GST (Goods and Services Tax) is an indirect tax where the tax burden is shifted to the final consumer, unlike direct taxes where the burden cannot be shifted. Goods are defined as movable property excluding money and securities, but including actionable claims and grass if agreed to be severed before or during supply. Services are intangible items that are not goods, money, or securities. The key difference between direct and indirect tax lies in whether the tax burden can be passed on to another party.
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Day - 1: IDT - CA Final ENGLISH - REGULAR Batch for Nov'26/May'27 | CA Siddhesh ValimbeAdded:
Yes. So, hi everyone and a warm welcome to our lecture number one for CA final IDT journey.
This is our first 100% English regular batch. Irregular come exam oriented you can consider it either way. Okay.
Uh we took a practice batch once we had a very good response but the English batch in a proper manner in the proper detailed format. This is the first one.
Sir why did why wasn't this launched earlier? The reason was very simple as I discussed in the yesterday's zoom call that I didn't just want to start the class. I just I didn't just want to sell the lectures when there was a three attempt system in the CA final. I wasn't having the enough bandwidth to give you the revision lectures as well. So I didn't consider it right to just sell the lectures. But now since we have two attempts again back in CA final I will be able to give you to revision lectures as well and then properly give the support as well along with the class lectures because that is what my role is that is what my duty is okay is saying sir I'm not able to hear the audio just can you log out and refresh and then login once I think it would be fine okay so hence now we are starting with this journey I'm really excited to see you all and Uh let's start.
So this is going to be an 100% English batch for November 26, May 27 students.
Primarily the students might be from the November 26th attempt. But even if you are from a May 27th attempt, it's absolutely fine. You just have to cover the amendments because your May 27 cut off date period would be 31st of October 2026.
So just the amendments part you have to go for an extra thing and you will have to do the new questions with respect to the attempt of November 26 balance everything is updated in our lectures and our books. Now let's start with a brief introduction although we will be having zoom calls in between we will know each other a lot more. This is just a brief three four questions that you may have about your faculty. Okay. So brief introduction about me. I gave my CA final in November 18 attempt and I cleared with all India rank 26. Now obviously we don't write this on the thumbnails anymore. We get a small chance in the first lecture to you know show it off a little. So yeah I had a CF pal on India rank 26 and I was a very average student. Sir why are you saying this off track that you are a very you were a very average student because what I have seen is as a student when you express or whenever you introduce yourself to me and whenever I mention this that okay think about a rank a lot of times students say yes sir I am a very average student. It's fine. I was also very average student. But what matters in CA is your effort. If if your efforts are extraordinary, if your efforts are consistent, believe me, you can convert it into a rank. Rank is not a very big deal in CA final. It is a very simple path but not an easy one because consistency is difficult. Today the first lecture is there. You are all motivated, you are all energized but what after one week? What after two weeks? What after one month? That is where the game changes. That is where the consistency plays its part and motivation fades away. So if you are able to give consistent efforts in the next four five months hardly 160 170 days believe me you also can convert it into a rank. It is not a very big deal.
And yes, the rankers are going to get unfair advantage compared to the other charted accountants. That is the harsh truth. I want you to embrace that. I want you to accept that sir. Whether it is right or wrong, I don't care about it right now. But I'm telling you the rankers will are going to get a head start. So I want you to think about it today. We talked about this in the zoom call also but obviously now more people have joined in the class. So for me just embrace the thought embrace this thought think about it that okay I am going to maybe I will be able to get a rank because unless and until we think it here our efforts won't go into it okay so we are going to aim for a rank second sir when did you start teaching although my teaching journey has been a little unconventional one I will maybe discuss that in one of the classes but yes I have been teaching since prior to results before my results came I had already started my teaching path I will share that journey later on. Okay. It has been a very big kind of a roller coaster for me. Sir, where are you based? I am based in Pune. So I teach from Pune. And uh fourth, my study and my teaching is a little old school. Sir, what do you mean by old school? Old school in simple manner means we do 100% course. We write things down. We give you a little homework. We don't make any such kind of claims that you know you don't have to study anything at home.
No, whatever and however you studied in school that is the way we are going to study in CA final. Uh sometimes it happens that we complicate things unnecessarily just because it is CA final. No, keep it very simple, silly and see how easy this how simple this path becomes.
Okay. Now before starting further, can you just mention me the state or the city from where you are joining?
Obviously most of the students we have we would be having in in this batch would be concentrated from two or three states. But can you mention your city and state quickly? So I just know where our students are joining from quickly. Just mention your state city.
Tamil Nadu Kerala from where you are joining in. I would like to know that and obviously we will be knowing each other a lot more during the zoom calls.
Kerala okay Tamil Nadu. Okay. So from Kerala we have a couple of students.
Fourth student from Kerala. Okay. Kerala we have lot of students. Andhra Pradesh, Vizad, Tamil Nadu. Okay. So basically three four states as I imagined. Maduray.
Okay. Again Kerala, Andhra Pradesh, Tamil Nadu. So mostly three two three areas we have common. Okay.
Andhra Pradesh. Okay. Okay. Got it. So most of the students Andhra Pradesh, Kerala, Tamil Nadu, Chennai. Okay. Fine. Okay.
Got it. So basically what I had imagined we have students from those two three areas only. Fine. Okay. More than that we will get to know each other in the zoom calls.
Okay. Noted. Now let's come ahead.
Now there is a short dream that I'm sharing in front of you. My aim from this batch. What I need from you? What my aim is from this batch? I want at least three rankers. Often we see that out of the rankers list, not many students are from south. I want to change that. I want at least three rankers from your batch. Whatever support you need from my side, I will be giving that. But I want three rankers from you. Second, I want the all India topper from you. I've given the same aim to the Hindi batch as well. I'm giving it to you as well. Plan for your best study possible. This will convert.
Generally, all India topper means 84 85 marks you can imagine. And third at least a minimum score of 70 plus. This should be the bare minimum our batch is achieving. This should be the bare minimum our batch is achieving. That is the score of 70 plus.
See if you're just planning for a 55 60 score that sir will pass the paper that could have that could have been achieved with the revision videos and our books as well. If you're sitting for this batch, if you're investing the time with me in the proper batch, we are aiming for 70 plus. Sir Jan 26 May 26 paper were a little tough. No if you are conceptually prepared those paper were are also they were manageable though you could have tackled those papers very well. Okay maybe we couldn't have got 80 plus but 70 plus we could have got worst comes exemption we still could have got and I will prove that to you. I will cover those questions also side by side.
I have incorporated those in the question bank. Let me cover the concepts during the chapters and we will see those questions and to achieve that what are the things I need from you. These were your queries as well. So what all things that you need to take care of is daily live attendance. Now what happens earlier for your batch I had planned recorded update because I was not sure how many students will join in because the batch size we know comparatively will be very limited but still we have around I think 70 people who have joined the batch and around 20 people had mentioned that sir we are willing to join live. Hence for the first month at least the first month where we cover all the important chapters till ITC I'm going to conduct the lectures live from 5 to 8 p.m. And I want your daily live attendance.
That is the first thing I want. Next, I want you to daily revise the class that will take approx 1 hour. So apart from class, whatever our 2.5 3 hours we will take. Apart from that, you will be needing 1 hour to revise it. And before unless and until you revise the class, you will not be sitting for the next class. This is very important. The focus is not on classes completion. The focus is upon the classes completion in a proper manner. And that is going to happen only and only when you revise things side by side.
Next one register you have to make for homework as well as for scribbling things down. So homework I will be giving you will be writing that down.
Scribbling means whatever revision that you will be doing. I want you to write things down. That doesn't need to be in a fair manner. That can be in a very rough manner. You don't have to see it again. Why scribbling helps? First your writing speed increases. And second you are more attentive while revising things. So one register is fine. You can maintain it for both the purposes. You can write the day or the lecture number and you can write the homework and scribble things down. Next QB markings.
This is the game changanger approach.
Believe me you can follow this for every subject possible. So for example after chapter of supply there are 15 questions in the question bank. Out of the 15 maybe there are 10 questions where you got stuck. out of 10 maybe three questions are those where you need to do the complete question entirely again and out of maybe seven there were certain points that you got stuck in. So I want you to write that point alongside the question. So the next time your revision number two happens you know out of the 15 questions you have to focus upon 10 out of which three need to be done again out of the seven that particular point needs to be revised again. So at the end of the lectures or when you are going for your second or third revision your question bank is completely sorted with personalized markings. You exactly know what I need to do and how much I need to do. LDR list and everything I will be giving. I've already marked the LDR question in your question bank but that is not sufficient. Your own marking should be ready. I want you to have that marking ready that where I'm getting stuck. Maybe sir has not marked that point for us but I'm getting I'm facing some issue. I should be writing that point down and this is something that you can follow in each and every subject. So at the end you should not be struggling for finding the questions that sir which questions do we need to focus upon. Your list should be already ready.
Okay. These are small points that improve your study. These are the small points that help you in your revision.
So start doing it from day one.
Next your article and your CA interstudy experience. I don't care. I'm not banking upon your CA interstudy. I'm not banking upon your article ship experience. I will be moving with a clean slate approach. I will be we will be doing the concepts again. So I don't care how your C enter or article ship has been completely forget that point.
We will be building the concepts right from the start right from the scratch one by one. And I want this particular thing that please stay connected with me. Let's make this the best online class experience. What happens is in the online class the correct is not there.
So we will try to change that. We will have zoom sessions or I will ask you like even if some student is joining in later in a recorded mode maybe after 2 months you are joining in. I want you to stop just pause a little and message me your name city and with what aim you're sitting and connect with me once.
Sometimes you like the class very well you understood the concept very well.
Message me sir this was the lecture I loved the concept sometimes you face any issue tell me in the message that sir I'm doing this lecture I face some issue but okay I will do it I will cover it later I will revise this again these small conversations it will help you to you know elenate that feeling of a typical recorded class followed by zoom sessions everything we will try to do to ensure that this is not a typical online class but I alone cannot make it that experience has to be you know it will need some effort on your side as well so this number you can note it down. I see this number myself. Stay connected with me. There is a class telegram group. The link is available in your mail itself.
