{"id":9797,"date":"2020-06-01T13:45:53","date_gmt":"2020-06-01T08:15:53","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=9797"},"modified":"2024-06-18T10:44:36","modified_gmt":"2024-06-18T05:14:36","slug":"gst-on-legal-services-in-india","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/","title":{"rendered":"GST on Legal Services in India: Taxability of Legal Services under GST"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Before\naddressing the <strong><em>applicability of GST on legal services in India<\/em><\/strong>, let&#8217;s begin\nwith the basic understanding of GST for a better perspective towards the whole\nconcept.<\/p>\n\n\n\n<p>Goods and service tax is a <strong><em>comprehensive, multi-stage, value-added indirect tax<\/em><\/strong> imposed on the supply of taxable goods and services. The purpose of the presentation of goods and service tax into the Indian economy was to <strong><em>supersede multiple levies<\/em><\/strong> and act as a <strong><em>substitute for indirect taxes with a unified tax<\/em><\/strong>. After the goods and service tax got implemented and came into operations, it has abolished the cascading effect on tax. <\/p>\n\n\n\n<p>In the Goods and Service Tax regime, <strong><em>legal services<\/em><\/strong> refer to any service provided with respect to <strong><em>consultancy<\/em><\/strong>, <strong><em>advice<\/em><\/strong> as well as <strong><em>assistance in any category of law<\/em><\/strong>, in any way comprises <strong><em>representational services<\/em><\/strong> prior to any tribunal, court or authority. The impact of GST is not limited to the business owners and regular taxpayers, but the <strong><em>impact of GST on legal services in India<\/em><\/strong> and the entire legal community is visible, covering the broader legal aspects. <\/p>\n\n\n\n<p>There was an assumption regarding the legal community that legal firms and lawyers were not part of the GST framework. However, now things are unclouded that <em><strong>Central Goods and Services Act<\/strong><\/em> encompasses <strong><em>advocates and services<\/em><\/strong> rendered by <strong><em>law firms<\/em><\/strong>, <strong><em>legal advisors<\/em><\/strong> along with <strong><em>services that advocates provide.<\/em><\/strong> <\/p>\n\n\n\n<p>Yes, you got it right. The goods and service tax is leviable on <strong><em>legal services as well as accounting services<\/em><\/strong>. The <strong><em>GST rate applicable is 18%.<\/em><\/strong> In the <strong><em>Pre-GST period<\/em><\/strong>, the <strong><em>statutory tax rate<\/em><\/strong> for most of the goods was <strong><em>26.5%.<\/em><\/strong> After the implementation of GST, the indirect taxation system has witnessed many changes. Given below is the diagrammatic explanation of legal services. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"494\" height=\"330\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image.png\" alt=\"GST on Legal Services\" class=\"wp-image-9798\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image.png 494w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-300x200.png 300w\" sizes=\"(max-width: 494px) 100vw, 494px\" \/><\/figure><\/div>\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/#GST_on_Legal_Services_and_Lawyers_in_India_Applicability_Part\" >GST on Legal Services and\nLawyers in India: Applicability Part<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/#Classification_of_GST_on_Legal_Services_in_India\" >Classification of GST on Legal\nServices in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/#Fully_Exempted_Services\" >Fully Exempted Services<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/#Services_Chargeable_under_Normal_Charge\" >Services Chargeable under\nNormal Charge<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/#Services_Chargeable_under_Reverse_Charge_Mechanism\" >Services Chargeable under\nReverse Charge Mechanism<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/#GST_Registration_for_Law_Firms_and_Lawyers\" >GST Registration for Law Firms\nand Lawyers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/#Legal_Requirements_to_Acquire_GST_Registration_to_pay_GST_on_Legal_Services_in_India\" >Legal Requirements to Acquire\nGST Registration to pay GST on Legal Services in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/#Reverse_Charge_on_the_Recipient_of_Service\" >Reverse Charge on the Recipient\nof Service<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/gst-on-legal-services-in-india\/#Bottom_Line\" >Bottom Line<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GST_on_Legal_Services_and_Lawyers_in_India_Applicability_Part\"><\/span>GST on Legal Services and\nLawyers in India: Applicability Part <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>GST on legal\nservices and advocates are chargeable under various prescribed conditions. The\nefficient implementation of goods and service tax on the 1st of July, 2017 has\nserved the purpose of replacing the service tax system and different forms of\nindirect taxes. However, the order of legal services taxation remains the same\nas it was earlier. There is no applicability of reverse charge or forward\ncharge for law firms as well as lawyers. As per the following conditions, <strong><em>GST\non legal services and advocates<\/em><\/strong> would get charged.<\/p>\n\n\n\n<ul>\n<li>GST is chargeable on the <strong><em>legal services<\/em><\/strong> that a <strong><em>senior advocate<\/em><\/strong> would provide to a legal firm or some other individual advocate.