Reverse charge service tax on security service
This query is : Resolved
26 November 2014
A security company issue bill including Service tax, In that case i will pay service tax payment to security co. or reverse charge service tax amount paid. Please tell me i pay service tax in reverse charge or pay service tax including bill amount to security company & i can take input in that case plz reply me.
27 November 2014
in this case you have pay the total amount of 75% or 9.27% of ST and pay to vendor of 3.09% or 25% of service charges
and you can take the input of both of them.
if you have manufacturer.
and you can take the input of both of them.
if you have manufacturer.
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27 November 2014
if you are pvt ltd/ltd company thenyou liability to pay the reverse charge. but it is not payable when service provider is also pvt ltd /ltd company the they charge full tax from you.
27 November 2014
Dear Sharma Jee We the Pvt Ltd Co. we can take input or not
27 November 2014
yes you can take the input if you pay the excise as a manufacturer
08 December 2014
Dear Sharma jee we are the advertising company
22 July 2025
Here’s a clear explanation of Reverse Charge Mechanism (RCM) on security services under service tax based on your discussion:
Scenario:
You (a Pvt Ltd company) are receiving security services.
The security company issues the bill including service tax.
You want to know:
Whether you pay service tax to security company or under reverse charge.
Whether you can take input credit on service tax paid.
Key points:
Who pays service tax?
Under service tax law, security services provided to a company by an individual or partnership firm are subject to RCM.
If the security service provider is a Pvt Ltd / Ltd company (i.e., a registered company), then they charge full service tax on invoice and pay tax themselves.
If the service provider is an individual, partnership, or unregistered entity, the recipient (your company) pays service tax under RCM on 75% of the service value at applicable rate.
How much tax to pay under RCM?
The recipient pays service tax on 75% of the total service amount (service charge excluding taxes) at the service tax rate (e.g., 12.36%).
The service provider can charge service tax on the remaining 25% of the service value.
Input Credit:
The recipient company can take CENVAT credit on the service tax paid under RCM.
The service tax charged by the security company on the 25% amount is also available for credit.
Example:
Particulars Amount (₹) Explanation
Service value 1L Total charges excluding tax
Service tax on 25% (by provider) 3,090 (12.36% of 25K) Charged by provider in invoice
Service tax on 75% (by recipient under RCM) 9,270 (12.36% of 75K) Paid by recipient under RCM
Total service tax 12,360 Total service tax on ₹1L
Accounting treatment:
Pay ₹1,03,090 to security provider (₹1L + ₹3,090 service tax on 25% value).
Pay ₹9,270 service tax under reverse charge separately to government.
Claim input credit for total ₹12,360 service tax paid.
Scenario:
You (a Pvt Ltd company) are receiving security services.
The security company issues the bill including service tax.
You want to know:
Whether you pay service tax to security company or under reverse charge.
Whether you can take input credit on service tax paid.
Key points:
Who pays service tax?
Under service tax law, security services provided to a company by an individual or partnership firm are subject to RCM.
If the security service provider is a Pvt Ltd / Ltd company (i.e., a registered company), then they charge full service tax on invoice and pay tax themselves.
If the service provider is an individual, partnership, or unregistered entity, the recipient (your company) pays service tax under RCM on 75% of the service value at applicable rate.
How much tax to pay under RCM?
The recipient pays service tax on 75% of the total service amount (service charge excluding taxes) at the service tax rate (e.g., 12.36%).
The service provider can charge service tax on the remaining 25% of the service value.
Input Credit:
The recipient company can take CENVAT credit on the service tax paid under RCM.
The service tax charged by the security company on the 25% amount is also available for credit.
Example:
Particulars Amount (₹) Explanation
Service value 1L Total charges excluding tax
Service tax on 25% (by provider) 3,090 (12.36% of 25K) Charged by provider in invoice
Service tax on 75% (by recipient under RCM) 9,270 (12.36% of 75K) Paid by recipient under RCM
Total service tax 12,360 Total service tax on ₹1L
Accounting treatment:
Pay ₹1,03,090 to security provider (₹1L + ₹3,090 service tax on 25% value).
Pay ₹9,270 service tax under reverse charge separately to government.
Claim input credit for total ₹12,360 service tax paid.
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