How to Start a Security Agency in India: 2026 Checklist

The checklist at a glance

1. Pick a structure: proprietorship, partnership firm, LLP or private limited company, registered in India, with Indian citizens as proprietor, partners, directors and majority shareholder.
2. Apply for a PSARA licence in every state where you will supply guards.
3. Get a contractor licence under the OSH Code once you cross the contract labour threshold.
4. Register for GST and check who pays it for each client.
5. Register for EPF and ESI, professional tax and shops and establishments.
6. Set up training, verification and uniforms before guards go on duty.
7. Fix wages at or above the state minimum wage.
8. Build a cost sheet for every contract.
9. Find clients and tenders, including GeM and state portals.
10. Run payroll and returns every month.

Step 1: Choose a structure that works for PSARA and GST

An individual, a partnership firm or a company can apply for a PSARA licence. Two rules make this choice matter.

First, PSARA will not consider a company, firm or association that is not registered in India, or whose proprietor, majority shareholder, partner or director is not an Indian citizen (section 6(2)). Under the Central Model Rules 2020, every proprietor, partner, majority shareholder and director files an antecedent verification form as if each were the applicant. So anyone you bring in must have a clean record under section 6(1), for example no conviction for an offence punishable with two years or more.

Second, GST. The reverse charge on security services applies only when the supplier is not a body corporate.

Settle the structure before you apply: the licence goes to the applicant you name, and the model rules require a change of management to be reported to the Controlling Authority within 30 days.

Step 2: Get a PSARA licence in each state

No one may carry on or start the business of a private security agency without a licence under the Private Security Agencies (Regulation) Act, 2005 (section 4). Each state's Controlling Authority grants licences for one district, several districts or the whole state. You can apply and renew online on the MHA licensing portal, psara.gov.in, and pay the fee electronically.

• Fee (section 7(3)): Rs 5,000 for one district, Rs 10,000 for two to five districts, Rs 25,000 for the whole state. Ask your state about any separate verification charge.
• Decision: within 60 days of a complete application, after inquiries and a no objection certificate from the police (section 7(4)).
• Validity: five years. Apply for renewal at least 45 days before expiry (sections 7(5) and 8). The model rules do not process a later renewal, so you would need a fresh licence.
• After grant: start operations within six months and engage supervisors within 60 days (section 9).
• Owner training: at least six working days under the model rules, unless you already hold a licence in another state.

Form I under the model rules asks for items such as a photo of your office premises, ID proof of all management persons, your training arrangement, colour photos of your uniform and a current income tax clearance certificate. Our PSARA application checklist helps you collect the documents, and does every security agency need a PSARA licence explains who is covered.

Running without a licence can mean up to one year in prison, a fine of up to Rs 25,000, or both (section 20(1)). From 15 May 2026, the Jan Vishwas (Amendment of Provisions) Act, 2026 removed the separate fine for breaking the commencement, training, supervisor and guard eligibility rules in sections 9 and 10, and omitted section 12 on displaying the licence. The model rules still ask you to display the licence at your office. The Controlling Authority can still suspend or cancel a licence for breach of the Act, the rules or licence conditions, and for breach of the labour laws listed in the Act's Schedule, which name the older wages, PF, bonus, contract labour and gratuity Acts, most of which the labour codes replaced from 21 November 2025 (section 13).

For the documents, the online steps on psara.gov.in, training rules and how to check your licence status, read our PSARA licence guide.

Step 3: Get a contractor licence under the labour codes

A PSARA licence does not replace the labour licence. When you supply guards to a client's premises you generally act as a manpower supply contractor under the Occupational Safety, Health and Working Conditions Code, 2020, which took over from the Contract Labour Act on 21 November 2025.

Under Chapter XI, a manpower supply contractor who employed 50 or more contract labour on any day in the preceding 12 months needs a licence (sections 45 and 47). The licence is valid for five years for the number of workers stated in it, and a contractor supplying in more than one state can take it from the Central authority. The Code sets this 50 worker test for every state; your state's OSH rules set the application procedure, fees and security deposit. Read does a contractor need a labour licence for the detail.

The licence also carries a wage risk. If you short-pay or pay late, the client as principal employer must pay your guards and can recover the amount from your bills or as a debt, and the government can pay them out of your licence security deposit (section 55).

Step 4: Register for GST and understand the reverse charge

GST registration becomes compulsory once your aggregate turnover in a financial year crosses Rs 20 lakh, or Rs 10 lakh if you supply from one of the few special category states covered by section 22 of the CGST Act. Security services are taxed at 18%.

Who pays depends on your structure. Under Notification 13/2017-Central Tax (Rate), as amended by Notification 29/2018 from 1 January 2019, security services supplied by any person other than a body corporate to a registered person are taxed under reverse charge, so the client pays the GST. The reverse charge does not apply where the client is a government department, local authority or government agency registered only to deduct TDS, or a client paying tax under the composition scheme. In those cases, and for unregistered clients, you charge GST yourself. See what GST rate applies to manpower supply for the invoice details.

One exception: if all your supplies are taxed under reverse charge in your clients' hands, Notification 5/2017-Central Tax exempts you from registering. Bill even one client outside reverse charge and the normal threshold applies.

Clients also deduct income tax (TDS) from what they pay you. Under section 393(1) of the Income-tax Act, 2025 (Table serial 6(i)), the rate on contractor payments is 1% if you are an individual or HUF and 2% otherwise. It applies once a single payment crosses Rs 30,000 or the year's total crosses Rs 1,00,000, so plan cash flow around it.

