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Arjuna (Fictional Character): Krishna, 'Chowkidaar' word is nowadays famous in political world . However are there any changes occurred regarding 'Chowkidaar ki services' that is Security Services on 31st of December. What are the changes brought in?

Krishna (Fictional Character): Yes Arjuna, the word 'Chowkidaar' Security Services has become a big topic of discussion nowadays and Security Service Provider as well as Receiver, both Taxpayers need to be aware of the new changes. Let's discuss about the same. 

From 1st January, 2019, Government has made certain changes in Tax Rates. As per the changes made, Security Service Provider has been exempted from GST liability for non corporate suppliers . The changes made the Security Service taxable under RCM which means Security Service Receiver who will be a registered taxpayer have to bear the GST liability.

Arjuna (Fictional Character): Krishna, what were the tax provisions for Security Services previously?

Krishna (Fictional Character): Arjuna, under Service Tax, Security Services were taxable under RCM. However, under GST, it was kept out of RCM and therefore it was taxable at 18 % GST. Whereas, as per the changes brought in by Government on 31st December, 2018, RCM will be applicable for Security Services under GST.

Arjuna (Fictional Character): Krishna, what are the provisions applicable to Service Provider?

Krishna (Fictional Character): Arjuna, when a Security Service Provider (other than Company) provide services to a registered person, then such Service Receiver will be liable to pay tax under RCM. The Service Provider will not make the tax payment. So, the Service Provider will not be able to issue Tax Invoice to the Service Receiver for the services rendered, resulting in issue of Bill of Supply instead.

Arjuna (Fictional Character): Krishna, what should the Service Receiver do?

Krishna (Fictional Character): Arjuna, when the Security Service Receiver receives services from any person (other than company), the Service Receiver shall be liable to pay tax under RCM. The Service Receiver can claim ITC for the same.  

 For example, A provides Security Service to B before 31stDecember,2018; then A will have to pay tax. Whereas, now A being any person (other than company) provides Security Service to B after 31st December,2018; then B will be liable to pay tax under RCM.

Arjuna (Fictional Character): Krishna, what if the Company provides Security Services?

Krishna (Fictional Character): Arjuna, in the case where Company is a Security Service Provider, it has to pay tax at 18 % GST.  This service will not be taxable under RCM. Therefore, Service Provider will have to issue Tax Invoice in this case.

Arjuna (Fictional Character): Krishna, What lesson should the Taxpayer draw from this?

Krishna (Fictional Character): Arjuna, the Taxpayers should understand well before taking Security Services because Government has brought provision of RCM for the same from 1st January, 2019. The Taxpayers should note the changes in law properly and pay the taxes thereby for their safety. Thus, the work of a 'Chowkidaar' Security Personnel is to get hold of the thieves whereas lack of attention to GST would result in tax evasion, therefore for 'Chowkidaar ' providing Security Services, one needs to be alert!


Published by

CA Umesh Sharma
Category GST   Report

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