Otherwise, in your application also it is there. Use it for doubt support. I will be replying the queries myself. Use it for class updates especially for the live class or whatever updates that we will be giving. I will be using these particular class group only. So ensure you are added to that. And all in all from my side whatever you are seeing this here ID like never before. This is not a marketing tagline. This is something I will genuinely try for you to say it at the end of the lecture at the end of the batch that sir we did study ID like never before with the combination of legal reading that we will be doing interlinking approach we'll be following structured thinking and field factor something that I stress upon a lot you will understand what I'm trying to say here when we cover the concepts 100% coverage conceptual study doubt support all in all we will try to make this a very good experience for you Okay. So, till this point, are you feeling confident about the journey we are embarking upon? Are you feeling positive? Can I start with the subject basics? Anything you want to ask in general?
Yes.
So, do I have that jo from your side?
Because your energy also trans will transmit to me. Okay. So, are you ready?
Can we start the subject? Anything in general you want to ask? Confident? Yes.
Sunonny, Prajid, Alana, Arjun, Logesh?
Yes. Okay. So, let's start everyone.
No Swini, you don't have to mention it otherwise. Okay. So, let's start everyone. I will be starting with the basics of the subject now. So about the subject of your CA final indirect tax, this is combined into two parts. Okay.
One is your part number one GST that will take your 80 marks and part number two is your customs and FTP portion that will combine your 20 marks. So part number one GST 80 marks the customs and FTP will be 20 marks. Now GST it is basically if you see the IC modules there are four modules. So IC 1 2 3 and four module they contain chapter number 1 to 24 which deal with the GST and IC module number four that is chapter 1 to8. So basically 1 to7 is your customs.
1 to 7 is your customs and chapter number eight is your FTP including FTP we will be covering the things. Okay. So this is a part of module number four. That is how your IC module is testing pattern basic you have the idea we will be seeing the mock test and everything later. 70 marks is descriptive 30 marks is MCQ. You will have an option out of one question in the descriptive. Question one is compulsory that you know. Now how our modules work? I will show you just one minute.
This is how our modules will work.
Okay. This is how our modules will work.
You will be getting you will be getting two books with respect to the concept book that is the ID concise. Now these are not two separate books per se but rather these are two volumes. For ease of study, we have divided that into two volumes. So this is chapter number 1 to3 that is of the GST and this is chapter number 14 to 24 plus the customs FTP portion. Two volumes you will be getting for concise and one question bank that you will be getting. This is the IDT clarity. This contains the questions till your RTP MTP of May 26 and the Jan 26 paper. So for November 26 only additional thing is May 26 suggested and your attempt RTP MTP that's it everything else it is covered all the prior RTP MTP and this is in a colored manner with a proper font size proper colorcoded format so you're going to love this book believe me okay most of many of you might have received the book whatever the balance dispatches they are happening keep tracking okay so you will get that very very soon this is how our modules will work now sir tell me one thing in The GST do we need to cover the entire GST law? Answer is no. Our focus is going to be on the CGST law and IGST law. So when I say CGST law, obviously we are covering SGST law as well. I will cover the nature of transactions and everything. So you will understand that CGST law and SGST law are exactly the same thing. And secondly, we will be covering the IGST law. Other than that, you don't have to cover anything. CGST and IGST will be covering. Now tell me one thing our entire GST study right from the substantial portion to the procedural portion will be to make one person happy in India. Who is that person?
Who is that one person we have to make happy? This is how our feel factor is going to work. This is how our feel factor means logic. So whatever field factor we will design that is to make one person happy. Who is that one person?
Yes, Nirmala. Thai means sister Nirmala.
Nirmala G means Nirmala. So we are going to be covering each and everything from the point of view that our Nirmala ma'am should be happy governmental.
Okay. So she is Nirmalai. We are going to make that person happy. So everything will be linked to this particular concept. Now one small thing this is something that you might have covered in the uh CA inter or something that GST is an indirect tax not a direct tax. What is the difference between indirect tax and direct tax? The difference is very very simple that in indirect tax the burden the burden of the tax is shifted to the final consumer is shifted to the final consumer. But in the direct tax the burden cannot be shifted.
The burden cannot be shifted.
Now what is the meaning of this? Can you try to understand what is the meaning of this? The these are just the basic elementary concepts that we'll be focusing upon today. Now direct tax and indirect tax. So suppose I'm earning a salary. Suppose I am an employed chartered accountant with the big four.
I'm earning a salary income. On that salary I have to pay income tax. Now can I recover income tax from you? Naga Sairam. Can I recover income tax from you or any other student? Let's say OJS.
No sir. I have earned the income. I have to bear the income tax. This is known as indirect tax. So when I say burden cannot be shifted means ultimately I'm going to bear that amount. I have to pay it from my own pocket. But when I say indirect tax, indirect tax means I'm going to pass on the burden to someone else means the payment will be done by the final consumer. So when we are selling the class to you, let's say we sold the class to you at let's say 7,000. So in that 7,000 there is a portion of GST entire 7,000 we do not retain in the 7,000 there is an 18% GST that comes out to be around 1067 rupees that comes out to be 1067 rupees so you are the student we recover 1067 GST from you and we pay this particular tax to the government.
So this particular GST we are paying BB virtuals is paying but we are not absorbing it. We are taking from you.
You are ultimately paying that GST. You are the final person. You are the final consumer on which the burden is falling.
Are you able to differentiate between direct tax and indirect tax? So the GST works as an indirect tax. Ultimately the consumer is going to bear the burden of it. If tomorrow taxes increases, let's say the GST rate on any day-to-day items are increases. If it is increased, we as the consumers are going to bear the burden of it because ultimately the shopkeeper is going to pass on the burden to me. He will increase the cost sales price. It will include the GST at a higher rate, we are going to bear the tax.
But if tomorrow let's say income tax rate is increased from let's say 30 to 60%. Then whosoever is earning the income is going to be at the burden. It will not be shifted to someone else.
This is the basic difference between direct and indirect tax.
Clear?
Yes. Done everyone? Now when I say and when I use this word G ST, let's try to decode the meaning of GST. I don't want to get into the formal definitions today. I just want to briefly see how our understanding works.
G ST goods service tax this was named as goods good and a simple tax now that is debatable good and simple tax we really don't know it is a very debatable point but legally it is goods and service tax so let's try to decode these three terms to have an understanding about what the GST is what is tax sir let's see what is tax is a mandatory payment to Government tax is a mandatory payment to government. Is it a voluntary payment?
Is it a voluntary payment? Absolutely no. It is not a voluntary payment. I don't think if it is voluntary tomorrow that many people will pay. So yes, it is a mandatory payment, not a voluntary payment. It is a compulsory tax you have to pay, compulsory amount you have to pay. So tax is sorted. Now let's try to decode the meaning of goods. Can you try to think that if tomorrow we are the legislators?
If we are the we are into the legislating part, what can be the definition of goods?
Try to think and tell me everyone what do you feel can be the definition of goods? Everyone please think about it and be participator. I don't care your answer is wrong or right. No one is going to judge you. Your answers are visible only to me. So relax, think about it. What can be defined as goods?
As says something tangible. Okay, movable items, tangible items, those who are movable in nature. Okay, so everyone is pinpointing to the fact that it is kind of a movable. Everyone is using the word movable property.
Movable, movable, movable, movable.
Okay.
Anyone else? So correct. You have identified the first thing absolutely correctly that goods as the first point.
It is something of a movable property.
It is first thing as a movable property.
So this calculator is a goods. This water bottle is a goods. This pencil is a goods.
Yes, it is a movable property. It is goods.
My next question to you is what is this?
Is this movable guys? Is this movable? Can I move it in front of you? Can I hand it over to you?
Yes, it is movable. Now, tell me one thing. If money is considered to be goods, what kind of interpretations, what kind of implications will it follow in our country?
Imagine, think about it. I am giving you a service of teaching and you are giving us money. So if money is goods means I am giving you service and you are giving goods. Or let's say I obtain a loan from a bank means bank is giving me goods and we apply the GST on money. Do you think it is leading to absurdity, some absurd results and absurd interpretation? Will it negatively impact the entire money related market?
Capital market, not capital market, forget about the securities right now.
The money related transactions, will it be adversely impacted if you charge if you charge GST everywhere where the money is involved?
And in reality, do you think money is goods? Is it an item or is it a medium of exchange of items?
See understand it is a movable thing but do you think making this goods is leading to logical interpretation in our country or very will lead to very absurd results mean see sometimes you don't need a legal definition to uh clarify something the field factor itself will say that no sir this is leading to a little adverse op adverse situation it is a medium of exchange it is a medium to exchange the goods. So to buy the goods I will be using the money. Everyone agrees with me till this point. Before going to the definition by logic it is very very clear that we have to exclude certain things and first exclusion will be money.
Similarly second exclusion will be securities.
Maybe there is a share certificate or something. Again it will impact again it will lead to very absent result that let's say I am buying the shares of the Reliance securities means I am buying goods then you will be charging GST on me so it will lead to a very negative impact on the capital market and the securities market in India we don't want that we want to promote that please don't bring those things into the GST so the securities are also outside the scope of GST and money is also outside the scope of GST so till now what my definition on a very logical basis it has been constructed Ed that goods means every kind of a movable property except money and except securities. Is this clear? Are you with me till this point with logic? Are you able to understand things?
Now next when I say money, when I say money, what do you mean by money?
Your money is money. Money is currency or any form of money. It can be some currency. It can be a check. It can be a demand draft. It can be a credit card payment. Everything is money that is recognized by the RBI used as a legal tender exchange.
Sir, is it defined somewhere? Absolutely yes. But I don't want to focus on definitions today. I just want to have a very logical interpretation with you today that money means RBI recognized legal tender. RBI recognized legal tender. But suppose I tell you one thing, everyone pay attention. Everyone this is a coin and this is not used for a medium of exchange. This is 100 years old coin that I have been preserving and I'm preserving this for its rarity. Tomorrow I know this will be a collectible and this will fetch a very good value in an exhibition.
So do you think this is money?
Technically it is currency but do you think this will be considered as money?
Will I be using this in the transactions or I'm holding it for it rarity? So something being held for its rarity or maybe I'm going to sell it further in the future when it will acquire a lot more value.
So do you think this is money? This is not money. And technically this particular thing is known as held for numismetic value. This is known as held for numismetic value. So if any currency is held for numismetic value, it is not money.
It is not money. It becomes uncollectible. And if tomorrow this is sold, this actually can again come into the definition of goods.
So two negatives negative -1 and negative -2 means it will again come back in the definition of goods and there the GST will be applicable.
where the GST will be applicable.
Now first leg is clear. First leg of exclusions is clear. Now I will talk about the second leg that is certain inclusions but includes but the goods includes one actionable claims.
