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Legal services of advocates liable to GST under reverse charge

Avinash Jeevan Dsouza 
on 11 April 2018

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The government has clarified that there is no change in taxation of legal services in the GST era.

"There are points being raised about the applicability of GST on legal services provided by advocates - whether it is in forward charge or reverse charge. It is clarified that legal service has been defined to mean 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," a finance ministry statement said.

It referred to a notification issued under Central Tax Rate that states that services supplied 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.

The words "by way of legal services" are preceded and succeeded by comma, it said.

According to Advocate Shailesh Sheh, an expert on GST, "The legal services( including representational services)are taxable under GST regime but put under 'reverse charge' as recommended by GST Council. The liability to pay GST on such services is thus shifted to the business entity." The issue arose about the applicability of GST on legal services provided by advocates- whether it is in forward charge or reverse charge."

Referring to the definition of ' 'legal services' that includes 'representational services' and Central Government Notification, the Government has clarified that legal services which includes representational services provided by advocates, that is, an individual advocate including a senior advocate and a firm of advocates are liable for payment under reverse charge by the business entity. It is emphasized that there is no change made in taxation of legal services in the GST era.


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