Service tax for lawyers


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Service tax for lawyers

  1. 1. Service tax for Lawyers<br />A.VALLI<br />Accountant<br />Altacit Global<br />Email: Website:<br />
  2. 2. What is Service Tax?<br /><ul><li>Form of indirect tax
  3. 3. Imposed on specified services
  4. 4. Taxable services</li></li></ul><li>Who are liable to pay service tax?<br /><ul><li>Person provides the taxable service
  5. 5. On Receipt of service charges
  6. 6. Responsible for payment of Service Tax to the Government
  7. 7. Sec.68 (1) of the Service Tax Act.</li></li></ul><li>Is Receiver of the Services responsible for the payment of Service tax?<br /> Not Always but some instances below Yes… Recipient of Services is Liable to pay service tax <br /><ul><li> Taxable services provided by foreign service providers without establishment in India
  8. 8. Insurance Auxiliary Service by an Insurance Agent </li></li></ul><li>Continuation…….<br /><ul><li>Goods Transport Agency for transport of goods by road (consignor or consignee falls under any of the seven categories viz. (a) a factory (b) a company (c) a corporation (d) a society (e) a co-operative society (f) a registered dealer of excisable goods (g) a body corporate or a partnership firm)
  9. 9. Mutual Fund Distributors in relation to distribution of Mutual Fund </li></li></ul><li>Are Lawyers Liable to pay service tax ?<br /><ul><li>Lawyers are providing Legal services
  10. 10. They also come under service providers.
  11. 11. They also liable to pay service Tax</li></ul> <br />
  12. 12. Amendment of Service Tax<br /><ul><li>The 2009-10 Union Budget has extended service tax to law firms.
  13. 13. Budget extended service tax on advice, consultancy or technical assistance provided in the field of law.</li></li></ul><li>CONTINUATION…<br /><ul><li>Budget has also set out the tax position of firms wanting to convert to  limited liability partnerships (LLP) and introduced a more powerful advance rulings tribunal for taxes, which could be a welcome relief for foreign investors</li></li></ul><li>Why Union Budget Extended Service Tax to Law firms?<br /><ul><li>Yield Revenue to the government
  14. 14. The legal consultancy market was estimated between Rs. 400 crores to Rs. 500 crores while amending the service Tax
  15. 15. Imposition of service tax would bring in about Rs 50 crore Revenue to the government.</li></li></ul><li>Is Service Tax Applicable to individual Lawyers ?<br /><ul><li>No.
  16. 16. Service tax is not applicable for Individual lawyers and sole proprietorship.
  17. 17. Sole proprietorships will not come within the purview of the service tax as per the amended service tax Act.</li></li></ul><li>Service Tax Applicability to Law firms.<br /><ul><li>Service Tax will apply on advice provided by a business entity to another business entity.
  18. 18. Service Tax will not apply on advice provided by a business entity to individual or Individual providing legal service to Legal entity.</li></li></ul><li>Exemption from Service Tax<br /><ul><li>Many legal outfits will not come within the purview of the service tax on legal consultancy services as they operate as sole proprietorships.
  19. 19. If a Legal firm is providing services such as drafting plaint, Litigations, appearing in court proceedings are exempted from Service tax payment.</li></li></ul><li>Whom it is Applicable in the field of Law?<br /><ul><li>Only law firms or business entities under the Indian Partnership Act or the Limited Liability Partnership Act, will have to pay service tax on fees charged from corporates.
  20. 20. Eventhough Law firms providing legal services to Individual there is no service tax applicable, since the receiver is Individual.</li></li></ul><li>Percentage of Service Tax & Payment of Service Tax to the Government<br /><ul><li>As of now service tax is charged @ 10% on taxable services, In addition to that Education cess @ 3% on Service tax Value is charged.
  21. 21. On Receipt of the payment of service charges
  22. 22. Quarterly Payments should be made, Once in 3 months, on or before 5th day of proceeding month </li></li></ul><li>Advantages and Disadvantages of Service Tax implication to law firms<br /><ul><li>As per legislature point of view it yield more income to the government.
  23. 23. As per law firm point of view it is a excess burden for them since they are paying professional tax, Income tax and also they are liable to service tax.
  24. 24. It will also affect their business since there is added charges along with the professional fee which may be a extra burden for their clients. </li></li></ul><li>Case Laws<br /><ul><li>Madurai District Central Co-operative Bank Ltd. V. Third Income-tax Officer, Madurai
  25. 25. U.P. & Another V. Kamla Palace
  26. 26. R. K. Garg V. Union of India</li></ul>All the above cases Judgment made in favor of legislature, saying levy of a tax is totally in the hands of the legislature and it can do it for public good.<br />
  27. 27. THANK YOU<br />