Advocates under GST Net

By CA. Manoj Gupta

Jodhpur

9828510543

1. Under GST services provided by advocates are exempt as follows.

Services provided by

(a) a partnership firm of advocates or an individual as an advocate other than a senior advocate,
by way of legal services to-
(i) an advocate or partnership firm of advocates providing legal services;
(ii) any person other than a business entity; or
(iii) a business entity with a turnover up to rupees twenty lakh (ten lakh rupees in a special
category state) in the preceding financial year; or
(b) a senior advocate by way of legal services to-
(i) any person other than a business entity; or
(ii) a business entity up to rupees twenty lakh (ten lakh rupees in a special category state) in the
preceding financial year.

Is exempt.

Therefore, legal services provided to a business entity having turnover exceeding Rs 20 lakhs is
not exempt.

2. Under GST advocates providing legal service to any business entity having turnover
exceeding 20 lakhs are not liable to pay GST but GST will be payable by business entity
under RCM.

3. It means legal services provided by Advocates to any business entity having turnover
exceeding 20 lakhs is a taxable supply.

4. Now we consider case of non-senior advocate. He has receipts from legal services as
under

(a) . From individual advocates/ advocate firms Rs 1000000 [Exempt supply]

(b) From business entities having turnover below 20 Lakhs Rs 500000 [Exempt supply]

(c ) From business entities having turnover above 20 Lakhs Rs. 1000000 [ Taxable supply
but tax payable under RCM by business entity]

5. By definition “aggregate turnover” means the aggregate value of all taxable supplies
(excluding the value of inward supplies on which tax is payable
by a person on reverse charge basis), exempt supplies, exports of
goods or services or both and inter-State supplies of persons having
the same Permanent Account Number, to be computed on all India
basis but excludes central tax, State tax, Union territory tax, integrated
tax and cess.

So in this case aggregate turnover of advocate will be 2500000 which is above the threshold of
Rs. 2000000 provided in section 22.

6. Now as per section 22 every supplier shall be liable to be registered under theAct in the State
or Union territory, other than special category States, from where he
makes a taxable supply of goods or services or both, if his aggregate turnover
in a financial year exceeds twenty lakh rupees.

7. Since in the given case advocate is having aggregate turnover of Rs 2500000 and he makes
taxable supply which is chargeable under RCM hence advocate will be required to take
registration under the Act.

8. Since they become registered person by virtue of section 9(4) they will be required to pay
tax under RCM on goods or services procured from unregistered persons

CA Manoj Gupta

Jodhpur

9828510543

© CA. Manoj Gupta