GST on Legal Services : Definitions, RCM, Exemptions & SAC Codes

Under GST, legal services are liable to reverse charge, i.e., where a business entity located in the taxable territory receives such services, the recipient is liable to pay GST on them. The RCM mechanism shifts tax liability from the service provider to the service recipient. Hence, if you are availing any services from an advocate, a firm of advocates, or an arbitral tribunal, it becomes imperative that you know the applicable RCM framework on legal services.

Table of Contents

1. What Are Legal Services?
2. Who Pays GST On Provision Of Legal Services?
3. Definition of “Advocate”
4. Definition of “Senior Advocate”
5. Definition of “Arbitral Tribunal”
6. Which legal services are exempt from GST?
7. Are services by one advocate/firm to another exempt?
8. Applicable HSN/SAC Codes for Legal Services
9. Closing Comments

Question 1: What Are Legal Services?

As per Notification 12/2017 – Central Tax (Rate), “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.

It is clear that the definition of legal services is a wider one and it includes most of the services which can be construed to be given by any legal professional including:

• Advising on legal matters
• Drafting agreements, contracts or any sort of legal documents
• Litigation related services
• Representational services before any court/tribunal or any authority
• Consultancy services on any branch of law

Example: A legal professional appears before the Income Tax Appellate Tribunal (ITAT) for a business entity and also provides valuation services to that company for capital infusion.

Representation in ITAT: Legal service
Valuation services: Not a legal service

Question 2: Who Pays GST On Provision Of Legal Services?

As mentioned at the beginning of the article, RCM is applicable when a business entity located in the taxable territory receives legal services.

As per Notification No. 13/2017 – Central Tax (Rate), liability to pay GST under the Reverse Charge Mechanism (RCM) arises when the service provider is:

• An individual advocate (including a senior advocate), or
• A firm of advocates, or
• An arbitral tribunal

Question 3: What is the definition of “Advocate”?

As per Para 2(b) of Notification No. 12/2017 - Central Tax (Rate), “Advocate” has the same meaning as is assigned to it in section 2(1)(a) of the Advocates Act, 1961.

Under the Advocates Act, 1961, an “Advocate” is a person whose name is entered in the roll of advocates maintained under the provisions of the Act. Section 2(1)(k) clarifies that the term “roll” refers to the official register of advocates prepared and maintained by each State Bar Council under the Act.

Foreign lawyers cannot be regarded as advocates in India, as under Sections 24 and 29 of the Advocates Act, 1961, only citizens enrolled with a State Bar Council are entitled to practice as advocates.

Question 4: What is the definition of “Senior Advocate”?

As per Para 2(zzd) of Notification No. 12/2017 - Central Tax (Rate), “senior advocate” has the same meaning as is assigned to it in section 16(2) of the Advocates Act, 1961.

Under the Advocates Act, 1961, an advocate may, with his consent, be designated as senior advocate if the Supreme Court or a High Court is of opinion that by virtue of his ability, standing at the Bar or special knowledge or experience in law, he is deserving of such distinction.

Question 5: What is the definition of “Arbitral Tribunal”?

As per Section 2(1)(d) of the Arbitration and Conciliation Act, 1996, an arbitral tribunal means a sole arbitrator or a panel of arbitrators constituted to adjudicate disputes referred to arbitration. It exercises quasi-judicial powers to resolve disputes, and its award is binding and enforceable as a decree of a court under the Act.

Question 6: Which legal services are exempt from GST?

To know which legal services are exempt from GST, we need to look at two entries in Notification No. 12/2017 – Central Tax (Rate) dated 28th June 2017.

Entry No. 45 talks about exemptions for legal services provided by advocates, law firms, and arbitral tribunals. Entry No. 3 covers pure services (including legal services) given to government bodies, but only when they relate to basic functions of Panchayats or Municipalities such as health, sanitation, education, or water supply.

Entry No.	Who Provides Service	Who Receives Service	Exempt from GST?
45(A)	Arbitral Tribunal	Any person other than a business entity Business entity with turnover ≤ ₹20 lakh (₹10 lakh in special category states) in the preceding FY	Yes
45(B)	Advocate (other than senior advocate) or Firm of Advocates	Another advocate or partnership firm of advocates Any person other than a business entity Business entity with turnover ≤ ₹20 lakh (₹10 lakh in special category states) in the preceding FY	Yes
45(C)	Senior Advocate	Any person other than a business entity Business entity with turnover ≤ ₹20 lakh (₹10 lakh in special category states) in the preceding FY	Yes
3	Arbitral Tribunal / Advocate / Senior Advocate / Firm of Advocates	Central/State Government, Union Territories, Local Authority, Governmental Authority, Government Entity Only if services are pure services relating to functions entrusted to Panchayats (Art. 243G) or Municipalities (Art. 243W)	Yes (subject to above condition)

Question 7: Is the provision of service by an advocate/advocate firm to another advocate/advocate firm exempt?

Yes. As per Entry 45 of Notification No. 12/2017, legal services provided by an advocate (other than a senior advocate) or a firm of advocates to another advocate or a firm of advocates are exempt from GST.

However, services provided by a senior advocate to another advocate or firm of advocates are not exempt. In such cases, GST is payable by the recipient under the Reverse Charge Mechanism (RCM).

Question 8: Which are the applicable HSN/SAC Codes for Legal Services?

SAC Code	Description
998211	Legal advisory and representation services concerning criminal law
998212	Legal advisory and representation services concerning other fields of law
998213	Legal documentation and certification services concerning patents, copyrights and other intellectual property rights
998214	Legal documentation and certification services concerning other documents
998215	Arbitration and conciliation services
998216	Other legal services nowhere else classified

Closing Comments

The GST framework for legal services is a unique one. Unlike most of the other services, it shifts the tax liability to the recipient of the service under RCM. It definitely eases compliance for advocates and arbitral tribunals, while placing responsibility on business entities to pay and report GST correctly.

At the same time, exemptions ensure that individuals, small businesses below the threshold limit, and certain government-related functions are not burdened.

Being updated and clear with the latest notifications, SAC codes, and exemption lists is the key to avoiding confusion and managing compliance.