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Reverse charge on legal services

Niraj Kumar Sinha (Sr. Officer, SPSIL) (648 Points)

01 August 2017

Dear Sir,

We have received a bill of Rs. 3,000/- from our advocates.

Will we have to pay GST under RCM on this bill?

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8 Replies

CA Mayur Todmal (Practicing CA) (7645 Points)
Replied 01 August 2017

Yes.

Services provided or agreed to be provided by an individual advocate or firm of advocates by way of legal services, directly or indirectly to any business entity is under RCM

RAMESH D MODI (Proprietor) (4864 Points)
Replied 01 August 2017

may 5000\- exemption

Gaurav Agrawal (15 Points)
Replied 01 August 2017

5000/ day is exempted from reverse charge

CA Vamsi Krishna N (Finance & Accounts) (65 Points)
Replied 01 August 2017

Exemption of Rs.5000 is applicable only for sec.9(4) RCM whcih is purchases by Registered dealer from Unregistered dealer.

Here Legal services falls under 9(3) and no exemption is given.

1 Like

Neha Jain (Chartered Accountant) (1085 Points)
Replied 01 August 2017

If your all exps. on that day below 5000 from unregistered than no RCM

Neha Jain (Chartered Accountant) (1085 Points)
Replied 01 August 2017

Exemption of Rs.5000 is applicable only for sec.9(4) RCM whcih is purchases by Registered dealer from Unregistered dealer. Here Legal services falls under 9(3) and no exemption is given."

May be than

Chhatra Singh Dugar (1464 Points)
Replied 02 August 2017

In my opinion Legal Services are exempted from tax net u/s 9(3) this is not charging section. It is section 9(4) which levies tax on both goods & services.
If we read section 9(4) with notification 8/2027 central tax dated 28-6-2017 it covers both goods & services. So exemption of Rs 5000/- is applicable in both case. As recipient is registered one, he is required to deduct GST on RCM basis.

CA Vamsi Krishna N (Finance & Accounts) (65 Points)
Replied 02 August 2017

The question posted was about 5000 limit exemption but not exemption from registration.

Under Reverse charge notification Legal services are notified and once we avail those servics we have to discharge our liabilty irrespective of value and registration.

The Limit of 5000 is only for those Reverse charge cases where Register dealer make purchases from Unregistered dealer. Here it is irrlevant whether Advocate is registered or not and has got minimum 5000 limit or not.

In this case the exemption of 5000 is not applicable and thereby GST liability under RCM on Rs.3000 to be discharged.