transport person is a supplier.
He is such a supplier who is providing services for goods
transportation.
Look at the example of this. If you are not able to
understand, I will show you a photo so that the point is
clear.
Look at this.
What are tempo trucks?
One minute, look at this.
Can you see?
Can you see this at the back?
Now this is a goods transport person.
Suppose I am the owner of this truck and I am providing the
services of transportation to some particular people.
In that case, I will not be held responsible for collecting
the GST and depositing it.
The responsibility will be of the other party.
Now let us try to see who are those other people.
Now it is clear that I am the goods transport agent.
My trucks are here. I am only providing the services.
Who are these other parties?
To whom am I providing these services?
Look at this.
To whom am I providing these services?
I am providing these services to a factory.
I am providing the services of transportation to a factory.
I am providing to a society.
I am providing to a cooperative society.
I am providing to a person who has registered in GST.
I am providing these services to a body corporate or a
company.
Or I can give services to a partnership firm or a casual
taxable person.
In a way, people like you and me who are unregistered, who
are end customers, who have nothing to do with GST.
We don't do any business that is covered in GST.
You are a student, I am a student.
Or for example, I am a salaried person who doesn't pay GST.
If this truck driver gives me services, what is covered
here?
For example, I have to shift my house.
I live in Bombay and I got a job in Pune.
And I want to shift to Pune.
So I called the truck driver.
I called the goods transport agent.
The truck driver stood at the door of my house.
He loaded all my luggage, took it to Pune and unloaded it
there.
So is my case being covered here?
Sir, my case is not being covered here.
He will discuss my case later.
He is exempt in GST.
He doesn't have to pay GST.
I am an end customer.
But all those services, if he gives to a factory worker,
the factory worker says, do one thing, this is my factory.
Bring the truck.
Get the goods loaded in the truck.
And get the goods directly from the factory to my showroom.
If he gives those services, if he gives services to a
partnership firm, if he gives services to a company, then
it will be covered in reverse charge.
In that case, the partnership firm, the company will be
held responsible that the tax will be paid directly to the
government.
This is the point, sir.
And what will be the rate in this?
Sir, this rate will be 5%.
GST rate will be 5%.
Come to the next.
Are you understanding things slowly?
Look, advocate's service.
Advocate's service.
Look, service provided by individual advocate, including
senior advocate.
For example, who was the individual advocate?
Jolly LLB.
And who was the senior advocate in that movie?
Was it Rajpal?
Boman Irani.
He became the senior advocate.
And Jolly LLB, Arshad Warsi, was our individual advocate.
Now, these services that he is giving, these services that
he is giving, to whom is he giving?
If these services are given to a business entity, which is
located in taxable territory, if these services are given
to a business entity, then in that case, they don't have to
pay tax.
Advocates will not be liable for GST.
In that case, the business entity, the company which is
taking the services from you, the company which is taking
the services from you, the company which is taking the
services from you, it is liable that it will go and deposit
its GST.
The services that it has taken from you, that GST will be
deposited on that.
This is the point.
Come to the next.
Services supplied by arbitral tribunal.
This is also the same.
The legal work is done.
If the arbitral tribunal gives service to a business
entity, then in that case, the arbitral tribunal doesn't
have to collect any tax.
It is a business entity.
It will be liable that it will go and deposit the tax
directly to the government.
This is the same type of sponsorship.
It is a sponsor.
Advertisement services are there.
If sponsors give services to any body corporate, then the
company is liable to deposit GST.
Hold on to the fifth point.
I will explain it separately.
Come to the sixth point.
There is a director of the company.
There is a director of the company and he is giving some
services to the company.
Try to understand this.
There are two things.
There is a director of the company.
First, it will be seen that you are not taking a salary.
You are on a salary basis.
Because if he is on a salary basis, if he is on a salary
basis, then it will be covered in the relationship between
the employer and the employee.
We have already read this in Schedule 3.
In the chapter on supply.
Wherever there is a relationship between the employer and
the employee, that will not be considered as a supply.
In that case, GST will not be charged.
But here,
But here, as a consultant, he is being shown that the
director's fees are paid.
The TDS is done in 194J.
In the professional one.
He is not on a salary basis.
Professional fees are paid to him.
When you make books of accounts, then check that the
director of the company is either on a professional fee or
on a salary basis.
If he is on a salary basis, then he is being shown that if
you attend a board meeting, if you give a consultancy, then
the fees are paid.
This type of fees are covered in TDS 194J.
It is not covered in the salary part.
It will be covered here.
So, if the director gives services to the company, then the
director has no responsibility to show GST in his invoice.
The liability will be on the company that whatever GST has
to be charged, the company will pay it.
The director has no responsibility in that case.
An insurance agent gives services to the insurance company.
There are many insurance agents.
Some are registered, some are unregistered.
But he still talks about the registered ones.
An insurance agent, even if he has registered, what does he
do?
He gives services to the company.
In different places, he tells people at home that life is
very risky.
You are still alive. If you are not there, what will happen
to your wife and kids?
That person scares you so much that you yourself start
getting scared.
You shiver even when you go to the balcony.
They scare you so much.
