RCM on Security Charges applicable on inward supply of security charges

[chandan bera]

Dear Sir/Madam,

We, register regular tax payer under GST Act, have received security service from a registered supplier and values of the total contract in a year exceed 2.5 lakh.

Q1) form 01/01/2019 as per Notification No. 29/2018- Central Tax (Rate) liable to pay GST on reverse charge?

Q2) forms 01/01/2019 as per Notification No. 29/2018- Central Tax (Rate) liable to deduct TDS as per GST Act?

[KASTURI SETHI]

Reply to Q. No.1 : If your firm is body corporate business entity and you receive security service from any person i.e. Partnership firm, Proprietorship, LLP, One person co., individual etc. you are required to pay GST under RCM. No threshold exemption limit is admissible under RCM.

Reply to Q.No.2 : It is not relevant for you it is for GTA who supply services Govt. registered under GST for deduction of tax at source under Section 51 of CGST Act, 2017.

[Ganeshan Kalyani]

With effect from 01.01.2019, the security services (services provided by way of supply of security personnel) provided by any person other than a body corporate to a registered person is brought under reverse charge mechanism. A registered person receiving the security service from any person other than a body corporate shall pay tax under reverse charge. However, in you case if a registered person other than body corporate is providing the services to you then you have to pay GST under reverse charge. And if he is a body corporate providing security service to you then he will charge tax on the invoice, collect the tax from you and pay to the Government.

[chandan bera]

Sir/Madam,

we are the partnership firm and as per your replay security service provider except body corporate not required to charge gst on their outward invoice and we have to paid under RCM basics.

[Ganeshan Kalyani]

You, being receiver of service, are a partnership firm. What is the status of service provider ?. Is he a body corporate? if yes, then he will charge GST on invoice and you need not have to pay GST under reverse charge. If he is not then you will have to pay GST under reverse charge.

[Prudhvi Jakkula]

KASTURI SETHI sir

You said that if the firm is body corporate and service provider is any registered person RCM will not applicable. But if the service provider is also body corporate then the firm should pay tax in RCM.

Correct me if wrong

[Ganeshan Kalyani]

If both service provider and the service receiver are body corporate then body corporate providing service will charge GST on the invoice. RCM will be applicable in this case. However, as desired by the querist, the views of Sri Kasturi Sir is welcomed.

[Ganeshan Kalyani]

Please read ''RCM will not be applicable'' in this case in second sentence of my last reply.

[KASTURI SETHI]

Sh. Prudhvi Jakkula Ji,

Yes, you are right. You have understood the concept of security service along with RCM. You are yourself expert. There is not even an iota of doubt.

[Spudarjunan S]

Dear Sir,

PFA the analysis to your Q.1 -

Description of Service	To be paid by - Recipient being	Notification No.	W.e.f.
Security services (services by way of supply of security personnel) provided by other than body corporate. Refer below for exceptions.	Any registered person, located in the taxable territory.	30/2018-Integrated Tax(Rate)29/2018-Central Tax(Rate)	01.01.2019

Exceptions to above provisions:-

Security services when provided to the following persons doesn't attract RCM:-

(1) A department or establishment of the Central Government or State Government or Union Territory; or

(2) local authority; or

(3) Government agencies which has taken registration under the GST only for the purpose of deducting tax under section 51 and not for making a taxable supply of goods or services; or

(4) A person registered under composition scheme (as per section 10 of CGST Act).

Reply to Q.2

TDS provisions under GST will be applicable only under Section 51 of CGST Act which says deduction of tax by the Government Agencies (Deductor) or any other person to be notified in this regard, from the payment made or credited to the supplier (Deductee) of taxable goods or services or both, where the total value of such supply, under a contract, exceeds two lakhs and fifty thousand rupees.

Presently, the persons liable to deduct TDS under GST are:-

1. a department or establishment of the Central Government or State Government;

2. Local Authority;

3. Governmental Agencies;

4. an authority or a board or any other body, -

a. Set up by an Act of Parliament or a State Legislature; or

b. Established by any Government, with fifty-one per cent. or more participation by way of equity or control, to carry out any function;

5. Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860 (21 of 1860);

6. Public sector undertakings.

Unless otherwise you are a person as listed above and falling under the scenario as explained earlier there is no need of deducting TDS under GST.

AI Summary

Reverse charge on security services: recipient pays GST when supplier is not a body corporate; otherwise supplier invoices GST. From 01.01.2019, security services supplied by persons other than a body corporate to a registered recipient are taxable under the reverse charge mechanism and the recipient must pay GST; no threshold exemption applies. If the supplier is a body corporate, the supplier charges GST on the invoice and RCM does not apply. Specified exceptions (government departments, local authorities, government agencies registered only for TDS purposes, and composition scheme taxpayers) are excluded from RCM. Tax deduction at source under GST is a separate regime limited to specified government or notified deductors and does not apply to ordinary taxpayers like partnership firms unless they are so notified.