Supplier :- Any person other than a body corporate
Recipient :- A registered person located in a taxable territory other than government department, local authority or governmental agencies registered only under section 51 and a person registered under section 10.
Services provided by way of supply of security personnel, commonly referred to as security services, have been notified for reverse charge under Entry No. 14 of Notification No. 13/2017-Central Tax (Rate). As per this entry, when a supplier of security services, other than a body corporate, provides such services to a registered person, the recipient is liable to pay GST under reverse charge. This entry was introduced via Notification No. 29/2018-Central Tax (Rate), effective from 1st January 2019.
The term "security services" in this context refers specifically to services by way of supply of security personnel, such as guards, gunmen, bouncers, and similar manpower services typically engaged to ensure physical safety of premises or persons. This entry does not include electronic surveillance, equipment supply, or installation services-those would be covered under separate provisions.
The key condition for the applicability of this RCM entry is that the supplier must not be a body corporate, Hence our earlier discussion regarding whether LLP is a body corporate or not becomes relevant. As we discussed earlier in detail, LLP needs to be considered as body corporate.
However, there are two important exclusions built into this entry. The reverse charge shall not apply where the recipient is registered under :-
Section 51 of the CGST Act :- This covers government departments or establishments, local authorities, or governmental agencies that are registered under GST only for the purpose of deducting tax at source (TDS). If such an entity receives security services from a non-body corporate, RCM shall not apply, and the supplier must charge GST under forward charge, if liable to register.
Section 10 of the CGST Act :- This covers composition taxpayers. If a person registered under the composition scheme receives security services from a non-body corporate, RCM shall not apply, and the supplier shall be liable to pay GST under forward charge, if they exceed the threshold for registration.
This ensures that the burden of GST compliance is not shifted to persons who are not required to discharge outward tax liabilities under normal provisions- i.e., composition dealers and government departments registered only for TDS.
Where the supplier of security services is a body corporate, such as a private limited company or public limited company, RCM is not applicable, irrespective of the recipient's status. In such cases, the body corporate must charge GST under forward charge, issue a tax invoice, and comply with all related obligations.
To illustrate :-
If M/s SafeGuard Security, a proprietary concern, supplies guards to XYZ Pvt. Ltd., a regular registered company, RCM will apply, and XYZ Pvt. Ltd. will be liable to pay 18% GST under reverse charge.
If the same services are provided to ABC Ltd. by SecureCorp Pvt. Ltd. (a body corporate), RCM will not apply, and the supplier, SecureCorp, must charge GST under forward charge.
If M/s Shree Agencies, a non-body corporate, provides security services to a district education office registered only under Section 51 for TDS, then again, RCM does not apply, and the supplier must charge GST under forward charge, if registered.
Similarly, if a composition dealer receives such services from a non-body corporate, the supplier must discharge GST liability under forward charge, and RCM will not apply.