0:00 Hello everyone, how are you all? In fun In today's class, you will learn about administration under GST Who administers GST? Central government as well as State government These people are administering GST, and they are also collecting its revenue It's simultaneous revenue Half is going to Central government, half is going to State government and both are administering it together You also know that you get a deduction of input tax from the output tax Right You get to claim input tax credit Claiming input tax credit means that the GST you collect on your sales
0:49 Out of that you can deduct the GST you have paid on your purchase and balance tax has to be paid to the government But you also know that GST has 3 main component. Majorly 3 components Otherwise, there is also the GST Compensation Cess There are 3 components of GST CGST SGST IGST Alright SGST/UTGST, that which is called SGST in the states is referred to as UTGST in the Union Territories So, there are 3 taxes CGST, SGST and IGST So which tax will be deducted from the tax on sales? Means, can the IGST collected on sales be reduced by all of these 3 taxes paid on purchase?
1:35 Or will any 1 or 2 of these be deducted? How does this adjustment happens? How do we utilize our purchase GST from sale GST? Right, so this is also something you'll be learning today Let's start The two components of GST, CGST and SGST, shall be administered by Center and State simultaneously CGST on intrastate supply shall be levied and collected by Center and SGST on such intrastate supply shall be levied and collected by State The power to levy, collect, and administer IGST shall rest with the Center See You have to understand like this The GST that is coming is coming on intra-state basis
2:27 Or applicable on interstate If it is for intrastate, then it will be CGST + SGST Alright So who is looking after its administration? Administered by Central government and State government In interstate IGST Administered by Central government Have you noted?
3:14 Well, it's not like that as when I start writing something Then you might be checking first that “what sir is writing”? If something valuable is written, we will note, otherwise, if it will be written meaningless, we won’t note If you think that way, then absolutely don’t think like that Whenever I start writing anything, then you also start writing without thinking too much Alright Even if you write something unnecessary, what will happen if you write an extra line or two in your copy? Right It won’t happen that sir will write unnecessary things, but even if it does, I say, take the risk Alright, if you write an extra line or two in your copy, what will go wrong? So whenever I start writing anything, you also keep noting those things Alright All these things are very helpful when you revise during exams
4:03 Input tax credit of CGST shall be used for payment of CGST and IGST Input tax credit which is for the purchase of CGST This will one and only be deducted from where, you know? CGST on purchases will be deducted Alright, where will the credit for the CGST on purchases be deducted from? It will be deducted from CGST or from IGST Means, credit of CGST will not be deducted from SGST If you have credit of SGST, meaning you have paid SGST on purchase So, from where it will be deducted? While SGST credit shall be used for payment of output liability of SGST and IGST SGST can be deducted from SGST and IGST
4:49 SGST cannot be used for payment of CGST and vice versa You cannot adjust SGST from CGST and vice versa Meaning, SGST cannot be paid from CGST and CGST cannot be paid from SGST Input tax credit of IGST shall be used for payment of IGST, CGST, and SGST If you have credit of IGST Alright, so if you paid IGST on the purchase, then You can pay IGST, CGST, SGST, all whatever you wish Alright Credit of, I'll explain this chart to you now
5:35 Credit of input tax from output IGST shall be as under Credit of input tax from output IGST You have output of IGST Alright You also have input tax, let's say CGST, SGST, IGST all are available Now, how will you deduct it if it is output IGST? So, first adjust the input IGST from it Alright, then adjust the input CGST And then, adjust the input SGST Alright, whenever I say SGST, if it’s for a Union territory, it will be UTGST So there’s no need to repeatedly say both terms with a slash Entire ITC of IGST should be fully exhausted before utilizing ITC of CGST or SGST
6:23 If you have all three IGST, CGST, SGST in your input tax Then, ITC of IGST will be fully utilized first before touching CGST and SGST Will touch I know I’ve said so much that it might not be sinking in mind Don’t worry, it will sink in when we go through practical examples Alright ITC of IGST should be fully utilized to pay IGST first Then CGST and SGST in any order of proportion If you have ITC of IGST available Alright, it’s ITC of IGST So, you will first use it to pay IGST, and then pay CGST, SGST as required
