Service tax On Legal Service Charges paid By Pvt . Ltd. company

[ASHOK CHOUDHARY]

1. Private Limited Company  Turnover  in the year ended 31.3.2012 as :-

                                   Profit on sales of Investment  Rs. 99,20,000/-

Other Income   :-                               Nil

 

1. Legal fees to  Firm  of  Advocates and   Individual Advocate  paid in the year ended 31.3.2013 as :-

         1.7.2012 to 31.12.2012           Rs. 55 lacs

 

 

QUERY   :-

 

1        Is Company liable under Reverse Charges for the Year ended 31.3.2013 on the payment of the Legal fees. 

[YAGAY andSUN]

Dear Ashok,

According to the Notification No. 30/2012-ST dated 20-06-2012 w.e.f. 01-07-2012, your company is liable to pay the Service Tax 100 percent under reverse charge mechanism along-with interest at the rate of 18 percent p.m.

Regards,

Team YAGAY & SUN

(Indirect Tax Consultants)

AI Summary

Reverse charge on legal services makes the corporate recipient liable to pay service tax and interest for taxable payments. Under the provision effective 1 July 2012 the recipient of legal services bears 100 percent reverse charge, making the corporate recipient liable to discharge the service tax on payments to advocates and law firms; interest is chargeable on unpaid tax at the prescribed delayed payment rate.