Quick Summary
The Central Association of Private Security Industry (CAPSI) has written to Prime Minister Narendra Modi, urging the government to review the 18% GST levied on the sector and address disparities in the application of the Reverse Charge Mechanism (RCM). In a letter dated August 19, 2025, CAPSI Chairman highlighted that under the current regime, 'body corporate' entities in the private security industry are denied the benefit of RCM, while proprietary and partnership firms are allowed to operat
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FAQ :
CAPSI is urging Prime Minister Narendra Modi to review the 18% GST levied on the private security sector and address the unequal application of the Reverse Charge Mechanism (RCM).
The main issue is the disparity in how the Reverse Charge Mechanism (RCM) is applied. 'Body corporate' entities are excluded, while proprietary and partnership firms can operate under it, leading to an unjust tax burden on some companies.
Under RCM, the recipient of services pays GST directly to the government. When 'body corporate' security firms are excluded from RCM, the GST liability remains with them, causing cash flow stress and higher costs.
The current tax treatment distorts competition, severely impacts the financial sustainability of security firms, and forces them to pay GST before receiving client payments, especially given their thin profit margins.
The private security industry is one of the largest employment-generating sectors in India after agriculture, employing over 8.5 million people, largely within MSMEs.
Yes, CAPSI has been raising this issue since the tenure of former Finance Minister Arun Jaitley, noting a deviation between a GST Council decision and a subsequent official notification in 2018.
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