VAT, VDS and AIT on security service bills

Many guarding companies find that clients never pay the full invoice. Usually nothing is wrong: the client has deducted VAT and income tax at source, as the law asks them to, and will hand over certificates. The trouble starts when nobody records those deductions and the receivables never balance.

VAT on security services

Security services carry VAT under their own service code (S040.00). Practitioner charts for 2025-26 show 15%; some older lists show 10%. Confirm the current rate with your VAT adviser. Ovelit Guard defaults to 15% and lets you set the rate per contract.

VDS: VAT deducted at source

Many clients, including banks, large companies and public bodies, withhold the VAT on your invoice and deposit it themselves. They should give you a VAT deduction certificate. The invoice is settled by the cash plus that certificate.

AIT: income tax withheld

Clients also withhold advance income tax from payments to contractors, commonly 2% of the bill for service providers. Keep the tax certificate: it is credited against your company's income tax.

A worked example

Services ৳1,00,000 + VAT 15% ৳15,000 = invoice ৳1,15,000. The client deposits the ৳15,000 VAT and withholds ৳2,000 tax, and transfers ৳98,000. The invoice is fully paid: ৳98,000 cash + ৳15,000 VDS + ৳2,000 AIT.

Recording it properly

In Ovelit Guard, when you record a payment you enter the cash received, the AIT and the VDS. The invoice settles at the full amount, the ageing report shows what is really outstanding, and you can see which certificates to chase.