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:

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 find GST rate for all goods and services in India.