RCM Entry 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Entry 2 looks simple — advocates, reverse charge. It is not. The entry casts a wide net and the exemption notification then pulls most of it back, and the two operate on the same fact: what kind of person the client is, and how large.
Entry 2 of Notification No. 13/2017-CT(Rate), as substituted by Corrigendum GSR 1199(E) dated 25.09.2017, covers "services provided by an individual advocate including a senior advocate or firm of advocates by way of legal services, directly or indirectly" to any business entity located in the taxable territory. "Legal service" is defined in the entry itself to mean advice, consultancy or assistance in any branch of law, in any manner, and to include representational services. Entry 45 of Notification No. 12/2017-CT(Rate) then exempts the same services where the client is not a business entity, is a business entity below the registration threshold, or is government. Circular No. 27/01/2018-GST confirms that non-representational legal services are equally caught.
What the 2017 corrigendum changed
The entry as originally notified was narrower and clumsier. It read as services "supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity".
The corrigendum of 25.09.2017 replaced that with a single clean sentence and moved the width into the definition instead: legal service means any service in relation to advice, consultancy or assistance in any branch of law, in any manner, and includes representational services.
Read the definition carefully. Representation is included, not the boundary. Opinion work, drafting, due diligence, retainer advice and transaction support are all "assistance in a branch of law" and are inside the entry.
And the phrase "directly or indirectly" survives. A brief routed through another advocate or a firm does not break the chain — the business entity that is the client remains the recipient.
Who is an advocate, and who is a senior advocate
The definitions are borrowed, not invented:
- Advocate has the meaning in clause (a) of section 2(1) of the Advocates Act, 1961 — an advocate entered in any roll under that Act.
- Senior advocate has the meaning in section 16 of the Advocates Act, 1961 — an advocate designated as such, with consent, by the Supreme Court or a High Court by virtue of ability, standing at the Bar, or special knowledge or experience in law.
A firm of advocates is inside the entry, and by explanation (e) to Notification No. 13/2017-CT(Rate) inserted by Notification No. 22/2017-CT(Rate) dated 22.08.2017, an LLP formed under the LLP Act, 2008 is treated as a partnership firm — so an advocates' LLP is a firm of advocates for this purpose.
A person who is not an advocate is outside Entry 2 entirely. A chartered accountant, a company secretary, a cost accountant or an in-house counsel not on a roll does not attract this entry, whatever the subject matter of the advice.
"Business entity" and the litigant rule
Business entity means any person carrying out business. That is the whole definition — it does not require registration, incorporation or a turnover.
Clause (c) of the explanation to Notification No. 13/2017-CT(Rate) then fixes who the recipient is: the business entity located in the taxable territory who is the litigant, applicant or petitioner, as the case may be, is treated as the person who receives the legal services for the purposes of the notification.
That clause exists to defeat routing arguments. Where a brief is placed by a holding company, a group legal department, an insurer or another advocate, the notification does not chase the payer — it fixes on the party whose matter it is.
The exemption that decides most files: entry 45
Entry 2 has to be read with entry 45 of Notification No. 12/2017-CT(Rate) (heading 9982 or 9991), which exempts:
Under clause (b) — services by a partnership firm of advocates or an individual advocate other than a senior advocate, by way of legal services to:
- an advocate or partnership firm of advocates providing legal services;
- any person other than a business entity;
- a business entity with an aggregate turnover in the preceding financial year up to the amount that makes it eligible for exemption from registration under the CGST Act; or
- the Central Government, State Government, Union territory, local authority, Governmental Authority or Government Entity.
Under clause (c) — services by a senior advocate to the same categories, minus the advocate-to-advocate limb: any person other than a business entity, a small business entity as above, or government.
The threshold text is deliberately self-updating. Up to 30.09.2019 the limb read "twenty lakh rupees (ten lakh rupees in the case of special category States)". Notification No. 21/2019-CT(Rate) dated 30.09.2019 substituted the turnover figure with a reference to the registration threshold itself — so a change to the section 22 limit now flows through automatically without amending entry 45.
The practical shape of the rule:
| Client | Position |
|---|---|
| Individual, not in business | Exempt under entry 45 |
| Business entity below the registration threshold | Exempt under entry 45 |
| Business entity above the threshold | Reverse charge under Entry 2 |
| Government, local authority, Governmental Authority, Government Entity | Exempt under entry 45 |
| Another advocate or advocates' firm providing legal services | Exempt under entry 45(b) |
The clarification that closed the non-representation argument
Circular No. 27/01/2018-GST dated 04.01.2018 answered the question directly: are legal services other than representational services provided by an individual advocate or a senior advocate to a business entity liable under reverse charge?
Yes. "In case of legal services including representational services provided by an advocate including a senior advocate to a business entity, GST is required to be paid by the recipient of the service under reverse charge mechanism, i.e., the business entity."
What the business entity actually has to do
The Handbook's own illustration is the common case: a registered company engages an advocate who is unregistered because their turnover keeps them outside registration. The steps are unchanged by the advocate's status:
- The company generates a self-invoice under section 31(3)(f) for the service received.
- It pays GST under reverse charge from the electronic cash ledger — rule 85(4) forbids using the credit ledger.
- It claims ITC of that tax, the legal services being used in the course or furtherance of business.
A payment voucher under section 31(3)(g) is also required at the time of paying the advocate.
The advocate's own registration position is worth stating. By section 23(2) read with Notification No. 5/2017-Central Tax dated 19.06.2017, a person engaged only in making supplies on which the whole tax is payable by the recipient under section 9(3) is exempt from obtaining registration. An advocate whose entire practice is with business entities above the threshold therefore need not register at all.
Key takeaways
- Entry 2 covers all legal services, not only representation — the definition in the entry says advice, consultancy or assistance in any branch of law, and includes representation.
- "Directly or indirectly" defeats routing through another advocate or firm.
- An advocates' LLP is a firm of advocates, by explanation (e) inserted on 22.08.2017.
- Clause (c) of the explanation fixes the recipient as the litigant, applicant or petitioner.
- Entry 45 of Notification No. 12/2017-CT(Rate) exempts services to non-business persons, small business entities below the registration threshold, and government — the threshold limb being self-updating since 30.09.2019.
- Circular No. 27/01/2018-GST confirms non-representational work is caught.
- An advocate supplying only RCM services need not register, under Notification No. 5/2017-Central Tax.
Read next
- RCM Entry 3: Services of an Arbitral Tribunal
- ITC on Reverse Charge Tax: Conditions, Timing and the ISD Route
- RCM Entry 5: Government Services to a Business Entity
Disclaimer: Positions stated as on 5 September 2026, based on entry 2 of Notification No. 13/2017-Central Tax (Rate) as substituted by Corrigendum GSR 1199(E) dated 25 September 2017, entry 45 of Notification No. 12/2017-Central Tax (Rate) as amended by Notification No. 21/2019-Central Tax (Rate), Notification No. 5/2017-Central Tax, and Circular No. 27/01/2018-GST, as reproduced in the ICAI Handbook on Reverse Charge under GST (2nd edition, February 2025).