Now what do you mean by actionable claims? In simple words, actionable claims means a claim on the basis of which I can take an action. Sir, I did not get it. A claim for which I can take an action. What action? I can get the civil court relief for it.
Hello, listen. I can get civil court relief for it.
So, for example, there is an insurance claim.
For example, there is an insurance claim. Let's say I have an insurance from ICICI, general insurance and unfortunately touchwood my car had a small accident. Now legally I have a claim against ICICI if I have paid the premium and if tomorrow ICIC refuses I can drag it to the court and the civil court may grant will grant me the relief. This is the simple meaning of actionable claim. Legal definition we will see not required technically in our course. General understanding you need to have specifically included in the definition of goods. But sir, will all the actionable claims will remain under GST? No.
We will cover in schedule number three.
All actionable claims will go outside the definition of supply. Again, I will cover that in the chapter of supply. But some items will stay under the GST that I will cover. Just for understanding I'm telling you that all actionable claims will not stay under GST. Right now I am getting all the actionable claims in the definition of goods but all will not remain under GST ultimately. And secondly let's try to understand with a small diagram. Let's say this is a land.
Let's say this is a land and there is some grass and crops growing here. There is some grass and crops growing here.
Now technically tell me this grass and the crops are they movable?
No sir they are not movable they are attached to the land. But what if I say that before or during the supply is the basic taxable event. If I say that before or during the supply let's say I am selling to WC I'm selling the grass to WC or the crops to WC and under the supply or before the supply I promise that uh we have made a contract that it will be severed. Severed means it will be cut off. Once it will be cut off can it be a movable property? Answer is yes.
So only that grass will be covered in the goods which is agreed to be severed under or before means during or before the supply during or before not after. If supply is happening and that time it is not cut then it is not a movable property but if during or before supply it is it is severed then it becomes a movable property. These two specific inclusions they have taken in the definition of goods. Is this clear?
Everyone guys are you able to understand this point? Formal definition we will see tomorrow. Basic understanding. Can I quickly revise? I want you to say it loud in your room. Okay? If you're sitting in front of a laptop or a mobile, say it with me. Goods means every kind of a movable property except money and securities but it includes the actionable claims and the grass provided it is agreed to be severed before or during the supply not after supply.
Before or during the supply this is the basic definition of goods.
Now can we try to define services?
Sir services means intangible. Let's have a better definition. Ive defined goods, right? So whatever is not goods, let's put it into the service.
Mo movable property means tangible now.
So when I say not goods, it is kind of intangible only. So let's define service in a simple manner. Let's define service in a simple manner that whatever is except goods except money and except securities.
So the money and securities are completely outside the scope of goods and services and this becomes a residuary kind of a definition that whatever is not goods it is a service.
But if you're changing form of money from one form to another, you are changing denomination from one denomination to another. Let's say Nagas comes to me and says that sir I have 100 rupee notes and in exchange I want 500 note.
So basically he wants to basically convert the denomination. He wants 500 notes against the 100 rupees nodes. And I say to Nagasai Ram that okay it's fine I will do that but I will charge a 10% fee for it. So I will pay you 10% less because I'm providing you this service.
Do you think this becomes a service?
Although I'm saying that I'm providing this service but do you think this will be technically a service where I'm charging the commission? Answer is yes.
Money is not under service but anything with respect to money you're changing the form you're changing the currency you're changing the denomination USD to INR INR to uh USD and someone is charging a separate consideration for it that is absolutely a service so when you go to a local forex dealer and you buy a foreign currency you want to visit UK US you buy pounds and USD so he's not going to do it for free he's not going to give you the equal value he will charge this commission and that commission is going to be under GST because it is a service it has been specifically provided into the definition of service.
Similarly with respect to the securities. So for money I have told you form denomination I will just mention it here as well. Although it has everything been mentioned in the introduction lecture introduction chapter but I will still write it with respect to money.
If you change the form, if you change the currency denomination for which a separate consideration you are charging, separate consideration you are charging, it is very much a supply of service.
And similarly with respect to the securities.
Similarly with respect to the securities if you are facilitating or arranging any transaction. Let's say you are arranging a transaction or facilitating the transaction for which you are charging something.
Yes, it is definitely a supply of service. A simple example you can keep is zeroda.
Now when I buy my securities from Reliance, when I buy the securities of Reliance Industries Limited, is it a supply of service? No. But for making that transaction, for making the purchase of the share, Zeroda charges me rupees five for every transaction. That is absolutely a supply of service.
This is just a macrolevel understanding of what is goods, what is services and what is tax because we are studying GST.
So very brief understanding of what is goods, what is service and what is tax.
Everyone is this clear till this point.
Everyone is this clear till this point? Are you able to understand the concepts? Well, Hindi batch we get used to it. It is my almost eighth or ninth batch. So English batch I'm asking you again and again.
Just bear with me for the first three four classes. I will keep on asking just to ensure everyone is with me.
I hope I'm able to deliver the concepts very properly. Okay.
Okay. And while revising things, please scribble these things as it is. You will be more attentive. You will be able to learn things well. Formally, we will see from tomorrow. Okay. Clear everyone?
Yes. Fine.
Let's move to the next.
So, next is a small chapter flow I have made. Okay. Arjun logages linguishi.
Yes. Let's come to the next part. I have made a small GST chapter flow. Now there are 24 chapters but this will just help you to understand how the GST chapters flow for payment of the GST. For payment of the GST these are the questions that will arise that whether I'm required to pay the GST or not whether it is a supplier or not. Who will pay the GST forward charge mechanism or reverse charge mechanism? Will I pay as per the intrastate transaction or will I pay the IGST as per interstate transaction?
Whether the service or goods is exempt or not if tax is applicable, when do I need to pay it to the government? How much do we need to pay value into GST?
How the valuation will be done? All these things our first eight chapters are going to help us. I'm taking you through a small chapter flow of how our model will work. So the chapter number one is supply. Supply means basically the taxable event.
Supply means basically the taxable event. That is if supply happens we will talk about the GST.
Chapter number two will come chapter of charge. It will talk about two things whether forward charge or reverse charge mechanism. It talks about charging section and also it talks about one scheme known as a composition scheme. I will cover that in that particular chapter. So chapter 2 charging section comes which basically says that we are going to be charging GST. It also gives us the list of the reverse charge mechanism and forward charge mechanism as to whether the supplier will deposit the government GST to the government or the recipient will deposit it. Chapter three is the place of supply. What is place of supply? Where the transaction consumption happened?
Where? What was the destination state?
Because indirect tax the revenue acres to that particular state where the consumption happens and how will we decide that as per the place of supply plus the place of supply will help us to determine whether it is an interstate transaction or is it an interstate transaction IGST or CGST and SDST that is where place of supply comes in.
So that will help me to determine the nature of transaction and that will help me to determine where the ultimate consumption took place. Then comes chapter number four exemption that sometimes all the parameters of supply are complied. It is a supply but in public interest the government gives exemption.
For example, schools for example schools. So the services of schools are exempt under GST. So that is given in chapter number four. Then comes chapter number five time of supply. This will decide that when will I pay the GST? When will I pay the GST to Nirmalatai to Nirmala.
So obviously there will be one date that we'll be deciding and that date depending whether I'm a monthly filer or a quarterly filer everything we will see in the due course accordingly I have to pay GST to the government. And here the field factor here the field factor of the time of supply chapter is ASAP government will try as soon as possible the payment is done.
Then comes the chapter number six valuation of supply basically the supply the GST is decided as per value into GST. So how this value will be decided?
This will be covered in chapter number six and chapter number seven. The most important I say that ITC is the heart and soul of GST. I will explain this in a few minutes. It is the heart and soul of the GST. It is what makes the GST a value added tax. A value added tax.
This is my input tax credit. And then comes the registration chapter which basically will talk about as to who all people need to pay the GST because let's say I'm starting with my uh CA coaching business today and I have just let's say 10 students with 5,000 fees. I'm earning 50,000 sales. Will I be needing to pay the GST? Answer is no. I won't be registered. So every person does not need to register under GST from day one.
So there we will see the registration chapter come into play.
And then from the chapter number nine to chapter number 24 are the procedural chapters. They are the procedural chapters which will support the substantial chapters. So all the rights, obligations and the substantial provisions are decided by chapter number one to chapter number eight. But chapter 9 and 24 are equally important as to how the tax invoice is made, how the eway bill is made, what are the provisions of penalties, how the appeals are made, how the disputes are resolved, everything will happen in chapter number 9 to 24.
So this is how our first eight chapters that that's why I say the first month that I'm conducting the live lectures, we will be focusing upon these chapters.
That's why I want to keep it live with you. you guys also supported that uh that decision. Hence, it is it would be beneficial for you conducting live lectures for these chapters.
Okay. So, we will be starting this from tomorrow from supply. Now coming to the next part, a brief legislative history.
Now, we don't need to go into the lot of detail about which government was there, BJP, Congress. We don't need to do that.
This has been a 10 years gone. Now 10 years passed we don't have to go in very much detail but basics you need to know certain basics that you need to know that can somebody try to tell me that when the GST came it led to a lot of constitutional amendments what all constitutional amendments took place that I will cover but basically there was a constitutional amendment bill which ultimately it was signed by the president and it became a constitutional amendment act. Can somebody try to tell me which was the number of the amendment bill and which was the number of the amendment act? Is anyone aware of what are the numbers of the amendment bill and the amendment act?
Can somebody try someone? anyone yes there was an amendment bill and then it become an act so I'm asking you the number very good lingua sparisha very very good yes Rajit this was the 122nd amendment bill and this became a 101st amendment act. So how come there is a difference in 122nd versus 101? All the amendment bills do not get the president ascent. Sometimes they fail to get the ascent. Basically the signature of the president. So this was the 122nd amendment bill that ultimately became the 101 amendment act 2016. Next if I ask you when is the happy birthday of GST? This date is also very close to our heart as a chartered accountant.
When was the day when the GST was implemented in India?
So when is the happy birthday of GST?
1st July 2017. Absolutely correct.
1st July 2017. So 9 years it has been since the GST has been implemented. And this is our day also as a chartered accountant. CA day.
