Fees
Your professional income. Raise a fee note, even if you are paid in advance, and keep it by matter.
Industry
Accounting for lawyers starts with whose money it is
Advocates often hold or spend money for clients, as well as earning fees. Mixing those two is the biggest source of confusion in a legal practice's books. This page covers the accounts of an advocate's own practice or a law firm.
Three kinds of money coming in
Bank credits in a law practice are not all income. Record each kind against the matter and the client.
Client expenses
Court fees, stamp paper and travel that you pay for a client. Ask Deepak Mittal how to record the recovery, because the treatment depends on the arrangement.
Money held for a client
For example, settlement amounts or deposits. This is not your income. Keep it clearly identifiable, and discuss with Deepak Mittal how it should be recorded in your books.
GST: reverse charge changes who pays
Under Notification 13/2017-Central Tax (Rate), GST on legal services by an individual advocate, a senior advocate or a firm of advocates to a business entity is paid by the client under reverse charge. Notification 12/2017-Central Tax (Rate) exempts legal services to anyone who is not a business entity, and to a business entity whose turnover in the previous year was within ₹20 lakh.
Non-legal services, such as tax filing or accounting provided by a law firm, may fall outside this rule. Have your receipts reviewed if you offer anything beyond legal work. Check the current text of the notification.
What your fee note should show
- Your name or firm's name, and the date
- Client and matter
- Professional fees, stated separately from any expenses
- Whether the client is a business entity, if relevant to GST
- Any TDS the client tells you it will deduct
Check the format with Deepak Mittal, and any rules that apply to you as an advocate.
Records that save trouble
- A matter list: client, fee agreed, billed, received and outstanding.
- TDS by client: corporate clients may deduct tax. Match it against your annual statement before you file.
- Office costs: clerk's pay, chamber rent, books, subscriptions and travel, kept apart from personal costs.
- Cash receipts: receipted and recorded the same day.
- Partners or associates: a clear record of shares and payments to each.
Income tax questions to raise
Legal is a specified profession under section 62(4) of the Income-tax Act, 2025, so books must be kept. Section 58 offers a presumptive basis of 50% of receipts for a resident individual or firm (not an LLP), up to ₹50 lakh, or ₹75 lakh if cash receipts are within 5%. Ask whether it suits you, and about advance tax.
Confidentiality
Your books contain client names and matters. Tell Deepak Mittal what must not be shared, use narrations that do not reveal case details, and agree how files are stored. Your own professional duties continue when you outsource.
Questions to ask Deepak Mittal before work starts
- How will you separate fees, client expenses and client money?
- How do you treat reverse charge when billing business clients?
- Can you report outstanding fees by matter?
- How do you protect client confidentiality?
Sources checked, November 2026
- Notification 13/2017-Central Tax (Rate), entry 2, with corrigendum (opens in a new tab); Notification 12/2017-Central Tax (Rate), consolidated (opens in a new tab), entry 45 (read at source, 10 November 2026)
- Income-tax Act, 2025, Gazette copy (opens in a new tab), sections 58 and 62 (read at source)
- Bar and Bench (opens in a new tab), SS Rana on GST for law firms (opens in a new tab) (secondary)
Fees, client expenses and TDS to separate?
Tell us whether you practise alone or as a firm, how you bill clients, and whether you hold money on their behalf.
