The direct answer
Manpower supply, that is staffing or human-resource supply to another establishment, attracts GST at 18% under service accounting code (SAC) 9985. This is a forward-charge supply by default: your agency charges 18% on the invoice, collects it from the client, and remits it. The one exception that most staffing firms run into is security services (supply of security guards or personnel), which are also 18% but shift to Reverse Charge when the supplier is a non-body-corporate and the recipient is a registered person. So the answer is a rule with an exception: 18% forward charge for general manpower, 18% under Reverse Charge for security services supplied by a non-body-corporate to a registered recipient.
The governing provision and how the tax is computed
The supply of manpower is a service taxed at 18% under SAC 9985 (GST law: the CGST, SGST and IGST Acts and the GST service rate schedule). Two points decide the amount. First, GST is charged on the full taxable value of the supply, the total billed amount, not only on your margin. The wages, allowances and statutory contributions you bill to the client form part of the taxable value. Second, the tax split follows the place of supply: for an intra-state supply you charge CGST plus SGST (9% plus 9%), and for an inter-state supply you charge IGST (18%). Illustrative example: a staffing agency bills a client Rs 1,00,000 for a month of deployed workers. GST at 18% applies to the full Rs 1,00,000, that is Rs 18,000, split as CGST Rs 9,000 plus SGST Rs 9,000 for an intra-state supply, or IGST Rs 18,000 for an inter-state supply. The agency collects and remits this under forward charge. (Illustrative example, figures assumed.)
The exception that usually applies: security services under Reverse Charge
If your firm supplies security personnel, the rate stays 18% but the payment mechanism changes. Under Notification No. 13/2017-Central Tax (Rate), as amended by Notification No. 29/2018-Central Tax (Rate), effective 01 January 2019, security services attract the Reverse Charge Mechanism when the supplier is a non-body-corporate and the recipient is a registered person. In that case the recipient pays the GST to the government directly, and your invoice should reflect that the tax is payable by the recipient under Reverse Charge. General manpower supply is not under Reverse Charge by default: only the security-services condition, with a non-body-corporate supplier and a registered recipient, triggers it. Whether a given supply is security services, and whether your firm is a body corporate, are facts to confirm before you decide who pays.
Input tax credit and the compliant invoice
Input tax credit is available to the recipient under the conditions of Section 16 of the CGST Act, 2017, provided you raise a compliant tax invoice. A compliant tax invoice carries the GSTIN of both supplier and recipient, the invoice number and date, the description of service (SAC 9985), the billing period, and the tax split: CGST plus SGST for an intra-state supply, or IGST for an inter-state supply, at 18%. The recipient reconciles its input tax credit through GSTR-2B. Getting the invoice fields right is what lets your client claim credit and keeps your billing clean.
Keep GST separate from TDS
GST at 18% is an indirect tax on the supply. It is not the same as TDS. Payments to a contractor for supply of labour attract TDS under Section 194C of the Income-tax Act, 1961, at 1% if the payee is an individual or HUF and 2% otherwise, subject to the applicable thresholds. TDS is a direct-tax deduction the client makes from the payment; the recipient tracks it through Form 26AS. Do not net one against the other: GST is charged on top of the taxable value, while TDS is deducted from the amount payable.
The action step
1) Classify the supply: is it general manpower (forward charge, you collect 18%) or security services supplied by a non-body-corporate to a registered recipient (Reverse Charge, the client pays)? 2) Once turnover crosses the GST registration threshold, register for GST and quote your GSTIN. 3) On every invoice, apply 18% on the full billed value under SAC 9985, show the correct CGST plus SGST or IGST split for the place of supply, and include the billing period and both GSTINs. 4) For security-services supplies that fall under Reverse Charge, mark the invoice as tax payable by the recipient. 5) Confirm the GST registration threshold, the place-of-supply split for each transaction, and the current Section 194C thresholds against the notified rules before you file.
Sources, last verified and disclaimer
Last verified: 20 September 2026, against the GST law and notifications named in the citations. This page is general information for staffing and manpower firm owners and is not legal or tax advice. It is pending named legal review. Reviewer byline: pending named legal review. Confirm the position for your firm's specific facts, state and transaction with a qualified GST practitioner before acting.
Key points
- Default GST rate on manpower and staffing supply is 18% under SAC 9985.
- GST is charged on the full billed value, not only on the agency margin.
- Forward charge by default: the agency collects and remits the 18%.
- Exception that usually applies to staffing firms: security services by a non-body-corporate to a registered recipient fall under Reverse Charge (recipient pays), per Notification 13/2017 as amended by 29/2018, effective 01 January 2019. General manpower supply is not under Reverse Charge.
- Input tax credit is available to the recipient under Section 16 conditions, provided a compliant tax invoice is issued (both GSTINs, SAC 9985, billing period, correct tax split).
- Tax split follows place of supply: CGST plus SGST for intra-state, IGST for inter-state.
- GST (18%) is separate from TDS under Section 194C of the Income-tax Act (1% or 2%).
Related questions
Is GST charged on my margin or on the full bill?
On the full taxable value of the supply, that is the total billed amount, not only your margin. The wages, allowances and statutory contributions you bill to the client form part of the taxable value, and 18% applies to that whole amount.
Do I always collect the GST, or does the client pay it?
For general manpower supply, forward charge applies: your agency collects and remits the 18%. The main exception is security services supplied by a non-body-corporate to a registered recipient, which fall under the Reverse Charge Mechanism, so the recipient pays the GST directly. General manpower supply is not under Reverse Charge by default.
Can my client claim input tax credit on my invoice?
Yes, input tax credit is available to the recipient under Section 16 conditions, provided you issue a compliant tax invoice showing both GSTINs, the description as SAC 9985, the billing period, and the correct CGST plus SGST or IGST split at 18%. The recipient reconciles the credit through GSTR-2B.
Check for your state
- GST registration threshold: the turnover threshold that triggers mandatory GST registration varies (including by state category and special-category states); confirm against the current notified threshold before relying on it.
- Place of supply and the CGST+SGST vs IGST split are decided per transaction (intra-state vs inter-state); confirm for each supply.
- Section 194C TDS rates and thresholds are subject to the current notified thresholds; verify before deducting or filing.
- Whether a specific supply qualifies as security services for Reverse Charge, and whether the supplier is a body corporate and the recipient a registered person, are fact-specific; confirm the constitution of supplier and recipient before deciding who pays the GST.
- Any exclusion from the full taxable value (for example reimbursements billed at cost) is fact-specific; confirm with a GST practitioner rather than assuming the margin alone is taxed.
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