Absolutely. Just to just note that in Jammu Kashmir it was implemented from 8th of July but balance entirely it was done from 1st of July and just a brief timeline I have given from the IC material itself. If you want to understand this you can have a just a brief reading that actually it was not introduced during the time of NDA. It was introduced much earlier in year 2000. The then prime minister under the then prime minister Atal Bhari Bajai Gi had talked about this concept of GST where Kar committee Kar committee Vijay Kar committee was formed to design the concept of GST and the first reference of this particular concept of GST was made by P Chambaram in year 2006 who was the then finance minister. Then Lok Sabha was dissolved in 2014 when the India government came in and obviously then it was reintroduced. Then it received the ascent of all the bills.
CGST bill, IGST bill, SGST bill, UTGST bill, compensation to the states act.
All those bills were introduced received the majority Lok Sabha, Rajya Sabha and ultimately the president ascent. This all thing happened in the year of 2016 and 17 and at ultimately from 1st July 2017 the GST was implemented in India but in Jammu Kashmir it was implemented from 8th of July 2017.
This is just for your understanding that it should not be the case that we are studying the GST but we don't even know the basics.
Okay. General question. Do you know which is the first country to implement VAT? GST is kind of a VAT. I'm not talking about our earlier indirect tax of VAT. I'm using the general concept as the value added tax. This is just a general knowledge question. Do you know which was the first country to implement VAT in a VAT in the entire world?
People will say that sir focus on India.
A general question here.
No, no one.
This concept of value addition tax for indirect taxation.
Very good. Eva and Linguisha. Absolutely correct. It was in France in year 1954.
It was in France in 1954. Absolutely. Not no not Switzerland it was France.
Okay.
Now one of the portions that we need to have a very brief understanding not required in CA and used to learn it for exam purpose for final level. We don't even need to learn it. We just need to have a very basic understanding that why was GST required? What were the problems in the earlier regime? So the earlier regime was cumulative of multiple taxes.
V was there excise was there excise also central excise and state excise luxury tax octra entertainment tax. So there were multiple taxes into play. But if we ask that specifically what were the problems that we were facing the substantial problems which was leading to a lot of litigation as well. Let's see first was the double taxation. What is double taxation? One thing you are treating as goods also and the same thing you are treating as a service also. Example software. So I am designing a software in the preGST regime. The central government will come to me because service tax was a union levy. Service tax was a union levy. So the center used to come to me and say Mr. Walimbe you are designing a software you are giving a software service. So please pay us the service tax.
Simultaneously my state government used to come and say you are selling the software in a CD pen drive or some form.
It is kind of a sale of goods. You have to pay the VAT as well. Litigation happening for years and years.
Ultimately, it is the consumer who focus who is troubled.
I also I'm also troubled as a businessman. But ultimately, the consumer will suffer because he will be paying the higher taxes. He will be paying the both the he will be ultimately bearing the burden of bad and service tax. And this is not right. This is not right. You should treat it either as goods or services.
But what was the problem? Center and state. Center and state used to act in isolation. There was no correlation between them. They were not talking to each other.
So ultimately the country was suffering.
Double taxation in tax on tax. No double tax is not tax on tax. Double tax is one thing is taxed twice.
Similar example restaurant services. So the restaurant the center used to come and say you're offering a dining experience so you charge the service tax and the state government used to say that you are selling the food items you charge that on it.
How stupid is it? You're treating one thing as goods plus services because you don't talk to each other. Center is in it in its own world and the state government is in its own world.
Ultimately the consumer is paying higher amount. Ultimately the litigation is increasing. Similarly, it used to happen in the AMC contracts, annual maintenance contracts, service also, spare parts involvement. It is a goods also. This was the first problem. Second problem, cascading effect.
What is cascading effect? This is tax on tax. Very wrong for a country to have an indirect tax system where there is a cascading effect because ultimately the consumer, the normal Aadmi citizen, he suffers. Small example I will take.
Let's say here there is a manufacturer.
Everyone pay attention. Here there is a manufacturer.
He makes the goods and sells it to a dealer.
He will charge 1,000 plus excise whatever the rate may be. Dealer will sell it. Let's say in the same state he's in Delhi. He will stay sell to the consumer. Example in Delhi itself he will charge VAT.
He will charge VAT.
Now what is going to happen is will this dealer be able to set off excise from VAT? What do you mean by set off? It means ITC. Simple. Can dealer say can dealer say that for me the government is one only. So excise also have paid. Excise also I have paid and VAT also I'm charging. So can I set off the excise from the VAT? So if the VAT is let's say 100 and excise is let's say 80 can I make a net payment of 20 will you allow me the credit of the excise let's say this was a central excise duty let's say this was a central excise duty government says no why because this is gone to the central government this has gone to the state government my state government will say that we haven't received this excise duty even if this was a state excise depend on manufacturer state that amount has gone to other government. Why will we provide the set off? So you pay the VAT again on the total amount. Now how this will impact that this dealer the cost for the dealer will not be 1,000. The cost for the dealer will not be 1,000 but rather let's say excise is rupees 100 it will be 1,100. And now I will charge the VA let's say 12.5% on 1100.
What is wrong here? Are you able to spot what is what is the wrong thing happening here that 12.5% is being charged on 100 rupees as well that is actually the excise tax on tax absolutely wrong for economy absolutely wrong for any indirect tax regime that ultimately tax on tax is happening but why was this the case with because the excise and state v there was no set off central excise going to the center state v going to the state government they don't act in cooperation to each other no fiscal econ autonomy no togetherness in both the governments ultimately this was the problem due to which we were facing cascading effect are you able to understand tax on tax how it is happening see as a dealer if you give me the credit of 100 I will what will be my journal entry let's keep it very simple if you give me the credit of 100 my purchase value will be 100 my purchase value will be 100 if you do not give me the credit of central excise my purchase value sorry it was 1,000 but if you do not give me the p the basically the input tax credit of excise it will be 1 so you give me the credit I will make my cost 1,000 if not my cost will be 1100 then on which ultimately the VAT is going to be applied you can consider profit margin whatever it is but ultimately whatever the VAT is charged It will be charged on the central excise as well and this was cascading impact. Are you able to understand this?
It's okay that this is not a part of our course but for general understanding of how indirect tax works are you able to understand this everyone is this example clear any query I will explain the whole thing again please confirm is this clear absolutely clear completely you should be absorbing things clear okay and even if at home whom you face any query put an audio note in the group okay I will explain the whole thing Again, don't worry.
Understood.
Next. Multiplicity of taxes. That is okay.
Could you explain the general entry?
Yes, absolutely.
Yes, absolutely. Eva, I will explain the general entry. See, understand. If you do not give me the credit, you don't give me the credit, my purchase value will be 1,100 to whatever my vendor is.
my purchase cost has increased on which I will add my profit margin on which there will be a VAT. But if you give me the credit, if the the central excise credit was available, the the journal entry would have been purchase credit that will be my asset that I will set off to vendor.
So here my cost is 1,000 where I will add the profit whatever my value addition will be let's say 500. So here the vat will be on 1500 but here the vat will be on 1600.
I don't care. I don't care. I'm a businessman. I will pass on the burden to the consumer. Ultimately the citizen the arm army of India will suffer.
General journal entry clear very much clear. Okay great. Next similar problem that VAT on goods and service tax again no set of possible same thing that I covered about I took the example of central excise versus VAT VAT and service tax same story VAT is going to the state service tax is going to the center so if I'm a service provider today I'm into the teaching service in the preGST regime I'm charging 6% GS uh 6% service tax on my service I buy a goods I buy some item let's I buy my desktop. I buy this desktop for 1 lakh rupees and I pay VAT on it. How will I set up the credit? The VAT has gone to the state government.
Service tax is going to the center government. Center will raise its hand say we will not give the credit. That VAT has gone to your state government.
Again ultimately who is going to suffer?
You the students will suffer. I will pass on the burden to you. Burden means basically the cost will increase on that cost. You will be paying the service tax. So ultimately service tax will be charged on the that as well.
because you are not allowing me the credit.
So the core problem is the center and state are not working together.
The center and state are not working together and that is what is troubling us.
Same same story. Absolutely.
Another problem was a big thing CST tax.
This was the very absurd tax going against the principles of any indirect tax. Sir, when was CST leveled? CST was leveled on interstate sale of goods. So if it was intra, it is a VAT sale. We will be charging VAT. If it would have been an interstate trade commerce, I would be charging the CST tax. And this CST was origin based tax which is absolutely against the principle which is absolutely against the principle of any indirect tax is that it should be consumptionbased tax.
The focus is on consumption and you're making this an origin based tax. I will explain the problem here as well. This was a unionless subject means the center was leaving it. There was a levy by center but it was collected by state. This is just for understanding. Now what problem is to create again see a simple level transaction. Let's say there is Mr. A from Punjab.
Okay. He's a manufacturer. He manufactured the goods and he sold it to Mr. B of Delhi. Now Mr. B of Delhi means it is an interstate trade commerce. Here there will be involvement of CST.
Now earlier there was one concept of form C. You must not be knowing it.
You must not be having any idea of it.
There was earlier this thing as form C that if you have the form C the CST rate would be 2%. Otherwise it would have been at the rate of VAT. So let's say 1,000 + 2% 1020 I sold it to the Mr. A sold it to the dealer of Mr. who is Mr. B in Delhi and if Mr. B sells it to the ultimate consumer in Delhi now he's going to charge that on what value will the credit of 20 be available? No CST credit not available. Why?
Why it will not be allowed to be set off? Because this is Delhi government.
This is collected by Punjab government and ultimately going to the central government. So again here the cost will be 1020.
So CST is unnecessarily becoming the part of cost. It is non-matable. It is not creditable. No credit of CST. This was very absurd tax. It was going against the principle of any indirect tax. That is any indirect tax should be consumptionbased levy. And this my dear friend it was a origin based levy.
So due to all these issues there was a need for an indirect tax reform to solve these problems.
GST came.
Sir can we today say that cascading impact has completely been resolved?
Answer is no. I will be telling you in chapter number six where GST valuation still the cascading impact is happening. Government is still living tax on tax to be covered in chapter number six.
Understood? No one is going to ask you this but ultimately we have to understand the concept. What were the problems? How the indirect tax works?
Why input tax credit is important?
Done.
Okay.
Now next I will be taking you over through the constitutional link. Now what do you mean by constitutional link?
What articles are relevant to understand the study of GST?
What articles came into existence due to the GST mamy entertainment tax everything was removed ultimately all the all the taxes were removed. It's not as if excise and all these things are completely eradicated.
They exist but in a very limited manner for petroleum products, alcoholic liquor that I will be covering in a few minutes.
