My company is a dormant, inactive and inoperative corporation to hold shares of another company as an asset without significant accounting transactions, except for the payment of fees to RoC and other office maintenance costs and legal fees for ongoing shareholding disputes. Is my dormant business responsible for reverse tax liability for legal services received from a law firm? The company has no turnover other than the sale of certain shares on which capital gains taxes are paid. In addition, a combined reading of the headings of sections No. 45(b)(ii) and 45(c)(iii) of Communication No. 45(b)(ii) and 45(c)(iii) of Communication No. 45(b)(iii) of Communication No. 45(b)(ii) 12/2017-CTR, as amended, it is considered that legal services provided by an individual lawyer, a senior lawyer or law firm for a business entity with total sales in the previous fiscal year up to which the registration exemption is granted are exempt from GST. In the case of legal services, services supplied outside India are considered exports of services provided that all conditions are met. Therefore, the RCM does not apply.
Communication No 5/2017 – Central tax of 19 June 2017 is not applicable, as the export of services does not fall within the scope of the RCM. The export of services is considered an inter-State transaction; Therefore, Article 24 of the CGST Act is applicable and registration is mandatory if the turnover Rs. 20 Lakhs exceeds If banks pay legal fees to lawyers and debit borrowers` accounts, is GST payable by banks under RCM? The GST Council stated in August 2017 that legal services provided by lawyers, including senior counsel and law firms, are subject to GST under a reverse charge system. J.K. Mittal and Company filed a written petition challenging the legality of the GST for law firms, and “The GST Council, which charges GST for lawyers` fees and services, has approved this request. This also falls under the reverse charge group mentioned by a junior and individual lawyer. As a result, lawyers and law firms were not registered at the time. However, GST for law firms and GST for legal services must comply with the new 2017 GST system. Usually, legal fees attract RCM while we pay for legal fees/expert opinions. In clarifying F.
No. 354/107/2017-TRU, it was clarified by the government that legal services, including representation services, provided by a lawyer, including a lead lawyer of an economic entity are taxable under RCM, i.e. The company must pay taxes according to RCM. In accordance with Communication No. 13/2017 – Central tax (rate) of 28 June 2017, RCM applies to legal services provided to the business entity. If the services are provided outside India, RCM is not applicable as the business entity is located outside the tax jurisdiction. Lawyers must first register to provide legal services as part of the GST reverse charge process. Legal fees are subject to GST, as are other service providers with total revenues above Rs 20 lakhs. We are often faced with a situation where we seek legal advice.
With this section, tell us how lawyers such as lawyers and lawyers are taxed under the GST. Answer: In case the lawyer provides legal services to Mr. X, whose total turnover is Rs. 16 lakhs is exempt from tax in accordance with notification No. 12/2017-Central tax (rate). In the case of importation of services, the company that has used the legal services from outside the tax territory must pay the tax according to the reverse charge mechanism. All legal services, whether provided by a law firm or an individual, are subject to payment in accordance with the reverse charge provision of the GST Act. No other expenses for law firms or lawyers providing legal services are subject to GST liability, as all would be exempt from GST claims for legal services. If a legal services contract is entered into with another lawyer or law firm, the MRC on Legal Services is also in effect. It also applies if the legal services are provided in the tax territory by another lawyer or law firm.
However, if the lawyers or law firm provide services other than legal services and their total turnover is more than Rs. 20 lakhs, registration is required for them. Please note that total turnover includes taxable turnover, exempt turnover, zero tax rate, export supplies and supplies for which tax was paid under the reverse charge mechanism. However, if a law firm provides legal services outside of India, you need to confirm its registration. Also, you should keep an eye on the amount of foreign currency that India receives. Is the legal position held by a lawyer from a university (i.e. Kerala Health University under the status of a local authority) subject to the RCM? – You do not need to create an invoice for legal fees. Pay GST on the bill you received from the lawyer. They should only be displayed in GSTR-3B and not in GSTR-1 because GSTR-1 is displayed for sales data. – The RCM concept does not apply to fees paid to CA.
CA`as are not exempt from GST. They charge GST on their bill. Yes, even if the lawyer`s fees are not listed on the GST return and you can claim it on the tax return. Exceptions and other provisions relating to legal services will only be used in the context of lawyers or a law firm. Therefore, an auditor who provides legal advice on commercial law, although falling within the definition of legal services, will not be considered under the provisions or exemptions of the reverse charge mechanism (MCR). 4. Services other than legal services provided by lawyers and law firms are taxable under the normal provisions of the GST Act. Yes, you must pay GST on RCM for the monthly fees paid to the lawyer. Legal services are advice or advice in any area of law. Yes, you can be included on the tax return. “Services provided directly or indirectly by a single lawyer, including senior counsel or law firm, through legal services.” 7. JK Mittal case – In the case of Mr J.
K Mittal High Court of Delhi, the Government clarifies that legal services are taxable under the RCM. But also in the case of services provided by senior counsel to lawyers or law firms, adequate clarification on the exemption is awaited. The VAT credit cannot be claimed by the lawyers or law firm providing the legal services. Please note, however, that if lawyers or law firms provide other taxable services, they may claim the input VAT credit on a pro rata basis under the conditions prescribed by Rule 42 of the CGST Regulation. All legal services provided by a lawyer or law firm for a business entity with a total annual turnover of at least Rs 20 lakh are subject to GST collection. If a senior lawyer provides legal services to another lawyer or law firm, GST is also payable for those services. My question is whether all legal fees should be incurred during and to promote the business. It may be disputed that certain legal fees were incurred, e.g.
legal advice incurred to defend the MSME case/intentionally delayed in making payment to input suppliers or contractors, etc., not for the purpose of promoting the business, but to defend the charge against someone. There is no benefit to the evaluator of these expenses. In my view, the GST paid under the RCM in respect of legal fees should be analyzed as an ITC. What is the opinion of my learned author? The inclusion of lawyers and law firms in the cost structure of the reverse charge mechanism increases them Therefore, it was clarified at the GST Council meeting that the GST will apply to legal fees in India on a reverse charge basis.