Private Security Agencies demand ‘Reverse Charge Mechanism’ for GST payment

Around 100 owners and employees of Private Security Industry on Wednesday, July 18, 2018, staged a silent protest at India Gate, Delhi and demanded streamlining of GST rules for the industry which is forcing the closure of private security agencies due to increasing financial burden. They demanded immediate implementation of ‘Reverse Charge Mechanism’ for GST payment so that payment of GST is done directly by service receiver to the government and those running private security agencies should not be burdened by it.

Gathered under the banner of Central Association of Private Security Industry (CAPSI), owners and employees of Private Security Industry, a majority of whom are retired Armed forces officers and personnel, first laid a wreath at the Amar Jawan Jyoti at India Gate in respect to martyrs and then staged silent protest in support of their demands. Similar protests were also organized in all state capitals across the country by CAPSI members.

“We have made several representations to the Finance Ministry and to the GST Commissioner demanding streamlining of the GST mechanism for our industry. The major issue, which is forcing owners to close down their companies, is the methodology of depositing GST. The GST has to be deposited by the Security Agencies on 20th of the Month in which the Bill has been raised. However, the payment of these Bills is received by these Agencies only after 60-90 days or more. Thus, the cash flows of this low-margin Industry gets impacted seriously due to 2-3 months delay in getting payments. We have to carry this huge back-breaking burden,” said CAPSI Chairman Kunwar Vikram Singh.

“The logical remedy to this problem is the introduction of ‘Reverse Charge Mechanism’, as done for other industries, where in the Principal Employer (to whom the security guards are outsourced) pay the GST on due date and claim refund of the same at a later date. This will reduce the financial burden on the owners of Private Security agencies,” said Mr. Singh.
Incidentally FICCI has already submitted a petition to the finance ministry on the issue 3 months back.