But ultimately all the other taxes, entertainment tax, luxury tax all were removed. Today we mainly have only and only GST.
Pay attention now.
constitutional link.
Let's see certain articles to understand the background of GST. Certain new articles that came into the context of GST. Let's see. Article 265.
This is the basic authority of law. No tax can be levied or collected. Pay attention. No tax can be levied or collected. Levy means charge. Collect means to collect the amount of money from you except by the authority of law.
Now law is a separate definition in itself. It's a not a definition. It's a separate jurist prudence in itself that what do you mean by law? But in simple terms unless and until there is a proper authority either a central act, some state act, you cannot charge tax. So tomorrow the government cannot just say that okay we are charging GST. Where is the power? Where is the power in the constitution? So there were certain amendments that were made. So 265 says that ultimately you require the authority of law.
Article 245 gives this power of the extent basically the law makingaking power to the center and the respective states. Okay. So just heading is sufficient here that extent of laws made by parliament and by the legislature of state that basically the parliament will make the laws for the entire country.
The states will make the laws for that particular state. But what subject?
Parliament will make for what subject and state will make for what subject?
that has been given article number 246 that is read you don't have to study the articles in detail okay just for reference I have given the article 246 is read along with the schedule number seven which basically talks about the three list that you must be knowing union list state list and concurrent list only the parliament can legislate.
State list only the state can legislate.
Concurrent list both can legislate. But if there is any inconsistency, parliament but obvious will prevail over the state.
This you must be knowing. So this is article 246. Power to center state and concurrent list both have the power. So for example, income tax center has the power. Customs duty center has the power. Central excise center has the power. State excise state has the power.
Similarly, police, forest, all other topics proper the list has been divided into the subjects have been divided into the three list.
Now here I have not talked about GST yet.
Now I will talk about GST. There was a new article introduced article number 246A. Pay attention everyone. Article 246A special provision with respect to GST.
Now what does this say? Let's try to decode.
Notwithstanding. What do you mean by notwithstanding? Notwithstanding means completely ignoring. Notwithstanding anything contained in article 246 that we just now covered about the three list and article 254. What is 254? It talks about the inconsistency between the center and state. If there is any inconsistency between the center and state, basically central center has a superior power.
So ignore those two artic those two articles. Now what we say is the supreme thing. See subject to clause number two means we will respect sub clause number two. We will not override clause number two. Subject to clause number two, the legislature of every state shall have the power to make laws with respect to GST imposed by union or by such state.
And parliament has exclusive power to make laws with respect to the GST where the supply of goods, services or both takes place in the interstate, trade or commerce.
Sir, what does it say? Clause number one basically says that parliament and state both have the power.
So the GST the what was the problem that was happening that center and state are not working together. That is what we are here to solve. Center and state both will have the power to make the laws with respect to the GST.
But interstate means more than one state is involved. Whom to give the power? No one. Let the center take the charge. So for interstate that is IGST the parliament has the ultimate authority.
Forget this explanation for few minutes.
So this is how article 246A gave birth to the power of the GST and since it is 246A means it was inserted by the constitutional amendment act 101. Is this clear?
Now my question to all of you is one small thing.
This is our student. So he's asking that sir why not add GST simply into the concurrent list schedule number seven like income tax was there in in your union list customs duty was there you just add the GST in the concurrent list why was there a need for a separate article number 246A can you try to tell me why not add GST simply into the concurrent list would have been a simple task Why to introduce a new article altogether?
Let both the powers both center and state have the power to legislate with respect to the GST.
Can you try to think about it?
Because of 265. No lingo because even if 265 we are providing in the union list.
Now we are giving the power to legislate in the union list.
Sparisha you are touching that reason on some level.
I've already covered the reason in inherently while explaining certain things.
See if I add the subject into the concurrent list the primary reason yes correct Alana in the concurrent list the ultimate superpower is center the states will never agree for it to maintain the fiscal autonomy between the two powers states will always say that if you put it into the concurrent list ultimately 254 which resolves the inconsistency the center is superior why will we allow to add it into the concurrent list we want to make the laws with respect to our state. The 50% law we will make the 50% part CG SGST is also involved. So we want to legislate.
Yes, absolutely correct. Hence it was added as a separate article. And the second reason is GST was an indirect tax reform. You cannot just add it merely into the concurrent list. It's better to provide the proper article and to explain the power properly. So both the reasons you have to understand why we did not add it into the concurrent list.
It was an indirect tax reform and to avoid center being the superior one. To avoid center being the superior one.
Okay. And uh basically it was a complete ID reform.
No one is going to ask you this but understanding is needs to be there.
Then there was article number 366 that is the definitions.
Two articles were introduced.
Two small articles were introduced defining certain things. Article number 366 clause number 12A. It defined the GST as pay attention goods and service tax means means means it is a restrictive clause exhaustive definition.
It means any tax on supply. Supply is the taxable event.
This is just for your general understanding. Okay. No one is going to ask you this definition in paper. So it means tax on supply of good service or both or both we will interpret in chapter number one except the taxes on supply of alcoholic liquor for human consumption. Oh sir, so you are saying alcoholic liquor for human consumption. So whiskey, beer, all this which is consumed by human that is not under GST. No, it is not under GST.
Have you observed this that whenever someone orders whenever you might be going with your family, relative, friends, if someone is getting a beer or a whiskey or whatever alcoholic liquor for human consumption, there will be a separate bill of it and that separate bill will have a charge of VAT.
That's why I say excise VAT are there still today but in a very limited application. I will show you one bill. I will show you one bill. Pay attention.
This was one small bill of my friend, not me. Not me. It was my friend. Okay, stay away from all these items. This is my friend's bill I'm showing. He had this alcoholic liquor for human consumption. Okay, this is some ultra point. I don't know. And this was for 229 for which there is a VAT of 10%. So next time when you order or your friend orders alcoholic liquor for human consumption and if someone says that why there is a separate bill for the alcohol raise your hand and show off your knowledge that because of this this reason because of the article number 36612A it is not under GST it is excluded from the definition of GST itself.
What is KF?
KF is king fisher.
I don't consume but I know it is a king fisher ultra point. Now please don't focus here. Focus here.
Okay. It is a vat sale. But when you order the normal food. So he ordered chicken tikka biryani and a masala papad.
So here there is a GST involved. So two separate bills.
Are you getting it?
Yes. Now comes the question sir why alcoholic liquor for human consumption is outside the GST perview?
Because alcoholic liquor for human consumption is a very big revenue source for the state government.
Excise is also there in a very big volume lots on lots of revenue collection is on a very big level very big scale. So the state government said that we will not allow the alcoholic liquor for human consumption to go outside our control.
We want to earn that. We want to earn revenue of excise on the production. We will not let go of it. It will lead to a massive revenue loss. And they ensure that this is written in the constitutional definition itself.
Is this clear?
Are you able to understand things?
This is masala papad. Why are you focusing on the food items?
Focus here what I'm trying to teach.
Okay? Don't focus on these items.
Okay?
Next.
Next. Okay.
See, Hindi bad students are very naughty. You guys are not that naughty.
They go very off track. So, sometimes I have to school them. But English students, you guys are very disciplined.
But it's okay. Sometimes you are also, you know, studying the entire day. So, little must is fine. Okay. 26B.
This was again introduced. See A B means these were added in between. So due to that constitutional amendment act what is this state with reference to the articles d what are these articles?
These are the GST articles. All these articles deal with the GST related things.
I will cover that. Give me some time. So with respect to the GST articles they say that state includes a union territory with legislature. Now my question to you is what are the union territories? I will give you a small hint.
There are three union territories with own legislature.
There are three union territories with own legislature.
What are the three union territories with own legislature? That will be basically be considered as states. So if there is any intrastate transaction CGST and SGST will be charged. Not UDGST. Not UTGST. Correct. First answer is correct.
Puru Cherry.
Second guys, this is you should be knowing this. Huh? Correct. Delhi. And third, Jammu and Kashmir. Absolutely correct.
Hindi students they didn't answer this correctly.
But I had very high hopes from you. Very good. So Jammu, Delhi and Purucher.
Basically these will be considered just like states. Okay. Then there is a brief understanding you need to have of the GST council that came by article 279A.
What is the focus of GST council?
Basically it is a body that studies the things. It u it basically recommendations are given to the government according to which the government acts. So it is basically a body of 33 people. What are the 33 people?
two members from the union, the finance minister and the union government minister in state of revenue. So in charge of the state I will show you. So Nirval Sith Raman is the chairperson that is the current finance minister.
Apart from these two there are 31 representatives of the state. How come?
31 28 states everyone 28 states plus three union territories with own legislature. So that is 31 and plus two people from the union. So that is a 33 member body. So GST council it studies the issues it gives the recommendations and similarly you must have heard about the council meetings that takes place.
So that is how the GST council operates.
If you want you can see the website of the GST council and you will see Delhi Purucher and um Delhi Puri and Jammu and Kashmir and if I show you the GST council members it's not opening I don't know why just a minute the GST council the site is not working properly. I had opened in the morning class. The arrow is not working but it's okay. Basically, the these are 33 people that I was going to show you. That's fine.
The site the drop-down is not working. I don't know why. Okay. Nevertheless, this is basically article 279A. If you see the constitution is the union finance minister, the union minister of state in charge of the revenue. So, this is the union minister only. Don't get confused of state. So it's a union minister in charge of revenue and then you have the people from the state representatives and if any person nominated by the government where there is some emergency which has been proclaimed so that is a emergency case but other than that there are 33 people right okay next jurisdiction of GST GST extends to the whole of India India I will be explaining it tomorrow we'll be covering it into the part of the definitions but in general you It extends including the Jammu and Kashmir area everything is covered below the sea territorial waters all those things are covered sky above the ground that is also covered formally we will see it tomorrow this was the general understanding of constitution and basic legislative history till this point very honestly are you enjoying are you able to understand concepts well because I'm going to give you a 5 minutes break now before starting the GST core concepts Today we might not need complete 3 hours. So next appro 40 minutes I will be needing more.
I will give you 5 minute break because it is a first class.
So till now happy enjoying and understanding the lecture.
Yes. Yes. Yes.
See it's also important that you have fun. I will try my level best to bring a fun element also along with the conceptual clarity because I understand you are sitting on your laptop the entire day studying. So we will try that the class is actually fun as well understanding enjoying very good okay very happy to see this we will take a short five minutes break have some tea have some coffee let's meet for the GST core concepts you will enjoy this even more now the above part the general legislative and the boring stuff is done now we will focus on certain core concepts of GST okay short 5 minutes break Okay. So the recording has been resumed.