<\/li>\n\n\n\n<li>GST is chargeable on the legal services rendered by any advocate practicing on an individual basis or senior advocates or a firm of advocates to a business corporation with a <strong><em>yearly turnover<\/em><\/strong>&nbsp;up to<strong><em> Rs&nbsp;20 lakhs<\/em><\/strong>.<\/li>\n<\/ul>\n\n\n\n<p><em>The <strong>enactment\nof CGST 2017<\/strong>, along with goods and service tax legislation, has been consolidating\nvarious levies into one single unified tax.<\/em><\/p>\n\n\n\n<p><strong><em>Article\n279A of the Indian constitution<\/em><\/strong><em>\nstates that the rate of goods and service tax on legal fees in response to\nlegal services coupled with the exemptions of the earlier tax regime got\nsettled by the Goods and Service Tax Council.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Classification_of_GST_on_Legal_Services_in_India\"><\/span>Classification of GST on Legal\nServices in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"493\" height=\"372\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-1.png\" alt=\"Classification of GST on Legal Services\" class=\"wp-image-9799\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-1.png 493w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-1-300x226.png 300w\" sizes=\"(max-width: 493px) 100vw, 493px\" \/><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Fully_Exempted_Services\"><\/span>Fully Exempted Services<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>As per the Notification No.9, Integrated\nTax Rate dated 28th of June, 2017; the following services got exempted- <\/strong><\/p>\n\n\n\n<ul>\n<li>Legal services provided by a partnership firm\nconsisting of advocates or an individual lawyer advocating any individual\nalongside businesses.<\/li>\n\n\n\n<li>Legal services provided by a partnership firm\nhaving advocates or an individual lawyer advocating senior advocates,\nindividual advocates, or a firm of advocates.<\/li>\n\n\n\n<li>Legal services rendered by a partnership firm\nhaving advocates or an individual lawyer advocating a business institution\nhaving an aggregate turnover of <strong><em>not less than Rs 20 lakh and Rs 10 lakh<\/em><\/strong>\nin various <strong><em>hill states<\/em><\/strong> or <strong><em>states that belong to the special category<\/em><\/strong>\nin the previous financial year.<\/li>\n\n\n\n<li>Legal services that a senior advocate provides to\na business establishment having an annual turnover <strong><em>not<\/em><\/strong> <strong><em>exceeding Rs 20 lakhs<\/em><\/strong> and\nin case of special category states or hill <strong><em>states not exceeding Rs 10 lakh<\/em><\/strong> in\nthe last year of financing.<\/li>\n\n\n\n<li>Legal services rendered by a senior advocate to\nany individual person besides a business entity.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Services_Chargeable_under_Normal_Charge\"><\/span>Services Chargeable under\nNormal Charge<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Under the standard charge, the taxpaying\nliability is entirely on the firm of advocates or the advocate.<\/li>\n\n\n\n<li>Services granted by an individual advocate or a\npartnership firm of advocates to a business entity with the turnover exceeding\nRs <strong><em>20\nlakhs or Rs 10 lakhs<\/em><\/strong> outside the taxable territory is neither a part of\nreverse charge mechanism or nor under the exemption, the following points get\nheeded-<\/li>\n<\/ul>\n\n\n\n<p>According to <strong><em>Section\n7 of IGST Act, 2017,<\/em><\/strong> this comes under the ambit of inter-state service,\nand tax must get paid after getting the registration. As the export of service\nopen to qualifying conditions, this taxable service can be eligible. This is\nfor those entities which went through the registration process outside the\ngeographical boundaries of India. <\/p>\n\n\n\n<p>As mentioned in <strong><em>Section 2(6) of the IGST Act,<\/em><\/strong> The following conditions must get fulfilled in order to qualify as export of services- <\/p>\n\n\n\n<ul>\n<li><em>The supplier needs to be in India <\/em><\/li>\n\n\n\n<li><em>The recipient must be outside the boundaries of India<\/em><\/li>\n\n\n\n<li><em>Place of supply should be outside India <\/em><\/li>\n\n\n\n<li><em>Recipient and supplier are not a distinct person<\/em><\/li>\n\n\n\n<li><em>Payment should get received in convertible foreign exchange<\/em><\/li>\n\n\n\n<li>Registration in Case of Export of Services <\/li>\n<\/ul>\n\n\n\n<p>If a person\ninvolved in interstate services having <strong><em>a turnover not more than Rs 20 lakhs or Rs\n10 lakhs within a financial year,<\/em><\/strong> then there is no requirement to\nobtain registration. This exemption is needless because of the following\nreasons- <\/p>\n\n\n\n<ul>\n<li>Since only a person who is registered can claim a refund, exporters of services can&#8217;t even go on claiming a refund as per <strong><em>Section 16 of the IGST Act.<\/em><\/strong> <\/li>\n\n\n\n<li> In this exemption, a turnover limit is granted. <\/li>\n<\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/job-work-under-gst\/\">\nA Complete Outlook on Job Work under GST Regime\n<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Services_Chargeable_under_Reverse_Charge_Mechanism\"><\/span>Services Chargeable under\nReverse Charge Mechanism <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Services that an individual advocate (Comprising\na legal firm or a senior advocate rendering legal services, either in a direct\nway or an indirect way) grants to a business entity settled in the taxable\nterritory.