GST on Security Services in 2026: Reverse Charge, the Body-Corporate Test and Worked Examples

Factories, warehouses, hospitals, offices and housing societies across India hire guards from private security agencies, and most of those agencies are small proprietorships or partnership firms. Since 2019, GST on such contracts has usually been paid by the client rather than the agency. Who pays depends on two questions: what legal form the agency has, and whether the client is a registered business. This guide gives the 2026 position on GST on security services — the rate and SAC code, the reverse-charge rule and its exceptions, the LLP question, what agencies must do, and worked examples in rupees.

Quick answer

Security services are taxed at 18% (SAC 998525 for guard services). Since 1 January 2019, when security personnel are supplied by anyone other than a body corporate — a proprietor, partnership firm, HUF, trust or society — to a registered person, the client pays the GST under reverse charge (Notification 29/2018-CT(R), serial 14 of Notification 13/2017). If the agency is a company, it charges GST itself on a normal invoice.

• Reverse charge does not apply to composition taxpayers or to government bodies registered only to deduct TDS — the agency charges GST

• Unregistered clients (most housing societies, small shops) pay GST to the agency as usual

• LLP agencies are a grey area — one advance ruling treats them as body corporates

• GST is on the full bill, including guards' wages, PF and ESI

What counts as security services under GST

In the GST classification of services, security services form group 99852 under heading 9985, "support services". The official scheme lists nine service codes:

The reverse-charge entry is narrower than the whole group. It covers "security services (services provided by way of supply of security personnel)". Supplying guards, bouncers, gunmen or supervisors to stand at your premises is covered. Installing CCTV cameras, monitoring an alarm panel from a control room, running a background-verification check or giving security advice is not, even when the same agency provides it. Those services stay under forward charge: the agency charges GST if it is registered.

All the codes in the group carry 18% under heading 9985. The rate is unchanged in 2026: when the GST Council restructured rates from 22 September 2025, Notification 15/2025-Central Tax (Rate) amended many service entries but did not touch support services.

The reverse charge on security services

Until 31 December 2018, every registered security agency charged GST on its own invoices. On the GST Council's recommendation, Notification 29/2018-Central Tax (Rate), dated 31 December 2018, inserted serial number 14 into Notification 13/2017-Central Tax (Rate) from 1 January 2019. The entry has three columns that must all match:

• Service: security services by way of supply of security personnel.
• Supplier: any person other than a body corporate.
• Recipient: a registered person located in the taxable territory.

When all three match, the client pays the full 18% under section 9(3) of the CGST Act, and the agency's invoice carries no tax. The idea was to collect tax reliably from thousands of small agencies, many of which collected GST from clients but did not deposit it. In 2025 the Bombay High Court, in Eagle Security & Personnel Services v Union of India, rejected a challenge to this arrangement, holding that separating body corporates from other suppliers is a reasonable classification.

Who pays GST on a guard bill?

Step 1

Guards supplied?

CCTV, consulting → agency charges GST

Step 2

Agency is a body corporate?

yes → agency charges 18%

Step 3

Client is registered?

no → agency charges GST

Step 4

Client is composition or TDS-only government?

yes → agency charges GST

Step 5

Client pays 18% under RCM

and claims ITC

The body-corporate test

Explanation (b) of Notification 13/2017 gives "body corporate" the meaning in section 2(11) of the Companies Act, 2013. That covers private and public limited companies, including companies incorporated outside India, but excludes co-operative societies. So:

• Proprietorship, partnership firm, HUF, trust, society or co-operative — not a body corporate. Reverse charge applies for registered clients.
• Private or public limited company — a body corporate. The agency charges GST itself.
• LLP — disputed. Section 3 of the LLP Act, 2008 calls an LLP a body corporate, and the Haryana Authority for Advance Ruling relied on this in 2023 (AS&D Enterprise LLP) to hold that an LLP supplying guards falls outside the reverse charge and must charge GST. Other practitioners argue the opposite. An advance ruling binds only the applicant and its jurisdictional officer, so for an LLP agency the safest course is to agree the treatment in the contract, record the reasoning, and apply it consistently.

Checking the agency's form takes a minute: the constitution of business appears on the GSTIN search on the GST portal, and a company or LLP has a CIN or LLPIN on the MCA website.

Exceptions where the agency charges GST

Serial 14 carves out two kinds of registered recipient, even when the agency is not a body corporate.

