GST on Lawyers and Law Firms

 

The Goods and Services Taxation is a new form of indirect taxation which is applicable to all kinds of goods and services in India. There is a consensus in India that lawyers and law firms are not entitled to obtain GST registration under GST law for the legal services they provide in India. The tax bracket of GST starts from 5% and ends at 28% and also brings lawyers and law firms under the ambit of GST law in India.

Applicability of GST on lawyers and Law firms

GST is applicable to lawyers and law firms in which they are providing their legal services to a business or entity having turnover of more than 20 lakhs or more in a previous year. GST is also applicable to a senior advocate who is roving his services to another law firm or an advocate.

Since GST was introduced, there is no amendment yet in the law and therefore the same tax rates are applicable to legal services. 

Exemption of GST on lawyers and Law Firm

There is an exemption from paying general sales and tax on law firm fees and on the lawyer’s fees only if they provide service to an individual and not an entity.

The following exemptions are extended in case of business entities-

• Business entities having turnover of Rupees Twenty Lakhs and more.

• Business entities having turnover of Rupees Ten Lakhs and more in case of a North-East States.

In the year 2017, Government of India has introduced GST and it has undergone many changes during the time. In respect to legal services, a senior advocate comes under a separate category in the reverse charge list. As per the new indirect tax law, all lawyers and law firms are entitled to pay GST under the reverse charge. However, one should keep in mind that if they are providing legal services outside India then receipts related to freign exchanges need to be under check.

GST on Lawyers and Law firm Fees and Services

The term legal services defined under notification number. 12/2017 as per Central tax rates as “Legal service is a service which is provided in respect to assistance, advice and consultancy in any branch of the law and also includes representational service before any authority, tribunal or court indirectly or directly, to any territory located in the taxable territory.”

If law firms are earning more than twenty lakh a year then they are entitled for paying GST as per the Goods and services Act. Therefore, the tax on the legal services by the lawyers and the law firms will be taxable under the category of legal consulting services.

However, if similar services were taken from a lawyer or from a lawyer who is working under a law firm then they are not liable to get registered under GST and hence they are not liable to pay GST. 

Registration of GST on lawyer and law firm

There is no differentiation in respect of obtaining registration between a partnership firm and individuals. However, GST registration is mandatory for individuals who are making inter-state transactions of supplies.

All the law firms and lawyers who are providing legal services to a business entity to any place other than India must obtain registration under the goods and services Tax law to avoid any penalty under the GST Law.

Conclusion

It is clear from the above that GST is applicable to law firms and lawyers under certain conditions only. It is clear from above that law firms and lawyers who are providing their legal services outside India should obtain GST registration to avoid any penalty under the GST law. However the exemption is extended in case of business entities if the turnover of that particular business is not more than twenty lakhs.