Tuesday, July 4, 2017

GST and Lawyers!!!

What is GST?

First, we need to know what is GST. GST is an indirect tax reform. GST try to remove tax barriers between states and makes into a single market. The motive of the bill is to bring one single tax on supply of goods and services, from the manufacturing stage until its delivery to the final consumer. The final consumer of the goods and/or services will only have to carry the GST charged by the final dealer in the supply chain, and avail set-off benefits at all the preceding stages. This means interim tax stages such as excise duties and service tax and state levies like VAT will be absorbed under the GST.

How GST Affecting Lawyers?

Exempt Services:-

A person, including a business entity with a turnover up to twenty lakes in preceding financial year by an individual advocates or firm who provide services or agreed to provide services will continue to be service tax free under the new goods and service tax regime. Both direct and indirect legal services are not taxable.

Senior Advocate providing service to Person and business entities with turnover less than twenty lakes is exempted from service tax. But the service provided by a senior advocate to an Advocate firm or Advocates is not exempted.

The services provided by an arbitral tribunal to any business entity whose turnover is less than twenty leaks are also not taxable.  

Taxable Services:-
The individual advocates who provide services to a business entity with a turnover more than 20 Lakh in preceding a fiscal year or legal services provided by a partnership firm of advocates are applicable for tax.  
The senior advocate who is providing legal services to a Business entity with a turnover more than twenty lakh rupees in preceding fiscal year. Tax is applicable to Senior advocates who provide legal service to another advocate or partnership firm of advocates providing legal services.

Registration Criteria:-

If an advocate has an aggregate turnover in a financial year exceeds twenty lakh rupees, then as per section 22 he shall be liable to be registered under the Act in the State or Union territory (other than special category states) from where he makes a taxable supply of goods or services or both. Exempt Supplies is also included in the word aggregate. On becoming registered person, by virtue of section 9(4) they will be required to pay tax under RCM ongoods or services procured from unregistered persons.

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