Security Services Agreement (India)
SECURITY SERVICES AGREEMENT
This Security Services Agreement ("Agreement") is entered into on [Agreement Date] between:
CLIENT (Principal Employer): [Client Name], registered at [Client Address], GSTIN: [Client GSTIN] (the "Client"); and
SECURITY AGENCY: [Agency Name], registered at [Agency Address], PSARA Licence No.: [PSARA Licence Number], GSTIN: [Agency GSTIN], PAN: [Agency PAN] (the "Agency").
This Agreement is governed by the Indian Contract Act 1872, the Private Security Agencies (Regulation) Act 2005 (PSARA), the Contract Labour (Regulation and Abolition) Act 1970, the Minimum Wages Act 1948, the Employees' Provident Funds and Miscellaneous Provisions Act 1952, the Employees' State Insurance Act 1948, the Central Goods and Services Tax Act 2017, and the Income Tax Act 1961.
1. PSARA COMPLIANCE
1.1 The Agency represents and warrants that it holds a valid PSARA licence (No.: [PSARA Licence Number]) issued by the Controlling Authority of [Governing State] under Section 4 of the Private Security Agencies (Regulation) Act 2005, authorising it to provide security services in [Governing State]. The Agency shall maintain this licence in full force throughout the term of this Agreement.
1.2 All security guards deployed under this Agreement shall: (a) be trained in accordance with the training standards prescribed under the PSARA Rules 2006 and the National Skill Qualification Framework; (b) have their antecedents verified by the police in accordance with Section 10 of PSARA before deployment; (c) be at least 18 years of age and physically and mentally fit.
1.3 The Agency shall provide the Client with copies of police clearance certificates for all deployed guards within 7 days of deployment. The Agency shall not deploy any person whose antecedents reveal a conviction for any offence involving moral turpitude.
1.4 If armed guards are deployed ([Guard Type]), all firearms shall be licensed under the Arms Act 1959 and held in the name of the Agency. The Agency is fully responsible for the lawful custody and use of any firearms by its guards.
2. SCOPE OF SECURITY SERVICES
2.1 The Agency shall provide the following security services at the premises located at [Premises Address]: [Security Scope].
2.2 The Agency shall deploy [Number of Guards] guards in the following shift arrangement: [Shift Arrangement].
2.3 The Services shall commence on [Start Date] and continue for [Contract Duration], unless earlier terminated in accordance with this Agreement.
3. SERVICE FEE, GST, AND TDS
3.1 The Client shall pay the Agency a monthly service fee of ₹[Monthly Fee] (exclusive of GST).
3.2 GST: [GST Mechanism]. GST at 18% (SAC 998531) applies. Under the Reverse Charge Mechanism (RCM) per Notification No. 13/2017-Central Tax (Rate), where both parties are body corporates, GST is payable by the Client directly to the government; the Agency issues a tax invoice without charging GST. Under Forward Charge, the Agency charges GST on the invoice.
3.3 The Client shall deduct TDS at 2% on the service fee (excluding GST) under Section 194C of the Income Tax Act 1961, and deposit it with the income tax authorities. Form 16A shall be issued to the Agency quarterly.
3.4 Payment shall be made within 30 days of invoice. If the Agency is MSME-registered, payment shall be made within 45 days of acceptance under Section 15 of the MSMED Act 2006.
4. LABOUR LAW COMPLIANCE
4.1 The Agency shall comply with all applicable labour laws for deployed guards, including: minimum wages notified for security guards under the Minimum Wages Act 1948; PF contributions at 12% employer + 12% employee under the EPF Act 1952; ESI contributions at 3.25% employer + 0.75% employee for guards earning up to ₹21,000/month under the ESI Act 1948; and gratuity under the Payment of Gratuity Act 1972 for guards with 5+ years of continuous service.
4.2 The Agency shall provide monthly PF and ESI payment proofs (challan copies) to the Client by the 15th of the following month. The Client may withhold payment pending receipt of compliance proofs.