Now I want to focus upon certain core concepts of the GST.
It's not as if this will not be covered from tomorrow yet again. But today again I want to just touch base upon certain things to make a small base about the overall subject. Right now as I told that ITC is a heart and soul of the GST.
I don't know now you may or may not be knowing these characters. This is a very famous Bollywood movie Herafi from which we have picked the characters. He's Babura, he's Raju, he's Sham and she is Anurraha.
Do you know these characters? So we'll take a small example and try to understand how the GST works, how the input tax credit works, how the revenue to the government is accumulated. Okay.
Now pay attention very very carefully.
He is a manufacturer. He's the first person. So obviously he doesn't have any ITC. He's the first person in the chain of the entire goods. So he sells goods for rupes 1,000 to Raju plus 18% GST he charges that is 180. The total is 1180.
The total is 1180. Now what will be the journal entry in the books of the dealer? He will show it as purchases and as I told you one of the problems we solved that GST is only one thing. Now we don't have a separate excise. We don't have a separate V. We have only one GST. So the dealer will be able to take the ITC. So the purchase value will be 1,000. The ITC will be 180 to Babura.
To Babura it will be 1180. So for the dealer the cost will be 1,000.
He will add his profit margin that is his value addition whatever he will be doing. Obviously he will not be selling at cost. He will keep some money for himself. So let's say this is 500. So he sells the goods for 1,500 plus 18% of GST. This becomes 1,500 into 18% of 270. So this becomes the total invoice value of 1770 for the retailer.
Let's say this is Mr. Sham. Now what will be the general entry in the books of Sham? Because he will be able to take the credit purchase ITC to Raju.
So purchase will be how much? Purchase will be 1,500. ITC will be how much?
270. And what will be the total payment?
It will be 1770.
And now the retailer will sell to Anurraata. Anurata is the final consumer. Okay? She's the final consumer.
This final sale value will be how much?
Let's say he adds his own profit margin of rupes 300. So cost is rupes 1,500.
The cost is rupes 1,500. His profit is 300.
So the total sale value is 1,800.
Means the sale value means the taxable value on which there will be 18% GST. So 1,800 into 18%. This will come out to be 324. So the total invoice value will be how much? It will be 2124.
Finally she will pay 214 224. This is nothing that I have done.
I've just passed the goods through three different levels right from the manufacturer to dealer to retailer to the final consumer. Now I will explain it to you how much GST the revenue actually the government is earning. Pay attention now manufacturer how much GST is going to pay to the government he is going to pay 180. He doesn't have any ITC.
Simple. How much Raju will pay the GST to the government? He has to pay 270 but he has the credit of 180. He has to pay 270 but he has the credit of 180. So he will net pay rups 90. Right? That is that is how the credit will work in my GST return. I will be having the credit.
The net payment I will make. How much GST will Raju this Mr. Sham pay? He has to pay rupees 324 but he has the credit of 270 that is lying in his asset ledger of ITC. So the net payment will be how much minus 270 324 minus 270 that will be 54 that will be 54. Is there anything that is of a query here?
Respective returns will be filed a manufacturer, dealer and retailer. Will Anurada be taking any credit? No.
Because she's the ultimate consumer.
When U and B buy goods from market, are we taking any kind of ITC? No. We pay the total value. We are absorbing the cost. We are ultimately absorbing the cost.
So now if we talk about the actual earning of government, if we talk about the actual earning of government, we have two approaches to decide about this. Approach number one, approach number two. Approach number one is the real analysis.
How the ITC will work. The real analysis that will happen is first person is paying 180. Second person is paying 90.
Third person is paying 54. So how much is this total? 180 + 90 + 54. This comes out to be 324. The second analysis is the logical analysis. Now there is one small statement I am going to make.
There is one small statement I'm making.
I hope you will agree with it. that in indirect tax in GST the actual revenue occurs to the nirmalatai only when the final consumer is involved in the picture because still ultimate consumer is not involved it is it is just a game of charge and ITC manufacturer pays 180 Raju takes the ITC Raju pays 270 Sham takes the ITC sham pays 324 but Anurraha does not take the ITC this is the point where the government earns its share of revenue are you agreeing with me on this? So in every B2B transaction means GST to GST transaction, register to register transaction, there is no revenue of the government because simultaneously the recipient is getting the ITC. But when the final consumer is involved where the ITC is not being avail That is where the real revenue lies. And if you directly focus upon the last transaction, you will find the same figure 324.
You will find the same figure 324.
Now in India, can we follow this kind of analysis? Can we follow approach number two where we finally pick the figure of 324? No. How will government track this?
How will government track this? Can government track every transaction? Oh, okay. Let it reach the final consumer and then we will collect 324. No, it is not possible. So government says every person has to charge GST and whoever is taking ITC you take the credit ultimately the answer is going to same.
So this is the approach we follow in our country. This is what makes the ITC a value added tax and if another approach I will give you focus on value addition how GST is a value added tax. Babur added value of 1,000. Raju added the value of 500 profit and Sham added the uh value of 300. So if you pick the 1,000 + 500 + 300, 1,800 into 18% it is also 324. Hence proved that ITC makes GST a value added tax here.
Okay, no one is going to ask you this. You need to have an understanding how a tax is working in our country. That's why we say without ITC GST will fail.
Next concept, small concept clear. Clear never thought about it.
Great.
Now you have to structure your mind towards these things.
What is a taxable event in GST? Taxable event means which gives rise to a tax consequence.
It is supply.
Earlier in the indirect tax regime, we had different taxable events.
We had different taxable events. In excise there was manufacturing for V. It was a sale. All those taxable events are now removed. We for GST we have only one taxable event that is section number seven that is supply. I will tell you three basic parameters of supply. Three very basic parameters of supply. Detail we will cover from tomorrow itself. Just for a basic understanding that understand three parameters. First it should be of good services. That is the reason we first started with the understanding of what is goods and what is services.
Second parameter, second condition, there should be a consideration involved money.
And third, third, it should be in the course or furtherance of business.
We will deep down deep dive into the analysis tomorrow. But just understand these are three basic parameters. It should be of good services. It should be involving a consideration and it should be involving in the business.
So for example, I'm teaching it is my business. I'm providing service and I'm getting consideration from BB virtuals.
I'm providing a taxable event of supply.
I have to pay GST.
Nature of transaction. So this supply that is the transaction can be of two parts.
It can be either an intrastate nature transaction or it can be a interstate nature transaction.
What is interested nature? Location of supplier and place of supply. What am I saying?
Location of supplier and place of supply. If they happen if they happen in one state or one union territory. If they happen in one state or one union territory it is an intrastate nature transaction where there will be involvement of CGST and SGST or UTGST. 50% will go to the center 50% will go to the state.
And what do you mean by interested transaction? It means the location of supplier and the place of supply are not in one state or UT means it is in either different states or different union territories or maybe one state and one union territory.
Not in one state or one union territory means not in the same area. one state, one union territory, two different states or two different union territories. So here there will be involvement of IGST which is collected by the government of union that is central government 50% will be aortioned where the place of supply lies with the consumption state and that is exactly how we understand on a very macro level right now that which government earns the revenue 50/50 to the center 50% to the state where the place of supply falls for which my chapter 3 will help me CGST SGST directly 50/50 will go into the respective accounts but inter GST IGST the 50% will be aortioned later center will collect it first because two states are involved so center says that okay let me collect IGST and I will aortion to the relevant state Okay, clear.
Now, goods which are outside the scope of GST. You have already taken the names.
We have also talked about certain items.
There are three items which are outside the scope of GST.
First, we have covered it today in the class itself in the definition of the GST. Alcoholic liquor for human consumption.
Alcoholic liquor for human consumption not the industrial use.
Don't write just alcohol. Alcoholic liquor for human consumption. Second, we know you have already taken the name five petroleum products which will include your petrol, crude, diesel, aviation turbine, fuel, gas. Why petroleum products are included here?
Now comes again a question why the petroleum products are also outside the scope of GST? the same reason a big tax revenue for the states but but it is quite possible that we might see the petroleum products into the scope of GST but alcoholic liquor IP we will never see into the scope of GST petroleum products yes very much possible and there is a third item can someone try to tell me last year this was an amendment last to last year what is the third item which is outside the scope of GST What is the third item which is outside the scope of GST? I will give you a hint. It is a raw material for alcoholic liquor for human consumption.
It is a raw material for alcoholic liquor for human consumption.
Who just the same reason I told you it's a very big revenue for the state government through VAT and excise. They will never allow GST in it.
It is a very big revenue source from the from what from the VAT and the excise duty that is charged. States are earning very big manner. In fact, I will tell you the license with respect to alcoholic liquor. It is also outside the scope of supply. I will cover that in chapter number one. This entire thing is outside the scope of GST agriculture goods. No. Okay. I don't think you might be knowing it. So understand now right undenatured if you want scri you want to scribble it you can write it okay you can scribble it alongside me. Yes, correct. Goautami.
Rectified spirit. It is known undenatured extranutral alcohol.
Undened extra neutral alcohol used for production of alcoholic liquor for human consumption.
This is also known as rectified spirit that someone has taken the name.
Now sir, why did this amendment came?
What was the logic behind it? Now understand what was happening. I'm using a raw material in producing alcoholic liquor for human consumption. The output is outside the scope of GST. The input is under GST. I will not be able to take credit. So demand was made to the GST council that why this inconsistency your output is not in the scope of GST and the main raw material you are keeping inside the scope of GST let both stay outside the scope of GST hence this was amended and this was also outside the scope of GST which is the raw material for the alcoholic liquor for human consumption make no mistake whatsoever I'm talking about the use in alcoholic liquor for human consumption I'm not talking about the industrial application industrial alcohol industrial use raw material it is very much under the GST and you can pay attention to a very important word I'm using here is undenatured if it is denatured that is for industrial application if it is denatured it is for industrial application that is very much under GST undenatured is for human consumption raw material for alcoholic liquor for human consumption now I know what your query might Sir, you taught us that in the definition of GST, this was excluded.
But this has not been covered yet.
Section number nine, charging section.
Section number nine, charging section.
These two items you will find outside the scope of GST from the charging section itself. So if tomorrow I want to bring petroleum products inside the scope of GST versus if I want to bring alcoholic liquor for human consumption in the scope of GST. Which is easier to bring?
