Hi, Good Morning, Good Evening, Good Afternoon
Whoever is watching me at this time, I would like to extend
my warmest greetings to that person
How are you all?
I am Shrey Gupta, your friend, your companion, your
sympathizer Your companion in this GST class
Friends
In the last lecture, we had discussed a very important
topic and we had tried to see that if GST was not there
The tax you were paying at the time of purchase
If the credit you were paying at the time of output sales
was not there, then what would have happened? Then what
would have happened?
And now when GST has come and you have started getting
credit then what is happening?
The price of things has naturally decreased Things have
gradually decreased
Because earlier tax was being imposed on tax You were
buying things worth Rs.
You were paying tax worth Rs.
Now the price has increased to Rs.
You know that the tax I am paying worth Rs.
I will not get its credit anywhere
So what will I do?
I will add Rs.
1100 to my cost
Rs. 1100 will become my cost
On that cost, whatever profit margin I want to add
I will add that profit margin and on that profit margin
plus my cost
I will put my tax on it
So ultimately what was happening?
Tax was being imposed on Rs.
Your cost of Rs.
1100 10% tax was being imposed on that 10% tax was being
imposed on profit
Ultimately tax on tax was being imposed
So to remove this GST has been brought
Basically what is GST?
It is a tax that is imposed on your value addition
The value that you add to things
GST is imposed on that value addition
Sir, what are you saying?
What did you say about value addition?
That tax is imposed on value addition
Till now we thought GST is goods and services tax
You are buying goods or services
You have to pay tax on that
This is what we thought
Now what are you doing with value add?
That you have to pay tax on value addition
Sir, try to understand
What is the tax on value addition?
How is it imposed?
I am taking the same example
First person imposed his cost of Rs.
He paid tax of 10% of Rs.
Value of Rs.
This is the case that
You have to pay tax on purchase time
You will get tax credit on purchase time
We are discussing this
The second trader
He bought goods worth Rs.
Cost of Rs.
Why cost of Rs.
Why not cost of Rs.
Because he knows that
I will take credit of Rs.
When I take credit of Rs.
Then my cost
He added his profit of Rs.
Rs. 1500
He added his profit of 10% of Rs.
Try to understand
Rs. 1500
Value of Rs.
Look at it
Can you see it?
Is the point clear?
Is it clear?
Come here
Now try to understand his point
What will he do?
How will he do?
Adjustment is a bit wrong
I slip in flow
Please forgive me
We were discussing
The second trader
He is the first manufacturer
He is the second trader
What will he do?
Output tax
During sales
Tax collected from customers
How much is it? Rs.
Rs. 150
But GST gives this feature
Whatever you will purchase
During purchase
Whatever you will pay tax
Take the input of that tax
Minus that tax How much?
During purchase
How much? Rs.
Minus Rs.
How much tax will he collect from his pocket?
He will collect from his pocket
Second trader
Rs. 50
Rs. 50 tax He will collect from his pocket
Now think properly What is Rs.
What is Rs.
I move away What is Rs.
What is Rs.
What is 10% of Rs.
Someone please tell me
The person who told me
I will pick up my phone and pay him
Rs. 2000
Someone please tell me
What is 10% of Rs.
And what is Rs.
Where is Rs.
Sir, this Rs.
500 is for profit This thing
This thing
This Rs.
Please try to understand
Rs. 1000 tax 10% Rs.
500 10% Rs.
500 added value
Rs. 1000
Rs. 500 added value
So what is the value? Rs.
Rs. 1000 tax Rs. 1000 tax
I have already paid
I have taken the credit of Rs.
What I am paying here
Is this 10% of Rs.
I have already written Rs.
The extra that is going out of my pocket
The extra tax that I am paying I am paying on the value
that I have added
In this case, I have not added Rs.
In this case, I have added
Rs. 500
Which is my profit
The value that I will add
I will deposit my GST on that Which will go out of my pocket
Tax on the value added
Rs. 1000 was my cost
Rs. 1000 is my purchase
In this case In this case, I have purchased Rs.
Please try to understand
I have purchased Rs.
I have shown my profit margin of Rs.
Then I have made Rs.
The 10% of Rs.
1500 that I have to deposit
Rs. 1500
How will I deposit it?
Rs. 1500 is fine, I have to deposit it
I have taken Rs.
1500 from the customer
But Rs.
The old purchase of mine
I have minused it
Now this Rs.
50, what is this? Rs. 50 is 10% of this
The value that I am adding
What is GST? GST is the tax
Which you deposit on your value addition The value that is
added in every chain
You deposit it on that
Suppose there is a third person
He is worth Rs.
He sells it for Rs.
Rs. 2,000 is 10% of his GST Rs. 2,000 is 10% of his GST
Rs. 2,000 is Rs.
2,000 is Rs.
