GST on Security Services
It is noteworthy that the term security service is not defined under the GST Act. However, in general terms, a security service provides a service for the protection of any object (movable or immovable) or the protection of any person in any way. Unlike the previous law, initially, the rules of the reverse charge mechanism (i.e. GST paid by the service receiver) did not apply to the security service. However, from 1 January 2019, within the boundaries of the reverse charge mechanism bring the security service. The current article provides a comprehensive analysis of the GST on security services.
GST Registration for Security Services
Most companies interested in providing security services need to register because they have annual sales of over Rs 20 lakh or may commit to providing interstate assistance. In addition, all security service providers with existing service tax registration must complete the GST registration and obtain the GSTIN. Finally, to perform a security service in India, the company must have a security guard service license.
GST on Security Services in India
The SAC codes mentioned above come under an 18% GST application. This means that most services within India will charge at a fixed rate of 18%.
The following two types of security services are exempt in India:
- Security services are provided to an educational institution in the form of security, home maintenance, or cleaning.
- Security services for any person or person engaged in a foreign diplomatic mission or diplomatic post in India for personal or professional use.
Payment of GST on Security Service the period 1st July 2017 till 31st December 2018
From the date of implementation of GST, i.e. from 1st July 2017 to 31st December 2018, GST for security service is payable by the service provider. In other words, until 31 December 2018, the GST for security service must pay under the Forward Charging Mechanism.
Payment of GST on Security Service on or after 1st January 2019
Detailed notice no. 29/2018 Federal Tax (Rate) dated – 31 December 2018, GST Terms are subject to various changes to apply to GST charges in the Security Service.
Follow the notice above; the reverse charge mechanism has changed to be useful for security service. The reverse charge mechanism only applies to security services and only if all the conditions mentioned below are satisfied.
Payment on GST on security services
In other words, if all the following conditions met, the service provider will pay GST-
- Service – Description of the security service (services provided by security personnel).
- Security Service Provider – Any person other than the physical entity.
- Service Recipient – A registered person located in the taxable area.
Important here is the term ‘Body Corporate’ provided under Section 2 (11) of the Companies Act, 2013. By the stated definition, the following are subject to the term ‘Body Corporate’ –
- A company.
- Limited liability partnership.
- Any company/organization affiliated outside India
If all the above conditions are satisfied, the service recipient. will pay GST. However, the notice also provides a list of exceptions, meaning that the reverse charging mechanism does not apply in the following cases (i.e., GST will be paid by the service provider in the following cases)
- A registered person paying taxes under the compounding scheme; and
- A department/institution of the Central/State Government or Union Territory; A local authority or a government agency which has taken GST registration only for the purpose of paying DTS under Section 51.