Complete Guide to GST Compliance for Manpower Supply Contractors in Maharashtra

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.

Who 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.

What GST Rate Applies, and on What Value?

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.

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.

Summary of the rules above. General manpower supply, other than security personnel, always stays under forward charge.

How Is Work for Government Clients Taxed?

Which Returns and Deadlines Apply?

For the annual return, see our GSTR-9 annual return filing guide. Track monthly and quarterly dates in our Compliance Calendar.

What 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.

Which 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.

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.

What Are the Most Asked Questions About GST for Manpower Contractors?

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.