What is a Legal Service under GST?
"Legal service" means any service provided about advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority
What is Reverse Charge in Legal Service?
Services by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity.
“Business entity” means any person ordinarily carrying out any activity relating to industry, commerce or any other business, or profession
Thus, service by Individual Advocate, Senior Advocate or Firm of Advocates to a Business Entity is subject to reverse charge mechanism
Which Legal Services are Exempt?
Services by Individual Advocate and Firm of Advocates
Services provided by an individual advocate or a partnership firm of advocates to a business entity with an aggregate turnover up to Rs. 20 lakhs in preceeding year (Rs. 10 lakhs for businesses in the northeastern states and hill states).
Services provided by an indivdual advocate or a partnership firm of advocates to an individual for non-business purposes.
Services provided by an arbitrator or a mediator.
Services by Senior Advocates
any person other than a business entity; or
a business entity with an aggregate turnover up to twenty lakh rupees (ten lakh rupees in the case of special category states) in the preceding financial year.
Thus, service by Senior Advocates to Advocates or Firm of Advocates are taxable under GST.
Senior Advocate is an advocate may, with his consent, be designated as senior advocate if the Supreme Court or a High Court is of opinion that by virtue of his ability, [standing at the Bar or special knowledge or experience in law] he is deserving of such distinction
Place of Supply for Legal Services?
Legal services falls under General Rule of place of supply. The rule provides that the place of supply of services is the location of the person receiving the services. However if recipient of service is not available in the ordinary course of business , place of supply is the location of the supplier of services.
In case of immovable property , place of supply for legal service will be location of immovable property
GST on Export of Legal Services?
Under the Goods and Services Tax (GST) regime, exports of services , including legal services, are regarded as zero-rated supplies in India. This suggests that the export of legal services is exempt from GST. Legal services delivered to clients outside of India are considered to be exported. These exports are eligible for zero-rated taxation under the GST regulations, implying no tax rate on these services.
GST on Import of Legal Services or Service by Foreign Advocates?
Import of legal services are subject to the reverse charge mechanism under India's Goods and Services Tax (GST) regime. Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient.
Also foreign advocate services are obtained by Indian Lawyers or Law Firms. This services of foreign advocates cannot fall under GST Exemption as advocates are specifically defined under the law which includes on only those advocates that are on roll of bar council of India
Legal Advice by Chartered Accountants or any other professionals will attract GST RCM or GST Exemptio?
No as the services by advocates are only subject to RCM or Exemption under GST
To read about more about reverse charge servies click here
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