Sir.. Thanks for updating our knowledge.. Now, my question is:
M/s.AB Enterprises, a partnership firm( registered under GST, engaged in trade & manufacturing business which is liable for Tax audit U/s.44AB of Income Tax Act,1961) has paid legal charges to an advocate Mr.Chandan of Rs.50,000/- on obtaining legal services for case filed against one of its Debtor Mr.Dayam for non payment of amount of Sale made to him. After Some period of time, M/s AB Enterprises won the case and has recovered an amount of Rs.60,000/- from Mr.Dayam in terms of Legal costs incurred. Now, my queries are:
1.What is the GST liablity on payment of Rs.50,000/- ?
2.What is the GST liablity on receipt of Rs.60,000/- ?
3.Is there any Input Tax Credit option available under the entire scenario?
- Legal services by advocates is covered under RCM and thus AB Enterprises would be required to pay GST.
- Rs 60,000/- recovered through suit towards legal costs incurred should not be taxable in absence of any supply.
- ITC of the tax paid under RCM on legal charges to advocate can be availed.
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