Arjuna (Fictional Character): Krishna, “Chowkidaar” word is nowadays famous in political world . However are there any changes occurred regarding “Chowkidaar ki services” that is Security Services on 31st of December. What are the changes brought in?
Krishna (Fictional Character): Yes Arjuna, the word “ Chowkidaar “ Security Services’ has become a big topic of discussion nowadays and Security Service Provider as well as Receiver, both Taxpayers need to be aware of the newchanges. Let’s discuss about the same.
From 1st January, 2019, Government has made certain changes in Tax Rates. As per the changes made, Security Service Provider has been exempted from GST liability for non corporate suppliers . The changes made the Security Service taxable under RCM which means Security Service Receiver who will be a registered taxpayer have to bear the GST liability.
Arjuna (Fictional Character): Krishna, what were the tax provisions for Security Services previously?
Krishna (Fictional Character): Arjuna, under Service Tax, Security Services were taxable under RCM. However, under GST, it was kept out of RCM and therefore it was taxable at 18 % GST. Whereas, as per the changes brought in by Government on 31st December, 2018 , RCM will be applicable for Security Services under GST.
Arjuna (Fictional Character): Krishna, what are the provisions applicable to Service Provider?
Krishna (Fictional Character): Arjuna, when a Security Service Provider (other than Company) provide servicesto a registered person, then such Service Receiver will be liable to pay tax under RCM. The Service Provider will not make the tax payment. So, the Service Provider will not be able to issue Tax Invoice to the Service Receiver for the services rendered, resulting in issue of Bill of Supply instead.
Arjuna (Fictional Character): Krishna, what should the Service Receiver do?
Krishna (Fictional Character): Arjuna, when the Security Service Receiver receives services from any person (other than company), the Service Receiver shall be liable to pay tax under RCM. The Service Receiver can claim ITC for the same. For example, A provides Security Service to B before 31stDecember,2018; then A will have to pay tax. Whereas, now A being any person (other than company) provides Security Service to B after 31st December,2018; then B will be liable to pay tax under RCM.
Arjuna (Fictional Character): Krishna, what if the Company provides Security Services?
Krishna (Fictional Character): Arjuna, in the case where Company is a Security Service Provider, it has to pay tax at 18 % GST. This service will not be taxable under RCM. Therefore, Service Provider will have to issue Tax Invoice in this case.
Arjuna (Fictional Character): Krishna, What lesson should the Taxpayer draw from this?
Krishna (Fictional Character): Arjuna, the Taxpayers should understand well before taking Security Services because Government has brought provision of RCM for the same from 1st January, 2019. The Taxpayers should note the changes in law properly and pay the taxes thereby for their safety. Thus, the work of a “Chowkidaar “Security Personnel is to get hold of the thieves whereas lack of attention to GST would result in tax evasion, therefore for “Chowkidaar “ providing Security Services, one needs to be alert!
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Dear Sir,
Can we claim ITC after payment of Tax under RCM on Security services.
ABC is a Security Agency regd. under GST but is not a Body Corporate.
XYZ is a Coop Society not regd. under GST since its Turnover is less than the thresh hold limit. XYZ has not taken any voluntary registration.
Under the circumstances, till 31.12.2018 ABC was raising monthly bills on XYZ with 18% GST. XYZ was however not able to claim ITC thereof it being not regd. under GST
However, wef 01.01.2019 ABC will be raising monthly bills on XYZ without 18% GST
Will this not result in decrease in the revenue of Govt. as compared to the era post 01.01.2019
What to be done in case of If security service provider collecting tax from service receiver/ raise the tax invoice with gst.
Security service provider under RCM has to issue TAX INVOICE and not bill of supply and in tax invoice there is a coloum `whether tax is payable under RCM`.
Further bill of supply is to be issued only by composition dealers and if the supply is related to exemted goods. Security servcie is not an exempted but taxable and tax to be paid under RCM by specified persons.
pls endorse your views.
What will be situation where the security service provider is a firm and not a company registered with ROC. I think provision of RCM is to ensure GST through registered service receiver as the service provider may not be an entity under the scanner of GST authority.
Please clarify.