CAPSI Delhi Unit made it at India Gate, New Delhi
Implementation of the ‘Reverse Charge Mechanism’
for the payment of GST demanded to save the interests of the industry
Under the aegis of CAPSI, huge gatherings of owners and employees of the private security industry across the country staged nationwide peaceful protests on 18 July 2018 against the existing modus of GST rules which in principle, largely goes in contradiction to the business module of the industry, and has brought various security agencies to the verge of closure owing to the imposed unwarranted financial burden. The major impediment stems from the fact that GST is due to be deposited every month without fail while agencies receive payments for their respective services after 60 to 90 days. They demanded immediate implementation of the ‘Reverse Charge Mechanism’ whereby the payment of GST is done to the government directly by the recipients of the security services and not by the private security agencies, the service provider. This mechanism hardly impacts the revenue collection of the government.
“ The private security industry is one of the largest job providers employing over 80 lakh people, mostly retired personnel from the armed forces and the para-military forces. Most of the security guards come from the rural and economically poor backgrounds. Any government decision resulting in the closure of even one average security agency could mean unemployment to a large number of security guards causing large scale unemployment in the rural sector.”
– Kunwar Vikram Singh , Chairman, CAPSI
The Delhi Chapter of CAPSI held their protest at the India Gate where hundreds of security professionals gathered in black T-shirts to support the cause. The Chairman of CAPSI, Kunwar Vikram Singh was also present there. They showed their respect to the martyrs by laying the wreath at the Amar Jawan Jyoti before the protest.
“During the last six months, we have raised this issue with the government at various levels to highlight problems being faced by the industry. We made representations to the Ministry of Finance, the GST Commissioner, the Competition Commission of India (CCI), and the MSME and so on, demanding the streamlining of the GST mechanism for our industry; but no viable solutions have come forth leaving CAPSI with no other option than to hold a protest. The major issue which forces owners to close their companies is the methodology of depositing GST. The GST regulations mandate the security agencies to deposit tax on the 20th of every month when bills are raised; however, the payments against these bills are received after 60 to 90 days, or even more. This gap impacts the cash flows of our low-margin industry badly causing us to carry huge back-breaking burdens,” said Kunwar Vikram Singh, “The logical remedy to this problem is the introduction of the ‘Reverse Charge Mechanism,’ whereby the principal employer (to whom the security guards are outsourced) pay GST on due date and claim its refund later. This will reduce the financial burden on the owners of the private security agencies.”
“Security service industry essentially recruits, trains, and then provides jobs to the trained manpower; which along with other statutory costs constitute about 90% of our billing amount. Our margin ranges up to 5% only. TDS at the rate of 2% of the billing amount further erodes the margins. Low margins coupled with delays in payments create a huge pressure on the cash flows in the industry. Most of the players often find it extremely difficult to pay even wages on time, besides to comply with the statuary requirements of depositing dues like PF and ESI. Under such circumstances the additional burden of GST is unbearable. The implementation of the ‘Reverse Charge Mechanism’ in GST is the only way out,” Mr. Singh concludes.
The protest saw an active involvement of APDI as well.