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Advocates Exempted from GST Registration

As the Government is all set to roll out the Goods and Services Tax Act from 1st July, the 16th Meeting of the GST Council held at New Delhi decided to exempt Advocates, including Senior Advocates from obtaining CGST Registration under section 23(2) of the Central Goods and Services Tax Act, 2017.

Services provided by the Senior Advocates, which were brought under the tax net in the year 2016 was continued to be taxed under the GST regime. However, the services provided to any person other than a business entity and a business entity having a turnover of below 20 lakhs are out of the ambit of GST.

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

 

  1. 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. under

 

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

 

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

(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]

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

 

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