SAC Code and GST on Security Services

After the implementation of GST, the GST Council in India introduced the GST on security services. The Council fixed the GST on services based on SAC Code or Services Accounting Code, the services classification system developed by the erstwhile service tax department for levy of service tax. GST rate for services fall under five slabs namely 0%, 5%, 12%, 18% and 28%. In this article, we look at the GST rate for security services in detail.

GST Registration for Security Services

Most entities involved in providing security services would have to obtain

GST registration, as they would have an annual sales turnover above Rs.20 lakhs or be involved in providing an inter-state supply of services. Also, all security service providers having an existing service tax registration would have to mandatorily complete GST migration and obtain GSTIN. Finally, to operate a security service in India, the entity must have a security guard service license.

SAC Code for Investigation and Security Services

The following SAC codes are applicable for investigation and security services:

S.No.	SAC Code	Services
1	SAC Code 998521	Investigation services
2	SAC Code 998522	Security consulting services
3	SAC Code 998523	Security systems services
4	SAC Code 998524	Armoured car services
5	SAC Code 998525	Guard services
6	SAC Code 998526	Training of guard dogs
7	SAC Code 998527	Polygraph services
8	SAC Code 998528	Fingerprinting services
9	SAC Code 998529	Other security services

GST Rate

As per the GST Council, 18% of GST rate applies for the above types of security services. Proper documentation must be taken by the taxable person under GST to ensure that while raising GST tax invoice, the proper SAC code as per the above list is mentioned.

Click here to read on HSN Code and GST Rate for Tin and Tin Products

Payment of GST on Security Service on or after 1st January 2019

As per the notification no. 29/2018 – Central Tax (Rate) dated 31st December 2018, GST provisions as applicable to GST payment on Security Service has undergone various changes. The notification states that the Reverse Charge Mechanism has been made effective to the Security Service. Reverse Charge Mechanism shall henceforth apply 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– Description of Service–Security Service (services provided by way of supply of Security Personnel). 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 or corporation incorporated outside India.
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)– A registered person paying tax under composition scheme and A Department or 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.

GST Exemption

The following are the types exempted from GST: Services provided to an educational institution, by way of security or cleaning or house-keeping services performed in such educational institution. Services provided by any person for official use of a foreign diplomatic mission or consular post in India or personal use or the use of the family members of diplomatic agents or career consular officers posted therein. This exemption is available on a reciprocal basis based on a certificate issued by MEA.

Click here to 1 in India.

Back to Learn

Frequently Asked Questions

Common questions about GST on Security Services in India.

The GST rate for security services in India is 18%. This includes services such as security consulting, security systems, armored car services, guard services, training of guard dogs, polygraph services, fingerprinting services, and other security-related services.

Most entities involved in providing security services would need to obtain GST registration if their annual sales turnover exceeds Rs. 20 lakhs or if they are involved in providing an inter-state supply of services. Additionally, all security service providers having an existing service tax registration would have to mandatorily complete GST migration and obtain a GSTIN (GST Identification Number).

The Services Accounting Codes (SAC) used for classification of security services under GST are: 998521 for investigation services, 998522 for security consulting services, 998523 for security systems services, 998524 for armored car services, 998525 for guard services, 998526 for training of guard dogs, 998527 for polygraph services, 998528 for fingerprinting services, and 998529 for other security services.

Yes, it is essential to mention the proper SAC code on GST tax invoices for security services to ensure compliance with GST regulations. This helps in identifying the correct GST rate applicable for the specific security service provided.

Yes, there are exceptions where security services are exempt from GST. These include security services provided to educational institutions for official use and security services provided to foreign diplomatic missions or consular posts in India on a reciprocal basis, as certified by the Ministry of External Affairs.

From January 1, 2019, the Reverse Charge Mechanism has been made effective for GST payment on security services. Under this mechanism, the GST is payable by the service receiver (registered person) if the service provider is not a body corporate, and the service receiver is a registered person located in the taxable territory.

Yes, the Reverse Charge Mechanism will not apply if the service receiver is a registered person paying tax under the composition scheme or a government department, local authority, or agency registered only for TDS payment purposes under Section 51.

Yes, to operate a security service in India, the entity must have a valid security guard service license issued by the appropriate authorities.

In addition to the general GST registration requirements, security service providers having an existing service tax registration would have to mandatorily complete GST migration and obtain a GSTIN (GST Identification Number).

Proper documentation, such as GST tax invoices mentioning the correct SAC code and GST rate, must be maintained by the taxable person under GST to ensure compliance with GST regulations for security services.