7:11 Having trouble, right? Let me explain with an example Example one Write this, we are learning ITC credit, of input tax credit Our question is, let’s assume output tax In output tax, I have IGST Of ₹50,000 Meaning, IGST of ₹50,000 is charged on sale Alright Alright, when do we need to make these adjustments? Basically, some people need to file returns monthly, while others need to file quarterly So, the entire output and input tax will either be for a quarter or for a month Depending upon which person you are, and when you need to settle and pay these
8:00 Alright So IGST output tax is ₹50,000 and you have input tax You have input tax for IGST, CGST, and SGST. Do you understand what that means? Output tax on IGST means we sold all the goods outside the state during this period This data we’re providing will either be for one month entire period Or it will be data for one quarter, as some people settle this quarterly because they need to file quarterly returns, while others need to file monthly returns, so they do this settlement monthly Alright I noticed that there is only IGST on my output Output tax is only IGST. Does that mean where do we sell all the goods? We sale out of state
8:46 and when I checked, my input tax is also IGST That means for the purchase, I have paid IGST, as well as CGST and SGST This mean which purchase do we make? We make purchase intrastate (within state) and from outside state (interstate) Is everyone understanding this? My sale is only and only interstate supply, because see, my output tax is one and only IGST While my purchase tax is IGST, CGST, SGST, that means I am buying intrastate as well as interstate Now how to adjust this I have IGST Let's do one thing Let's make CGST ₹2,000 and SGST ₹20,000, now it will be interesting Alright Now, let’s read the law to see how it gets adjusted If output tax is IGST, then how do we adjust it?
9:34 See What was written? Credit of input tax from output IGST If we need to offset or adjust output IGST, output tax is ₹50,000 We will deduct the input tax and pay the balance But which input tax will be subtracted? So we know that from IGST, all three taxes will be subtracted No worries, IGST, CGST, SGST, all three are decreasing Right So, the question is, that all three get decrease, then in which order it will decrease? In which order will it be adjusted? It says that, shall be as under, first decrease IGST Then decrease CGST, then decrease SGST Did you notice, we have to subtract from all three lines? We will first subtract IGST If the output is IGST, so we will first subtract the input IGST
10:21 IGST Then CGST, and then SGST. all three has to be subtracted in a line Otherwise, look, I had an IGST of ₹30,000 Since it gets subtracted from all three, we could have subtracted ₹30,000 We would have subtracted this ₹20,000 and finished the whole amount ₹50,000 But if you do that, it will be wrong because after IGST, you have to adjust CGST next Now, then you have to adjust SGST Right So, let’s see how we create chart for this We write "Output Tax" here Alright, in Output Tax, whatever taxes are there like IGST, CGST, SGST I don't have it, but I'm still creating it so that you know you will make the same chart every time and on this side, we write "Input Tax" and when we write "Input Tax" on this side, what do we write?
11:09 Okay, first fill in the Output Tax. Output Tax is only IGST of ₹50,000 This is all just nill, there is nothing Alright Now we will draw a line here and on this side, we write "IGST Input Tax" IGST CGST SGST What is the amount in this column? ₹30,000, ₹2,000, ₹20,000 Just keep in mind that we will create chart like this, only then will you understand the entire law I use this chart to help you visualize the picture From here it gets adjusted, from here it gets adjusted. It’s hard to remember which one goes where and when it gets adjusted? Alright So, see, the taxes written here get adjusted in the same order as they are listed Just keep that in mind
11:56 Alright We need to finish IGST first Finished it from here ₹30,000 is gone Then, CGST comes next in line, so now this will be finished first Right So, we will write ₹2,000 here How much is left now? ₹32,000 is adjusted and we need ₹18,000. So, will subtract SGST from here, ₹18,000 Right Now, look here, this liability has become nil. This is what we need to make everything These both CGST and SGST were nil this our output tax is also nil. It’s finished. So, what do I have left? Look, out of the ₹20,000 SGST, only ₹18,000 has been adjusted, meaning ₹2,000 is left So, we will write "ITC Carry Forward," which includes only SGST of ₹2,000
12:47 Did everyone understand? So, just keep this chart in mind. If you create a chart like this Then we visualize picture in our mind that it get adjusted in this order only First, we will finish this one, then this, then this Create another chart like this Let’s move on to the second question In this question, what I want to teach you is that your output tax includes all three The output tax includes all three IGST CGST SGST So, can anyone tell us where we sell goods? Where we sell goods? We are selling within state that's why applied CGST, SGST and IGST also we have applied, it means we are also selling goods outside the state
