Key Takeaways
- Registration: mandatory above ₹20 lakh aggregate turnover for service suppliers in Maharashtra.
- Rate: 18% on manpower and security services; value generally includes reimbursed wages and statutory contributions.
- Reverse charge: only for security services from non-body-corporate suppliers to registered recipients.
- Government work: the exemption is narrow; expect 2% GST TDS on contracts above ₹2.5 lakh.
- Returns: GSTR-3B Table 3 locked from July 2025; returns are time-barred after three years.
Current to 26 October 2026. Rates, thresholds and procedures are based on the CGST Act, notifications and published rulings as of this date. Treatment depends on contract terms and facts, so check the GST portal and current notifications before you act.
Manpower supply is one of the easier businesses to get wrong under GST. The tax is simple to state, 18% on the service, but the value on which it is charged, the party who pays it and the way government clients treat it all depend on contract structure. A staffing or security agency that bills salaries “at actuals” without GST, or misses a reverse charge, can face a demand years later.
This guide sets out who must register, the rate and taxable value, reverse charge on security services, government contracts and GST TDS, the returns and deadlines that apply, input tax credit and the Maharashtra-specific duties. Terms such as aggregate turnover and input tax credit are explained in our tax glossary, and our GST compliance team can help with invoice structuring, reconciliations and returns.
RegistrationWho Must Register for GST?
A supplier of services in Maharashtra must register when its aggregate turnover in a financial year exceeds ₹20 lakh. Aggregate turnover is calculated on a PAN basis across all states and includes taxable, exempt and export supplies. Registration is also compulsory in certain cases regardless of turnover. Many contractors register before crossing the threshold because large clients will only work with registered suppliers and want to claim input tax credit.
Rate and ValueWhat GST Rate Applies, and on What Value?
| Service | Typical classification | GST rate |
|---|---|---|
| Contract staffing / manpower supply | Employment services, e.g. SAC 998513 | 18% |
| Security guard services | Security services, SAC 998521–998529 | 18% (reverse charge in some cases; see below) |
| Housekeeping and facility services | Cleaning and other support services (check SAC) | Generally 18%; confirm for the specific service |
Are salary reimbursements taxable?
In most cases, yes. GST is charged on the full consideration for the supply. Where the contractor employs the workers and is liable to pay them, the wages, PF and ESI contributions and the service fee together are the price of the manpower service. Rule 33 of the CGST Rules allows a narrow pure-agent exclusion, but advance rulings have refused it to manpower contractors. In Prodip Nandi, the West Bengal AAR held that showing wages separately on invoices did not make the contractor a pure agent, because it alone was liable to pay the workers.
Illustrative figures only, to show how the taxable value is built up. Actual invoices depend on contract terms.
Common error. Charging GST only on the service charge or commission, while billing salaries “at actuals” without GST, is a frequent cause of demands for manpower contractors. Review contract terms and invoice structure with your adviser.
When Does Reverse Charge Apply?
General manpower supply is taxed under forward charge: the contractor charges and pays GST. Security services are different. Under Notification 29/2018-Central Tax (Rate), from 1 January 2019, services by way of supply of security personnel provided by a person other than a body corporate to a registered person are taxed under reverse charge, so the recipient pays the GST.
- If the security agency is a company (body corporate), forward charge applies.
- If the recipient is unregistered, the agency charges GST under forward charge.
- Recipients paying tax under the composition scheme, and government bodies registered only to deduct TDS, are excluded from reverse charge; the composition exclusion was added by an amendment in October 2024.
- Under reverse charge, the agency issues an invoice without GST and notes that tax is payable by the recipient.
| Security agency (supplier) | Recipient | Who pays the GST |
|---|---|---|
| Body corporate (company) | Any | Agency, under forward charge |
| Not a body corporate | Registered person | Recipient, under reverse charge |
| Not a body corporate | Unregistered person | Agency, under forward charge |
| Not a body corporate | Composition taxpayer, or government body registered only for TDS | Excluded from reverse charge |
Summary of the rules above. General manpower supply, other than security personnel, always stays under forward charge.
Government WorkHow Is Work for Government Clients Taxed?