Government bodies registered only for TDS. A department or establishment of the Central or a state government or Union territory, a local authority, or a governmental agency that has taken GST registration only to deduct tax at source under section 51 — and not to make taxable supplies — does not pay the reverse charge. The agency charges 18% on its invoice. The department, in turn, deducts TDS at 2% (1% CGST + 1% SGST, or 2% IGST) on the taxable value when the contract value exceeds ₹2.5 lakh; our TDS under GST guide explains how the agency claims that credit.

Composition taxpayers. A business that pays tax under section 10 (the composition scheme) is excluded. The agency charges GST, and the composition dealer pays it as a cost, because composition dealers cannot claim input tax credit. This works in the composition dealer's favour on cash flow: it does not have to pay reverse-charge tax on guards out of its own pocket on top of the bill.

Unregistered clients. The entry only applies to registered recipients. A housing society, a small shop or a school that is not registered pays GST to the agency as part of the bill, if the agency is registered.

Housing societies, hospitals and other common clients

Housing societies and RWAs. Many residential societies are not registered under GST, because their maintenance collections are small or exempt. An unregistered society is outside serial 14, so a registered agency charges it 18% on the bill. Once a society registers — usually because its taxable collections cross the threshold — it becomes a registered recipient and must pay reverse charge on guards from a non-corporate agency. It can claim that tax as credit only to the extent it uses the guards for taxable supplies to members.

Hospitals, schools and other exempt businesses. A registered hospital that also runs a taxable pharmacy or canteen pays reverse charge on its guards like any registered person. Because most of its own supplies are exempt, most of that tax becomes a cost: credit must be split between taxable and exempt supplies under rule 42. The same applies to schools and colleges that are registered for some taxable activity.

Businesses with several branches. The recipient is the registration whose premises the guards protect. A company with factories in two states pays reverse charge under each state's GSTIN for the guards at that site, even if the head office signs one national contract. Ask the agency to raise site-wise invoices so each GSTIN can match its own tax and credit.

What the GST is charged on

Section 15 of the CGST Act taxes the transaction value — everything the client pays for the service. For a manpower contract, that means the whole bill: the guards' wages, overtime, the employer's PF and ESI contributions, bonus, uniform and equipment charges, and the agency's service charge or margin. A common error is to apply GST only to the agency's commission on the ground that wages are "reimbursements". Guards are the agency's employees, so their wages are the agency's own cost of providing the service, not amounts paid on the client's behalf as a pure agent under rule 33.

Separately itemised charges are still part of the same supply. If the contract adds a monthly charge for a CCTV monitoring console alongside guards, the agency can bill that item under forward charge while the guards remain under reverse charge, provided the two are genuinely separate and priced independently. When in doubt, ask the agency to split the bill clearly.

What goes into the taxable value of a ₹3,00,000 guard bill

₹2,40,000

Guards' wages

taxable

₹33,000

Employer PF and ESI

taxable

₹27,000

Uniforms and service charge

taxable

₹54,000

GST at 18% on the full ₹3,00,000

How a registered client pays the reverse charge

The client pays the tax in cash, reports it, and claims it back as credit if the guards protect business premises. For a fully taxable business, the net cost is nil, but the cash leaves first and the credit is available only after the return is filed.

The time of supply is the earlier of the date of payment and the date immediately after 60 days from the agency's invoice. Monthly guard bills are usually paid within a few weeks, so the month of payment is normally the month of tax. If you hold an agency's bill for more than 60 days, the tax falls due when the 60 days end, and paying it later attracts interest at 18% a year.

Paying RCM on a monthly guard bill

1. 1

   Check the agency's form and your own status

   Confirm the agency is not a company (and decide on LLPs), and that you are a registered normal taxpayer — not composition and not a TDS-only government registrant.

2. 2

   Check the invoice

   A registered agency's invoice must state that tax is payable on reverse charge (rule 46(p)) and show its GSTIN, SAC 998525 and the taxable value with no GST added.

3. 3

   Self-invoice if the agency is unregistered

   Issue a self-invoice within 30 days of receiving the service, and a payment voucher when you pay.

4. 4

   Pay and report

   Show the value and tax in GSTR-3B Table 3.1(d) and pay CGST and SGST (or IGST if the agency is in another state) through the cash ledger.

5. 5

   Claim the credit

   Claim the same tax in Table 4A(3) of the same return if the guards are used for business.

   Tip: Guards at a director's house or a guest house used for personal stays are not business use — keep that tax out of your credit claim.