13:34 Alright If you talk about input tax, there's only IGST in the input tax This means where do we buy the goods from? We buy everything from outside We don't need to do anything. Create a simple chart as I taught you Alright Now write Output tax In output tax, I mentioned that you should write down the names of all three taxes IGST, CGST, and SGST Fill in the amounts underneath ₹20,000 ₹10,000 Alright On this side, your Input Tax will be listed Alright and under Input Tax, write IGST and next to it, the amount ₹25,000 Now there's nothing else
14:19 Look, the chart is complete. Can you create charts like this? Will you be able to arrange the Input Tax and Output Tax like this? If you do it this way, you'll never make a mistake, I guarantee it Alright I mentioned earlier that it gets adjusted in this order, meaning the one written at the top will be finished first Alright, so there's nothing below, Just need to finish this one Now, where will this ₹25,000 be adjusted? First, IGST gets adjusted from all three You know that and by all three taxes, it means that the entire adjustment is done using IGST Alright, CGST is adjusted with CGST and IGST, SGST is adjusted with SGST and IGST But everything is adjusted with IGST
15:05 So, with the ₹25,000, what will we do? We will adjust ₹20,000 against IGST Now, what's left? ₹5,000 Now, what's left? ₹5,000 .Where will this be adjusted from? From CGST first ? No Wasn't referring to this Let me show you what I was referring to It was referring, If you have ITC of IGST, so you will firstly pay IGST You will first pay IGST. If you have ITC of IGST, you will first pay IGST Then, CGST or SGST in any order or proportion After that, do anything CGST or SGST in any order, any proportion Meaning, you need to adjust one first and then the other later To adjust in any ratio you prefer as you like
15:54 You might be wondering, "What are you saying, sir? I can’t understand" Now you saying to adjust in any ratio Earlier, you mentioned that there is a specific order, first IGST, then CGST, then SGST Please When adjusting the input tax credit, then first IGST, then CGST, then SGST When adjusting IGST from here So, first, you needed to adjust IGST. For example, listen carefully, I am changing this question Let's say instead of ₹30,000, the input tax here is ₹35,000 Here, instead of ₹30,000, it could be ₹35,000 Alright So, we first adjust ₹30,000 here
16:41 Then balance The remaining ₹5,000 can be adjusted wherever you prefer ₹3000 here ₹2000 here or full ₹5000 here, nothing here Do not adjust anything here, adjust ₹5,000 here This thing was happening When you go through the bottom part, you won’t skip it First, you will write IGST, and then you have to bring in CGST Then, SGST will have to be brought in separately It is not that first IGST ₹30,000 was written here and then SGST ₹20,000 was written here This ₹20,000 couldn't have been brought here Now you're getting it; as you go down, you need to step down step by step Keep in mind that we will create a chart and step down carefully, like going down a staircase Okay, we won't jump or take leaps; that's the mindset we need to have When it's moving forward, look at this
17:26 Oh my God, how the sir is explaining it exactly like that is how we need to fix it in our minds When going down, we'll use the stairs; when moving forward, we can walk however we like Will everyone remember this? When we go down, we'll step down carefully, one step at a time, otherwise, we'll stumble and fall, sir said that When going down, take it step by step, or you'll end up stumbling When you are walking in front, keep jumping, what's the problem? Okay, yes, now it we will remembered sir. When moving forward, we’ll jump and skip around freely But first, we have IGST Even when moving forward, make sure to take the first step correctly Just then start jumping around, create chaos, jump around completely Okay, So what can we do? Here, we can When ₹5,000 is left, We take ₹2,500 from here and ₹2,500 from there
18:14 So, CGST will have to be paid ₹7,500 And SGST will also have to be paid ₹7,500 It is not necessary to do only this, And I am suggesting several alternatives for it Alternatives for adjusting it, ₹20,000 will have to be taken from here We will take ₹5,000 from here, And will not take anything from here And We will take ₹20,000 from here, we will not take anything from here and will take ₹5,000 from here And, anything can happen child We will take ₹20,000 from here We will take ₹1,000 from here, We will take ₹4,000 from here And, take whatever you want, I’m saying Why are you getting worried, brother? Take ₹3,000 from here and ₹2,000 from here Take it, however you like from there Child, all this doesn’t get remembered Which credit will go from where and what will go I die trying to explain this to the children, But they don’t pay attention That for output tax, what did Sir say about IGST, And for input tax, what did he mention?