4.3 The Client is the 'principal employer' under the CLRA and acknowledges subsidiary wage liability under Section 21(4) of the CLRA. The Client may satisfy unpaid wages directly and recover from the Agency's dues.
5. LIABILITY AND INSURANCE
5.1 The Agency's maximum liability for losses arising from the negligence of deployed guards shall not exceed 3 times the monthly service fee per incident.
5.2 The Agency shall maintain: (a) valid public liability insurance covering third-party bodily injury and property damage at the Premises; and (b) employee fidelity (dishonesty) insurance covering losses from fraudulent acts by guards. Proof of insurance shall be provided to the Client annually and on request.
6. TERMINATION AND GOVERNING LAW
6.1 Either party may terminate this Agreement by giving [Notice Period] written notice to the other party.
6.2 The Client may terminate immediately if the Agency's PSARA licence is revoked, suspended, or expires, or if the Agency commits a material breach of its PSARA or labour law compliance obligations.
6.3 This Agreement is governed by the laws of India and the State of [Governing State]. Disputes shall be resolved by arbitration under the Arbitration and Conciliation Act 1996, with the seat at [Governing State].
Client (Principal Employer)
________________
Signature
Security Agency
________________
Signature
What Is a Security Services Agreement (India)?
A Security Services Agreement in India is a formal contract between a client (the person or entity requiring security cover) and a licensed private security agency, defining the scope of security services, the terms of guard deployment, PSARA compliance obligations, the fee structure including GST, liability provisions, and termination rights. It is governed primarily by the Indian Contract Act 1872, the Private Security Agencies (Regulation) Act 2005 (PSARA), and a suite of labour laws including the Contract Labour (Regulation and Abolition) Act 1970.
PSARA, enacted by Parliament in 2005, is the foundational legislation for the private security industry. It requires all private security agencies to hold a valid PSARA licence from the Controlling Authority of the state, mandates training of security guards to prescribed standards, and requires character verification of all guards before deployment. The client must satisfy themselves that the security agency holds a valid PSARA licence — engaging an unlicensed agency is a violation of the law.
The Agreement must also address GST — security services attract 18% GST (SAC 998531), and a critical nuance is the Reverse Charge Mechanism (RCM) under GST Notification 13/2017-CT (Rate), which requires the client (if a body corporate) to pay GST directly to the government when the security agency is a body corporate. TDS under Section 194C of the Income Tax Act 1961 also applies to security payments.
In the private security industry, India is one of the world's largest markets with over 9 million security guards deployed across various sectors. A well-drafted Security Services Agreement is essential for managing the significant legal, financial, and operational risks in this sector.
The legal framework governing the Security Services Agreement (India) in India draws on several key statutes and regulatory bodies. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Parties executing a Security Services Agreement (India) in India should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Indian Contract Act, 1872 sets the foundational requirements.
When Do You Need a Security Services Agreement (India)?
A Security Services Agreement is needed whenever a business, commercial complex, housing society, industrial unit, hospital, hotel, or institution engages a private security agency for guarding, access control, CCTV monitoring, or other security services.
You need this agreement when engaging security guards for a commercial office or business premises — defining the number of guards, their positions, shift timings, access control responsibilities, and the security agency's PSARA compliance obligations.
You need this agreement when a residential housing society appoints a security agency for entry/exit management, visitor logging, and patrolling of common areas. The agreement should define the society's rights to approve or reject individual guards deployed.
You need this agreement when an industrial facility or warehouse engages security personnel for perimeter security, factory gate management, and prevention of theft of goods or materials. In such cases, the liability provisions for goods loss are especially important.
You need this agreement when engaging a security agency that will also provide VIP protection, event security, or cash-in-transit services — each requiring additional licences and specialised provisions.
You need this agreement to comply with the Reverse Charge Mechanism under GST — the agreement establishes the nature of the supply (security services from a body corporate) that triggers RCM obligations for the client.
Parties in India should prepare a Security Services Agreement (India) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Security Services Agreement (India)
A well-drafted India Security Services Agreement should contain the following essential elements.
