Service tax on services provided by lawyers/advocates
This query is : Resolved
06 January 2015
A lawyer/advocate is providing services to all categories of service receiver i.e. business as well as non-business entities having turnover less as well as more than 10 Lakh. Legal services as per Service Tax Rules is covered under reverse charge mechanism. Now my queries/doubts are:
Situation 1 : As long as lawyers/advocates gross receipts/turnover is below 10 Lakh, one is not required to register under service tax.
Situation 2 : When one is crossing or likely to be crossing the basic limit of 10 Lakh
Whether the service providing lawyer/advocate is required to obtain service tax registration in view of the fact that the category of service is covered under RCM and business entity is suppose to pay service tax?
If yes, then once obtaining such registration whether he/she is availed of basic exemption of 10 Lakh or he/she has to charge service tax on all previous bills as well?
Whether service tax is to be charged to all categories of clients (business and non-business entities) irrespective of their turnover criteria set in section or only to non-business entities?
Thanks
Situation 1 : As long as lawyers/advocates gross receipts/turnover is below 10 Lakh, one is not required to register under service tax.
Situation 2 : When one is crossing or likely to be crossing the basic limit of 10 Lakh
Whether the service providing lawyer/advocate is required to obtain service tax registration in view of the fact that the category of service is covered under RCM and business entity is suppose to pay service tax?
If yes, then once obtaining such registration whether he/she is availed of basic exemption of 10 Lakh or he/she has to charge service tax on all previous bills as well?
Whether service tax is to be charged to all categories of clients (business and non-business entities) irrespective of their turnover criteria set in section or only to non-business entities?
Thanks
CA R SEETHARAMAN
(Expert)
06 January 2015
Lawyers individual or firm is exempted from payment of service tax on legal services.
If they render services to business entities service tax is payable by the entities under RCM.
According to notification no 25/2012 dated 20/6/12,
If an individual advocate or partnership firm of advocates provides service to:-
i.Individual advocate
ii.Partnership firm of advocates
iii.Any person other than business entity
iv.A business entity with a turnover not more than 10 lacks in preceding financial year,
The service is exempt from levy of service tax.
What is business entity?
Any person (individual, firm, HUF, company etc) carrying out any activity relating to industry, commerce or business or profession.
That means utilization of legal service for personal purposes is exempt.
When to pay the tax and by whom?
If business entity that has turnover more than 10 lacks in preceding financial year receives legal service, business entity has to pay whole service tax under reverse charge mechanism.
If lawyer provides service other than legal service, it is taxable as per taxability of that service. Exemption is only for legal service.
If they render services to business entities service tax is payable by the entities under RCM.
According to notification no 25/2012 dated 20/6/12,
If an individual advocate or partnership firm of advocates provides service to:-
i.Individual advocate
ii.Partnership firm of advocates
iii.Any person other than business entity
iv.A business entity with a turnover not more than 10 lacks in preceding financial year,
The service is exempt from levy of service tax.
What is business entity?
Any person (individual, firm, HUF, company etc) carrying out any activity relating to industry, commerce or business or profession.
That means utilization of legal service for personal purposes is exempt.
When to pay the tax and by whom?
If business entity that has turnover more than 10 lacks in preceding financial year receives legal service, business entity has to pay whole service tax under reverse charge mechanism.
If lawyer provides service other than legal service, it is taxable as per taxability of that service. Exemption is only for legal service.
06 January 2015
What if an individual legal practitioner is crossing the basic limit of Rs.10 Lakh turnover?
Please answer point-wise as in my query. I have read the notification but I have questions as stated in my query.
Please answer point-wise as in my query. I have read the notification but I have questions as stated in my query.
CA R SEETHARAMAN
(Expert)
06 January 2015
If individual legal practitioner is crossing 10 lakh limit no service tax payable and no registration is required.
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