GST taxability in case of supply of security gaurd services----Reverse charge or forward charge

[milan bamal]

Dear Respected Members,

We have two entities engaged in the business of supplying security guard services:

1. A Private Limited Company
2. A Proprietorship Firm

Both provide security guard services to registered clients.

I would like clarification on the following points:

1. In the case of the Private Limited Company, should the monthly invoice be issued under Forward Charge or Reverse Charge Mechanism (RCM)?
2. In the case of the Proprietorship Firm, should the monthly invoice be issued under Forward Charge or Reverse Charge Mechanism (RCM)?
3. Please mention the relevant GST provisions/notifications supporting your answer.

[Sanjeev Agarwal]

GST on Security Guard Services - Private Limited Company vs. Proprietorship

The GST liability depends on whether the supplier is a body corporate.

1. Private Limited Company

A Private Limited Company is a body corporate under Section 2(11) of the Companies Act, 2013.

Since Entry 14 of Notification No. 13/2017-Central Tax (Rate) (as amended by Notification No. 29/2018-Central Tax (Rate)) applies only when the supplier is any person other than a body corporate, it does not apply to a Private Limited Company.

GST Treatment: Forward Charge

• The company issues a tax invoice charging applicable GST.
• It collects and pays GST to the Government.

2. Proprietorship Firm

A proprietorship is not a body corporate.

Accordingly, where a proprietorship supplies security guard services to a registered person, GST is payable by the recipient under Reverse Charge Mechanism (RCM) under Section 9(3) of the CGST Act, 2017 read with Notification No. 13/2017-CT (Rate), Entry 14, as amended.

GST Treatment:

• Registered recipient: RCM (recipient pays GST).
• Unregistered recipient: Forward Charge (supplier charges GST).

Summary

Supplier	Recipient	GST Mechanism
Private Limited Company	Registered / Unregistered	Forward Charge
Proprietorship Firm	Registered Person	Reverse Charge (RCM)
Proprietorship Firm	Unregistered Person	Forward Charge

Relevant Provisions

• Section 9(3), CGST Act, 2017
• Notification No. 13/2017-Central Tax (Rate) dated 28.06.2017, Entry 14
• Notification No. 29/2018-Central Tax (Rate) dated 31.12.2018 (security services under RCM)

[KASTURI SETHI]

1. In the case of the Private Limited Company, should the monthly invoice be issued under Forward Charge or Reverse Charge Mechanism (RCM) ?

Ans. Invoice is required to be issued under Forward Charge Mechanism because Private Ltd. Company is a body corporate.

2. In the case of the Proprietorship Firm, should the monthly invoice be issued under Forward Charge or Reverse Charge Mechanism (RCM) ?

Ans. Under Reverse Charge Mechanism.

1. Please mention the relevant GST provisions/notifications supporting your answer. Notification No.29/2018-CT(R) dated 31.12.2018 effective from 1.1.2019.

[Shilpi Jain]

Company to charge GST under FCM

Proprietor when supplies to a registered person - liable under RCM.

In other cases - i.e. is proprietor supplying to an unregistered person - to pay under FCM.

[Shilpi Jain]

Though one more aspect to note is that the services should be by way of supply of security personnel

AI Summary

GST on security personnel services follows forward charge for companies and reverse charge for proprietorship supplies to registered recipients.
GST treatment of security personnel services depends on the supplier's status and the recipient's registration. A private limited company, as a body corporate, is liable to charge and pay GST under forward charge. A proprietorship firm supplying security personnel services to a registered person is covered by reverse charge, with GST payable by the recipient. If the proprietorship supplies to an unregistered recipient, GST applies under forward charge and is payable by the supplier.