GST on Professional Services: Rates, SAC Codes and RCM (2026)

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

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 ₹5 crore must mention the full 6-digit SAC code on every invoice. Businesses below ₹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-3B (Table 3.1(d))
4. You claim the same amount as ITC in the same GSTR-3B return (Table 4(A)(2))
5. Net cash impact is zero if you have sufficient output liability to offset

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

• Advocate invoices ₹1,00,000 (no GST charged)
• You self-assess ₹18,000 GST (18% of ₹1,00,000)
• You pay ₹18,000 in your GSTR-3B under RCM
• You claim ₹18,000 as ITC in the same return
• Your net additional cost: ₹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 ₹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 ₹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 ₹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-3B 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-1, so the credit appears in your GSTR-2B
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 ₹20 lakh in most states and ₹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 ₹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 ₹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-3B.

3. Ignoring the turnover threshold for the legal services exemption. If your preceding year turnover was below ₹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-2B for professional service credits. If your CA or consultant has not filed their GSTR-1, the ITC will not appear in your GSTR-2B 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 ₹20 lakh threshold does not apply to inter-state service providers.

Frequently Asked Questions

What is the GST rate on professional services in India?

18% GST applies to all professional services in India, including Chartered Accountant fees, legal services, management consulting, architecture, engineering, company secretarial services, and tax consulting. The rate is uniform at 9% CGST + 9% SGST for intra-state or 18% IGST for inter-state transactions.

Do I need to pay GST under reverse charge on my lawyer's fees?

Yes, if your business entity had aggregate turnover exceeding ₹20 lakh in the preceding financial year. Under Notification 13/2017-CT(Rate), when a business entity receives legal services from an individual advocate or a firm of advocates, the recipient must self-assess and pay 18% GST under RCM. You can claim this as ITC in the same GSTR-3B return. If your preceding year turnover was below ₹20 lakh, the legal services from an individual advocate (not a senior advocate) are exempt.

Does reverse charge apply to CA or management consultant fees?

No. Reverse charge under GST applies only to legal services from individual advocates, senior advocates, firms of advocates, and arbitral tribunals. CA, Company Secretary, Cost Accountant, management consultant, architect, and engineering fees follow the normal forward charge model where the professional charges 18% GST on their invoice.

Which SAC code should a Chartered Accountant use on invoices?

CAs should use SAC 998221 for financial auditing services (statutory audit, internal audit, tax audit) and SAC 998222 for accounting and bookkeeping services. For tax consulting and return preparation, use SAC 998231 (corporate) or 998232 (individual). The 4-digit heading 9982 is acceptable for businesses with turnover below ₹5 crore, but the 6-digit code is recommended.

Can my business claim ITC on fees paid to a CA or lawyer?

Yes. Businesses can claim ITC on GST paid for all professional services used for business purposes. For CA and consultant fees, claim ITC from the forward charge invoice via GSTR-2B. For advocate fees paid under RCM, claim ITC in the same GSTR-3B return where you report the reverse charge payment. The net cash impact of RCM is zero if you have sufficient taxable output.

When must a CA or consultant register for GST?

GST registration is mandatory when aggregate turnover in a financial year exceeds ₹20 lakh (₹10 lakh in special category states). However, if you provide services to clients in other states, registration is mandatory from the first inter-state transaction regardless of turnover. Most professionals serving clients across India need GST registration from day one.

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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.