For example, your sales are of 1 crore rupees and you are
saying that you would like to pay tax on 1 crore rupees.
So, I want to ask you, sir, that have you taken 1 crore
rupees to your home?
Can't you take 1 crore rupees to your home?
Any person on this earth, the sales he does, all the sales
figures, can't he take them to his home?
Ask me why?
To do sales, he must have bought goods from somewhere.
If he is doing sales of 1 crore, then he must have bought
goods worth 50 lakhs, 60 lakhs, 70 lakhs from somewhere.
So, what must he have given to buy those goods?
He must have given money.
In a way, he has spent money.
If, for example, take a simple case, there is a sale of 1
crore and he is buying goods worth 60 lakhs.
So, what is the profit? 40 lakhs.
How much will he take to his home? 40 lakhs.
What will be the income?
What is income?
See, one is revenue.
Revenue means sales.
How much is income? How much is left in hand?
40 lakhs.
So, when I get to know the income, I will give income tax
on that income.
I am not talking about sale tax.
That GST will be applied on sales.
I am talking about income tax.
So, what is income?
What will I deduct from sales?
I will deduct it from my expenses.
So, the money that will be left after deducting the
expenses,
that will be my profit in a way.
I will give my income tax on that profit only.
I will not give it on sales.
If you have studied accounts in the 11th and 12th grade,
then you will remember that here we used to make trading
and P&L accounts.
So, here we write sales.
But when sales is my income,
then I will have some expenses corresponding to it.
I will have to purchase also.
I will deduct the expenses of purchase from sales.
I will have some opening stock also here.
Remember, we used to do it.
And here some closing stock will also be there.
And suppose, some profit is left after deducting from here.
So, what we used to say?
We used to get gross profit here.
Remember, we used to get some gross profit here.
You must be remembering something or the other.
If you don't remember, then there is no problem.
I will get it done.
Don't take tension.
Just keep understanding things.
Now, look at me and tell me,
what is my income from this?
Will I consider this as my income?
Am I taking this money to my home?
Will I not deduct purchases from this money?
Will I not make payment from where I have brought the goods?
Will I not make payment from where I have bought the goods?
Only after making payment, some profit will be left.
Now, next.
This gross profit used to come here.
Look, even I, after 11th February,
I have never seen this.
Even I am like you, let's assume.
In this, I will do some expenses.
In expenses, rent can be done.
I will give salary to people who work here.
These are expenses.
Depreciation of expenses can also be done here.
Depreciation of assets that I have bought.
This is what we used to do.
Expenses used to be of this type.
Trading and P&L.
And here, net profit used to be left.
Now, I am asking you a question again.
This is,
this is, and this is.
The three circles, you have three options.
And the question is of one crore rupees.
Just think and tell.
Income tax.
On whom does it apply?
On income.
Out of these three, which income will be considered?
Income means that money,
out of which there is no share.
That money, I will directly take it home, with my wife and
children,
I will have fun with that money.
Which money is that out of this?
Is this that money?
Is this?
Out of this, expenses will be less.
So, is this?
Out of gross profit, what did I do?
I reduced expenses as much as possible.
Ultimately, this is net profit.
Will any expenses come out of this?
Did any expenses come out after net profit?
This is what net means.
Out of gross, indirect expenses,
I used to reduce.
So, net profit used to come.
Now, after net profit, I don't remember that we used to
spend anything else.
I mean, I don't remember, but you remember something like
this.
Ultimately, this was the money that I was taking home.
What do I take home?
Income.
And on whom does income tax apply?
On income.
So, in this case, on whom should income tax apply?
Income tax should be applied on net profit.
Now, those who were saying that it should be applied on
sales,
did you get the point clear?
Why didn't we apply it on sales?
Sales was our only revenue.
Out of that, we were spending.
To earn sales,
the expenses that we spent,
I will remove them.
Ultimately, income,
I will see what income
I am taking home.
The income that I am taking home, in a way, it is my profit.
And on profit, income tax will apply because it became
income.
And on which side will it apply?
Profit and gain from business and profession.
You don't have to do anything.
In this entire chapter, you have to calculate this thing.
How much net profit will you get?
The net profit that you will get, on that, you will pay
your income tax.
Is this a simple point?
Is the point clear?