GST ON LEGAL SERVICES
Contents
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Meaning of Legal Service |
Explanation to Entry 2 of N No. 13/2017 - Central Tax (Rate) |
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Clasification and SAC of Legal services |
NA |
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GST Rate on Legal services = 18% |
Entry 20 of N No. 11/2017 - Central Tax (Rate) |
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Exemption on Legal Service [Heading 9982] |
Entry 45 of N No. 12/2017 - Central Tax (Rate) |
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Reverse charge on legal services |
Entry 2 of N No. 13/2017 - Central Tax (Rate) |
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Summary of applicability of GST on legal service |
NA |
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Exempted Legal service |
NA |
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Legal service taxable under RCM @ 18% |
NA |
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Legal service taxable under forward charge @ 18% |
NA |
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Misc Questions |
NA |
1.1 Meaning of Legal Service
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Explanation to Entry 2 of Notification No. 13/2017 - Central Tax (Rate) dated 28-06-2017 “legal service” means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority] |
1.2 Clasification and SAC of Legal services
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SAC |
Nature of services |
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Legal and accounting services |
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99821 |
Legal Services |
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998211 |
Legal advisory and representation services concerning criminal law |
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998212 |
Legal advisory and representation services concerning other fields of law |
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998213 |
Legal documentation and certification services concerning patents, copyrights and other intellectual property rights |
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998214 |
Legal documentation and certification services concerning other documents |
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998215 |
Arbitration and conciliation services |
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998216 |
Other legal services nowhere else classified |
1.3 GST Rate on Legal services = 18%
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Entry 20 of Notification No. 11/2017 - Central Tax (Rate) dated 28-06-2017 |
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GST rate on Legal and accounting services = 18% |
1.4 Exemption on Legal Service [Heading 9982]
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Entry 45 of Notification No. 12/2017 - Central Tax (Rate) dated 28-06-2017 |
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Cl |
Legal Services provided by- |
Legal service to (Recipient) |
Rate |
Condition |
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(b) |
(i) a partnership firm of advocates or (ii) an individual advocate other than a senior advocate, to- |
(i) an advocate or partnership firm of advocates providing legal services; (ii) any person other than a business entity; or (iii) a business entity with an aggregate turnover up to [1][such amount in the preceding FY as makes it eligible for exemption from registration under the CGST Act, 2017]; [2][(iv) the CG/ SG/UT, local authority, Governmental Authority or Government Entity.] |
Nil |
Nil |
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(c) |
a senior advocate -
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(i) any person other than a business entity; or (ii) a business entity with an aggregate turnover up to [3][such amount in the preceding FY as makes it eligible for exemption from registration under the CGST Tax Act, 2017]. [4][(iii) the CG/ SG/UT, local authority, Governmental Authority or Government Entity.] |
Nil |
Nil |
1.5 Reverse charge on legal services
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Entry 2 of Notification No. 13/2017 - Central Tax (Rate) dated 28-06-2017 |
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Category of Supply of Services |
Supplier |
Recipient of Service |
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Legal Services provided directly or indirectly by |
(i) an individual advocate (ii) a senior advocate or (iii) firm of advocates. |
Any business entity located in the taxable territory
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Meaning of Business entity the business entity located in the taxable territory who is litigant, applicant or petitioner, as the case may be, shall be treated as the person who receives the legal services for the purpose of this notification. |
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1.6 Summary of applicability of GST on legal service
1.6.1 Exempted Legal service
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Legal service shall be exempt if provided by (a) an individual advocate or a partnership firm of advocates to an advocate or partnership firm of advocates (b) any advocates to following person (i) any person other than a business entity (ii) business entity with an aggregate turnover <= Rs.20 or 10 lacs (iii) the CG/ SG/UT, local authority, Governmental Authority or Government Entity |
1.6.2 Legal service taxable under RCM @ 18%
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Legal service shall be taxable under RCM only if it is provided by any advocate to business entity with an aggregate turnover >= Rs.20 or 10 lacs |
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In such case, GST shall be paid by business entity. |
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1.6.3 Legal service taxable under forward charge @ 18%
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Legal service shall be taxable under forward charge if it is provided by any person other than any advocate to any person |
1.7 Misc Questions
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1.6.2 Legal service taxable under RCM @ 18%
Question-1 [ICAI-I-M18-O-9b(ii)-1.5] [ICAI-I-SM-Ch3-5]
Legal Fees is received by Sushrut, an advocate, from M/s. Tatva Trading Company having turnover of Rs.50 lakh in preceding financial year Who is the person liable to pay tax in this case?
Answer
GST on legal services supplied by a senior advocate [Mr. Sushrut] to any business entity [M/s. Tatva Trading Company] located in the taxable territory is payable on reverse charge basis.
Therefore, in the given case, person liable to pay GST is the recipient of services, i.e., M/s. Tatva Trading Company.
1.7 Misc Questions
Question-1 [ICMAI-F-D18-4b-4]
In the light of the provisions of GST law as it stands w.e.f. 01.07.2017, briefly explain as to whether it is taxable service and who is the person responsible for paying GST in the following situations:
(i) Legal service provided by Senior Advocates to business entities.
(ii) Mere Contracts for representation service provided by the Senior Advocates to any business entity has been entered into through another advocate or firm of advocates. State the turnover criteria of the previous year which applies, including the one for special category States.
[1] Substituted for “twenty lakh rupees (ten lakh rupees in case of a special category state) in the preceding financial year” by Notification No. 21/2019-Central Tax (Rate) dt. 30-09-2019 wef 01-10-2019.
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