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India Confirms Reverse Charge GST On Legal Services

by Mary Swire, Tax-News.com, Hong Kong

20 July 2017


The Indian Government has said that all legal services provided to a business should be subject to goods and services tax under a reverse charge.

The reverse charge shifts the obligation to collect and remit GST from the supplier to the recipient. The mechanism is typically introduced for certain goods or services to prevent tax fraud.

The Government clarified that the following services are taxable under a reverse charge:

"Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity."

"Legal service has been defined to mean 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."

The Government said it had received questions about representational services. It said: "The words 'by way of legal services' are preceded and succeeded by [a] comma. Therefore, the said words apply to an individual advocate including a senior advocate and a firm of advocates. Legal services provided by either of them are liable for payment of GST under reverse charge by the business entity. The words "by way of representational services before any court, tribunal or authority…." appear in conjunction with senior advocate without a comma and merely describe the nature and mode of representational services provided by a senior advocate to a business entity. It, therefore, follows that legal services, which includes representational services, provided by advocates are under reverse charge."

TAGS: court | tax | business | India | legal services | law | goods and services tax (GST) | services

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