19:01 I say, don't remember so much If you know how to make a chart, make the chart You will go down Just go down step by step, Otherwise, you will stumble and fall Okay And when you walk forward, When you walk forward Like it is called walking forward, When we are going from this side This is called we are walking forward This is what walking forward means When walking in front, Create a fuss Okay I’ll give you one more question Now you do it, then it will be fun, Otherwise, What fun will it be if I do it myself? And I have explained to you in the best way There is so much confusion that children end up doing it wrong
19:50 Alright Overall, the law is this That if you have to pay output IGST You have to pay the IGST of Output Then you will have to first adjust with IGST, Then with CGST and finally with SGST Okay If you have input IGST Then first use it to pay output IGST, And then pay CGST or SGST as you like You might still not be getting it, When I’m saying these lines But when I’m just presenting it through a chart, I’m confident that it will fit into your mind That’s why I made this chart and programmed it so that it fits into the child’s mind Fit this chart The law will not fit
20:36 Come on The output tax that is, And the input tax that is, I will explain everything to you, all three are there Of IGST Of CGST Of SGST You can make your own chart for it This is for ₹50,000 ₹20,000 And ₹20,000 Okay Input Tax IGST CGST SGST ₹60,000 ₹25,000 And ₹25,000
21:26 Okay Now do it I will give you two minutes First, you will do it and in case, You have got the right answer You will just right it in the comment box Okay And do not see my solutions, Unless you have done it on your own Alright Your time starts now Alright, I hope you have done it, If not, pause the video and continue doing it Until it is done Come Let’s see First, let’s write down our entire output tax here How do we write it, children? We will write, IGST Inside this, We will write ₹50,000 Then we will write, CGST Inside this, We will write ₹20,000
22:12 Then, SGST Inside this, We will write ₹20000, This is what we do Then we draw a line from here and divide it like this And here, We will write Input Tax Now, inside the Input Tax, We will write three taxes, IGST CGST SGST, Just this Once you learn to make this chart, child Then your work is done No need to worry at all Now tell me quickly How do we go down? How do we go down? Just step by step by using the stairs, Do not misbehave Do it in a straight line, First finish the IGST work, then CGST and then SGST Okay Now, when you jump, hop and walk in front, Then When moving in front, Do it with enjoyment and however you like Create a fuss and jump around But handle the first step carefully
22:58 Okay, even when moving in front, Handle the first step carefully So, out of ₹60,000, We will first adjust ₹50,000 from here Alright, it’s over IGST is completely finished, no need to pay it Now we have ₹10,000 remaining Now, brother Where should we adjust the ₹10,000 from? Adjust it from wherever you want brother, Adjust it from wherever you want Okay So, what we do Is We should have adjusted them equally, Both the liabilities seem to be equal We should have adjusted them equally, What is the tension? Just adjust it equally, my friend Okay We adjust ₹5,000 from here and ₹5,000 from there Okay, You might ask, "Sir, if we adjust something else, will it be wrong?" No, it won’t be wrong It’s fine; There’s no tension
23:44 Now CGST is ₹25,000 So, child, tell me where CGST is adjusted from Tell me where will it be adjusted from? Child, it will be adjusted from IGST and CGST Okay First CGST and then IGST Okay CGST will first be adjusted from CGST and then from IGST, and how does SGST work? First, it will be adjusted from SGST and then from IGST Actually, Each tax first settles its own tax, Keep this also in mind first For example, when we were adjusting IGST, We said to handle the first step carefully But it's not just about handling the first step First we will finish our taxes Whatever ITC there is, It will first be adjusted against its own tax Now, when we bring in CGST, We will know where we can adjust it See that CGST can be adjusted here and from here And from where can SGST be adjusted?