Party Details: Full legal name, address, GSTIN, and PAN of the client. Full legal name, address, PSARA licence number (state-wise), CLRA contractor licence number, GSTIN, and PAN of the security agency.
Scope of Security Services: Detailed description of services — number and type of guards (unarmed/armed/supervisor), posts to be manned, shift timings, patrol routes, access control responsibilities, visitor management, CCTV monitoring, and any special duties.
PSARA Compliance: Obligation on the security agency to maintain a valid PSARA licence throughout the contract term; confirm all guards are trained to PSARA standards; produce police clearance certificates for all deployed guards; and not deploy any person who does not meet PSARA character requirements.
Labour Law Compliance: Obligation to comply with Minimum Wages Act 1948, EPF Act 1952, ESI Act 1948, CLRA 1970, and Payment of Gratuity Act 1972 for all deployed guards. Monthly proof of PF and ESI payments to be provided to the client.
Fee, GST, and TDS: Monthly fee (₹) excluding GST; applicable GST rate (18%, SAC 998531); statement of whether GST applies under forward charge or RCM (based on the legal constitution of the agency); TDS at 2% under Section 194C acknowledged.
Liability and Insurance: Liability cap for losses due to negligence of guards; requirement for the agency to maintain public liability and fidelity insurance; client named as additional insured.
Termination: Notice period (typically 30–60 days), immediate termination for PSARA non-compliance or security breach, and guard handover obligations.
Additional compliance elements for a Security Services Agreement (India) used in India include: Under Indian law, the Indian Contract Act 1872 governs contractual obligations, with Section 10 setting essential requirements for valid agreements. The Companies Act 2013 regulates corporate entities through the Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Industrial Disputes Act 1947 and state labour commissioners govern employment disputes. The Information Technology Act 2000 and IT (Reasonable Security Practices) Rules 2011 protect personal data. The Income Tax Act 1961 and Goods and Services Tax Act 2017 govern tax obligations through the Central Board of Direct Taxes (CBDT) and GST Council. Forms-legal.com provides this template as a starting point for India-compliant documentation.
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title = {Security Services Agreement (India) (India)},
year = {2026},
howpublished = {\url{https://forms-legal.com/india/business/services/security-services-agreement-india}},
note = {Free legal document template. Based on Indian Contract Act, 1872}
}Also available for these jurisdictions:
Frequently Asked Questions
Security agencies operating in India are regulated by the Private Security Agencies (Regulation) Act 2005 (PSARA), which is the primary central legislation governing the private security industry. PSARA was enacted to regulate the functioning of private security agencies, ensure the character, antecedents, training, and conduct of security guards, and impose licensing requirements on agencies. PSARA Licence: Under Section 4 of PSARA, no person or entity shall carry on or commence the business of a private security agency without obtaining a licence from the Controlling Authority of the state in which they intend to operate. The Controlling Authority is typically a senior police officer designated by the state government. The licence is state-specific — an agency operating in multiple states must obtain a separate PSARA licence for each state. A national licence was introduced through the Private Security Agencies (Regulation) (Amendment) Act 2019, allowing agencies to apply for a single national licence covering all states, but implementation varies by state. Eligibility for PSARA licence: The applicant must be a company, LLP, or partnership firm (not a sole proprietorship). The proprietors/directors/partners must not have been convicted of any offence involving moral turpitude; must be Indian citizens; and must satisfy the character requirements under PSARA. The agency must comply with the Private Security Agencies Central Model Rules 2006 and the applicable state rules.