In that case, what would he do? He would tell the customer
Rs. 2,000 is Rs.
Rs. 200 is Rs.
He would give Rs.
He would collect Rs.
200 from the customer
And here, he would minus Rs.
It is very simple
You have to see the value addition What is the value
addition?
The more your value addition is
The more money you will deposit from your pocket
The tax on the value added
The best feature is that the old concept of tax on tax,
that you were imposing tax on the 100 rupee tax, cascading
effect of the taxes, that also ends here. Cascading effect
of the taxes also ends here, sir.
Tax on tax is not being imposed. Cascading effect of taxes
is over.
It is a value added tax. You are paying your tax on value
addition.
This is the point, sir.
I will deposit 50 rupees from my pocket.
I have taken 150 rupees from the customer.
I have taken 100 rupees as input, which I have paid tax on
at the time of purchase.
I will go and tell the government, that government,
government, I have deposited 100 rupees when I bought the
goods.
I have already paid for it.
Why are you taking it from me again and again?
When I bought the goods, I gave GST to him.
So, minus that from 150 rupees.
Now, I have to see how much is my value addition.
If it is a value addition of 500 rupees, I will make it 10%
simple.
GST is such a tax, friends, which is imposed on value
addition.
Listen to this and put it in your heart and mind, sir.
Is this point clear?
Due to GST, we have got rid of a lot of taxes.
Like excise duty, service tax, that has also been put in
GST.
But there are still some such things, friends.
There are some such things that give a lot of revenue to
the government.
Do you understand this?
There are some such things that give a lot of revenue to
the government. The government gets a lot of revenue. For
example, alcohol.
Alcohol is such a thing that if a person is addicted to it,
it becomes impossible to quit it.
Cigarettes etc. People who become addicts are unable to
quit it.
So the government also does business.
The government sees that this person will not be able to
quit it.
He will do anything. He will sell his house. He will sell
his wife and children.
He will do anything. But he will definitely drink alcohol.
So why not put a lot of tax on alcohol?
What will happen with that? He has to drink alcohol.
The drunkard has to drink alcohol.
Even if you sell a bottle worth Rs. 1000 for Rs. 2000, he
still needs alcohol.
The benefit of the government will be that if a bottle
worth Rs.
1000 is sold for Rs.
2000, the government is taking the extra tax of Rs.
The government is taking the extra tax.
It will go into the treasury of the government.
So the government also does business.
Very clever minds work behind the government machinery.
They know that the thing that is getting the most revenue,
don't bring that thing into GST.
The thing that collects the most tax, keep that thing out
of GST.
GST is a mechanism where we have kept the rates of tax
simple and normal.
There are things like alcohol, where the tax is very high.
If you bring it into GST for no reason, the tax will be
less.
There will be a loss of the government.
So let's take a little more tax than alcohol.
So that the government also benefits.
There is no problem for the drinker.
He was drinking RGPA till the liver doesn't rot.
So alcohol has been kept out.
Petroleum, high speed diesel, aviation, turbine fuel, there
are 4-5 things that we will discuss later.
These things have also been kept out of GST.
There are some products that have been kept out of GST.
This is the point.
What have we read so far?
We have read and discussed what GST basically is.
Let's go to that.
We are covering what we should have covered in the
beginning at the end.
What is GST basically?
As I told you earlier, there were services.
Service tax was imposed on them.
You used to sell goods.
VAT was imposed on them.
But the problem was that the service tax that you used to
pay, if you have purchased a service at the time of
purchase, if you have purchased a service input, you used
to pay service tax on that.
You didn't get the credit for that in GST or VAT.
But now you will get it.
That's why it was named as goods and services tax.
Goods and services tax.
If you deposit GST at the time of service, and later you
sell a product, if you have used a service to sell a
product, if you sell a product, it will be taxed on goods.
If we talk about earlier, if we are selling goods, then VAT
is imposed at that time.
And service tax is imposed on the services that I am using.
The government of these two states had said that you don't
take its input from here.
But now the government has said that GST has come.
You are selling goods.
You will collect GST while selling goods.
Here you are utilizing services.
So when you are utilizing services, you are paying GST at
that time.
You are collecting GST and paying GST.
So you take GST's input here.
That's why goods and services tax.
You take goods, you take services, you take their input,
you take their output.
It doesn't matter.
You will definitely get the credit.
And as soon as you get the credit, generally what will
happen in the country, tax on tax will not be imposed.
Prices of goods will be reduced.
We are moving towards one nation, one tax.
This is the concept of GST.
This is the point.
This was its basic gist.
There is a little more formality to explain things.
The basic crux is what is GST?
And why did we bring it?
What is the benefit of bringing it?
Was life going on before GST?
What work happened?
What was the need that we brought GST?
This is the point.
How is its management?
Someone asked a very good question.
How is its management?
You are saying that you raised the bill.
