Under the Goods and Services Tax Act, 2017 (GST Act 2017), legal services are defined broadly as any service provided in relation to advice, consultancy, or assistance in any branch of law, in any manner. This includes:

• Representational services:Appearing before courts, tribunals, or any other authority on behalf of a client.
• Drafting of legal documents:Preparing contracts, legal opinions, petitions, pleadings, and other legal documents.
• Legal advice and consultancy:Providing guidance and advice on legal matters to clients.
• Other incidental services:Any other service related to the practice of law, such as legal research, document verification, and mediation.

However, it’s important to note that not all legal services are subject to GST. Several exemptions are available under the GST Act 2017, including:

• Services provided to an individual advocate or firm of advocates.
• Services provided to senior advocates.
• Services provided to a business entity who is eligible for exemption from registration under the CGST Act, 2017.
• Services provided to any government entity.
• Services provided to non-business entities.

The GST rate applicable on legal services is generally 18%. However, GST Act 2017some services may be subject to a different rate or be exempt altogether.

Here are some additional points to consider:

• Reverse charge mechanism:In some cases, the recipient of the legal service (instead of the provider) is liable to pay GST under the reverse charge mechanism. This typically applies when the recipient is a business entity registered under the GST Act 2017.
• Registration requirement:Individual advocates and firms of advocates providing legal services are required to register under the GST Act 2017 if their annual turnover exceeds Rs. 20 lakhs.
• Input tax credit:Businesses registered under the GST Act  2017can claim input tax credit on the GST paid on legal services received by them.

EXAMPLE

There are many different types of legal services available in India, depending on the specific state and the needs of the individual. Here are a few examples:

• Civil law:This area of law deals with disputes between individuals or organizations, such as contract disputes, property disputes, and family law matters GST Act 2017. Lawyers who specialize in civil law can help you draft and review contracts, negotiate settlements, and represent you in court.
• Criminal law:This area of law deals with crimes and the prosecution of those who commit them. Criminal lawyers can represent you if you have been arrested or charged with a crime, or if you are a victim of a crime.
• Family law:This area of law deals with matters relating to marriage, divorce, child custody, and adoption. Family lawyers can help you negotiate prenuptial agreements, file for divorce, and represent you in court proceedings.
• Labor law:This area of law deals with the relationship between employees and employers GST Act 2017. Labor lawyers can help you understand your rights as an employee, negotiate contracts, and represent you in disputes with your employer.
• Tax law:This area of law deals with the taxes that individuals and businesses must pay to the government. Tax lawyers can help you prepare your tax returns, minimize your tax liability, and represent you in disputes with the tax authorities.

In addition to these general areas of law, there are many other specialized areas of legal practice, such as environmental law, immigration law, and intellectual property law.

If you are looking for legal services in India, it is important to find a lawyer who is licensed to practice in the state where you live and who has experience in the area of law that you need help with. You can find a list of lawyers in your state by contacting the local bar association GST Act 2017.

FAQ QUESTIONS:

Q: Are legal services taxable under GST Act 2017?

A: Generally, yes, legal services are taxable under GST Act 2017 at a rate of 18%. This includes services like advice, consultancy, drafting documents, and representational services before courts or tribunals.

Q: Are there any exemptions from GST on legal services?

A: Yes, there are several exemptions for legal services under the GST Act, 2017. These include:

• Services provided to individual advocates, senior advocates, or firms of advocates.
• Services provided to the Central or State Government, Union Territory, local authority, or any governmental entity.
• Services provided to non-business entities.
• Services by way of litigation services provided to a non-business entity.

Q: Who is responsible for paying GST on legal services?

A: The responsibility for paying GST depends on the type of service and the parties involved.

• In most cases, the advocate or firm providing the service is responsible for paying GST. They will need to register under GST Act 2017 and charge GST on their fees.
• However, in some cases, the recipient of the service is responsible for paying GST under reverse charge mechanism. This applies to legal services provided to business entities by advocates or firms of advocates.

Q: How do I know if I need to register under GST Act 2017 for legal services?

A: If you are an advocate or firm of advocates providing legal services, you need to register under GST Act 2017 if your aggregate turnover exceeds Rs. 20 lakhs in a financial year.

Q: What documents do I need to keep for GST purposes?

A: You must keep proper records of all your income and expenses related to legal services. This includes bills, invoices, receipts, GST Act 2017 and payment records.

CASE LAWS

The Goods and Services Tax Act, 2017 (GST Act 2017) doesn’t explicitly classify legal services under a specific heading. However, the interpretation of whether and how legal services are taxable under GST Act 2017 has been the subject of several case laws. Here’s a breakdown of some key rulings:

Exempt Legal Services:

• M/s Khaitan & Co. & Ors. Vs. Union of India & Ors.(2019): This landmark case by the Supreme Court clarified that legal services provided to the government or a local authority for a consideration solely by way of a fee determined by law or rules made by the government are exempt from GST Act 2017.
• S. Manocha & Co. Vs. Union of India & Ors.(2019): This case reiterated the exemption for legal services rendered to the government or a local authority, further specifying that the exemption applies even if the fee is not pre-determined but negotiated.

Taxable Legal Services:

• Union of India Vs. M/s Abraham Koshy P.T. & Ors.(2019): This case held that legal services provided to private entities are taxable under GST, with the applicable rate being 18%.
• M/s. Shardul Amarchand Mangaldas & Co. Vs. Union of India & Ors.(2020): This case clarified that legal services provided to foreign clients (non-resident taxable persons) are also taxable under GST Act  2017, with the place of supply being the location of the lawyer providing the service.

Other Important Rulings:

• Commissioner of Central GST, Delhi Vs. M/s. Khaitan & Co. & Ors.(2020): This case dealt with the input tax credit (ITC) eligibility for legal services received by businesses. The court ruled that ITC on legal services used for commercial purposes is generally allowed, but not for services related to personal matters or litigation for recovering taxes.
• M/s. Kochhar & Co. Vs. Union of India & Ors.(2021): This case clarified that legal services provided by in-house counsel to their employer company are not considered “supply” under GST Act 2017and hence not taxable.

Please note: This is not an exhaustive list, and the applicability of GST to legal services can be complex and depend on various factors like the nature of the service, the client, and the place of supply. It’s recommended to consult with a tax professional for specific guidance based on your situation.