Is GST Applicable to Legal Services in India? A Simple Guide for Lawyers and Clients
- lakshmi180592
- Jun 17
- 4 min read
If you've ever hired a lawyer or paid for legal advice in India, you might have asked yourself:“Do I have to pay GST on legal services?”
It’s a common question—and not just among clients. Even lawyers and law firms are often unsure about how GST applies to legal services. With India’s tax rules evolving quickly, it’s important to understand how the Goods and Services Tax (GST) affects legal work.
This article breaks down the key aspects of GST on legal services in easy-to-understand language. Whether you’re a lawyer, law firm, business owner, or individual client, this guide will help you make informed decisions.
What Counts as a Legal Service Under GST?
According to the GST Act and Government Notification No. 12/2017, the following activities are considered legal services:
Representing clients before any court, tribunal, or legal authority
Legal consultation or advice
Drafting contracts and legal documents
Arbitration and mediation services
In short, almost everything a lawyer or law firm does professionally is covered under “legal services” for GST purposes.
What is the GST Rate on Legal Services?
The GST rate on most legal services is 18%.This applies to:
Court appearances
Legal consultations
Drafting documents
Arbitration or negotiation work
The tax is calculated on the total fee charged by the advocate or law firm.
Do Lawyers Need to Register for GST?
Not all lawyers and law firms must register for GST. Registration depends on a few factors:
Threshold Limit: If your total income from legal services exceeds ₹20 lakh in a year (₹10 lakh in special category states), registration is mandatory.
Inter-State Services: If you offer legal services to clients outside your state, GST registration is required regardless of your turnover.
Voluntary Registration: Even if your income is below the limit, you may choose to register to claim input tax credit on business expenses.
Who Pays GST? Understanding the Reverse Charge Mechanism (RCM)
Here’s where legal services are treated differently. In most industries, the service provider collects GST from the client and pays it to the government. But for legal services, the Reverse Charge Mechanism (RCM) often applies.
How RCM Works in Legal Services:
If the client is a GST-registered business:The client—not the lawyer—must pay GST directly to the government under RCM.
If the client is an individual or unregistered business:The advocate does not need to charge GST, as long as their annual income is below the threshold.
📝 Key Point:If you are a business hiring legal services, you are responsible for paying GST and filing it under RCM.
GST Exemptions for Legal Services
Not every legal service is taxed. Below are the main exemptions:
Small Firms/Advocates: If annual income is under ₹20 lakh (₹10 lakh in special category states), no GST registration is needed.
Individual Clients: If the fee charged is below ₹1,000 per day, GST is not applicable.
Legal Services to Courts/Tribunals: Exempt from GST.
Services to Government or Local Authorities: Exempt from GST.
Senior Advocate to Advocate: When one senior advocate provides services to another, it’s exempt.
Key Court Ruling: Legal Services Are Not Just a Business
In the 2024 case Bar of Indian Lawyers vs D.K. Gandhi, the court ruled that the relationship between a lawyer and client is a personal service, not a business one. This makes legal services different from regular commercial services, which are taxed under GST in the usual way.
What This Means:
Legal work is not treated like other trades.
This supports the idea that law practice is a fiduciary (trust-based) duty, not a commercial activity.
Real-World Scenarios: GST on Legal Services
Law Firm to Company
Client is GST-registered
GST is paid by the company under RCM
Law firm does not collect GST
Advocate to Individual Client
If the advocate earns less than ₹20 lakh a year, no GST is required.
Law Firm to Government Department
Services are exempt from GST
Senior Advocate to Law Firm
Exempt from GST
GST Codes for Legal Services (SAC)
Service Description | SAC Code | GST Rate |
Legal and Accounting Services | 9982 | 18% |
Legal Advisory & Representation (Criminal Law) | 998211 | 18% |
Other Legal Advisory & Representation | 998212 | 18% |
Legal Documentation & IP Rights | 998213 | 18% |
Arbitration and Mediation Services | 998215 | 18% |
What Should Lawyers and Clients Do?
✅ For Lawyers and Law Firms
Monitor your annual income for GST eligibility
Register for GST if required
Issue GST-compliant invoices
Understand when you must pay GST and when the client must pay under RCM
✅ For Clients
If you’re a business, pay GST under RCM when hiring legal services
Keep records and claim input tax credit if eligible
Always ask for a proper invoice from your lawyer
A Note on the Constitution
Under the Indian Constitution, legal services are not considered trade or commerce. Entries 77 and 78 of the Union List deal with regulation of legal profession and justice system, showing that the practice of law is distinct from regular business.
This raises deeper questions about whether GST should apply to legal services in the same way it applies to other services.
Comments