GST shall be chargeable on the total amount received against the security guard services including the wages which are payable to the security guards. The ruling was given by Gujarat Advance Ruling Authority in a recent ruling sought by a security agency. Let’s discuss this Advance ruling related to GST on security guard service.
The applicant in this case received the amount against the deployment of the security guards. The amount received against the service was the amount payable to the guards as per the minimum wages act plus 12% as establishment charges towards the administrative expenses like office, salary etc.
| Amount | Particulars |
| Rs 100 | Amount payable to Security Guards as per minimum wages act |
Add | Rs 12 | 12% Establishment Charges |
Total | Rs. 112 | Net Consideration Receivable |
Now the question arises whether the GST shall be chargeable on Rs. 112/- which is the total amount received from the customer or it shall be charged only on Rs. 12/- which is the amount received over and above the amount payable to security guards.
The applicant had quoted certain judgments wherein the authorities have decided that for arriving at the value at which tax is to be charged, abatement or deduction shall be provided from the total receivable amount towards the payment made for wages, salaries, contribution towards PF, ESIC, etc
Gujarat Industrial Security Force Society sought an advance ruling in this regard with two following question
- Whether they can charge 18% GST only on establishment charges of Rs. 12 after abatement of wages that are paid to security guards and not on the whole amount of Rs. 112/- receivable from the customer?
- Whether they can take GST credit if they tend to follow the above method mentioned in Question No. 1 ?
Gujarat Authority of Advance Ruling (AAR) has given the ruling in this case that the applicant i.e. Gujarat Industrial Security Force Society, shall charge GST @18% on the entire amount received against the services provided including the wages to be paid to security guards and also the establishment charges received towards the administrative expenses. The applicant would be eligible to claim the GST credit in case they follow this specified procedure of charging GST on the entire receivable amount.
In regard to the judgments quoted by the applicant in support of the claim that reimbursable expenses are not to be added to the assessable value chargeable to GST, the authority said that all the judgments pertain to the pre-GST regime and are in respect of the valuation of the service on which service is to be charged.
Section 15(1) of CGST Act 2017 clearly states that the value of supply shall be the transaction value, which is the price actually paid or payable for the supply where the supplier and the receiver of the supply are not related and the price is the sole consideration for the transaction.
ADVANCE RULING NO. GUJ/GAAR/R/100/2020
Full judgement at :http://gstcouncil.gov.in/sites/default/files/ruling-new/GUJ_AAR_100_2020_14.10.2020_GISFS.pdf
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