Professional Services Under GST: Rates, SAC and RCM

If you run a business in India, you use professional services: a Chartered Accountant (CA) for audits, a lawyer for contracts, a consultant for strategy, or an architect for your new office. Every one of these services attracts 18% GST, but the compliance rules differ based on who provides the service. Legal services from advocates have a unique reverse charge requirement, while CA and consulting fees follow the standard forward charge model.

This guide covers the GST framework for professional services that Indian SMEs commonly use.

GST Rates for Professional Services

Tax Rate Chart

GST on Professional Services: Rates at a Glance

All professional services attract a flat 18% GST. The key difference is who pays, forward charge (provider bills you) vs. reverse charge (you self-assess).

Legal Services, Advocate / Law Firm

Reverse charge: recipient self-assesses GST under RCM (Notification 13/2017-CT Rate)

18%

Statutory / Financial Audit (CA)

Forward charge: CA charges GST on invoice, SAC 998221

18%

Accounting & Bookkeeping (CA)

Forward charge: CA charges GST on invoice, SAC 998222

18%

Corporate Tax Consulting

Forward charge, SAC 998231

18%

Management Consulting

Forward charge, SAC 998311 under heading 9983

18%

Architecture & Engineering

Forward charge, SAC 998321:998323

18%

Legal Services, Small Business Exemption

Turnover below Rs. 20 lakh in preceding FY: advocate fees exempt under Notification 12/2017-CT Rate, Entry 45

Exempt

Source: Notification 11/2017-CT(Rate) | Notification 13/2017-CT(Rate) | CBIC SAC Classification

The GST rate for all professional services is a flat 18%, with no concessional rate available. The Composition Scheme under Section 10 of the CGST Act is not available to service providers (except restaurants), so professionals must register under the regular scheme.

The critical distinction: only legal services from individual advocates (including senior advocates) and firms of advocates attract reverse charge. All other professional services follow the normal forward charge model where the service provider charges and collects GST.

SAC Codes: Heading 9982 vs. 9983

Professional services split across two SAC headings in the CBIC classification scheme:

Heading 9982: Legal and Accounting Services

This heading covers services by legal professionals (advocates, solicitors, arbitrators) and accounting professionals (CAs, cost accountants, company secretaries, bookkeepers, tax consultants).

• 998211: Legal advisory and representation in criminal law
• 998212: Legal advisory and representation in other fields of law (civil, commercial, labour, corporate)
• 998213: Legal documentation and certification for patents, copyrights, and intellectual property
• 998214: Legal documentation and certification for other documents (notarisation, contract drafting, affidavits)
• 998221: Financial auditing services (statutory audit, internal audit, tax audit)
• 998222: Accounting and bookkeeping services
• 998231: Corporate tax consulting and preparation services
• 998232: Individual tax preparation and planning services

Heading 9983: Other Professional, Technical and Business Services

This heading covers management consultants, IT consultants, architects, engineers, and other technical professionals.

• 998311: Management consulting and management services (financial, strategic, HR, marketing, operations)
• 998312: Business consulting services
• 998313: IT consulting and support services
• 998321: Architectural advisory services
• 998322: Architectural services for residential buildings
• 998323: Architectural services for non-residential buildings
• 998331: Engineering advisory services
• 998346: Technical testing and analysis services

Invoice requirement: Businesses with annual turnover above Rs. 5 crore must mention the full 6-digit SAC code on every invoice. Businesses below Rs. 5 crore may use the 4-digit heading 9982 or 9983), but using the full 6-digit code is best practice for audit compliance.

Reverse Charge on Legal Services (Advocate Fees)

This is the most important compliance point for businesses hiring lawyers. Under Notification 13/2017-Central Tax (Rate), when a business entity receives legal services from an individual advocate, a senior advocate, or a firm of advocates, the GST liability shifts to the business recipient.

How RCM works for advocate fees:

1. Your advocate sends an invoice without GST (the advocate does not collect GST from you)
2. You self-assess 18% GST on the invoice value
3. You pay this GST in cash through your electronic cash ledger in GSTR ThreeB (Table 3.1(d))
4. You claim the same amount as ITC in the same GSTR ThreeB return (Table 4(A) 2))
5. Net cash impact is zero if you have sufficient output liability to offset

Example: Your business pays Rs. 1,00,000 to a law firm for contract review. Under RCM:

• Advocate invoices Rs. 1,00,000 (no GST charged)
• You self-assess Rs. 18,000 GST 18% of Rs. 1,00,000)
• You pay Rs. 18,000 in your GSTR ThreeB under RCM
• You claim Rs. 18,000 as ITC in the same return
• Your net additional cost: Rs. 0 (assuming you have taxable output to offset)

Who is covered by RCM: Only individual advocates (including senior advocates) and partnership firms of advocates. If you hire a legal services company (not a firm of advocates as defined under the Advocates Act), or if you engage an in-house legal team (employer-employee relationship), RCM does not apply.

