Service tax liabilities on security services
This query is : Resolved
22 September 2012
Sir,
We have hire two security man for our Factory. The agency giving us bill every month along with Service Tax Charged and we are paying full bill amount of Bill. But some one told me that it is the Factory owner's liabilities to Service Tax deposit. Please tell me that is it true. If yes, will we have taken registration with service tax?
Kindly explain.
We have hire two security man for our Factory. The agency giving us bill every month along with Service Tax Charged and we are paying full bill amount of Bill. But some one told me that it is the Factory owner's liabilities to Service Tax deposit. Please tell me that is it true. If yes, will we have taken registration with service tax?
Kindly explain.
22 September 2012
Yes it is true in some cases. Please go through the notification no.30/2012 of service tax.. http://www.servicetax.gov.in/notifications/notfns-2012/st30-2012.htm
24 September 2012
So, kya hame service tax registration no. lena padega?
Kindly explain.
Kindly explain.
24 September 2012
So, kya hame service tax registration no. lena padega?
Kindly explain.
Kindly explain.
24 July 2025
This is a classic case involving the **“Reverse Charge Mechanism (RCM)”** under service tax for security services.
---
### What’s happening here?
* You hired a **security agency** to provide security personnel.
* The agency bills you every month **including service tax**.
* You pay the full amount (including service tax).
* You heard that the **liability to pay service tax actually lies with the factory owner (you)**, not the security agency.
---
### Is it true? What’s the law?
Yes, this is true **in some cases**. Here’s why:
* **Notification No. 30/2012-Service Tax dated 20-06-2012** says that for certain services, including security services, **service tax is payable by the recipient of the service (you)** under **Reverse Charge Mechanism (RCM)**.
* This means **you have to pay service tax directly to the government instead of the security agency**.
* The security agency cannot charge you service tax in this case (or if charged mistakenly, it’s your liability to pay service tax).
---
### What does this mean for you?
* You, as the **factory owner (recipient of security service), are liable to pay service tax** under RCM.
* The security agency provides service without charging service tax (or charges only the service amount).
* You must **register for service tax** (even if you are not otherwise liable) because you are receiving taxable services under RCM.
* You will deposit service tax on security services received.
* You will also file service tax returns accordingly (showing tax paid under RCM).
---
### Summary:
| Question | Answer |
| ----------------------------------------------------- | ------------------------------------------------------------------- |
| Who pays service tax on security services? | Recipient (factory owner) under Reverse Charge Mechanism |
| Does the factory owner need service tax registration? | Yes, registration is required to pay tax and file returns under RCM |
| Can the security agency charge service tax? | Generally, no, after the notification came into effect |
---
### What you should do next:
1. **Check if the notification applies to your case** (usually yes for security services).
2. **Obtain service tax registration** for your factory.
3. **Pay service tax on security services received under RCM**.
4. **Maintain proper records and file returns accordingly**.
---
If you want, I can help you draft an email to your finance team or help with registration and compliance steps. Would you like me to?
---
### What’s happening here?
* You hired a **security agency** to provide security personnel.
* The agency bills you every month **including service tax**.
* You pay the full amount (including service tax).
* You heard that the **liability to pay service tax actually lies with the factory owner (you)**, not the security agency.
---
### Is it true? What’s the law?
Yes, this is true **in some cases**. Here’s why:
* **Notification No. 30/2012-Service Tax dated 20-06-2012** says that for certain services, including security services, **service tax is payable by the recipient of the service (you)** under **Reverse Charge Mechanism (RCM)**.
* This means **you have to pay service tax directly to the government instead of the security agency**.
* The security agency cannot charge you service tax in this case (or if charged mistakenly, it’s your liability to pay service tax).
---
### What does this mean for you?
* You, as the **factory owner (recipient of security service), are liable to pay service tax** under RCM.
* The security agency provides service without charging service tax (or charges only the service amount).
* You must **register for service tax** (even if you are not otherwise liable) because you are receiving taxable services under RCM.
* You will deposit service tax on security services received.
* You will also file service tax returns accordingly (showing tax paid under RCM).
---
### Summary:
| Question | Answer |
| ----------------------------------------------------- | ------------------------------------------------------------------- |
| Who pays service tax on security services? | Recipient (factory owner) under Reverse Charge Mechanism |
| Does the factory owner need service tax registration? | Yes, registration is required to pay tax and file returns under RCM |
| Can the security agency charge service tax? | Generally, no, after the notification came into effect |
---
### What you should do next:
1. **Check if the notification applies to your case** (usually yes for security services).
2. **Obtain service tax registration** for your factory.
3. **Pay service tax on security services received under RCM**.
4. **Maintain proper records and file returns accordingly**.
---
If you want, I can help you draft an email to your finance team or help with registration and compliance steps. Would you like me to?
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