The pure-services exemption
Entry 3 of Notification 12/2017-Central Tax (Rate) exempts pure services (with no supply of goods) provided to the Central or State Government, a Union territory or a local authority, by way of an activity related to functions entrusted to panchayats under Article 243G or municipalities under Article 243W. Since 1 January 2022, the exemption no longer covers governmental authorities or government entities.
Rulings have gone both ways on manpower: the Gujarat AAR in A.B. Enterprise accepted the exemption where the work related to listed functions, while the Karnataka AAR in Sree Vinayaka Enterprises taxed security, housekeeping and catering manpower at 18% because it was not linked to those functions.
GST TDS
Government departments, local authorities and other notified bodies registered as tax deductors generally deduct GST TDS at 2% (1% CGST plus 1% SGST, or 2% IGST) on payments for taxable supplies where the contract value exceeds ₹2.5 lakh. The deductor files GSTR-7; once accepted, the amount is credited to your electronic cash ledger and can be used to pay tax.
Which Returns and Deadlines Apply?
| Return or requirement | Who | Key point |
|---|---|---|
| GSTR-1 / IFF | All regular taxpayers | Monthly by the 11th, or quarterly under QRMP for turnover up to ₹5 crore |
| GSTR-1A | Optional | Corrects outward supplies before filing GSTR-3B for the same period |
| GSTR-3B | All regular taxpayers | Monthly or quarterly; Table 3 auto-populated liability locked from the July 2025 tax period |
| Invoice Management System (IMS) | Recipients and suppliers | Recipients accept or reject invoices; suppliers should track rejections |
| GSTR-9 / GSTR-9C | Turnover above ₹2 crore / above ₹5 crore | Annual return; GSTR-9C reconciliation above ₹5 crore |
| E-invoicing | Aggregate turnover above ₹5 crore in any year since 2017–18 | Turnover ₹10 crore or more: report on IRP within 30 days of the document date |
| Three-year time bar | All returns | Returns cannot be filed more than three years after their due date |
For the annual return, see our GSTR-9 annual return filing guide. Track monthly and quarterly dates in our Compliance Calendar.
Input Tax CreditWhat About Input Tax Credit?
Manpower contractors can claim credit on GST paid on business inputs and services, such as uniforms, equipment, software, rent and professional fees, subject to the usual conditions. Section 17(5) of the CGST Act blocks credit on items such as food and beverages, health and life insurance and certain employee benefits, unless they are obligatory for the employer under law. Wages carry no GST, so there is no credit on them. Credit for a financial year must be claimed by 30 November of the following year or the date of filing the annual return, whichever is earlier.
For clients, GST charged by a manpower contractor is generally creditable when the service is used for business, so a correct, timely invoice matters to the client relationship.
MaharashtraWhich Maharashtra-Specific Obligations Apply?
- State GST: as a Maharashtra registrant, you pay SGST and CGST on intra-state supplies and IGST on inter-state supplies; your jurisdiction may be State or Central.
- Profession tax: employers generally need a Profession Tax enrolment certificate (PTEC) for the business and a registration certificate (PTRC) to deduct and pay profession tax from salaries, through the MahaGST portal; for most salaried employees above the exemption limit, the monthly deduction is ₹200, with ₹300 in February.
- Labour laws: obligations such as PF, ESI and contract-labour licensing sit outside GST but affect costing and client contracts.
Year-round bookkeeping, payroll-linked filings and income tax work run alongside GST, so see our accounting and tax compliance service for how these fit together.
Note. This article is general information based on the law and published sources as of 26 October 2026. It is not professional advice. GST treatment depends on contract terms and facts; consult a Chartered Accountant or tax adviser before acting.
What Should You Watch Into 2027?
After its 57th meeting, the GST Council approved process reforms covering registration, refunds, notices, enforcement and input tax credit, which the Finance Minister said would take effect from 1 April 2027 and could take about a year to stabilise. Also watch for the following:
- Hard-locking of auto-populated input tax credit in GSTR-3B.
- Any change to e-invoicing thresholds or reporting time limits.
- New advance rulings on manpower valuation and government exemptions.
- Maharashtra profession tax notifications.
Income tax deadlines run in parallel with GST, so see our guide to the ITR due dates for FY 2025-26 as well.
Frequently Asked QuestionsWhat Are the Most Asked Questions About GST for Manpower Contractors?
