We are an proprietary concern and we are providing security personnel services to clients like Schools, Co-op Hsg Societies, Trust and Other Unregistered Persons.
My query is while issuing invoice to them shall we charge GST on forward Charge Basis or Issue them invoice on exempt basis to (Schools, Co-op Hsg Societies, Trust and Other Unregistered Persons.)
11 July 2024
In India, the GST treatment for security personnel services provided by a proprietary concern depends on the nature of the recipient (whether they are registered under GST or not) and the specific category of services provided. Here’s a breakdown of how GST applies in your scenario:
1. **Nature of Recipient:** - **Registered Persons (Body Corporate, Businesses registered under GST):** For security services provided to registered entities, GST is generally charged on a forward charge basis. This means you, as the service provider, will charge GST on your invoice and collect it from the recipient. The recipient can then claim input tax credit (ITC) for the GST paid, if they are eligible.
- **Unregistered Persons (Schools, Co-op Hsg Societies, Trusts, etc.):** For services provided to entities that are not registered under GST (such as schools, housing societies, trusts, etc.), the concept of forward charge mechanism does not apply. In such cases, the liability to pay GST shifts to you, the service provider. You are required to issue an invoice without charging GST (i.e., on an exempt basis) and pay GST on these services under the reverse charge mechanism (RCM).
2. **Exempt Basis vs. Forward Charge Basis:** - For services provided to unregistered persons (like schools, housing societies, trusts), you should issue invoices without charging GST. This is considered as providing the service on an exempt basis to the recipient. - You, as the service provider, will then need to pay GST under reverse charge mechanism (RCM) on these services. This means you calculate the GST liability on the services provided and report it in your own GST returns.
3. **Practical Approach:** - **Invoice Issuance:** Issue invoices to schools, housing societies, trusts, and other unregistered persons without charging GST. Clearly mention on the invoice that GST is payable on reverse charge basis by the recipient. - **GST Payment:** Calculate and pay GST applicable under RCM on these services when filing your GST returns. This involves reporting the liability in your GSTR-3B and remitting the tax due to the government.
4. **Compliance:** - Ensure proper compliance with GST laws by correctly identifying the nature of the recipient and applying the correct GST treatment (forward charge or reverse charge) accordingly. - Maintain accurate records of invoices issued and GST paid under RCM for audit and compliance purposes.
In summary, while providing security personnel services to schools, housing societies, trusts, and other unregistered persons, you should issue invoices without charging GST and pay GST under reverse charge mechanism. This approach ensures compliance with GST regulations and avoids any penalties or interest for non-compliance. If in doubt, it’s always advisable to consult with a GST professional or tax advisor for specific guidance tailored to your business circumstances.
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