What are the books of accounts an advocate should maintain under the Income Tax Act of 1961?
Are you an advocate? Be aware of the taxes you have to pay.
Income Tax Act – Income Tax – books of accounts – advocate – books – What are the books of accounts – taxscan
Income Tax Act – Income Tax – books of accounts – advocate – books – What are the books of accounts – taxscan
- What do you mean by Advocate Fees?
A: Advocate fees, in simple terms means the amount or fees given to attorneys or other legal professionals for their services, is known as advocate fees. These services could involve creating legal documents, giving legal advice, representing clients in court, etc.
- Are services provided by advocates subject to direct taxes under the Income Tax Act?
A: Yes, advocates have to file their Income Tax Returns ( ITR ) under the Income Tax Act, 1961. The income that the advocates receive from their legal services is usually taxable under the heading ‘Profits and Gains of Business or Profession.’ The applicable taxation rates will depend on the advocate’s total income and prevailing tax slabs.
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3. What are the books of accounts an advocate should maintain under the Income Tax Act of 1961?
A: The basic books of accounts an advocate should maintain include a cash book, receipt voucher, payment voucher, ledger journal, etc.
4. What is the reverse charge mechanism (RCM) in the context of GST ( Goods and Service Tax ) on advocate services?
A: The reverse charge mechanism (RCM) shifts the responsibility of paying GST from the service provider to the service recipient. If an advocate provides services to a business entity whose turnover exceeds ₹20 lakhs, the recipient of the service must pay the applicable GST (usually 18%). This is to ensure that the advocate is not burdened with GST compliance for these transactions.
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5. What are the GST registration requirements for the advocates?
A: GST registration is required if an advocate, senior advocate, or firm of advocates provides legal services (whether exempt or taxable) if any of the following conditions are satisfied:
1. The turnover exceeds the GST registration threshold.
2. Tax is to be paid on a forward charge basis.
Additionally, if legal services are provided to a corporate body with a turnover exceeding ₹40 lakh, GST is applicable under the reverse charge mechanism.
6. What are the main exemptions under GST for services provided by advocates?
A: The main exemptions under GST for advocate services include:
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- Services provided to individuals or entities below the GST registration threshold.
- services provided to government or judicial bodies, which may be exempt or subject to specific conditions.
7. Can advocates avail of the Input Tax Credit ( ITC )?
A: No, ITC cannot be availed for the legal services rendered in India, as the output supplies are taxable at the recipient end under RCM.
8: What are the penalties for non-compliance with GST obligations by advocates?
A: Non-compliance with direct tax obligations can lead to penalties, interest on unpaid taxes, etc. If GST is not paid on time, it could lead to fines, interest on unpaid tax amounts, or even could lead to the suspension of GST registration.
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9. Is Tax Deducted at Souce ( TDS ) applicable to advocates?
A: By virtue of the Income Tax Act, 1961, TDS is usually applicable to the advocate fees paid by companies or professionals. Advocate fees have a 10% TDS rate, which is deducted at the time of payment. TDS is applicable if the advocate's fees exceed Rs. 30,000 in a fiscal year, regardless of whether they are paid by an individual or a Hindu Undivided Family (HUF).
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