The legal community is divided over the Finance Minister's decision to impose service tax on advisory, consultancy and technical services they provide to corporate houses.
While law firms opposing the proposal said that they would take up the matter with the Finance Minister, the Bar Council of India said that it welcomes the move.
Finance Minister Pranab Mukherjee, while presenting the Budget 2009-10, said, "I propose to extend service tax on advice, consultancy, or technical assistance provided in the field of law."
Society of Indian Law Firms President Lalit Bhasin said, "It is a (retrograde) step."
"Instead of helping, strengthening and promoting Indian law firms, the government is trying to substantially weaken them, and they are facing the threat of entry of foreign firms in the country," said Bhasin.
Meanwhile, Bar Council of India Chairman S N P Sinha welcomed the government move and said that all firms should be taxed and many of them have collaboration with foreign firms.
"The government of India has taken a wise decision by imposing tax. In the wake of the recently passed Limited Liability Partnership Act, foreign law firms are making (back-door) entry through joint ventures and collaboration. Thus they are justified in imposing tax," said Sinha.