24:31 This number one will be from here, Number two will be from here Then, where will SGST be adjusted from? Number one will be from here, And number two will be from here But see, number two is not needed, As my IGST is completely settled So, all what we need to do is adjust CGST with CGST How much? ₹15,000 Why ₹15,000? Hey child, the liability was ₹20,000, And ₹5,000 has already been settled We need another ₹15,000 to settle the liability, And ₹10,000 is remaining What to do? Pay it off with SGST, Oh no, Baba CGST cannot be paid using SGST, CGST and SGST do not adjust against each other Okay So None of this will work here Now, where will SGST be adjusted? SGST will be adjusted from SGST and IGST is not needed So, we'll adjust ₹15,000 from here, And it's over
25:19 Alright, the output tax payable is nil, We don't need to pay any tax this month Alright How much is my carried forward amount? My carried forward amount is ₹10,000, ₹10,000 Credit ITC Carried Forward ITC Carried Forward, CGST And SGST ₹10,000 One more example, I think, would be good to do, Well Are you gaining expertise in this now? Child, you are studying basic concepts ITC is a very long chapter Okay, when I will teach ITC, Then you will do the actual question Alright, we'll gain expertise then For now, we're just lightly covering the basics, Just giving a little idea, like this is how adjustments are made
26:04 Okay When we get to the chapter on ITC adjustment, We'll find out, "No, it doesn't even get ITC" Well, there is a different way of ITC for capital goods If your credit is on the input, Then for that A different approach My output services or output goods How they are, what they are, There are many things, There are a lot many thing At a general base level, this is the method for adjustment Let's create one more example no. 4 for you
27:04 Let's go ahead First, See the question And let me know if I have framed the question incorrectly Or is it correct, brother, Any figure can be anything First, you need to judge the question, Because if sir makes anything, then it will be a mess There should be accuracy in the question as well Practically, the question should be perfect You cannot do any calculation by just writing any figure, Is this possible? Come, Let's see The output tax is ₹50,000, CGST and SGST are ₹20,000 each, It means that the tax, I collected on the sale That is collected ₹20,000 as CGST and ₹20,000 as SGST Input Tax The Input tax is
27:50 ₹60,000 IGST, Let us assume that the sale is interstate and IGST of ₹60,000 must have been collected But CGST and SGST are always equal Tell me one thing, When we sell goods, the amount of CGST will be equal to the amount of SGST It means that these two will always be equal on the output tax The amount of SGST will be equal to the amount of CGST charged on the sale Will the amount of SGST be equal to the amount of CGST on purchases as well? Yes Sir, that's correct, The amount of SGST will be equal to the amount of CGST If the purchase is made within the same state So, how can this be different during a particular month? I have a doubt You might be framing the question incorrectly That's Correct The question is 100% correct Raj Sir made it, So it can't be wrong So sir then
28:35 What’s the story,? Exlain how it is correct, Sir You are saying it should be equal, But then you are also saying it is correct Yes Child, Try to understand, If in this month If you have paid ₹10,000 CGST on a purchase, then it is guaranteed that you must have also paid 10,000 SGST I'm also saying it is guaranteed You must have paid ₹10,000 It is possible that the last year's ITC, last month's ITC It could be carried forward, And the GST amount might have been ₹15,000 That's why your credit shows ₹25,000 Is carry forward allowed? You are carrying forward in every question See, in this question the carry forward was CGST ₹10,000 and SGST ₹10,000 So ₹10,000, ₹10,000 has been carried forward Right! So next year's, both CGST and SGST will increase by ₹10,000, they will definitely increase This question was such that your equal credit remained Could it have been more or less? Yes, it could have
29:24 Hey, if you had adjusted the IGST more than CGST Suppose that happens Just look at it a little Couldn't we have done that, We adjusted ₹50,000 left from CGST here, And suppose we adjusted ₹10,000 here We adjust ₹10,000 here Alright So, And here we would not have adjusted ₹10,000 Here, then it would not be adjusted here Now, what do we do here? We adjust ₹10,000 from CGST out of this ₹25,000 And how much do we adjust here? We adjust ₹20,000 So, how much CGST is left as carry forward? ₹10,000 is adjusted from ₹25,000 CGST, So, ₹15,000 is left And this ₹20,000 is adjusted from ₹25,000, So ₹5,000 is left Now, this will be carried forward to the next year
