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Applicability of RCM under GST on Legal Services

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Dilip Bhandarkar

Student

56 Points Posted on 18 January 2022

Dear all,

I would like to know your opinion on the following scenarios.

1) Assume 'X Co Ltd.' Which got incorporated in FY 2020-21, but did not have any operations (Aggregate Turnover was NIL) in that year, availed Legal services to the tune of Rs.10 lakhs in FY 2021-22. Does RCM apply on such a transaction?

My Opinion: Does not apply since PY Turnover did not exceed the threshold limit liable for registration.

2) Does exemption notification apply for inward supplies or applies only on outward supplies?

My opinion: Applies for all transactions having a 'Charge of GST' be it Forward Charge or Reverse Charge.

Please do let me knows if there are any case laws/circulars/notifications supporting your opinion. Thank you in advance.

Replies (2)

Quick Summary

This discussion explores the applicability of the Reverse Charge Mechanism (RCM) under GST for legal services. It questions whether RCM applies to a company with NIL turnover in the previous financial year but significant legal service expenditure in the current year. The thread also delves into whether exemption notifications for GST apply to inward supplies or solely outward supplies.