Legal Fees under Reverse Charge

[Basha AbdulRazack]

Sir,

We are paying monthly Retainer Fees to Advocate but they are not charging GST, so Reverse Charge mechanism is applicable or not, please clarify.

Thanks & Regards

Razack.

[KASTURI SETHI]

Legal services are under RCM. Recently Board has clarified.

[Basha AbdulRazack]

Sir,

Thank you for your clarification but Reverse Chage mechanisim rule for Epxenses cancelled till 30.06.2018, so advocate fees come under this category or not? please confirm once again to proceed further.

Thanks & Regards

Razack

[Rajagopalan Ranganathan]

Sir,

Vide Sl. No. 2 of Notification No. 13/2017- Central Tax (Rate) dated 28.6.2017 as amended under which

"Services provided by an individual advocate including a senior advocate or firm of advocates by way of legal services, directly or indirectly to any business entity located in the taxable territory.gst is payable .by such entity under Section 9 (3) of CGST Act, 2017.

Explanation.- “legal service” means 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.

Gst payable by RCM under Section 9 (3) of CGST Act, 2017 is not exempted. Only gst payable by RCM under Section 9 (4) of CGST Act, 2017 is exempted up to 30.6.2018 vide Notification No.8/2017-Central Tax (Rate) dated 28.6.2017 as amended.

[CASusheel Gupta]

There are two sections of RCM

Section 9(3) - which requires payment on RCM on advocate fees, transportation charges. etc.

Section 9(4) - which requires payment on RCM on purchases from unregistered suppliers

Section 9(4) has been deferred till 30.06.2018. But u need to pay GST on advocate fees under section 9(3) which has not been deferred and still applicable.

Regards

CA Susheel Gupta

9811004443, 8510081001

[Basha AbdulRazack]

Dear Sirs,

Thank you very much for giving detailed explanations to Mr. Rajagopalan Ranganathan Sir & Mr. Susheel Gupta Sir.

Regards

Abdul Razack

[Ganeshan Kalyani]

GST on legal service is required to be paid by the receiver of the service under reverse charge @18%.

AI Summary

Reverse charge on legal services: recipient must pay GST on advocate fees under Section 9(3). Services by individual advocates, senior advocates or firms to business entities are taxable under the Reverse Charge Mechanism and Notification No. 13/2017 requires the recipient to pay GST. The temporary deferral of reverse charge for certain purchases from unregistered suppliers does not exempt the reverse charge liability on legal services; recipients must therefore discharge GST on advocate fees under the applicable reverse charge provision.