Supply of Security Services (Private Security Agency) to an educational institution

[Silu Jose]

Sirs,

Whether security services rendered by a private security agency to an educational institution established by a regimental fund of the Armed Forces (ie their income is exempt from income tax u/s 10 (23AA) is exempt from GST.

The institute conducts a four year graduation course in Hotel Management to students of retired/serving Army personnel.

Please share circular/notification reference in this regard.

Thank you

[Rajagopalan Ranganathan]

Sir,

According to Sl. No. 66 of Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 as amended Services provided to an educational institution, by way of security or cleaning or housekeeping services performed in such educational institution is chargeable to Nil rate of gst provided the exemption shall not applicable to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent.

Therefore you are not eligible to avail the exemption since you are providing a four year graduation course in Hotel Management to students of retired/serving Army personnel.

[KASTURI SETHI]

Security services were brought under Reverse Charge Mechanism vide Notification No.29/18-CT(R) dated 31.12.18 effective from 1.1.19 (Serial No.14) amending original notification no.13/17-CT(R) dated 28.6.17. as per the notification, service provider should be a person other than body corporate and service receiver must be a registered person in a taxable territory. Security services provided to an educational institution (up to Higher Secondary or equivalent ) is exempted from GST vide Notification No.12/17-CT(R) dated 28.6.17. No threshold exemption limit is available to the receiver of security service and hence registration for the receiver of service is compulsory under Section 24 (1)(iii) of CGST Act. Thus no exemption is available to the institute in the scenario explained by you. The exemption benefit accorded under the Income Tax Act cannot be compared with the CGST Act.

[Silu Jose]

Dear Sirs,

Thank you for your replies. Now, if the Institute is receiving the service from a GST registered non-corporate, then, is it mandatory that the Institute register itself for GST, so that GST on security services be paid on RCM basis?

As of now the Institute is not registered for GST. Can they opt out from GST registration by paying the GST through the registered service provider under the FCM method?

Thank you.

[KASTURI SETHI]

In the above scenario, if Security Service provider is a non-corporate body and receiver of the service is unregistered person (educational institution), then RCM is not applicable. In this situation, GST has to be paid under Forward Charge Mechanism by the service provider.

[Silu Jose]

Thank you Sir

AI Summary

GST exemption for security services not available to degree-level educational institutions; reverse charge applies only if recipient is registered. Notification No.12/2017 exempts security services only for institutions up to higher secondary; degree-level institutions do not qualify. Security services were shifted to the reverse charge mechanism where the provider is non-corporate and the recipient is a registered person; if the recipient is unregistered, the provider must charge GST under the forward charge mechanism. Income tax exemption does not affect GST eligibility.