Note on taxability of services rendered by

Advocates w.e.f. 01-07-2012

1. Services provided by lawyers are subject to Service Tax, as they are not mentioned in the

negative list of services.

2. However, there is an exemption to individual lawyers and partnership firms of advocates, if

they provide legal services1 to,-

(i) an advocate or partnership firm of advocates providing legal services; or

(ii) any person other than a business entity2; or

(iii) a business entity with a turnover up to rupees ten lakh in the preceeding financial year.

3. If an individual advocate or a firm of advocates renders support services to business entities

with a turnover above Rs. 10 lakhs in the preceeding financial year, then the Service Tax will

be payable under the reverse charge mechanism, by the business entity receiving such services.

There will be no Service Tax liability of that individual or partnership firm of advocates to pay

service tax, if the services rendered by them are for a business entity having a turnover exceeding

Rs.10 lakhs in the preceeding financial year.

In short, Individual advocates and partnership firms of advocates are under no obligation to pay

Service Tax, whatever be the circumstances as they are provided with an exemption, or their

liability to pay Service Tax has been shifted from them to the business entities receiving their

services.

1. 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;

2. “Business entity” is defined to mean any person ordinarily carrying out any activity relating to industry,

commerce or any other business.