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 operate under it. The association termed this distinction as "unjust and arbitrary," stating that companies providing the same services are treated unequally under the tax law.
Under RCM, the GST burden shifts to the recipient of services, who pays and deposits the tax directly with the government. However, in the case of body corporates offering security services, the liability continues to remain on them, leading to cash flow stress, higher compliance costs, and operational risks.
CAPSI, which represents an industry comprising largely of MSMEs with over 8.5 million workforce, has been raising the issue since the tenure of former Finance Minister Arun Jaitley. The association noted that although the GST Council in its 31st meeting on December 22, 2018, had decided to put security services under RCM, the subsequent notification issued on December 31, 2018, restricted its applicability only to non-corporate entities, excluding body corporates.
"This unprecedented deviation between the Council's decision and the official notification has caused confusion, distorted competition and severely impacted the financial sustainability of security firms," the letter stated. CAPSI added that the sector, which operates on thin margins of 5-10% and often faces delayed client payments of 60-90 days, is left with no option but to pay GST before receiving dues.
Calling private security one of the largest employment-generating sectors after agriculture, CAPSI urged the government to intervene and bring parity in GST treatment under the upcoming GST reforms. The association emphasized that the relief is crucial for ensuring the economic viability and survival of MSME security providers in India.
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