GST on Manpower Supply & Recruitment — 18% on the Full Value

On the full invoice value, including the salary/wages reimbursed. Under Section 15 of the CGST Act, the taxable value of a manpower-supply service is the entire transaction value the agency charges the client — wages, PF, ESI and margin combined. Charging 18% only on the margin is a common error that leads to demand notices, unless a genuine pure-agent arrangement under Rule 33 is documented. Recruitment/placement, by contrast, is a one-off service fee, so 18% applies only to that fee.

Recruitment, placement, executive search and headhunting services are taxable at 18% GST (commonly under SAC 9983). The 18% applies to the agency's placement/service fee — not to the salary of the placed candidate. For example, a ₹1,00,000 placement fee attracts ₹18,000 GST, so the employer pays ₹1,18,000. A GST-registered employer can claim full ITC on the ₹18,000.

Temporary staffing and contract-workforce supply are taxed at 18% under SAC 9985. The staffing agency bills the client for both the deployed workers' wages (passed through) and its own margin, and 18% GST applies to the total. The agency is the employer of record — it deducts TDS and handles PF/ESI for the workers — and the client claims full ITC on the GST if registered and using the service for taxable business.

Yes. Supply of housekeeping, cleaning and other support staff is manpower supply under SAC 9985, taxed at 18% GST on the full invoice value including reimbursed wages. It is on forward charge — the agency charges and deposits the 18% — and a registered client can claim ITC.

It depends on who provides it. When security services (supply of security personnel) are provided by a non-body-corporate — a proprietor, partnership firm or individual — to a GST-registered person, the 18% GST is payable by the recipient under Reverse Charge (RCM) since 1 January 2019. If the provider is a body corporate (company/LLP), or the recipient is unregistered or a composition taxpayer, RCM does not apply and normal forward charge operates.

The recipient. Under the security-services RCM entry (Notification 29/2018-CT(R)), a registered business receiving security-personnel services from a non-corporate agency self-pays 18% GST directly in its GSTR-3B, instead of the agency charging it. The agency issues a bill without GST. The recipient can generally claim ITC of the RCM GST paid, keeping it cost-neutral.

No. The reverse-charge entry is specific to security services (supply of security personnel). Ordinary manpower supply, labour supply, housekeeping and staffing remain on forward charge — the agency charges and deposits the 18% GST. Do not apply the security RCM rule to general manpower contracts.

No. Recruitment and placement services are not covered by the Section 9(3) reverse-charge list, and Section 9(4) RCM on unregistered suppliers applies only to specific notified categories that do not include recruitment. So if a company engages an unregistered recruiter, no GST is payable by either party — but the company also cannot claim ITC, since no GST invoice is issued. Using a registered agency is preferable for compliance and credit.

Yes. GST paid on manpower supply, staffing and recruitment services is fully eligible for Input Tax Credit for a GST-registered recipient, provided the service is used in the course or furtherance of business, a valid tax invoice exists, and the credit reflects in GSTR-2B. These services are not blocked under Section 17(5). ITC must be proportionately reversed under Rule 42 only if the recipient also makes exempt supplies.

A pure-agent arrangement under Rule 33 of the CGST Rules lets an agency exclude reimbursed third-party costs (like wages) from its taxable value, charging 18% only on its own margin. But the conditions are strict: a written pure-agent mandate, payment to the third party only as authorised, actual-cost reimbursement shown separately, and no title/use of what is procured. In most staffing models the workers are the agency's own employees, so pure-agent status fails and GST applies to the gross value. It is the exception, not the norm.

Generally yes, at 18% — private agencies supplying manpower to government departments are taxable. A limited exemption can apply where pure services (excluding works contracts) are supplied to the central/state government, a local authority or a governmental authority by way of an activity in relation to a function entrusted under Article 243G or 243W of the Constitution. The exemption is narrow and fact-specific; confirm the exact function and recipient before treating a supply as exempt.

Yes. Recruitment, examination and selection services provided by constitutional and government bodies such as UPSC, SSC and state public service commissions are treated as government services and are exempt from GST. Application and examination fees they collect do not attract GST. This exemption covers only the government body's own services — a private agency providing recruitment services to a government department is still taxable at 18%.

A manpower, staffing or recruitment agency supplies a service, so GST registration is mandatory once aggregate turnover crosses ₹20 lakh in a financial year (₹10 lakh in special-category states). Agencies making inter-state supplies of manpower may need to register regardless of turnover. Because clients want ITC, registered status is a practical necessity for most agencies of any size.

No. The GST 2.0 rationalisation effective 22 September 2025 restructured goods and services into a two-slab framework but did not change the rate on manpower, labour, staffing, security or recruitment services — they remain at 18%. The value-of-supply rule (GST on gross value including wages) and the security-services RCM continue unchanged.