GST on legal services provided by advocates under reverse charge basis, Finance Ministry
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GST on legal services provided by advocates under reverse charge basis, Finance Ministry

Bar & Bench

No change made in taxation of legal services in the GST era, Finance Ministry

The Ministry of Finance has clarified that the Goods and Service Tax on services provided by lawyers including Senior Advocates and law firms would be applicable on ‘reverse charge’ basis.

In a press release issued yesterday, the Ministry has stated that there is no change made in taxation of legal services in the GST era.

The press release states that legal service means 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.

It then goes on to clarify that legal services, which includes representational services, provided by advocates are under reverse charge.

The press release reads,

It is further clarified that notification No. 13/2017-Central Tax (Rate) dated 28.6.2017 (Serial No. 2) specifies, inter alia, the following service under reverse charge mechanism,-

“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. Therefore, the said words apply to an individual advocate including a senior advocate and a firm of advocates. Legal services provided by either of them are liable for payment of GST under reverse charge by the business entity. The words “by way of representational services before any court, tribunal or authority….” appear in conjunction with senior advocate without a comma and merely describe the nature and mode of representational services provided by a senior advocate to a business entity. It, therefore, follows that legal services, which includes representational services, provided by advocates are under reverse charge.

On July 12, the Delhi High Court had asked the Central government to clarify the exact position on applicability of GST to lawyers.

Read the full press release below.

Finance-Ministry-Press-Release.pdf
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