You sold goods worth Rs. 2000.
It is 10% GST.
You took Rs. 200 GST.
Okay, sir. I understand.
Now, who will get this Rs.
200 GST?
Earlier, the indirect taxes, in indirect taxes, some taxes
were in the hands of the central government, like service
tax, excise, central excise, etc.
These were in the hands of the central government.
VAT was in the hands of the state government.
So, the collection from VAT used to go to the state
government.
The state government used to make its budget according to
this tax.
On the other hand, the service tax, excise, used to go to
the central government.
The central government used to make its budget and expenses
according to that.
But, sir, now you are saying that GST has come.
Now, this GST, this tax collection will come.
How will we distribute it?
How much portion will go to the central government and how
much portion will go to the state government?
This way, there will be a fight.
If you don't clearly specify how much money will go to the
central government, how much money will go to the state
government, there will be a fight, a dispute.
What should we do? What is the solution?
Sir, as I told you, very clever, brilliant, very
intelligent minds work behind the government machinery.
They also bifurcated this.
Sir, they also bifurcated this.
What did they bifurcate?
They bifurcated that one will be CGST and the other will be
SGST or UTGST.
Listen to me, keep a homework.
In the homework, you have to go and buy a shoe or jeans or
a shirt.
This is your homework for today.
I want you to get a bill and see the bifurcation in that
bill.
You won't be able to see a single bill where there is no
bifurcation of CGST and SGST or UTGST.
The government bifurcated this.
The government said that if we tell the rate that GST will
be 10% then 5% will be CGST.
CGST means central.
Central.
C means central.
Central means central.
Central means the collection of GST will go to the central
government.
For example, in our example,
GST was Rs. 150.
GST was Rs.
So, in Rs.
Rs. 75 will go to the central government and the remaining
Rs.
75 will go to the state government.
will go to the state government.
With this, the governments can plan out their budget and
expenses.
For this, different acts were made.
See, any act is made, any new thing comes.
If you present a new thing, you have to make a bill to
present it.
When the bill is passed in the parliament, it is made into
an act.
Now, an act will be made for GST.
What will that act be?
Sir, one is CGST Act.
One is CGST Act.
One is IGST Act.
Integrated GST.
And then comes SGST and UTGST Act.
There are 28 states in our country and there are 8 Union
Territories.
So, according to 28 states, there are different SGSTs.
According to 8 Union Territories, there are different
UTGSTs.
One is of the central government and the other is of IGST.
These are all acts.
Nothing different is written in these acts.
Whatever is written in CGST, the same language, the same
thing, is written in SGST.
Sir, what I mean to say is
Sir, what I mean to say is that if you say that 5% GST has
to be imposed on something.
For example, if someone has written in an act that 5% GST
has to be imposed.
For example, if I look at CGST Act, it says that 5% CGST
has to be imposed on clothes.
it says that 5% CGST has to be imposed.
This means that if there is 5% CGST, then 5% SGST or UTGST
will also be imposed.
If 2% CGST is written somewhere, then equal 2% SGST or
UTGST will be imposed.
If 6% CGST is written somewhere, then 6% CGST will be
imposed.
CGST never runs alone.
Remember this.
CGST, SGST can never run alone in life.
If there is mention of CGST, if there is a word that CGST
is so much percent, then same to same same percentage SGST
or UTGST will also be there and it should also be there.
CGST and SGST are used on Interstate Supply. IGST is used
on Interstate Supply. I will discuss these things in next
lecture.
But now just understand that how this collection of GST is
bifurcated. Its bifurcation is nothing but CGST and SGST.
Whatever is the rate of tax, it is equally divided in CGST
and SGST. If it is Interstate Supply, Interstate means you
are selling from this state to this state.
If you are selling from this state to another state, then
in that case CGST and SGST will not be used. In that case
IGST will be used.
Integrated GST.
We will discuss these things in next lecture.
But till now just try to understand that what was GST?
The value that you are adding, the value that you have
added, like you have added a profit margin of Rs. 500.
You will deposit that Rs. 500 GST from your pocket. You
will deposit that money by reducing your cash.
You will get the input of that money which you have given
at the time of purchase.
The output tax liability that you are giving at the time of
sales, you can take that from the customer.
You took money from the customer. At the time of purchase,
the tax that you paid was minused.
The balance amount that is left, always see that your value
will be added. That is your value added tax.
That is your GST that you are depositing from your pocket.
How is it bifurcated? GST does not mean only GST. CGST is
also included in GST.
That means Central GST, State GST or Union Territory GST.
This is an equal percentage.
If it is written in any act, like CGST is written in an act
that charging 5% CGST rate, then it means that 5% CGST will
be charged and 5% SGST will also be charged.
These two are equal.
What is IGST? We will discuss it in the next lecture.
Till then revise it. Thank you very much friends.