Tax on Legal Services to an educational institution

[Lalitha Krishnamurthy]

One of our clients is an educational institution, registered as a Society and is eligible for Income Tax exemption. It is receiving some legal consultancy services from a firm of advocates. Is the service exempt from GST or does the client have to pay tax on reverse charge basis as a business entity?

Would be obliged for opinions of the experts in this forum.

[Shilpi Jain]

Is it registered under gst?

[Lalitha Krishnamurthy]

Thank you.The institution lets out it's hall occasionally and for that activity it is registered under GST.The income from such activity is insignificant to its total turnover.

[KASTURI SETHI]

Your client is supplying Renting of Immovable Property Services as a Society. Hence the Society is engaged in commercial activity. The Renting hall may be occasionally. The 'occasional' renting does not help the Society in any way. Therefore, the Society is registered as business entity with the department. It cannot be denied. Hence RCM is applicable.

Your client cannot get rid of the phrase, 'business entity' on the premise mentioned by you.

[Ganeshan Kalyani]

Yes, RCM is applicable.

[Lalitha Krishnamurthy]

Thank you Ms.Shilpi Jain, Mr. Kasturi Sethi and Mr. Ganeshan Kalyani for your views.

AI Summary

Reverse charge applies where an educational society is treated as a business entity due to taxable renting activity. Because the Society is registered under GST for letting its hall, that taxable renting activity categorises the institution as a business entity for GST purposes; accordingly, legal consultancy services received by the Society attract the Reverse Charge Mechanism and the Society must pay GST on those services received.