The Commissioner of Service Tax on directions of the Finance Ministry has directed the Directorate General GST to look into the representation of the Security Association of India that wages and benefits paid to security guards should be excluded from the value for calculating the amount of service tax and service tax should be charged only on the total value of commission received by the security agency.
The grouse has been a long pending one of the private security industry and finally the Finance Ministry has started the process of seeking clarification on the subject with these directions to the GST commission by the Commissioner Service Tax.
The SAI in its representation had further clarified that as per section 67 of the service tax act, service tax should be levied on the total value of services provided. Security agencies charge 5 % to 10.5 commission which is the actual total value of providing services charged to the clients
The SAI further clarified that the the private security agencies are employers of the guards only on paper since the client reimburses wages via the agency and are effectively the employers since the guards function on the clients command and control.
SAI president Mr Gurcharan singh Chauhan has said that this battle has been ongoing for a long time and needs redressal since the PSIs are being forced to pay excess service tax. The SAI letter dated November 14, 2017, was sent to Finance minister along with the GST Department, Service Tax department and other related department and the directions of the service Tax commissioner to GST department was forwarded on November 17. It is now awaited how this matter is resolved.