30:11 Next month's, And added to the next month's Input tax credit So, one amount added is ₹15,000 and the other is ₹5,000 Tell me, does the figure change or not, as it did here? Yes, it changes Sir cannot be wrong Okay Meaning, The Input tax credit For a particular month, the GST you pay on purchases, That CGST and SGST will always be equal But Dear, For adjusting, the total credit you have for a particular month doesn't necessarily have to be equal Why? Because the credit of the previous month would have been carried forward as well So that's why, This figure changes "Yes sir understood" So It means, Sir, this figure can also be different
30:56 CGST and SGST in the output tax don’t necessarily have to be equal It is guaranteed to be equal, If there is a difference, Then the question is incorrect This difference cannot occur, Why? Because, for your sales, You will collect CGST and SGST equally in a particular month Previous month? Hey, The liability from the previous month isn't carried forward If there was any output tax left from the previous month, It would have been paid by you See, the output tax is becoming nil, so the work is getting done Otherwise, we would have paid that amount and settled it, finishing it off by paying in cash The balance has to be paid, Right! So, there is no output tax from the previous month Input tax is carried forward, And the output tax has to be paid So, the output tax will always be for the current period That’s why it will always be equal
31:41 Input tax can be different "Sir, You've shared a great insight", So, Come Now please do this question This will require your thinking Okay And if you manage to do it, Then you are truly an artist If any child solve this question correctly, I am giving a guarantee that he will definitely pass I know it I can tell how sharp someone's mind is, And what they can achieve in their life If your mind gets around this question, If you solve this question with the understanding as much as I have taught, So I guarantee it, Get it written right now Alright, That if you solve this question, you will pass, I'm ready to take that guarantee Even if you get it wrong, you'll still pass Because you'll learn from it
32:27 Right! But if you do this by yourself So, I’m ready to write down the guarantee of passing, Right now Provided that you've never studied GST before and haven't learned it from anyone else you're learning it for the first time from me You've attended as many classes as I've taught so far So if you still manage to answer this question, then you’re something else, really sharp! Alright, it's all about common sense. You can conquer anything in the world with common sense. Well, education is not as useful as common sense Okay Alright, first you’ll write down your answer, and only then will you see my solution The video should be paused until you've completed your answer Alright, you need to check yourself to see if you’re capable of passing. So, quickly give it a try!
33:18 Let's go ahead and solve this! You might be wondering what's so special about this, why did Sir say it like that? It is special because this question is based on common sense, my students
34:03 It’s not based on the law or GST law; I made this to test your common sense and your thinking skills This question is not in any book I created this to test you Take a look at the input tax IGST ₹60,000, CGST SGST ₹10,000 & ₹25,000, okay First, IGST will be adjusted with IGST., now, we're following this method. What is our way? First, we'll finish here, and then we'll proceed downward, step by step, okay First, we need to adjust ₹60,000 with ₹50,000; can't even think about it Initially, IGST will be cleared with IGST itself
34:50 Now, there’s ₹10,000 left Where should this ₹10,000 be adjusted? You can adjust it from anywhere, CGST or SGST Generally, we have adjust it eqaully Where should it be adjusted from? Tell me, students You might say, Sir, adjust it equally. Just like you adjusted equally before, you adjusted ₹5,000-₹5,000 Similarly, we can do the same here No We won't do that Since we can adjust it from anywhere, it’s up to me—we’ll adjust the ₹10,000 right here Sir, why, why, sir, why? Stop, and you'll find out I’ve completely cleared the ₹10,000 from here; the ₹60,000 is finished. Now it’s time for CGST Now, where will CGST be adjusted from? First, from CGST, here is only ₹10,000 Here, the 10,000 has been adjusted and cleared. This has also been exhausted IGST is done, and CGST is done
35:36 Now, let's look at SGST Where will it be adjusted from? We will first adjust it from SGST itself So, ₹20,000 has been adjusted from here Alright, ₹5,000 SGST is left All three are now nil Nil and my ITC carry forward, how much is it for SGST? ₹5,000 Say, is it making sense or not? Now I agree with your point Sir, why did you do it this way? You really confuse us! Let's adjust ₹5,000 here and ₹5,000 there, as you suggested
