How to start a private security agency in India: PSARA licence and registrations

Choosing a structure

Security agencies can be run by individuals, partnerships, LLPs or companies, but the structure has a direct GST effect. When an agency that is not a body corporate supplies security services to a registered business, the client generally pays GST under reverse charge. A private limited company charges GST itself under forward charge.

Many large clients prefer contracting with companies for this reason and because of the scale of liability involved. The directors, partners or proprietor will undergo police verification as part of the PSARA application, so choose people who meet the Act's eligibility conditions.

Registrations a security agency needs

The PSARA licence is the core requirement and is state-specific. Labour registrations are just as important because security is a manpower-heavy business with strict wage and social security obligations.

Getting the PSARA licence

Applications go to the Controlling Authority appointed by the state government, often the home department or police. Expect police verification of the applicant and key persons, details of the office, proof of arrangements for training guards, often through a memorandum with a recognised training institute, and the prescribed fee, which varies by state and by the number of districts covered.

A licence generally covers one state or specified districts. Operating in a new state needs a fresh licence from that state's authority. Start renewal well before expiry, since operating after the licence lapses is a violation.

GST and reverse charge

Security services attract 18% GST. Since 1 January 2019, where the supplier is any person other than a body corporate and the recipient is a registered person, the recipient pays GST under reverse charge, with limited exceptions such as composition taxpayers and certain government recipients. In those cases the agency invoices without GST but must state that tax is payable by the recipient.

Agencies run as companies charge GST on invoices and can claim input tax credit on uniforms, equipment and office costs. Check each client's status before invoicing, since the wrong method leads to double payment or demands.

Labour law obligations

Guards must be paid at least the minimum wage notified for their category and area, with overtime where applicable. EPF and ESIC contributions must be deposited on time, and wage registers, attendance and payslips maintained. Under the labour codes in force since 21 November 2025, contractors supplying 50 or more workers need a licence.

Principal employers are increasingly audited for contractor compliance, and many contracts let clients withhold payments if the agency misses EPF or ESIC deposits. Clean payroll records are a selling point.

Ongoing compliance

Keep training records, verification certificates and deployment registers for each guard, as authorities can inspect them. Renew the PSARA licence on time and inform the authority of changes in management or address.

File GST returns, TDS returns and payroll filings monthly. Clients deduct TDS on your contract payments, so reconcile Form 26AS. Maintain insurance for employee compensation and third-party liability as client contracts require.

Pitfalls for security agencies

Licence renewals and payroll compliance are the two areas where agencies most often face action, so assign responsibility and deadlines for both from day one.

• Deploying guards before training and verification are complete.
• Operating in a second state on the first state's licence.
• Charging GST on invoices to registered clients when reverse charge applies.
• Late EPF and ESIC deposits that trigger client penalties.

Step by step

1. 1Choose the entity

   Decide between company and non-corporate forms, considering the GST effect.

2. 2Arrange training

   Tie up with a recognised training institute as your state requires.

3. 3Apply for the PSARA licence

   File with the state Controlling Authority with documents and fee.

4. 4Complete police verification

   Cooperate with verification of applicants and key persons.

5. 5Register for labour laws

   EPF, ESIC, professional tax and contractor licence as applicable.

6. 6Register for GST

   Set up invoicing for forward or reverse charge by client.

7. 7Track renewals

   Calendar PSARA renewal well ahead of the five-year expiry.