Does Every Security Agency Need a PSARA Licence?

The governing rule: a PSARA licence is mandatory for the business

PSARA is the Private Security Agencies (Regulation) Act, 2005. It requires any person or entity that carries on the business of a private security agency, meaning providing private security guards or security services to a client for consideration, to hold a valid licence granted by the State Controlling Authority. The licence is tied to the state: a separate licence is generally required for each state in which you operate. The Act itself fixes the grant fee and the validity: under Section 7(3) the fee is Rs 5,000 if you operate in one district, Rs 10,000 for more than one and up to five districts, and Rs 25,000 for the whole state, and under Section 7(5)(a) a licence is valid for five years unless it is cancelled. Renewal fees, verification charges and application forms follow each state's PSARA rules, so check those against that state's own rules. The Act also requires that the guards you deploy meet its training and character or antecedent verification requirements.

The exception that usually applies: it is about scope, not headcount

PSARA regulates the business of providing security to others, so the exception turns on what you supply rather than on how many guards you have. Two situations commonly sit outside it. First, a firm that supplies only general, non-security manpower, for example housekeeping, drivers or office staff, is not running a private security agency, so PSARA does not apply to that activity (though the contract-labour regime still can). Second, an organisation that deploys its own employees to guard its own premises, and does not supply guards to third parties, is generally not carrying on the business of a private security agency. Because this turns on the statutory definition of 'private security agency', confirm your specific case against the Act and your state's rules before relying on the exclusion.

PSARA does not replace the contract-labour licence: the two stack

A PSARA licence does not substitute for the labour-law licence. If you supply security guards to a client, you are also supplying contract labour, so the Occupational Safety, Health and Working Conditions Code, 2020 applies. Under Chapter XI, a manpower supply contractor that meets the applicability threshold must hold a contractor licence under Section 47, issued by the licensing authority, and that threshold is set by the Code and the state notification, so the applicable number must be checked against your state's rule. In practice a security-supply firm commonly needs both a PSARA licence and a contract-labour or manpower-supply licence.

What else runs alongside for a security-supply firm

Several tax and social-security obligations run with the licences. Security services attract GST at 18 percent. Where the supplier is a non-body-corporate and the recipient is a registered person, GST on security services is paid by the recipient under the Reverse Charge Mechanism (Notification 13/2017-Central Tax (Rate) as amended by 29/2018, effective 01 January 2019); general manpower supply is not under reverse charge by default. Payments to the contractor for supply of labour attract TDS under section 393(1) of the Income-tax Act, 2025 (Table serial 6(i), formerly Section 194C): 1% for an individual or HUF and 2% for others. The guards you employ are covered by EPF and ESI in the normal way, and you remain responsible for paying their wages.

Illustrative example

Illustrative example: A firm places security guards at client sites in two states. Because PSARA licences are granted state by state, the firm generally needs a PSARA licence from the controlling authority of each of those states, in addition to any contract-labour or manpower-supply licence that applies. The grant fee for each licence is set by Section 7(3): if the firm works in only one district in each state it pays Rs 5,000 per licence, Rs 10,000 for the two; if it covers the whole of each state it pays Rs 25,000 per licence, Rs 50,000 for the two. Each licence is valid for five years under Section 7(5)(a), so the firm tracks two renewal dates, and the renewal fee, verification charges and forms follow each state's rules.

Action step

Confirm first whether you are supplying security services to clients (PSARA applies) or only general manpower (PSARA generally does not). If you supply security, apply for a PSARA licence to the State Controlling Authority in every state where you operate, and make sure your guards meet the training and verification requirements. In parallel, check the OSH Code Chapter XI contract-labour or manpower-supply licence threshold for each state and obtain that licence where it applies, and put GST, TDS under section 393(1) of the Income-tax Act, 2025 (formerly Section 194C), and EPF and ESI compliance in place. Budget the Section 7(3) grant fee, apply for renewal at least 45 days before each five-year licence expires (Section 8(1)), and verify every state-specific renewal fee, verification charge, form and threshold against the current notified rules before acting.

Sources and status

Sources: Private Security Agencies (Regulation) Act, 2005 (Section 7(3) grant fee, Section 7(5) validity and renewal); Occupational Safety, Health and Working Conditions Code, 2020, Chapter XI (Sections 45 and 47); Notification 13/2017-Central Tax (Rate) as amended by 29/2018 (GST reverse charge on security services); section 393(1), Table serial 6(i), Income-tax Act, 2025 (formerly Section 194C, Income-tax Act, 1961); Code on Social Security, 2020 (EPF and ESI). Last verified: 20 September 2026. This page is general information, not legal advice; the PSARA grant fee and five-year validity are fixed by Section 7 of the Act, while renewal fees, verification charges, forms and thresholds are set by state rules and change over time, so verify against the current Act, rules and notifications for your state before acting. Reviewed by: pending named legal review.

Key points

• A PSARA licence is mandatory for the business of providing private security guards or services to clients; it is issued by the State Controlling Authority.
• A separate PSARA licence is generally required for each state where you operate; the Act fixes the grant 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) and the five-year validity (Section 7(5)(a)), while renewal and verification charges and forms follow state rules.
• Guards must meet PSARA training and character or antecedent verification requirements.
• PSARA is separate from and additional to the contract-labour or manpower-supply contractor licence under OSH Code 2020 Chapter XI (Section 47); supplying security guards can trigger both.
• Security services carry 18 percent GST; where the supplier is a non-body-corporate and the recipient is registered, GST is paid by the recipient under Reverse Charge (Notification 13/2017 as amended by 29/2018).
• General non-security manpower supply, and purely in-house or captive security not supplied to others, generally fall outside PSARA, but the OSH Code contract-labour regime can still apply where thresholds are met.
• Payments for supply of labour attract TDS under section 393(1) of the Income-tax Act, 2025 (formerly Section 194C); EPF and ESI apply to the guards as to any employees, and the firm remains responsible for their wages.

Related questions

Check for your state

• The PSARA grant fee (Section 7(3)) and the five-year validity (Section 7(5)(a)) are fixed by the Act; the renewal fee, verification charges and application forms are set by state rules, so verify those against each State Controlling Authority's notified rules.
• The exact statutory definition of 'private security agency' and the in-house or captive exclusion should be confirmed against the PSARA Act and state rules before relying on the exception.
• OSH Code contract-labour and manpower-supply licence thresholds (principal-employer registration and contractor licence) vary by state notification; the applicable number must be checked against your state's rule.
• Exact PSARA guard training hours and verification requirements are set by state rules and are not restated here.
• GST reverse-charge applicability depends on the supplier's constitution (body corporate or not) and the recipient's registration status; confirm the transaction facts before applying it.