The tax department on Saturday clarified that legal services provided by advocates are covered under GST but the liability to pay the tax is on the client. After the Delhi High Court sough clarification whether legal services provided by advocates and law firms will be covered by the reverse charge mechanism under the Goods and Services Tax (GST) regime, the CBEC issued a statement saying, “There is no change made in taxation of legal services in the GST era.”
Legal services, including representational services, provided by advocated are covered under reverse charge of GST, it said. Reverse charge means the liability to pay tax is on the recipient of goods/services instead of the supplier.
Legal service, CBEC said, has been defined to mean 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.
This applies 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 statement said. “It therefore follows that legal services, which include representational services, provided by advocates are under reverse charge.”