Reverse Charge:

As per section 2(98) of CGST Act’ 2017, “Reverse Charge” means the liability to pay tax by the recipient of the supply of goods or services or both instead of the supplier of such goods or services or both.

Security Service:

The term Security Service is not defined in the CGST Act, 2017. As per general understanding, Security service is a service wherein a person supplies security personnel to another person for a consideration.

GST applicability:

GST on security services was applicable from 1st of July 2017 on forward charge but it has been brought under Reverse Charge Mechanism (RCM) from 1st January 2019 based on Notification No. 29/2018- Central Tax (Rate), dated 31st December, 2018

Extract of the Notice:

Sl. No. Category of Supply of Services Supplier of service Recipient of service
14 Security services (services provided by way of supply of security personnel) provided to a registered person:

Provided that nothing contained in this entry shall apply to, –

(i) (a) a Department or Establishment of the Central Government or State Government or Union territory; or

(b) local authority; or

(c) Governmental agencies;
which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only for the purpose of deducting tax under section 51 of the said Act and not for making a taxable supply of
goods or services; or

(ii) a registered person paying tax under section 10 of the said Act.

Any person other than a
body corporate
A registered person,
located in the taxable


RCM is applicable only when the security service is provided to a registered person.

RCM on Security service is applicable only when the supplier of service is any person other than a body corporate. For eg., if a Proprietory Concern or a Partnership Firm provides security services to a registered person then RCM is applicable but if a Private Limited Company providing Security services attracts forward charge and does not attract RCM.

Few points to be considered:

  1. An LLP is considered as body corporate as per section 2(d) of Limited Liability Partnership Act, 2008
  2. If recipient of service is not a registered person then GST liability to be paid by supplier on forward charge though he is not a body corporate.
  3. A person liable to tax under RCM shall compulsorily register under GST and thresh hold limit of 20/40 lakhs does not apply in such cases.
  4. RCM is not applicable for a registered person who has taken registration as a Composition dealer under section 10 of the CGST Act 2017
  5. Liability under RCM has to be discharged in cash and shall not be adjusted with the Input Tax Credit available.

Time of supply for Services (Security Service)

The time of supply will be the earlier of the following dates:
a) date of payment as per books of account or date of debit in bank account, whichever is earlier; or
b) the date immediately following sixty days from the date of issue of invoice by the supplier.

Where it is not possible to determine the time of supply from above 2 options then time of supply shall be the date of entry in the books of accounts of the recipient of supply. 

Implication of supplier of service paying Tax under RCM

If supplier of service being not Body corporate is including GST in their invoices and collecting and paying the GST liability, does this release the burden of recipient to pay tax on Reverse Charge Basis? Answer is No. As per the CGST Act, the burden is on the recipient of goods or services to pay the liability therefore a supplier collecting and paying GST shall not waive off the liability of recipient to pay the tax.

Input Tax Credit

A supplier of goods or service cannot avail input tax credit where the liability of tax to be paid is on the recipient of goods or services.

A recipient of goods and services can avail the input tax credit for the amount discharged by him under reverse charge. Credit can be availed only when the liability is discharged and not before that.

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  1. Manojit Ghosh says:

    Your comments as referred in Point No. 4 under “Few Points to be considered” as RCM is not applicable for a registered person who has taken registration as a Composition dealer under section 10 of the CGST Act 2017 is not correct.

    RCM tax is to be paid by Composite Registered dealer u/s 10 of CGST Act,2017 also.

  2. PRABHAKAR says:

    In some other Articles on GST implications on Security services, there was no information on ‘in case service provided to Non-registered persons’. In this article, second point on ‘Few points to be considered’ answered my doubt. Thanks.

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June 2021