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. However, in the old regime of Service Tax, the term Security Agency was defined under section Section 65(94) of Finance Act, 1994; which is reproduced as under:
“Security agency” means any person engaged in the business of rendering services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity, whether of a personal nature or otherwise, including the services of providing security personnel.
Applicability of GST
GST is applicable on Security services with effect from 1st July, 2017 under Forward Charge Mechanism (FCM) wherein the provider of security services is liable to pay GST. However, with effect from 1st January, 2019, the Govt. has introduced Reverse Charge Mechanism (RCM) on certain types of persons, wherein the person receiving the security service will be liable to pay GST.
The relevant extract of the notification of RCM (Notification No. 29/2018- Central Tax (Rate), dated 31st December, 2018) is reproduced as below:
|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;
(ii) a registered person paying tax under section 10 of the said Act.
|Any person other than a
|A registered person,
located in the taxable
As per section 2(d) of Limited Liability Partnership Act, 2008, the term Body Corporate includes a Limited Liability Partnership (LLP). The entire applicability provision can be analysed from following table:
|Supplier||Recipient||Applicable Charge||Who is Liable to Pay|
|Company / LLP||Registered / Unregistered||Forward Charge||Supplier|
|Other than Company / LLP||Registered||Reverse Charge||Recipient|
|Other than Company / LLP||Unregistered||Forward Charge||Supplier|
|Other than Company / LLP||Registered
i) Govt. Dept. (registered only for TDS)
ii) Composition Dealer
It is recommended for the supplier to verify/obtain suitable declaration from the recipients to ensure that they are covered under RCM before opting not to pay the tax on Forward Charge. The views and opinions expressed in this article are those of the author and are strictly personal and the author does not take any responsibility.