A private security agency in India is licensed under the Private Security Agencies (Regulation) Act, 2005, known as PSARA, and then has to comply with the same labour and tax laws as any employer of a large workforce. The licences required for a security agency start with the PSARA licence from the state Controlling Authority, followed by PF, ESIC, shop establishment, GST and, where the thresholds are met, a contract labour licence. This roadmap sets out the order and the recurring compliance that guard-supply businesses carry.
Licences and registrations to plan for
- Planning stageEntity formation
PSARA applications are made by a company, firm or other person that qualifies under the Act. A company or LLP is the usual choice, and ownership and director conditions are checked at the licence stage.
- Planning stageUdyam registration
Optional, but helpful for tenders and bank finance. Many security tenders ask for it.
- Before opening the officeShops and establishments registration
The agency's office is an establishment under the state labour law, so it registers with the labour department.
- Before deploying guardsPSARA licence
The core approval. A private security agency cannot operate without a licence from the Controlling Authority of the state where it provides guards.
- Before first invoiceGST registration
Security services are taxable. Some supplies to registered businesses attract reverse charge, so check how the liability is shared with your clients.
- On hiring guardsEPF registration
Guards are employees and the agency deposits provident fund contributions once coverage applies. Most guard agencies cross the threshold as they grow.
- On hiring guardsESIC registration
Guards with wages within the ESIC ceiling are insured through ESIC, with contributions from both employer and employee.
- Before crossing the thresholdContract labour licence
A guard agency supplying workers to principal employers is a contractor, and under the OSH Code a licence is needed when the contractor crosses the worker threshold. Check the current central and state rules.
- On hiringProfessional tax registration
Only in states that levy it. Check whether your state requires employer registration and enrolment.
- On hiringLabour welfare fund registration
Applies in states with a labour welfare fund law and requires periodic contributions for each employee.
- MonthlyPF returns
Monthly returns and payments are a recurring duty, and client invoices usually require proof of PF and ESIC remittance.
- Monthly or per periodESIC returns
ESIC contributions follow their own periods and rules, so build them into the payroll calendar.
How PSARA licensing works
PSARA requires every private security agency to hold a licence from the Controlling Authority designated by the state government, an officer not below the rank of Joint Secretary in the Home Department or equivalent. The Act directs a decision within sixty days of an application. The licence is valid for five years and is renewable, with the renewal application made at least forty-five days before expiry. We used the PRS India copy of the Act and flagged section numbers for human review on our PSARA page.
A licence is issued for the state or states where you intend to operate, and is not valid elsewhere. If you serve clients in Delhi, Uttar Pradesh and Haryana, plan a licence in each state where guards are deployed. The Act and Rules set conditions on the licensee, including police verification, training of guards, minimum eligibility and an ownership check. Check the state Rules for the current list.
The roadmap: order of approvals
The sequence below works for a new agency starting in one state.
- Form the company, LLP or firm and open a bank account. Directors and partners must meet the eligibility conditions and are subject to police verification.
- Take office premises and complete shop and establishment registration with the state labour department.
- Register for GST and, if your wage bill will cross the coverage thresholds, for EPF and ESIC.
- Arrange a tie-up with a recognised training institute for guard training, as the PSARA Rules require, and appoint a field supervisor as per the state rules.
- Apply to the Controlling Authority for the PSARA licence with the entity documents, identity and character documents, premises proof and the fee for your area of operation.
- After the licence, recruit guards through the agency's own process and verify their identity, address and antecedents. Deploy only trained and verified guards.
- Apply for the contract labour licence if your guard strength crosses the threshold, and register for professional tax and labour welfare fund where your state levies them.
- If guards will be armed, note that arms are separately regulated under the Arms Act and require the relevant licensing, which is outside this roadmap.
Labour compliance for a guard-supply business
Security agencies are labour intensive, so most of the compliance burden sits in labour law. The four Labour Codes came into force on 21 November 2025. The Code on Social Security governs provident fund and ESI, and the OSH Code governs contract labour. Our PF, ESIC and contract labour pages describe what we verified and what remains to be checked, such as the EPF Scheme 2026 reference and the contract labour worker threshold.