Which is easier to bring? This is easier to bring. Why? This will require a constitutional amendment.
And constitutional amendment article number 368 of the Indian constitution.
It is not very easy. Changing a section is easy. Power is there with the central government but constitutional amendment you will again require the approval of the states.
This you will find in the charging section chapter number two. And for this precisely this precisely there was an explanation in article number 246A as well. Now I will cover that explanation that the provisions of this article shall in respect of GST referred to in clause number five of 279. This is the five petroleum products. It will take effect from a date recommended by the council.
Currently, it is not recommended. So, tomorrow council may recommend central government will revise the section number nine charging section and bring the petroleum products into the GST.
Cool. Clear?
So, this is now someone asks you that what are the goods which are outside the scope of GST. These are also known as non-t taxable items. In simple words, these are non- taxable goods.
Sir, do we have any services which are outside the scope of GST?
Do we have any services which are outside the scope of GST? Currently, no.
Only three non-T taxable goods are there which are outside the scope of GST.
So let's repeat what are the goods which are outside the scope of GST.
Five petroleum products alcoholic liquor for human consumption. Undened. Say it.
Say it aloud in the room. Undened extra neutral alcohol used for the production of alcoholic liquor for human consumption.
Clear?
Next there are two special cases I will be covering that and OPM are two special cases which are under GST as well and they are suffering the earlier tax as well. Tobacco is under GST as well. It suffers central excise duty as well.
Entry number 84 union list.
It is a sin item. It is a sin item.
Government is trying to discourage.
Although what from what I know people won't care if they want to buy tobacco and cigarette they're going to buy by paying whatever price. But yeah this is the situation today that GST is also limit central excise is also there and opium and narco drugs GST is also there and state excise is also limit state excise not center so these two examples become little important to just know I see I won't ask you this you should note that these two items are suffering the current tax as well as the earlier tax next are the GST rates First of all understand the rates are not a part of our course.
The rates are not a part of our course.
For general understanding you should be knowing it that primarily legally the rates were 0% which is known as basically the nil rated that rate is there but zero 5% 12% 28% 40% plus special rates.
Now practically in our today's world 12% is not there. Hardly it is there on one item. 5% and 40% are there. 40% is a demerit rate which is on luxury items and sin items, cold drinkings, beverages. There the 40% is applicable.
And there are some special rates also.
For example, jewelry it is 3%, 1.5 + 1.5. precious stones it is I think one 1.5% so special rates are also there now if in the book you see there were certain questions where it was 12% I haven't edited that I feel you should be a you should be attentive enough in the question to pick the correct rate tomorrow instead of 12 they may give five eight maybe five okay 18 I did not write just 1 minute 18% I did not write so in the paper tomorrow they may give you 5% 18% and 40%. Or maybe legally they still give you 12%. So we are not focused upon the rate. Answers are not going to change from the solving point of view. The figures will change.
So I have not edited all the questions from changing the 12 to 18%. I have still I've still maintained the 12%. You should be able to pick the rate correctly. It will help you to read the question and solve it more more diligently. So rate it doesn't matter.
It will be given in the question. Okay.
So the primary rate you are going to find is 5% practically or 18% or 40%.
I will show you one jewelry invoice.
I will show you one jewelry invoice.
Just a minute here. If you see there was a diamond ring and if you see in this diamond ring what is the GST rate? They have applied 3%. So this is a special rate on hallmarking charges it is 9 and 9% because that is a service but on the core jewelry part it is 1.5 and 1.5%.
Okay so GST is something that you are going to see everywhere. You just have to be aware this is the most practical subject you will come across. You buy something you are going to see GST. You buy a house you're going to see GST. You rent a house you're going to see GST.
You travel somewhere you're going to see GST. You take a flight, you're going to CGST. Be aware. Question everything.
Believe me, you will love this subject.
Clear? Okay. Last couple of concepts.
There are three very important CGST schedules that I will be covering. I'm giving you a brief understanding of that. Schedule number one, schedule number two, and schedule number three.
This you should be knowing very very properly. These are of the CGST act. By the way, what is the year? 2017. Now, all the acts are two 2017. So, three schedules you should be knowing.
Schedule number one, schedule number two and schedule number three. Now, what is schedule number one? Schedule number one is deemed supply meaning which it is a supply without consideration.
Oh, sir, you taught us that there was a parameter of the consideration. Yes, but without consideration also it is a supply. Yes, there are four items that I'm going to cover that. So let's take a very simple example. Let's say I'm married and my wife is sitting here and after the class she says that hello mister, you preach all day. I did it like never before. I did it like never before. I want to test it.
So your bhabi gi bhabi means my wife. So for you she is your bhabi gi. So my wife says that I want to register. I want to see your class.
So I I ask her to register on the BB virtual website on which she shows me a denda that what did you say? I said okay okay okay sorry register it. I will ask the team to directly register it without consideration.
Here there is no consideration but will this be acceptable by our madame G to s to make one madam happy the other madam will be unhappy she came in front of me by smiling face that Mr. volume what are you doing because of your relationship you did not charge consideration normally the consideration should happen there and we would have collected the GSTs says ask for the fee sir and I asked for it but she's showing the denda what should I do okay I it will create a problem for me but niranatai says that no no no no I don't care without consideration you make it a supply and pay the GST. So these are certain four items, four paragraphs I will be covering in schedule number one that will make it what? Supply without consideration.
There is schedule number two. Schedule number two says we are not we do not care whether it is a supply or not that you deal with section 7 and schedule number one. We will clarify whether it will be a supply of goods or services.
We will clarify certain instances where it will be considered as a goods or services.
So you remember at the start I told you double taxation was happening for restaurant or software all those uh controversial transactions were clarified in schedule number two. They were considered to be services. So ultimately only once the GST will be applied. So certain controversial and certain confusion areas they clarified in schedule number two and schedule number three negative list that all the parameters of supply are complied but still we will put it under schedule number three and we will put it outside the scope of GST.
We will throw it outside the scope of supply.
example a short example I will give employee services to employer so if let's say I'm working in a big four let's say I'm working in EI at an annual package of let's say 25 lakhs so technically all the parameters of supply will be complied I'm giving a service I'm charging a consideration it is exceeding 20 lakhs but no supply negative list so there are certain 11 12 items that I will be covering in schedule number Next two important then not a very these two are very very important from your understanding exempt supply and a zero rated supply.
What is an exempt supply? It is defined sir. Do we need to learn section?
For your paper, you don't need to write the section number. But while doing it in the class, my suggestion would be let's try to learn it. Let's try to have a complete grip on the subject. It will give you a lot more conviction while writing things.
Okay? So, whatever we are able to do, we will write it. We will try to learn it.
If it doesn't happen till the exam, it's fine. You can skip the writing the section. Fine. So, exempt supply is section number two, clause 47 of CGST.
Now what is exempt supply? Three items are covered.
What are the three items of exempt supply? One is nil rated.
When is the nil rated? Means the 0% rate is given. It is an exempt supply. Second is your non- taxable items. That is the three goods that we covered.
That is the non- taxable item. The three goods that we covered petroleum products, alcoholic liquor and the rectified spirit.
And third is exempt via notification.
Exempt via notification. Example chapter number four that we will cover. It is an exemption notification.
These three items are covered under exempt supply. Learn it. I'm going to use it a lot in the paper during the study including the MCQs that we will be doing. Case booklet also has a lot of understanding required for exempt supply. So, nilrated non-T taxable items and exempt through a notification example chapter 4 or maybe there is some other exemption notification.
And now my next question comes that what is a zerorated supply? What is a zerorated supply? Can somebody try to think about it?
What is a zerorated supply? It covers two things.
First, export transactions.
Whether it is of goods or services, I will be defining the export of goods and export of services. But on a layman basis, you know that export means sending outside India, rendering service outside India. It is an export transaction. Legally, I will be defining it later in chapter number three.
So export is zero rated and second very good wy sez. So supply to sez unit or developer supply to sez unit or developer for authorized operations.
for authorized operations. Now please have a general understanding why it is what is the difference between the two.
Now why first of all we have taken this supply to SEZ unit or SEZ developer unit means the SEZ business unit which is operating in an SEZ and SES developer is the developer of that SEZ area for example no SCZ in UP.
Now for taxation purposes SEZ is considered to be abroad.
They operate in their own separate uh structure they enjoy tax privileges. So SEZ for tax purposes is considered to be outside India.
Hence if I make a supply to SS developer unit provided it is for authorized operations means as per the SEZ rules and regulations nothing else. We don't have to run authorized operations. It is as per the SEZ act 2005.
So if that happens it will be considered as a zero rated. Now my question to you is absolutely correct. I knew this query is going to come that what is the difference between zerorated and nil rated. So first of all difference is clearly evident that I'm defining defining this separately.
First evidence is there. Now first difference is clearly evident. I'm defining this separately as these two transactions and this I have made it a part of exempt supply.
Your question should be why zerorated supply is not a part of the exempt supply. Who can try to think about the reason why the law did not put the zerorated supply as a part of the exempt supply? And when I say zerorated, I'm not saying nilrated. I'm not saying it is zero rate. Zeror rated does not mean zero rate. Zeror rated means no GST involved in the entire supply chain with respect to the export transactions.
Vikram has given me the answer. I want you other people to also think about it and try to answer other people.
Subash to support more export. No. But why zerorated supply is not a part of the exempt supply?
Why did I purposely differentiate between two? Why I defined the zero rated supply separately?
Very very good. Eva, absolutely correct. AA and Vikram, please understand. If my output supply is exempt, if my output supply is exempt, I don't get ITC.
Why? ITC is used to set off against the output tax. If there is no output tax, why will you take the ITC? So, if my supplies exempt, I do not get any credit. The GST becomes a part of my cost.
But zerorated suppliers, they are the foreign exchange earners of our country.
They are the foreign exchange earners of our country.
Nirmala says that we do not want to make you unhappy.
We do not want to make you unhappy. We want to keep you happy. If we put you into the exempt supply, you will be discouraged. You will not get the ITC and we don't want to make that happen.
We want to promote you. We want to encourage you. So that's why you are given this separate definition of zerorated supply and that is the primary reason that if I'm making zerorated supply ITC is absolutely available.
ITC is absolutely available. Is this clear?