Step 5: Register for EPF, ESI, professional tax and shops

• EPF: applies to every establishment employing 20 or more employees (Code on Social Security, 2020, First Schedule). From 17 September 2026 the EPF wage ceiling is Rs 25,000 a month, up from Rs 15,000, which brings more guards into mandatory PF. The PF return and payment for a wage month are due by the 15th of the next month.
• ESI: applies to establishments with 10 or more persons, in areas where ESI is implemented. Employees earning up to Rs 21,000 a month are covered. The employer pays 3.25% and the employee 0.75%, and both shares are due within 15 days of the end of the month.
• Below the threshold: you can bring yourself under EPF or ESI voluntarily where you and a majority of employees agree. Once a chapter applies, it keeps applying even if your headcount later falls.
• Professional tax: a state tax levied only in some states, capped by the Constitution at Rs 2,500 per person per year. Check your state's slabs and employer registration.
• Shops and establishments: register your office under your state's shops and establishments law; the process and fee vary by state. Also check whether your state has a labour welfare fund.

Step 6: Set up training, guard verification and uniforms

Under section 10 of PSARA, every guard must be an Indian citizen (or from a country the Centre notifies), aged at least 18 and under 65, verified for character and antecedents, trained and physically fit. The Central Model Rules 2020, which state rules are to follow so far as practicable, set the detail:

• Training: at least 100 hours of classroom and 60 hours of field training over at least 20 working days for entry-level guards. Ex-servicemen and former police take a condensed course of 40 classroom and 16 field hours over at least 7 working days. Certificates from one state's institutes are accepted in other states.
• Verification: each guard gives you Form V and an affidavit in Form VI. You can rely on a valid verification certificate the guard produces, or check through the Controlling Authority or police. The report is to be issued within 15 days.
• Fitness: height of 160 cm (150 cm for women), eyesight and other standards, and a medical check every 12 months.
• Supervisors: one for every 15 guards, and at least one for every six where guards work at different premises that one supervisor cannot practically cover.
• Uniform and ID: issue a photo ID card worn above the waist, an arm badge, a shoulder or chest badge, a whistle, laced shoes and headgear. Guards must not wear army or police style uniforms: the guard and the proprietor face up to one year in prison, a fine of up to Rs 5,000, or both (section 21).

Step 7: Pay at least the minimum wage

Minimum wages are now fixed under the Code on Wages, 2019, and each state notifies its own rates by skill category. Guard rates differ by state and change when the state revises them, so check the current notified rate before you fix pay or quote. Start with your state page, for example the security guard minimum wage in Delhi, and confirm it against the latest state notification.

Step 8: Price a guard contract from the bottom up

Build every rate in this order: wage, statutory costs, service charge, then GST. A rate that does not cover statutory dues comes back to you, because the client can recover unpaid wages.

Assuming the whole wage is basic plus DA, the PF and ESI lines alone add Rs 3,250 a month. Use our statutory cost sheet to build the full rate for each post.

Step 9: Win your first clients and tenders

Keep your PSARA licence, registrations and a sample cost sheet ready before you approach offices, factories or housing societies. For government buyers:

• GeM: the Government e-Marketplace, a government-owned company under the Department of Commerce, is where ministries, departments and CPSEs buy common-use goods and services. It lists a Security Manpower Service category. As a registered seller, read each bid document and the buyer's additional terms, which set that bid's licence, experience and turnover conditions.
• Other portals: the Central Public Procurement Portal (eprocure.gov.in) lets you download tender documents free and bid online, and states run their own e-procurement portals.
• Udyam registration: free, online and paperless at udyamregistration.gov.in, and worth having where a tender gives benefits to micro and small enterprises.

Step 10: Run payroll and compliance as you grow

Each month, record attendance at every post, pay at least minimum wage by bank transfer, pay PF by the 15th and ESI within 15 days of month end, deduct professional tax where it applies, and raise GST invoices with the right tax treatment. Keep the PSARA register of managers, guards (with photos and salaries) and clients in electronic form, as the model rules require. Track renewal dates for your PSARA and contractor licences. Each new state needs its own PSARA licence, wage check and labour licence check.

How ZeniaHR helps

ZeniaHR is built for agencies that deploy guards at client sites. Its security guard payroll software turns post-wise muster into payslips, applies overtime, night allowance and reliever pay, and computes PF, ESI, professional tax and LWF for each guard. It keeps a separate bill rate and pay rate for each client, and produces wage registers, muster rolls and challan-ready PF and ESI outputs. It is free for up to 50 users, including 2 admins, with core payroll, PF and ESI reports; geotagged attendance and the full report set need a paid plan. Paid plans cost Rs 15 to Rs 25 per user per month depending on team size, with 20% off on yearly billing. See pricing. To compare tools, read our guide to payroll software for security agencies.

Key points

• A PSARA licence is needed before you start; it is granted state by state for one district, up to five districts or the whole state, at Rs 5,000, Rs 10,000 or Rs 25,000.
• The licence lasts five years; renew at least 45 days before expiry, start operations within six months and engage supervisors within 60 days.
• Your structure matters: PSARA verifies every proprietor, partner, director and majority shareholder, and the GST reverse charge on security applies only if you are not a body corporate.
• Supplying 50 or more contract workers needs a contractor licence under the OSH Code, 2020, on top of PSARA; apply under your state's OSH rules.
• EPF applies at 20 employees and ESI at 10; the EPF wage ceiling is Rs 25,000 a month from 17 September 2026.
• Guards must be at least 18 and under 65, verified and trained: 100 classroom and 60 field hours over 20 working days under the model rules.
• Price each post as wage plus statutory costs plus service charge, then GST at 18%.
• GeM lists a Security Manpower Service category, and each bid sets its own eligibility conditions.

Frequently asked questions