36:23 Sir, why not just do it this way? Adjust half and half So, ₹10,000 is adjusted from here for CGST, which is fine For SGST, ₹5,000 has already been adjusted, so we need ₹15,000 here So, what’s the answer? This one was already nil, it doesn’t make any difference From ₹20,000, subtract ₹15,000, which leaves ₹5,000, and this will also become nil So, here, if we had adjusted ₹5,000-₹5,000, I would have to pay output tax Means my tax would be payable CGST ₹5,000 and in this case, my ITC carry forward would be For SGST, out of ₹25,000, ₹15,000 has been used up, and the rest is finished
37:12 CGST ₹10,000 is completely over and the ₹60,000 was adjusted as follows: ₹50,000 in IGST, ₹5,000 in CGST, and ₹5,000 in SGST All of it is fully exhausted I have ₹10,000 SGST remaining Tell me one thing What does your mind say? That SGST of ₹5000 should be carried forward? Alright, should we either pay nothing or pay ₹5,000 in CGST first and carry forward ₹10,000 in SGST? How foolish it is You have taxes available for carry forward, and yet you are paying taxes Why should we pay taxes, when we have ₹5,000 available without paying any tax? Tell me one thing, if things are working fine without paying taxes, so, would you still pay taxes? What kind of wisdom is that? It means we don’t want to pay taxes, but your calculation is such that we end up having to pay taxes That’s why we shouldn’t do this; it’s all incorrect
37:58 Sir, this is what the law says to do, If the law said to hang yourself, would you do that? Try to understand what I’m trying to say The tax paper isn't just a paper; it represents the client The paper placed before you in an exam is a client He is saying, "You will be paid; just do my your work well" Tell me one thing, this same client came to you and came to me, I said that you do not have to pay any tax, ₹5,000 will be carried forward and the client came to you and you said, Pay ₹5,000 in tax, and ₹10,000 will be carried forward The day the client comes to know about this, after first consulting you and then me, he will throw you out Look, the meaning of tax is: Follow the law, but do the best job and the best planning possible
38:44 Alright, if you provide the client with the best benefit, then you are a successful professional The GST paper doesn’t want to know, whether you know to apply law or not It wants to know if you can apply the law in the best way possible Oh my God, sir! It means we don't need to just learn the law We need to be able to open and apply every page of the law accurately Yes He is a greatest lawyer, because everyone becomes a lawyer after studying law Who is the greatest lawyer? Who understands every page of the law and knows exactly when to refer to each page Here, the law is telling us to adjust IGST as we see fit So, we would apply our brain here, the law says to adjust it however we like We will adjust in a way that provides us with the maximum benefit
39:31 By applying the ₹10,000 credit here, we didn’t have to pay a single rupee in tax Have we done anything wrong? No, the law is saying to do it this way Now, do you understand what I was thinking? I figured that the credit for CGST is less Okay I have plenty of SGST credit. I thought, I don’t need to go down, but I’m looking at the next step ahead Tell me one thing: When you go down the stairs, you go step by step But can you see the stairs below? You’re not blind; you can see the steps below So, we know what the next step is, even though we’re not stepping down yet Look carefully but we know what the next step is So, we will step according to the next step, knowing that the next step is lower and deeper Alright, if the next step is uneven or difficult, we will step accordingly
40:19 That's what I’m explaining We’re not saying to jump down two steps at once. I’m not suggesting that We said, next step you know what it's like, then move accordingly We saw that there is very little credit in CGST but plenty of credit in SGST So, why would we adjust the SGST using the IGST We use the entire credit here, in CGST So, we won’t have to pay any tax for CGST We said that ₹10,000 will be adjusted from here, ₹10,000 more will be adjusted and the work will be over from here, we will not have to pay CGST and there’s no issue with SGST There’s a ₹20,000 tax, but we have ₹25,000 in credit, so we won’t have to pay that either See my cleverness! Okay So that means it has to be done in this way By doing this example, did I make you perfect in this calculation or made you an expert?
41:07 The answer is no Because ITC is a different chapter where you learn all these details The purpose of today’s lesson was to make you realize that while reading the tax laws That we don't have to learn the application of law Okay, just knowing the law won’t help us pass the tax exam If we know the best application of the law and apply it smartly Then we will win this battle and succeed in the examination paper Right, let's end today's class here. When we come in the next class, we will talk to you about something new
