Minister of State for Finance, Mr. Shiv Pratap Shukla promises relief from the 18% GST levied on the security services industry, at present

Speaking at FICCI’s Private Security Industry (PSI) Conclave-2018 themed, ‘Job Creation & Skill Development’, Minister of State for Finance, Mr. Shiv Pratap Shukla assured the private security industry today that the government will do whatever is possible to reduce the 18% GST levied on the industry

He acknowledged and recalled the past visits of the FICCI Private Security Industry Committee Members to his office seeking relief for the entire guarding services industry under the GST Act.  

Private Security Agencies, which are mainly SME segments, operate on very thin margins and find it challenging to cope with the requirements of the GST compliance provisions. The high GST rate of 18% has created immense cash-flow problems for this sector. The entire structure of charging GST was not optimal for the industry where the biggest component of costs is accounted for by wages, which were nothing but pass-through costs. It is felt that GST should, therefore, be levied on the service component and not wage costs.  

Mr. Shukla said that the government was fully conscious of the significant contribution of the private security industry in creating jobs for the poor, those that have migrated from the villages, and ex-servicemen. “We have received a FICCI representation on the issue and will do whatever is possible to reduce the 18% GST levied on the industry,” he said and invited a FICCI delegation again to North Block to discuss the matter further.

Chair of FICCI Committee on Private Security Industry, Mr. Rituraj Sinha, pointed out that based on the Committee’s discussions with the Finance Minister and the MoS for Finance, there is a conviction that there is genuine intent on the part of the government to give GST relief to the industry. Such relief, he said, would also greatly benefit the small players who have to bear the burden of interest costs, as they have to borrow cash to deposit GST in advance.

The Co-Chair of FICCI Committee on PSI & Chairman, Peregrine Guarding, Maj. Manjit Rajain, also expressed optimism of the serious inclination on the part of the government to give GST relief to PSI.

FICCI’s demand on GST relief is already pending with the government for the past few months. It speaks of three options to resolve the issue of GST on Private Security Industry.

Cmdr. Gautam Nanda, Associate Partner, BDO India, the knowledge partner for the conclave, gave an overview of the industry, underlining the vital role of PSI in skill development and job creation. He said that the estimated market size of the industry was Rs. 57,000 crore and was expected to rise to Rs. 1.5 lakh crore by 2022.