Private security agencies in the country have reiterated their demand for application of 5% GST on their gross income or, alternatively, the applicable 18% GST on their agency commission only.
“Private security agencies are under financial constraints [due to] GST which is collected on gross amount charged to a client [the principal employer] which includes reimbursement of wages and statutory benefits paid to security guards,” Security Association of India (SAI) said in a recent letter to the government.
‘Pleas yield no result’
“From the beginning, we have been representing that wages and benefits paid to security guards should be excluded from the value for calculating the amount for service tax and that the tax should be charged only on the total value of commission/agency charges received by the security agency,” SAI said in a representation to the Union Finance Minister.
The association said all its earlier pleas have yielded no result.
The umbrella organisation for this sector, the Central Association of Private Security Industry (CAPSI) has called for a nation-wide protest to press for its demands.
In a meeting held in Mumbai, the CAPSI and SAI, expressed fears that the 18% GST would force many players to close down their business and tender thousands of guards jobless.
To highlight their cause, President of CAPSI Viswanath Katti said that security agencies will demonstrate at GST offices across the country on July 18, 2018 and a memorandum will be submitted to GST commissioners.
Council urged to mull
SAI president Gurcharan Singh Chauhan said that Maharashtra’s Finance Minister Sudhir Mungantiwar has been approached and urged to discuss the issue in the GST Council meeting.
He said the sector helped employ the poor from rural areas and many of the estimated 70 lakh guards would be rendered unemployed as the cost of wages goes up.
They said GST should be levied on 10% of the agency’s service charge of ₹2,034 which will attract GST of ₹366 per month per security guard.
“The security guard who draws the lowest monthly salary of ₹10,000 is being taxed ₹4,028 per month, which is very high and unfair in comparison to his monthly wages,” the letter said.