What is the GST rate on manpower supply services?
Manpower and contract staffing services are generally taxed at 18% GST, classified under the employment services heading (for example SAC 998513 for contract staffing). Security services are also taxed at 18%. Check the SAC for your specific service and any notification that applies to your client.
Do salaries reimbursed by the client form part of the taxable value?
Usually, yes. Where the contractor employs the workers and is liable to pay their wages, the wages, statutory contributions and service fee together form the consideration for the manpower supply. Advance rulings, such as the West Bengal AAR in Prodip Nandi, have held that showing wages separately on the invoice does not make the contractor a pure agent.
When must a manpower contractor register for GST in Maharashtra?
A supplier of services in Maharashtra must register once its aggregate turnover in a financial year exceeds ₹20 lakh. Registration is also required regardless of turnover in certain cases, such as making inter-state taxable supplies of goods or being required to deduct tax at source. Most manpower contractors serving corporate clients register voluntarily because clients require a GST invoice.
Does reverse charge apply to manpower supply?
Not for general manpower supply. Reverse charge applies to security services (supply of security personnel) provided by a person other than a body corporate to a registered recipient, under Notification 29/2018-Central Tax (Rate) from 1 January 2019. Recipients paying tax under the composition scheme and government bodies registered only for TDS are excluded.
Is manpower supplied to government departments exempt from GST?
Only in limited cases. Entry 3 of Notification 12/2017-Central Tax (Rate) exempts pure services to the Central or State Government, a Union territory or a local authority in relation to functions entrusted to panchayats or municipalities under Articles 243G and 243W. Since 1 January 2022, supplies to governmental authorities and government entities are no longer covered. Advance rulings differ on facts, so each contract needs review.
Will government clients deduct GST TDS from my payments?
Government departments and notified bodies registered as tax deductors generally deduct GST TDS at 2% (1% CGST and 1% SGST, or 2% IGST) on taxable contracts above ₹2.5 lakh. The deducted amount appears in your electronic cash ledger once the deductor files GSTR-7 and you accept it.
Is e-invoicing mandatory for manpower contractors?
E-invoicing applies to registered persons whose aggregate turnover in any financial year from 2017–18 has exceeded ₹5 crore, for B2B invoices. From 1 April 2025, taxpayers with aggregate annual turnover of ₹10 crore or more cannot report invoices, credit notes or debit notes on the IRP more than 30 days after the document date.
What changed in GST return filing from July 2025?
From the July 2025 tax period, the auto-populated liability in Table 3 of GSTR-3B is locked; corrections must be made through GSTR-1A before filing GSTR-3B. GSTN also began blocking returns filed more than three years after their due date, under amendments notified in 2023.
Can manpower contractors claim input tax credit on employee costs?
Credit on most business inputs and services is available, but Section 17(5) of the CGST Act blocks credit on items such as food and beverages, health and life insurance and certain employee benefits, unless they are obligatory for the employer under law. Wages themselves carry no GST and no credit.
What other Maharashtra taxes apply to manpower contractors?
As employers of deployed staff, contractors must generally hold a Profession Tax enrolment certificate (PTEC) for the business and a registration certificate (PTRC) to deduct and pay profession tax from employees' salaries, administered through the MahaGST portal. Labour-law contributions and licences apply separately.
Related Guides and Services
- GSTR-9 Annual Return Filing Guide for FY 2025-26: who files, the ₹2 crore exemption, GSTR-9C, late fees and filing steps.
- Deadline Alert: ITR Filing Due Dates for FY 2025-26 (AY 2026-27): every income tax return date, the extended audit-case deadline and late fees.
- GST and indirect tax services: GST compliance, reconciliations and return filing.
- Accounting and tax compliance: year-round compliance for companies and individuals.
- Income tax audit: audit support and report filing for companies and businesses.
- Compliance Calendar, tax calculators and the Tax Glossary: quick references for dates, computations and terms.
Questions on GST for Your Manpower Business?
N D Savla & Associates, Chartered Accountants, Mumbai, advises on GST compliance, returns and annual filings. For questions, contact the firm using the details below.
Suite No.102, L1, Ashok Premises, Nicholas Road, Andheri East, Mumbai - 400069
Contact the Firm →This article is for general information only and is not professional advice or a solicitation of work.