Legal consultancy provided by a llp

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Ankit sehra (Querist)
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15 March 2013 Hi Experts,

Please tell me if LLP has provided legal consultancy services, But there is No lawyer partner in the Firm and in the service tax registration ( ST-2) they don't register for legal consultancy services?

They are registered in Business Auxiliary Services?
My question is, In which Head these services should be Charged ?

Business Auxilary or any other

Please Suggest.

CA.Hanumantha Reddy

CA.Hanumantha Reddy (Expert)
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15 March 2013 Need more clarity on your query. What type of legal services you are providing.Is it advisory,opinion type of services in such a case it may fall under Management consultancy services also.

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Ankit sehra

Ankit sehra (Querist)
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06 April 2013 Sir,

A LLP firm is providing legal services But its not a Law Firm & not a single partner is a lawyer, So under which service head this firm Falls .

Its Clients Individual as well as Corporates.

Thanks & Best Regards
Ankit Sehra

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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02 August 2024 In India, the provision of legal consultancy services is regulated by specific rules and regulations under the Goods and Services Tax (GST) and erstwhile Service Tax laws. If a Limited Liability Partnership (LLP) is providing legal consultancy services but is not a law firm and does not have a lawyer as a partner, there are important considerations regarding how such services should be classified and taxed.

### **1. Classification of Legal Consultancy Services**

**Legal Consultancy Services** are typically classified under the following categories:

- **Legal Services**: These are services provided by a legal practitioner or law firm. Legal consultancy is generally provided by individuals or entities that are recognized as legal practitioners or law firms.

**2. Service Tax and GST Classification**

Under **Service Tax** (prior to GST implementation):
- Legal services were specifically classified under the head "Legal Consultancy Services."
- Entities providing such services were required to have the appropriate service tax registration.

Under **Goods and Services Tax (GST)**:
- **Legal Services** are classified under **HSN Code 9982**.
- Under GST, legal services fall under the heading “Legal Services” and are subject to GST as per the applicable rates.

**3. Business Auxiliary Services vs. Legal Services**

- **Business Auxiliary Services (BAS)**: Under Service Tax, Business Auxiliary Services cover a broad range of support services but do not specifically include legal consultancy. BAS typically involves services like marketing, business promotion, or operational support, but not legal advice or legal representation.

- **Legal Consultancy**: If your LLP is providing legal consultancy services, it is critical to classify these services correctly. The fact that your LLP does not have a lawyer as a partner does not change the nature of the service being provided.

**4. Correct Classification for GST**

- If your LLP is providing legal consultancy services, these should be classified under **"Legal Services"** and the appropriate HSN Code **9982** should be used.
- Since legal consultancy is not covered under Business Auxiliary Services, it is crucial to correct the classification to avoid any issues with tax compliance.

**5. Steps to Take**

1. **Review and Update Service Registration**:
- Update your service tax or GST registration to reflect the correct service category. If your registration is currently under Business Auxiliary Services but you are providing legal consultancy, you need to update this to "Legal Services."

2. **Consult with a Tax Professional**:
- Engage a tax consultant or legal advisor to help with reclassification and to ensure compliance with GST regulations.

3. **Issue Correct Invoices**:
- Ensure that invoices are issued with the correct service head (Legal Services) and apply the appropriate GST rate. Legal services generally attract a GST rate of 18%.

4. **File Correct Returns**:
- File your GST returns with the correct classification and tax rates for the services provided.

### **Summary**

- **Legal Consultancy Services** should be classified under **“Legal Services”** and not under **“Business Auxiliary Services”**.
- Update your service tax or GST registration to reflect the correct service head if it is not currently registered for legal services.
- Consult with a tax professional to ensure compliance with GST regulations and proper classification of services.

This approach will help ensure that your LLP remains compliant with tax regulations and avoids potential issues with authorities.