Indian Staffing Federation demands abolition of 18% GST

The apex body of temporary workers industry in India, the Indian Staffing Federation has demanded that the Centre categorise its services as ‘Merit Services’ and reduce the GST on such services to 5% from the current 18%. At the moment, contractual staffing companies currently pay 18% GST which is as high as eight times the cost of the service fee leaving gross margins for such companies between 2% to 8% and net margins even lower. An average temporary employee’s compensation per month is approximately ₹18,000 which attracts a service fee of 4% i.e ₹720 plus the GST of 18% bring the total tax per month at ₹3,370. This is 4.68 months worth of gross earnings per person per month deployed by staffing companies.
The ISF, on behalf of the Organised Contract Staffing Industry has recently submitted a representation to the Finance Ministry requesting an urgent cut in GST and inclusion under the category of Merit Services.