Last updated: December 17th, 2019 5:20 PM

GST on Security Service

It is interesting to note that the term Security Service is not defined under the GST Act. However, in common parlance, Security Service means service rendered by any person towards the security of any property (whether movable or immovable) or security of any person in any manner. Unlike the erstwhile law, initially, the provisions of Reverse Charge Mechanism (i.e. GST payable by service receiver) were not made applicable to the Security Service. However, from 1^st January 2019, the Security Service has been brought into the purview of Reverse Charge Mechanism. The present article provides a detailed analysis of GST payment under Security Service. Payment of GST on Security Service the period 1^st July 2017 till 31^st December 2018 From the date of implementation of GST, i.e. 1^st July 2017 till 31^st December 2018, GST on Security Service was payable by the service provider. In other words, till 31^st December 2018, GST on Security Service was payable under Forward Charge Mechanism. Payment of GST on Security Service on or after 1^st January 2019 Vide notification no. 29/2018 – Central Tax (Rate) dated 31^st December 2018, GST provisions as applicable to GST payment on Security Service has undergone various changes. Vide the above-referred notification, Reverse Charge Mechanism has been made effective to the Security Service. Reverse Charge Mechanism is applicable to the Security Service only and only if all the below mentioned conditions gets satisfied. In other words, GST is payable by the service servicer, in case all the below conditions are satisfied–

1. Description of Service–Security Service (services provided by way of supply of Security Personnel).

2. Service Provider–Any person other than a body corporate.

Here it is important to under the term ‘body corporate’ which is provided under Section 2(11) of the Companies Act, 2013. As per the said definition, following are covered under the term ‘body corporate’–

• A Company.
• Limited Liability Partnership.
• Any company/corporation incorporated outside India.

3. Service Receiver–A registered person located in the taxable territory.

If all the above conditions are satisfied, then, the GST is payable by the Service Receiver. However, the notification also provides the list of exception, i.e. Reverse Charge Mechanism will not apply in the following cases (i.e. in below cases, GST is payable by the Service Provider)–

1. A registered person paying tax under composition scheme; and
2. A Department/establishment of the Central/State Government or the Union territory; a local authority or a Government agency who has taken GST registration only for the purpose of TDS payment under Section 51.

The following table would help to understand the effect of the Reverse Charge Mechanism under different situation:

Service provider	Service receiver	Person liable to pay GST	Reason
Company	Registered person	Service provider	Company is a body corporate and hence doesn’t satisfy the condition no.2 above
Individual	Registered person	Service receiver	All the required conditions are satisfied, and hence GST is payable under the Reverse Charge Mechanism
Partnership Firm	Registered person	Service receiver	All the required conditions are satisfied, and hence GST is payable under the Reverse Charge Mechanism
Limited Liability Partnership Firm	Registered person	Service provider	Limited Liability Partnership is a body corporate and hence doesn’t satisfy condition no.2 above
Hindu Undivided Family	Registered person	Service receiver	All the required conditions are satisfied, and hence GST is payable under the Reverse Charge Mechanism
Any assessee	Unregistered person	Service provider	Since the service receiver is an unregistered person, condition no.3 is not satisfied.