The liability of a security agency for theft, damage, or loss occurring on a client's premises is governed by the terms of the Security Services Agreement and, in the absence of specific contractual provisions, by the Indian Contract Act 1872 and the general law of torts. Contractual liability: Security service agreements typically contain a limitation of liability clause specifying the maximum amount the security agency will pay for losses occurring on the client's premises, and defining the circumstances under which the agency is liable (e.g., theft proven to have occurred during the security agency's shift, due to negligence of deployed guards). The limitation may be set as a multiple of the monthly fee or as an absolute cap. Courts in India have generally upheld reasonable limitation of liability clauses in commercial contracts under Section 73 read with Section 74 of the Indian Contract Act 1872. Negligence liability: Under the law of torts as applicable in India (based on common law principles), a security agency can be held liable for losses arising from the negligence of its guards — for example, if a guard falls asleep and a burglary occurs, or if a guard fails to follow the access control protocol and an unauthorised person enters. The agency is vicariously liable for the acts of its employees under the doctrine of respondeat superior. Vicarious liability for employee acts: If a security guard actively participates in theft or facilitates unauthorised access, the security agency may be held vicariously liable to the client.
Security guards in India are entitled to minimum wages as a scheduled employment under the Minimum Wages Act 1948. The applicable minimum wage varies by state, as minimum wages for private sector employment are set and periodically revised by each state government under the Minimum Wages Act 1948. The central government also notifies minimum wages for scheduled employments in central sphere establishments under its jurisdiction. State-wise minimum wages for security personnel: Most state governments classify security guard employment under a specific category (e.g., 'Private Security Guard,' 'Watchman,' or 'Guard') in their Schedule of Minimum Wages. The rates are revised periodically (typically semi-annually) by Variable Dearness Allowance (VDA) notifications. As of FY 2024-25, illustrative minimum wages for security guards in major states are: Maharashtra — approximately ₹15,000–₹17,000 per month (depending on the guard's grade and experience); Karnataka — approximately ₹14,000–₹16,000 per month; Delhi — approximately ₹16,000–₹18,500 per month (semi-skilled/skilled category); Tamil Nadu — approximately ₹12,000–₹14,000 per month. Actual rates must be verified from the current state government notifications at the time of contract execution. Categories of security personnel: Many states classify security personnel into multiple grades — Grade I (unarmed guard), Grade II (head guard/supervisor), and armed guard — with different minimum wages for each grade.
Security services provided by private security agencies in India are subject to GST at the rate of 18% under the Goods and Services Tax framework (CGST Act 2017 + applicable SGST Act). The relevant SAC (Service Accounting Code) for private security services is 998531 (Investigation and security services). The 18% GST rate has applied to private security services since the introduction of GST on 1 July 2017. Reverse Charge Mechanism (RCM): A critical GST feature for security services is the Reverse Charge Mechanism (RCM). Under Notification No. 13/2017-Central Tax (Rate) dated 28 June 2017 (as amended), if a security agency (supplier) is a body corporate registered under the Companies Act 2013 or an LLP, and the recipient of security services is also a body corporate (registered company or LLP), then GST is payable by the recipient (client) under RCM — not by the security agency. However, if the security agency is a sole proprietorship or partnership firm (not a company or LLP), the security agency itself charges and collects GST at 18% on the invoice and deposits it with the government. Practical impact: Security service agreements must specify whether GST applies under the forward charge mechanism (agency charges and collects) or the reverse charge mechanism (client pays GST directly to the government). This affects the invoicing format, ITC availability, and GST filing obligations of both parties.
Yes, a security agency providing services to consumers (as defined under the Consumer Protection Act 2019) can be held liable under the Act for deficiency in service. The Consumer Protection Act 2019 (CPA 2019), which replaced the Consumer Protection Act 1986, provides a comprehensive framework for consumer rights and redressal of consumer grievances, including against service providers in the security industry. Who is a 'consumer' under CPA 2019: Under Section 2(7) of the CPA 2019, a 'consumer' is any person who buys goods or hires services for a consideration (paid or promised), for personal use — not for resale or commercial purpose. Residential housing societies, individual homeowners, and small businesses that engage security agencies for the security of their homes or properties can qualify as consumers under CPA 2019. What is 'deficiency in service': Section 2(11) of the CPA 2019 defines 'deficiency' as 'any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.' Applied to security services, deficiency could include: deploying untrained guards; failing to maintain the agreed guard-to-post ratio; guards abandoning their post; failure to prevent theft or unauthorised access due to negligence; or failure to comply with PSARA requirements.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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