What services is the insurance agent providing?
Basically, he is attracting the client.
The client should take the insurance policy from him.
He will take the policy from the company.
But what will the agent get?
The client who is getting the insurance from the company,
he will get a commission.
The services that the client is providing to the company,
this service is covered in the reverse charge mechanism.
The company will pay the GST on it.
The agent does not have any responsibility in this case.
Is it clear?
The point is simple.
There is nothing like that.
There is no recovery agent.
Do you think he is a recovery agent?
Have you seen that movie?
Lage Rao Munna Bhai.
The second version of Munna Bhai.
In that movie, who was the headman, Babmani Rani?
Was he a recovery agent?
Did he vacate the house?
Did Vidya Bala vacate his house?
You must have seen the movie Sanjay Dutt's EMI.
In that movie, he also used to run a recovery agency.
What is a recovery agent?
The bank gives a loan to someone.
Let's say, he gave a loan of 10 lakhs or 1 crore to someone.
The bank gave a home loan.
Now what is the person doing?
He has a home loan.
He stopped giving installments.
The bank sent him reminders.
The bank kept sending him reminders for 1, 2, 3 years.
But that person was a shameless person.
He did not give any installments.
Now what option does the bank have after losing?
To vacate the house from him.
And sell the house and recover his money.
Now the owner of the bank will wear a coat to beat him up.
Or he must have hired a recovery agent.
He must have hired an external recovery agency.
He must have hired goons for this job.
Obviously, yes.
Now the recovery agent will ring the bell.
He will directly ask him,
Do you want to give this loan or not?
The person will say,
No, you can do whatever you want.
The recovery agent will show the gun.
The customer will say,
Okay, I will vacate the house.
Now the recovery agent,
What service is he providing to the bank?
He is providing recovery services.
So will the recovery agent himself charge GST?
Does he have the right to collect GST?
From the bank? No, sir.
In this case, the bank will directly deposit GST.
Okay, sir.
Let's move on to the next.
Supply of services by music composer,
photographer,
artist, by way of transfer
or permitting the use of
copyright.
Relating to musical work, artistic work
to a music company.
If you are interested in
entertainment business,
then what happens is,
generally if a person makes a song,
like you must have heard of Jubeen Nautiyal.
He has become a very famous singer in today's date.
He has become famous.
He is Armaan Malik.
He is a rising star in our music industry.
So what does he do?
What is the first step?
He records a song.
Now what will he do after recording a song?
A CD has been made.
He has inserted that song.
Now what should I do?
Should I listen to that song all my life?
Am I the only consumer of that song?
If I go in a car,
should I listen to my own song?
Or should I sell this song in the market?
Should I sell my song?
In that case, what should I do?
I will go to different music companies.
I will see if any music company
buys my song.
Can any music company buy my song?
If you have seen Jubeen Nautiyal,
all of his songs are bought by T-Series.
All of his songs are bought by T-Series.
If you have seen any song's trailer,
you will see T-Series written below.
So what is he doing?
He has sold all of his copyright rights
to a music company.
He has sold all of his copyright rights
to a music company.
Now the services that he is providing,
transfer of copyright,
transfer of intangible assets,
the services that he is providing to the company,
in that case, there will be no liability on him
to collect the GST.
The liability of the music company,
T-Series,
is that the GST will be deposited
directly to the government.
This is the point.
The same point is being covered by the author.
The people who write books,
like Chetan Bhagat,
a very famous writer,
or Amish,
who writes books on Ravan, Sita, and Bhagwan Shri Ram.
He has written a lot of books
on Lord Shiva.
So what do these writers do?
First they write books.
After writing a book,
it is not that I will keep that book at home.
I will have to sell it in the market.
If I don't have contacts,
then what will I do?
I will look for a publisher.
I will look for a publisher and tell him,
that this is a copy of my book,
read it.
If you don't like it,
if you think it has power,
then publish it
and sell it in the market.
Or I will sell you all the rights
to keep this copy for 10 lakhs.
Or you can give me some royalties.
In this case,
he sold all the rights.
I wrote the book,
I went to the publisher
and told him to read it.
The publisher finished the book
within three days.
He said,
give me 10 lakhs.
Give me 10 lakhs.
And from today,
this book is yours.
No matter how many copies you sell,
you will get all the money.
I have already got my 10 lakhs.
Now he is providing services.
The author
transferred his copyright
to this book.
Transfer of intangible asset.
Now he is providing services.
This is also covered in reverse charge.
All the taxes on this book
will be paid by the publisher.
The publishing company
will deposit the tax directly
on the GST portal.
The author has no responsibility
in this case.
If the author
wants to directly deposit the tax,
then yes,
he is welcome.
He will have to take
a direct registration in GST.
First, he will register himself.
After that,
it is written here,
comply with all the provisions
as they apply to person
who is liable for paying the tax
in relation to supply.
And he cannot withdraw this option
within a year.
He will give one more declaration.
These are simple points.
Nothing special.
There are members of overseeing committee.
They are providing services to RBI.
So RBI will deposit tax on them.
These are direct selling agents.
They are providing services to banks.
These are selling agents.
They are on commission basis.