Worked examples in rupees

A Pune factory with a partnership agency. A registered auto-parts maker hires twelve guards from a partnership firm. The September bill is ₹3,00,000: wages ₹2,40,000, employer's PF and ESI ₹33,000, uniforms ₹3,000 and service charge ₹24,000. The factory pays the agency ₹3,00,000 and pays reverse-charge GST of 18% — ₹54,000, split ₹27,000 CGST and ₹27,000 SGST — in its September GSTR-3B. It claims ₹54,000 as input tax credit in the same return. If it had wrongly calculated GST only on the ₹24,000 service charge, it would have paid ₹4,320 and still owe ₹49,680 with interest.

The same factory with a private limited agency. If the agency were a private limited company, it would bill ₹3,00,000 plus ₹54,000 GST on a tax invoice. The factory pays ₹3,54,000 to the agency and claims ₹54,000 from GSTR-2B. The tax is the same; only the person depositing it changes.

A composition restaurant. A restaurant paying tax under the composition scheme takes two guards from a proprietorship agency for ₹50,000 a month. Because composition taxpayers are excluded from serial 14, the registered agency charges ₹9,000 GST and the restaurant pays ₹59,000 with no credit.

A municipal corporation registered only for TDS. A proprietorship agency supplies guards to a municipal corporation for ₹6,00,000 a month. The corporation is registered only to deduct tax, so the agency charges ₹1,08,000 GST on its invoice. The contract value exceeds ₹2.5 lakh, so the corporation deducts TDS at 2% (1% CGST + 1% SGST, or 2% IGST) on ₹6,00,000 — ₹12,000 — and pays the agency the balance. The agency claims the ₹12,000 in its electronic cash ledger after the TDS return is filed.

Work out GST on a guard bill

Sales (Add GST)Purchase (Remove GST)Price Comparison

AmountGST Rate

0%3% (Gold / silver)5%18% (Standard)40% (Sin / luxury)

Transaction Type

Intra-state (CGST + SGST)Inter-state (IGST)

Base Amount (Before GST)₹3,00,000.00

CGST (9%)₹27,000.00

SGST (9%)₹27,000.00

Total GST (18%)₹54,000.00

Total Amount (Including GST)₹3,54,000.00

Open the full GST Calculator (PDF, save, compare)

What security agencies must do

Registration. An agency that supplies guards only to registered, non-composition clients has no tax of its own to pay on those supplies, and Notification 5/2017-Central Tax exempts persons making only reverse-charge supplies from registration. In practice most agencies also serve housing societies, schools, shops, composition dealers or government offices, where they must charge GST themselves. The value of reverse-charge supplies still counts in the agency's aggregate turnover, so once the total crosses ₹20 lakh (or the lower limit in some special category states) and the agency makes any forward-charge supplies, it must register. Agencies also need a licence under the Private Security Agencies (Regulation) Act, 2005 from the state controlling authority, which is separate from GST.

Invoicing and returns. Every invoice must say whether tax is payable on reverse charge. Show reverse-charge supplies in GSTR-1 against each client's GSTIN, flagged as reverse charge, so that the tax appears in the client's GSTR-2B. Do not charge GST on those invoices; collecting it and not depositing it is a serious offence, and the client's liability remains anyway.

Input tax credit. A non-corporate agency's main costs — wages — carry no GST, but it pays GST on uniforms, equipment, vehicles, software and rent. With most output under reverse charge, that credit can build up because there is little output tax to set it against. It can be used against GST on any forward-charge supplies. Plan pricing on the assumption that unused credit may not come back as a refund.

Common mistakes and how they are fixed

Paying GST to a proprietorship agency. If a non-corporate agency charges GST to a registered client, the client still owes the reverse charge; the tax paid to the agency is not valid credit. Pay the reverse charge, ask the agency for a credit note and refund, and reverse any credit taken on the agency's invoice.

Assuming every agency is under reverse charge. Company agencies must charge GST. A client that pays only the base amount to a private limited agency and self-assesses the tax ends up with a supplier that has not reported the supply properly and a GSTR-2B mismatch. Check the constitution of each agency before the first bill.

Missing the composition and government carve-outs. Agencies that stopped charging GST to all their registered clients in 2019 often forgot that composition dealers and TDS-only government registrants are excluded. The agency owes that tax, with interest. Review your client list against these two categories.

Applying reverse charge to CCTV and alarm contracts. Only supply of security personnel is covered. Systems work stays under forward charge.

Taxing only the margin. As the Pune example shows, GST is on the whole bill. Officers compare security expenses in the client's books with reverse-charge tax paid, so under-valuation shows up quickly.