Important: RCM on legal services means your business must be GST-registered to comply. Even if your turnover is below Rs. 20 lakh, receiving legal services under RCM creates a mandatory registration requirement.

Exemptions for Legal Services

Not all legal services attract GST. Notification 12/2017-Central Tax (Rate), Entry 45 exempts legal services in specific scenarios:

Key point for small businesses: If your business had aggregate turnover below Rs. 20 lakh in the preceding financial year, legal services from an individual advocate (not a senior advocate) or a firm of advocates are exempt. You do not need to pay GST under RCM on those fees. This exemption does not extend to services from senior advocates or arbitral tribunals.

The Rs. 20 lakh threshold is based on the preceding financial year's turnover, not the current year. A newly started business with no preceding year turnover is treated as below the threshold.

No RCM on CA, CS, or Consulting Fees

A common misconception: reverse charge does not apply to fees paid to Chartered Accountants, Company Secretaries, Cost Accountants, management consultants, or architects. These professionals charge GST on their invoices through the normal forward charge mechanism.

The distinction matters for your GSTR ThreeB filing. CA and consultant fees appear under Table 3.1(a) as forward charge. Advocate fees appear under Table 3.1(d) as reverse charge. Mixing these up is a common audit flag.

Input Tax Credit on Professional Services

Businesses can claim ITC on GST paid for all professional services used for business purposes. This applies to both forward charge (CA, consultant invoices) and reverse charge (advocate fees paid under RCM).

Eligible ITC claims:

ITC conditions:

1. The service must be used for business purposes (not personal)
2. You must have a valid GST invoice from the supplier (for forward charge services)
3. The supplier must have filed their GSTR One, so the credit appears in your GSTR TwoB
4. For RCM payments, you must pay the GST in cash before claiming ITC
5. Accept the invoice in the Invoice Management System (IMS) on the GST portal

Blocked credits (Section 17 5), CGST Act): ITC on professional services is generally not blocked. However, if the professional service relates to construction of an immovable property (for example, an architect fee for building your own factory), the ITC may be blocked under Section 17 5)(d) unless the construction is for further supply (real estate developers, for example).

GST Registration Threshold for Professionals

Professionals providing services must register for GST when their aggregate turnover exceeds the threshold. The threshold for services is Rs. 20 lakh in most states and Rs. 10 lakh in special category states (Manipur, Mizoram, Nagaland, Tripura, Meghalaya, Arunachal Pradesh, Sikkim, Uttarakhand).

Practical reality for CAs and consultants: Most professionals serve clients across state borders. A CA in Hyderabad filing returns for a company registered in Mumbai is providing an inter-state service. This triggers mandatory GST registration regardless of the Rs. 20 lakh threshold.

Voluntary registration advantage: Even below the threshold, GST registration lets professionals claim ITC on office rent, software subscriptions, internet, and other business inputs. For professionals with significant input costs, voluntary registration often results in net savings.

Common Mistakes Businesses Make

1. Not paying RCM on advocate fees. Every invoice from an individual advocate or a firm of advocates to a business entity above the Rs. 20 lakh threshold triggers reverse charge. Skipping this creates a liability that surfaces during assessment with interest under Section 50 of the CGST Act.

2. Applying RCM to CA or consultant fees. Reverse charge applies only to legal services from advocates and arbitral tribunals. Paying your CA's invoice under RCM instead of forward charge creates classification errors in your GSTR ThreeB.

3. Ignoring the turnover threshold for the legal services exemption. If your preceding year turnover was below Rs. 20 lakh, you are exempt from RCM on most advocate fees. Paying RCM unnecessarily ties up cash (you pay first, then claim ITC).

4. Using wrong SAC code on invoices. A CA using SAC 998311 (management consulting) instead of 998221 (financial auditing) creates misclassification risk during audit. Match the code to the actual service performed.

5. Not reconciling GSTR TwoB for professional service credits. If your CA or consultant has not filed their GSTR One, the ITC will not appear in your GSTR TwoB and cannot be claimed. Reconcile monthly and follow up with vendors.

6. Professionals not registering for inter-state services. A consultant advising a client in another state must register for GST regardless of turnover. The Rs. 20 lakh threshold does not apply to inter-state service providers.

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Sources and verification: This guide draws from Notification 11/2017-Central Tax (Rate) dated 28 June 2017 for GST rates on professional services, Notification 13/2017-Central Tax (Rate) for reverse charge on legal services from advocates, and Notification 12/2017-Central Tax (Rate) Entry 45 for exemptions on legal services. SAC codes verified against the CBIC Scheme of Classification of Services (cbic-gst.gov.in/hindi/pdf/central-tax-rate/Notification11-CGST-Annexure.pdf). Registration thresholds confirmed via Section 22 and Section 24 of the CGST Act 2017. ITC provisions verified against Sections 16-17 of the CGST Act 2017, including blocked credits under Section 17 5). RCM provisions verified against Section 9 3) of the CGST Act and Section 5 3) of the IGST Act. All rates and rules current as of May 2026.