GST is a major indirect tax system in India. The GST necessities tax collection at source to be done through the supplier while providing Goods or Services. However, Some lawyers and Law firms do not obtain GST Registration and do GST return filing as per the general opinion. This opinion is not completely true. Thus, Many Lawyers and Law Firms are required to have GST Registration in India. In this article, We will understand the GST Registration on Lawyers.
What exactly is a Legal Service?
Technically, Services provided by an individual advocate, including a senior advocate, in the form of representational services before jury, tribunal, or jurisdiction, explicitly or implicitly, to any corporate entity situated in the taxable region, along with where an agreement for providing of such services has been entered into via another advocate or a company of advocates, or by an agency of advocates, in the form of legal services, to a business organization is a Legal Service.
In simpler words, Services offered by Advocates and Lawyers in the form of advice, consulting, or help in any area of law, as well as representative services before any court. Thus, Legal Services is not restricted only to representative services before courts. Rather, Advice or Consultancy regarding legal matters also comes under the ambit of Legal Services.
Applicability of GST Registration on Lawyers in India
Goods and Services Tax (GST) is levied on law firms and attorneys who provide any form of legal services to a business or organization with a previous-year revenue or turnover of Rs. 20 Lakh or more. Furthermore, when a senior advocate gives services to another firm’s lawyer or any other expert, GST on legal services will be payable. Hence, in these scenarios lawyers need to apply for GST Registration in India and then go for GST Return Filing.
Furthermore, To avoid penalties under the GST Law, all law firms and attorneys offering any legal service to commercial organizations located anywhere other than India must seek registration under the Goods and Services Tax Act.
Important Note: Here applicability of GST Registration on Lawyers is on the basis of the Reverse Charge Mechanism. Any payment due under RCM under Section 9(3) of the CGST Act and Section 5(3) of the IGST Act must be paid upfront only. However, the Input tax credit cannot be used to discharge reverse charge debt.
What exactly is the Reverse Charge Mechanism?
The basic premise followed in imposing a tax indirect taxes is the acquisition of tax from the buyer of products or services by the producer, vendor, or service provider. After adjusting their production obligation, the manufacturer or service provider submits the tax with the Indian tax authorities. An individual advocate, especially a senior advocate, performs legal services at the GST rate and pays GST on the basis of a Reverse Charge Mechanism.
Exemption of GST Registration for Lawyers
GST Registration is exempted for Lawyers if they only provide services to-
- Businesses with a turnover of up to Rs Twenty Lakhs and
- Businesses with a turnover of up to Rs Ten Lakhs in North-East states.
- A senior advocate’s legal services to any individual person other than a commercial company.
Documents Required for GST Registration for Lawyers
You need to have the following documents to get GST Registration as a Lawyer or a Law Firm.
- Individual PAN Card or Company’s PAN Card.
- Individual Address Proof & Company’s Address Proof.
- Bank Details, etc.
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