Principal employers increasingly ask contractors to prove statutory remittances before releasing bills, so keep challans, returns and wage registers in order. Minimum wages for security guards are notified by each state and revised periodically, so price tenders on the current notified rate rather than on the previous contract.
GST and costing
Security services are taxable under GST. Under the reverse charge mechanism, the recipient pays the tax on some supplies of security services, depending on whether the supplier is a body corporate and whether the recipient is registered. The rules have been amended, so confirm the current position on the CBIC website or with a tax adviser before you quote tax-inclusive prices.
Government fees for PSARA depend on the area of operation, and some secondary guides report figures for one district, up to five districts and the whole state. We do not quote them here, so check your state's rules.
Delhi, Uttar Pradesh and Haryana: where applications go
Delhi: The Home Department of the Government of NCT of Delhi is the Controlling Authority, and applicants usually deal with the Police and Home Department offices for verification. Some filing may be offline or through a state portal, so check the current process.
Uttar Pradesh: PSARA applications are processed by the Home Department through the state's PSARA process, with police verification at district level. Shop registration goes through the state Labour Department.
Haryana: The Home Department is the Controlling Authority, and the state labour department handles shop registration. Haryana is notifying its own OSH rules, so contract labour and shop provisions are in transition.
Because portals, forms and fees change, confirm the current checklist with the state before you file.
Recurring compliance and pitfalls
- PSARA: renew at least 45 days before expiry, keep guard records and identity verification, and report changes in directors or address as the Rules require.
- Monthly: PF and ESIC returns and payments, GST returns and wage payment through banking channels, with wage slips and attendance registers.
- Annual: contract labour and labour code returns where required, income tax and TDS, and renewal of shop registration.
- Pitfall: deploying untrained or unverified guards. This is the most common ground for action against an agency.
- Pitfall: operating in a state where you have no licence. A licence from one state does not cover guards in another.
- Pitfall: underpricing contracts against the minimum wage and statutory contributions, which pushes agencies into non-payment.
Frequently asked questions
Is a PSARA licence mandatory to run a security agency?
Yes. The Private Security Agencies (Regulation) Act, 2005 requires every private security agency to hold a licence from the Controlling Authority of the state where it operates. Running without one exposes the agency to penalties under the Act.
How long is a PSARA licence valid?
The Act provides five years, renewable for further five-year periods, with the renewal application made at least forty-five days before expiry. Some state rules may differ, so check the validity stated on your licence.
Does PSARA licence work in all states?
No. A licence is issued by the state Controlling Authority and covers the state where it is granted. If you provide guards in several states, you need a licence in each of them.
Is PF and ESIC applicable to a security agency?
Guards are employees, so the agency registers for provident fund and, for guards within the wage ceiling, ESIC once coverage thresholds are met. Principal employers also ask for proof of remittances before paying bills.
Does a security agency need a contract labour licence?
A guard-supply agency acts as a contractor, and the OSH Code requires a contractor's licence above the worker threshold. Our contract labour page notes a 50-worker rule as reported, but you should confirm the threshold in the current central or state rules.
Is GST applicable on security services?
Yes. Security services are taxable, and reverse charge applies in some cases depending on the supplier and recipient. Check the current notification or consult a tax adviser before quoting rates.
Do security guards need training?
The PSARA framework requires guards to be trained, and agencies typically tie up with a recognised training institute. The syllabus and duration are set by the Central Model Rules and the state Rules, so check the current requirement.
Can an agency provide armed guards?
Armed deployment is separately regulated under the Arms Act and its rules, with licences from the district authorities. A PSARA licence alone does not authorise arms, so take specific legal advice.
How long does a PSARA licence take?
The Act directs a decision within sixty days of an application, but practical time depends on police verification and state processing. Avoid committing to guard deployments before you hold the licence.
Official sources
Reviewed by Satyam Gupta, Company Secretary (CS) & Advocate
8+ years of industry experience. Last reviewed 16 October 2026. Always confirm current rules and fees on the official portal before acting.