The government has said lawyers are exempt from service tax and there is no move to impose the levy on them for providing legal services. The response came after some lawyers raised the issue with the finance ministry following notices from tax authorities. Sources said some of the lawyers, who had received notices for divergence between their income tax and service tax returns, had registered as service tax payers. “There is a possibility that they may have provided other services since there are chartered accountants who are also qualified lawyers and provide consultancy services,” said an official. In such cases, the service provider has to respond to the notices.
The tax department has issued notices related to short or non-payment of service tax for financial years 2015-16 and 2016-17, leading to some of the lawyers practising in Delhi and Mumbai flagging their concerns to the finance ministry. Lawyers were exempted from paying service tax and enjoy the same status under GST regime. Central Board of Indirect Taxes and Customs said it appears that such service tax notices have been issued only to assessees registered with the department for the purpose of paying service tax. As per law, advocates are exempt from paying service tax for services rendered to individuals.