Industry body Assocham has asked the government to scrap service tax on security providers, besides giving them industry status to strengthen the private security sector.
"Security agencies should be exempted from paying 13 per cent service tax as these are also subjected to various other taxes which include higher import tariffs on security gadgets," the chamber said and demanded industry status for the private security business.
In a representation to the Ministry of Finance, it has demanded that labour-intensive security agencies should no longer be enlisted under the category of service providers and brought under the category of auxiliary service providers so that they could avail of tax benefits.
"Since security agencies ensure safety of material as well as of personnel ... The sector needs to be given status on the lines provided to industries such as infrastructure, civil aviation, and ports," it said.
Assocham said a notification of the Finance Ministry grants tax incentives on various industries located in Himachal Pradesh and North-Eastern states but security agencies do not get tax exemption in these states.
"The scope of this notification needs to be widened so that security providers avail (of) such benefits," it said.
The chamber estimates that the sector would become a Rs 50,000 crore industry in four years.