<\/li>\n\n\n\n<li>Under RCM, the entire responsibility to pay tax\nlies on the shoulder of the recipient of the services and not on the supplier.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GST_Registration_for_Law_Firms_and_Lawyers\"><\/span>GST Registration for Law Firms\nand Lawyers <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>As per the GST law, an individual involved in the inter-state taxable supply of services should get <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>GST registration<\/strong><\/a>.<\/li>\n\n\n\n<li>There is no significant requirement for GST registration for those persons who are engrossed in making taxable supplies. This is a case of applicability of RCM, and thus, the recipient of goods and services will be liable to pay the tax. <\/li>\n\n\n\n<li>GST on RCM won&#8217;t be applicable in the case of recipient sited abroad. After acquiring GST registration for lawyers in India, there will be a liability concerning the release of GST, determining the eligibility for the benefits of exports, which would then come under the LLP or the concerned lawyer or a law firm as well.<\/li>\n\n\n\n<li>Supplies made by the unregistered law firms or lawyers will be chargeable to GST. These supplies are inter-state supplies.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Legal_Requirements_to_Acquire_GST_Registration_to_pay_GST_on_Legal_Services_in_India\"><\/span>Legal Requirements to Acquire\nGST Registration to pay GST on Legal Services in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>Section 22 of the CGST Act- Obtaining GST\nregistration is mandatory for a person who is involved in <strong><em>inter-state services supplies<\/em><\/strong>.\n<\/li>\n\n\n\n<li>GST registration is mandatory for a person\ninvolved in the <strong><em>supply of services<\/em><\/strong> with a <strong><em>turnover of more than Rs 20 lakhs<\/em><\/strong>.-\nSection 22 of CGST Act <\/li>\n\n\n\n<li>As per the notification no. (5-CT) dated\n19-06-2017, persons occupied in <strong><em>supplying inter-state services <\/em><\/strong>are <strong><em>exempted\nfrom acquiring GST registration<\/em><\/strong> wherein the entire tax would get paid\nunder reverse charge mechanism. <\/li>\n\n\n\n<li>There is no major requirement to get GST\nregistration for any person involved solely in supplying services entirely\nexempt from tax.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reverse_Charge_on_the_Recipient_of_Service\"><\/span>Reverse Charge on the Recipient\nof Service <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is the liability of a business entity, which is the recipient of legal service, to pay tax under RCM. In the shadow of <a href=\"https:\/\/corpbiz.io\/learning\/analysis-of-reverse-charge-mechanism-under-gst\/\"><strong>reverse charge mechanism under GST<\/strong><\/a>, the liability to pay service tax is in cases where legal services received are from an <strong><em>Arbitral Tribunal, Individual Advocate, A firm of Advocates, and A Senior Advocate.<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Bottom_Line\"><\/span>Bottom Line <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The structure of GST on legal services in India is just like the service tax regime. Applicability of GST on legal services has passed through various changes from time to time. The latest provisions suggest that lawyers won&#8217;t be paying professional taxes anymore as everything has got clustered into a single unit. Talking about the current scenario, the applicability of goods and service tax is on law firms or advocate fees as well. At <a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong><\/a>, legal experts would guide you with respect to GST on legal services. We are India&#8217;s leading platform for legal solutions.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/gst-on-food-services-and-food-items\/\">GST on Food Services and Food Items: All that you need to Know\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Before addressing the applicability of GST on legal services in India, let&#8217;s begin with the basic understanding of GST for a better perspective towards the whole concept. Goods and service tax is a comprehensive, multi-stage, value-added indirect tax imposed on the supply of taxable goods and services. The purpose of the presentation of goods and [&hellip;]<\/p>\n","protected":false},"author":19,"featured_media":9822,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[615],"acf":{"service_id":"68"},"authorName":"Margesh Rai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2024\/03\/Margesh.png","authorDescription":"With 10+ years of creative writing experience and 500+ blogs and thought leadership articles to his credit, Margesh Rai has left a significant impact in the field of content marketing. A published author and poet, Margesh Rai has experience writing for 20+ segments, such as Legal, Fintech, SAAS, Dairy, Real Estate, Hospitality, Recruitment, Sustainability, etc.","postViews":15910,"readingTime":6,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/9797"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=9797"}],"version-history":[{"count":16,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/9797\/revisions"}],"predecessor-version":[{"id":64820,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/9797\/revisions\/64820"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/9822"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=9797"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=9797"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=9797"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}