If I want to sell a product,
if a new credit card has come
or a new loan facility has come
or a new overdraft facility has come,
I have to explain it to different people.
They have to sell that product.
In that, my commission
and the services I am providing you,
in that case, what is the liability of GST?
Direct selling agent does not have to do anything.
He will simply raise an invoice.
He will deposit it in the bank.
Bank will directly deposit it
in the GST portal.
Direct selling agent
does not have any liability.
Business facilitator
who is bringing business,
intermediaries etc.,
they are providing services to the banking company.
In that case, the liability
of the banking company will also be there.
There are agents of business correspondents.
They provide services to business correspondents.
In that case,
the liability of business correspondents will also be there.
What are the other services?
Security services,
bodyguard services,
security services that they are providing,
these services,
if a person provides these services to a registered person,
anyone can be a registered person.
A registered person can be from Reliance Industries Limited
who is running a business
and has registered in GST.
And a registered person can be a film star
who is providing services,
his services are covered in GST and he is a film star.
What about Salman Khan?
Does he have a bodyguard?
What is his name?
What is the name of his bodyguard?
Tell me about his bodyguard.
His bodyguard's name is,
someone has told me,
Shera.
I will make you do this all day.
You even know the names of bodyguards.
Now this Shera,
this Shera,
may be his own company.
May be his own company
and that company is providing security services
directly to Salman Khan.
It is also possible that,
who is Salman Khan in this case?
He is a registered person.
Salman Khan,
these services,
shooting services,
advertisement services,
when he works in films,
the services he provides to the producer,
he collects GST on that.
He charges GST directly.
So 100 crores plus,
18% GST.
So he is a registered person, Salman Khan.
And who is this person?
This is the person,
this is the person, security services to any registered
person.
So, in that case, we have to see who is responsible for it.
Come, read it. What it says is, there are security
services, you are giving it to a registered person.
And who is giving it? Any person other than Body Corporate.
Meaning, the person who is providing security services is
not a company, he is an individual etc.
He is not a company.
He has not made a private limited company.
He is working on an individual basis.
So, if he is working on an individual basis and is
providing security services to a registered person, then in
that case, there will be no liability of GST on him.
The liability will be of Salman Khan.
Salman Khan will directly deposit GST on him.
Fifteenth point.
Services provided by renting of motor vehicle.
You have given a car on rent.
Very common business.
You have given a car on rent.
Renting of motor vehicle designed to carry passengers.
Where the price of petrol is included in the bill that you
will charge your customer.
Meaning, you have a car.
You have rented that car for passenger transportation.
And in the final bill that you are giving to your customer,
all the services are included in that bill.
Petrol bill is also included in that.
The money for hiring a car is also included in that.
If you are given such services, and GST is charged at a
rate of 5%, see, who is that person?
Any person other than Body Corporate.
You are not a company.
The car is yours.
You have given it on rent.
You also collect the money for petrol from that person.
Like those who do tours and travels.
Okay, take the car from Delhi to Rishikesh for 3 days.
And the money for the car, give me 3000-4000 for the car.
Petrol bill is also yours.
I will give the car at zero meter.
According to the number of kilometers, give me the money
for petrol.
But who am I?
I am not a private limited company.
I am not a Body Corporate.
I am a normal individual person.
I am working on an individual basis.
And who am I giving these services to?
I am giving it to a Body Corporate.
So in that case,
I don't have to collect GST.
In that case, the responsibility of GST will come from the
company.
The responsibility of the company will come, which I am
giving.
If I am giving these services to a private limited company,
this responsibility will come on top of that.
This is the point.
Lending of securities.
The lender is lending securities to the borrower.
Sir, this is the case of Harshad Mehta.
Nothing else.
One bank is selling securities to another bank.
Because they have to make their reserves.
SLR, CRR has to be maintained.
So for that, securities are maintained.
Now one bank is selling securities to another bank.
Lending is happening.
So it happens through some intermediary.
Or sometimes they do it directly.
So if they are doing it directly, then the lender is giving
the services to the borrower.
So in that case, the lender doesn't have to collect GST.
The responsibility will come from the borrower bank.
Sir, this was the point.
See now.
This is the point of reverse charge.
This is it.
The point of reverse charge.
A fifth point was pending in the middle.
Let's see what it was.
Last point.
These are government services.
Who is giving the services?
Services supplied by the government.
Government is giving some services.
Whether it is central government or state government.
Excluding these three services.
So if the government gives any service to any business
entity, then the government is not going to pay any GST on
it.
Will the government pay GST itself?
The government will put that responsibility on the person
who is taking all these services from the government.
So in that case, the government has no responsibility.
Being supplier of service.
Whatever services the business entity is receiving, it will
directly go and deposit its GST.
Sir, this was the fifth point.
This was the mechanism of reverse charge.
What is reverse charge?
When does it happen?
On which services?
On which goods?
This was the point.
I hope the point is clear to you.
In the next lecture, we will revise it a little.
Now, I have drawn a basic idea in your mind.
What happens? How does it happen?
We will revise it once again in the next lecture.
Till then, friends, keep studying, keep understanding and
keep winning.
Bye.