Checks before paying a guard bill

0/6

• Agency's constitution confirmed on the GST portal or MCA (proprietor, firm, company, LLP)
• Your own status: normal taxpayer, composition, or TDS-only registration
• Invoice shows SAC 998525, value without GST and 'reverse charge: yes'
• Self-invoice issued within 30 days if the agency is unregistered
• Tax paid on the full bill including wages, PF and ESI
• Credit claimed only for guards at business premises

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Official links

• Notification 29/2018-CT(R) — security services under RCMSerial 14 from 1 January 2019
• Notification 13/2017-CT(R) — reverse charge on servicesDefinition of body corporate
• Scheme of Classification of ServicesSAC 998521–998529
• Notification 5/2017-Central TaxRegistration exemption for RCM-only suppliers
• GST portal — search taxpayerCheck an agency's constitution of business

What to do next

If you are a client, list every security agency you use, note each one's legal form, and check that reverse-charge tax was paid on the full bill in the right month; if anything was missed, pay it with interest and claim the credit. If you run an agency, sort your clients into reverse-charge, forward-charge and TDS categories and set up invoice templates for each — our invoice generator can add the reverse-charge note. The reverse charge mechanism guide covers the other services on the same list, and the GST calculator works out the tax on any bill.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Is RCM applicable on security services?

Yes, since 1 January 2019, when security personnel are supplied by anyone other than a body corporate — a proprietor, partnership firm, HUF or similar — to a registered person. The client pays 18% under reverse charge. It does not apply if the agency is a company, or if the client is a composition taxpayer or a government body registered only to deduct TDS; then the agency charges GST itself.

What is the GST rate on security services?

Security services are taxed at 18% — 9% CGST plus 9% SGST within a state, or 18% IGST between states. They fall under heading 9985 (support services), with guard services at SAC 998525. GST 2.0 on 22 September 2025 did not change the rate. Whether the agency or the client pays the 18% depends on the reverse-charge rules.

Is RCM applicable on security services provided by a private limited company?

No. The reverse-charge entry covers suppliers other than a body corporate, and a private or public limited company is a body corporate under section 2(11) of the Companies Act, 2013. A company agency charges 18% on a normal tax invoice, and the registered client takes credit through GSTR-2B in the usual way.

Is RCM applicable on security services provided by an LLP?

It is disputed. An LLP is a body corporate under section 3 of the LLP Act, 2008, and the Haryana Authority for Advance Ruling held in 2023 that an LLP supplying guards is outside the reverse charge and must charge GST itself. Some practitioners disagree, and an advance ruling binds only the applicant. Agree the treatment in writing with the LLP agency and record the basis.

What is the SAC code for security services?

Security services sit in group 99852 of the services classification. Guard services are 998525; others in the group are investigation (998521), security consulting (998522), security systems services (998523), armoured car services (998524), guard dog training (998526), polygraph (998527), fingerprinting (998528) and other security services (998529). The reverse charge applies only to supply of security personnel.

Does a security agency need GST registration if all clients pay under RCM?

Not if it supplies only to registered clients who pay tax under reverse charge. Notification 5/2017-Central Tax exempts from registration anyone making only reverse-charge supplies. Most agencies also serve housing societies, shops or other unregistered clients, on which they must charge GST themselves, so they need registration once aggregate turnover crosses ₹20 lakh.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Notification No. 29/2018–Central Tax (Rate), 31 December 2018 — Ministry of Finance (GST Council website) · accessed 9 October 2026
2. 2.Notification No. 13/2017–Central Tax (Rate), 28 June 2017 — Explanation (b) — CBIC · accessed 9 October 2026
3. 3.Notification No. 11/2017–Central Tax (Rate) — heading 9985 — CBIC · accessed 9 October 2026
4. 4.Notification No. 15/2025–Central Tax (Rate), 17 September 2025 — Ministry of Finance (copy on Chhattisgarh Commercial Tax (GST) Department website) · accessed 9 October 2026
5. 5.Annexure — Scheme of Classification of Services — GST Council · accessed 9 October 2026
6. 6.Notification No. 5/2017–Central Tax, 19 June 2017 — Ministry of Finance (GST Council website) · accessed 9 October 2026
7. 7.CGST Rules — rule 46 (tax invoice) — CBIC · accessed 9 October 2026
8. 8.HC upholds RCM on security services — no violation of Articles 14 or 19 — Taxmann · accessed 9 October 2026
9. 9.RCM does not tax LLP security services, claims AAR — Setindiabiz · accessed 9 October 2026
10. 10.GST on security services: rate, SAC code and RCM — ClearTax · accessed 9 October 2026