ITC is absolutely available. Now your next query will be that if my 100% supply is zero rated if some taxable portion is there I can use the ITC to set off against output tax but what if my 100% zero rated supply or maybe my taxable portion supply is very less I have a lot of ITC available what should I do of it what is my benefit I don't have any output tax to set it off against chapter number 15 refunds we will give you the refund of ITC please don't be disheartened we want to make you happy you claim the refund chapter number 15 rule 894 I am going to be covering that in chapter 15 ITC will be available we will give you the credit we will give you the refund if required please don't worry just ensure that you are earning revenue for our country. So the next time someone asks that why zero rated supply is not covered under exempt supply the primary reason is what it see is this clear okay so exams supply three things tomorrow I will be revising it again okay so while doing in the scribbling in the homework while doing revision of the class you also O should write it down. I hope you will do it. Eva, sir, could you please uh explain the SEZ pointer? Okay. Eva, basically the SEZ developer and SEZ unit. Basically, SEZ is considered to be foreign purpose. So, if I'm supplying to SEZ developer, SEZ unit, it is just considered as I'm supplying to foreign only. This is actual foreign supply. This is deemed foreign supply. Hence put into the same category of zerorated supply.
Zero rate does not mean zero percentage.
It means zero rated means no tax applicable. Input also we will give you the refund. Output also you do not have to charge because there is a principle in our indirect tax that goods should be exported, services should be exported, taxes should not be exported. Hence zero rated supply.
Export the goods not the taxes.
Promote our country. If the cost is on the lower side, it will encourage our exports. You will earn more foreign currency.
Clear?
More differences we will see later.
Today's just the brief understanding.
Who deposits GST to the government?
Simple. You have the concept. You this you might be knowing very well. Forward charge mechanism versus reverse charge mechanism.
There is a supplier.
There is a recipient.
There is a supplier.
There is a recipient.
Supplier charges let's say sells goods for rupees 1,000.
Collects 180 GST.
and pays 180 to the government.
This is forward charge mechanism.
Simple direct forward charge. Supplier charges and pays to the government.
But when I compare this with forward charge mechanism, what is happening here? Goods are sold of value what?
1,000 and 180. Recipient will pay 1,000 to the supplier and deposit 180 to the government under reverse charge mechanism. Under reverse charge mechanism. Now sometimes people ask this query or while revising you might have this query that sir invoice will be of 1,000 or 1,180.
It will be of 1180 and RCM disclosure will be given. RCM disclosure will be given in the invoice. Ultimately 1,000 payment will happen and 180 to the government.
Sir, why RCM? What was the need to introduce the reverse charge mechanism?
See, there are a lot of reasons. The primary reason is to increase the tax base. Sometimes the supplier is a small person. So it is not convenient for the supplier to get registered and pay GST is a small person maybe is a small agriculturist or an unregistered person. So at that time it is very convenient for the government to ask the recipient to pay the GST under RCM and tax base is also increased due to this where the tax revenue could have been lost instead because of the RCM the recipient is asked to pay the GST.
There are this is basically a broader macrolevel decisions that are taken where the RCM is made applicable. We will be covering a separate list just for general understanding I'm telling you this.
Now comes our today's last concept of GST then two legal points and the class will be done. Don't worry. What is the difference between the registered person versus taxable person? This is section 2 clause 94 and this is section 2 clause 107.
What is the difference between registered person and a taxable person?
Now primarily if you see the words are self-explanatory registered means I have GST a registered person I have the GST registered registration is done what is the meaning of a taxable person taxable person is something which is wider than registered person for obvious reasons taxable word is wider word. It includes two things. It includes a registered person but it also includes a person who is liable to register but has not taken registration.
If I'm liable to be registered and I have not taken registration, I'm still a taxable person. Government is going to demand GST from me. Now I'm going to link this very beautifully. Please pay attention.
If I link this closely with the charging section, chapter number two, section number nine, there the word used is taxable person.
There the word used is taxable person.
I will take you to a real life case study. What happened? There was a panipuri.
There was a panipuri selling panipuri.
So he was a panipuri seller in Karnataka. He's saying I sold panipuri.
Why did I receive this GST notice? This panipuri baya received a GST notice because his UPR receipts were crossing rupees 40 lakhs.
Sir 40 lakh it is a limit that I will be covering in chapter number eight. 10 lakh 20 lakh 40 lakhs are the limit. His UPR receipts were exceeding 40 lakh but he was not registered.
He was served a notice.
So can this panipuri take a stand that no I am not registered I will not be paying the GST? No Mr. You may not be registered but you are still a taxable person and ultimately the charging section I will take you in chapter number two. I will focus on this point that taxable person word is used.
Hence you are supposed to pay the GST to the government and see how beautifully the law is made. When we cover chapter number seven ITC ITC is a benefit to the person. There the word used is a registered person.
So tax payment taxable person you want ITC be a registered person everywhere you won't need the analysis people don't even focus on these small terms but sir we will focus we will try to get the maximum clarity from each and every word we can use we will try that once you are done with this course even if you are asked to interpret new things in law you are able to do it confidently Sir did this happen really? Yes. I will show you the real life GST notice that came.
See this was the notice to appear for the summons.
Notice to the panipuri vendor based on the reports received from razor pay and phone pay. You have received UPI payment for the outward supply of the goods services in these three years. dismay in which basically the 23 24 year the payment received was 40 lakh exceeding and whereas the further analysis shows that this was with respect to Tamil Nadu you have not registered under the provisions of the Tamil Nadu GST act as read with the relevant CGST act so he was called in the summons so whatever we are covering things are happening practically just be more aware be consciously more aware Till this point is it clear?
Till this point is it absolutely clear everyone.
Okay. Very clear. Very good.
Let's proceed now. It is done. I will just need five minutes.
basic law reading you need to understand what is the meaning of notwithstanding and what is the meaning of subject to although we will not be doing a lot of legal analysis per se some parts I will be doing ICI doesn't expect you to do but we will be doing notwithstanding means ignoring so for example I'm writing this I will keep using social media notwithstanding my upcoming CA final exams means your former is more superior than the latter this will be superior than the second part.
So this becomes substandard. This becomes superior.
If there is an inconsistency in law, the first part will prevail over the second part.
So is this correct? As a student, this is not correct for you. This is my humble request. Avoid social media till exams.
Social media is not what it used to be.
Lot of negativity, lot of distraction, lot of simulation of mind unnecessary.
It will try to make the problems which are not ours but still it will try to impose on us. Please stay away from it for your concentration and study.
Okay. And what do you mean by subject to? Subject to means the second part becomes the ultimate condition. For example, I will attend BBV felicitation subject to me clearing CA final and getting 70 plus in IDT.
So second part becomes superior. First part becomes substandard.
So second is the condition subject to which first will apply. So for attending our BB felicitation which you will love it, we will you will genuinely enjoy.
First you have to clear C and you have to get 70 plus in my subject.
Clear. Then this is a general understanding notwithstanding and subject to. Then whenever you see any definitions again there are two types of definitions. One is a exhaustive definition and one is an inclusive definition. For a simple example I will take CA faculty means teaching. What does it mean that I have restricted it?
Exhaustive and restrictive.
exhaustive and restrictive and nothing else that CA faculty only means teaching. I'm only going to teach you. No, CA faculty includes teaching. My role as a faculty is not only teaching, it includes teaching. So this is more of a clarificatory manner. It is not restricting the scope. It is just clarifying it. Plus it includes sometimes motivating you, sometimes guiding you, sometimes have a little fun with you, sometimes maybe if if required I will scold you. I I do have that right over you, right? I consider now to be a part of your family. So sometimes I will scold you where I I feel that okay you are not performing well. So as I I will take that right. Right? I will assume that I have that right and sometimes I will scold you.
So in our class my role will be includes teaching not means teaching.
So every definition that you see for example section number two I will take you to let's say section number two CGST and if you find the definitions everywhere you will see means means means or maybe some definition may include includes next time pay attention maybe in paper it may not require but legally small words will stop completely change our litigation case.
Subsection versus clause. Lot of times we use it interchangeably. Absolutely wrong. There are two approaches to understand what is a subsection and what is a clause. Subsection deals. First approach I will tell you. Subsection means it is dealing with an independent topic.
It is dealing with an independent topic.
Whereas clause is just talking about extension of the main topic.
For example, section number two are the definition. All the below are clauses because all are the definitions itself.
Second approach I will give you is the mechanical approach. If you find a full stop at the end of the first part and then subsection two, if you find it here starting with the capital letter, it is a subsection.
If it is a semicolon and the next one is starting with a small character, it is a clause. It is a mechanical approach. I will take you through an example. This was my section number two definition. If you see at the end here, there is a semicolon and two is starting. A is a small not a capital A. It means these are the clauses and by logical analysis these are the clauses of the definition itself. But if I see section number seven supply see two is starting with N capital ending with a full stop three again it will be a capital. These are the subsections dealing with individual topics with respect to supply for food stop also matter but I'm not going in that much detail won't be required everywhere anywhere in our course but certain things I did cover from the legal analysis.
This was all for today.
This was all for today.
We invested around 2 hour 12 minutes.
From tomorrow it will go at least half an hour more. Approx 2 45 minutes to 3 hours we will take 5 to 8. I sincerely sincerely hope it was useful. You understood the concepts well and it was a proper comfortable class for you. So tomorrow we'll be starting with introduction concepts and supply chapter as well. We will do both in interlinking manner.
I have attached the Google drive link.
The link is there in your application in the about section. Okay, in the about section there is the Google drive link.
You can access the notes till the point you do not get the books.
Okay. And I promise from my side the same energy, the same clarity we will give you for the entire patch.
Just do your best and make me proud. And one small request because not a lot of English options are available in the market. Just let your friends know. I will be uploading this as a demo on the YouTube as well. Just let your friends know and then they can take a call whether they are comfortable with the teaching or not. I would like to see our batch size also increase.
Okay. Thank you. Thank you everyone. So have a good day. Good evening. Not a good day. Good evening. Revise the concepts tomorrow. I will see you at 5:00 p.m. Yes. Yes, I will upload this on the YouTube as well in the application itself. Application also and on the YouTube also.
Yes, Arvin I have uploaded.
Thank you Eva.
Really enjoyed the session from my side also. Thank you. Maintain the same kind of discipline. We are meeting tomorrow at 5:00 p.m. Bye-bye. Take care.
Bye-bye.
Keep the revision on. Scribble things down. Study properly.
Thank you, Hersi Rajit. Bye-bye.
Yes. Go to me. Bye-bye.
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