# RCM on Legal Services

## Coverage

Legal services provided by:

An advocate
A senior advocate
A firm of advocates
An arbitral tribunal

→ Supplied to any business entity located in taxable territory → RCM applies, recipient pays.

## Exemption-first check

Legal services are exempt (so RCM does not arise) when supplied to:

Any person other than a business entity
Central Government, State Government, Union Territory, Local Authority, Government Entity or Authority
A business entity whose turnover in the preceding financial year did not exceed the turnover limit for registration

## How to apply the rule

```

1. Is the recipient a business entity? NO → Exempt; stop.

2. Is it a Govt/Govt-entity etc.? YES → Exempt; stop.

3. Did the recipient's preceding-FY turnover ≤ registration threshold? YES → Exempt; stop.

4. Otherwise → RCM, business entity pays GST as recipient.

```

## Registration thresholds to remember

Goods: ₹40 lakh (₹20 lakh in special-category States)
Services: ₹20 lakh (₹10 lakh in special-category States)

Apply the relevant threshold based on the recipient's nature of business.

Worked example

### Example 1

Q. Harish Salve (advocate) provides legal services to ABC Ltd., which had a turnover of ₹18 lakh in the preceding FY (services business). GST treatment?

A. Recipient is a business entity but its preceding-FY turnover (₹18L) is below the ₹20L registration threshold for services → Exempt. RCM does not arise.

### Example 2

Q. Harish Salve provides legal services to ABC Ltd. with preceding FY turnover of ₹52 lakh. GST treatment?

A. Recipient is a business entity above the threshold → RCM applies. ABC Ltd. pays GST directly to the Government on the legal fees.

⚠️ Common exam mistakes

Charging GST on the advocate's invoice — under RCM the advocate does not collect GST.
Forgetting the small-business entity exemption — recipients below the registration threshold are exempt.
Forgetting that services by an arbitral tribunal are also covered under this RCM entry.
Treating services to Government/local authority as taxable — these are exempt.

Reference: — Notification No. 13/2017-CT(R); Notification No. 12/2017-CT(R)

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RCM — Legal Services by Advocates

Worked example

⚠️ Common exam mistakes