REVERSE CHARGE MECHANISM (RCM)
ON SECURITY SERVICES

Previously under Service Tax, Security Services were taxable under RCM. Under Goods and Service Tax Act, it was taxable @ 18% as it was out of scope of RCM.

From 1 st January 2019 onwards, there are amendments made in GST rates.

According to the changes made, Security Service Provider (other than company) has been exempted from GST liability. This has made the Security Services taxable under RCM which implies that a registered Security Service Receiver will have to bear the tax liability.

Provisions applicable to Service Provider-

 

 Service provider (other than company) is not liable to pay GST on

services provided to a registered person.

 Service provider will not issue tax invoice instead he will issue “Bill of  Supply”.

 

Provisions applicable to Service Receiver-

 Service receiver liable to pay GST under RCM if services received from Security Service Provider (other than company).

 Service receiver can claim ITC for the same.

In case if the service provider is a company, Service Provider will be liable to pay

GST @ 18%.

 

A short summary-

 

Notified services under RCM

 Services by Goods transportation Agency (GTA)

 Services Provided by Advocates to Business Entity

 Services Provided by Arbitral Tribunal to Business entity

 Sponsorship service to any Body corporate/Firm

 Services provided By Central Govt./State Govt./UT/Local Authority to

Business Entity

 Services provided by Director of a Company

 Services Provided by Insurance Agents

 Services Provided by Recovery Agents to a Banking co./NBFC

 Supply of services by an author, music composer, photographer, artist or to a publisher, Music Company, producer or the like.

 Supply of services by the members of Overseeing Committee to RBI.