The Bar Council of India (BCI) recently sent a clarification to all lawyer associations in Pune that the service tax introduced for lawyers in this year's budget is applicable only to legal firms and not to independent practicing lawyers. There was confusion among lawyers regarding the introduction of service tax and the Pune Bar Association (PBA) had condemned this decision.
The letter received by Labour Law Practitioners' Association (LLPA) said that only law firms will have to pay the service tax and not individual lawyers. The letter, signed by advocate Satish Talekar, member of Bar Council of Maharashtra and Goa, also mentions that some lawyers in the state had conducted strike against introduction of service tax, which is why the clarification is being issued.
Although the service tax will have to be paid only by law firms, clients of such firms will have to spend more.
"While we are alright with the decision of paying service tax, we will obviously have to charge more from our clients. Just as income tax is applicable to all earning individuals, there should not be a problem in paying service tax," said advocate Sukrut Khude of Khude and Khude Advocates, Shivajinagar. He however added that the government must keep service tax at its minimum.
When the decision was declared in the budget in July, Sudhakar Velankar, trustee, Grahak Hitvardhini had outrightly opposed the move.
"When there is no monitoring on the fees of lawyers, on what basis will the government incur service tax?" he had said. Velankar added that lawyers would naturally take to manipulate their income accounts to keep service tax at its minimum.