👔 SAC Chapter 99: All Services - Labour Charges, Professional Services, Consulting & Manpower - GST Rates 2026

Answer: ALL labour contract services for construction and manufacturing attract 18% GST. This applies to mason work, carpentry, plumbing, electrical work, painting, factory labour, assembly workers, and all types of contract labour services.

Labour Charges GST Rates (All 18%):

Labour Type	SAC Code	GST Rate	Examples
Construction Labour	998511	18%	Mason, carpenter, plumber, electrician, painter
Manufacturing Labour	998512	18%	Factory workers, assembly line, production labour
Loading/Unloading	998513	18%	Cargo handling, material movement, warehouse labour
Security Services	998519	18%	Security guards, watchmen, patrolling services
Housekeeping	998519	18%	Cleaning, maintenance, janitorial services

Important Points on Labour Charges GST:

• 💼 Reverse Charge: RCM on labour services has been removed for most categories
• 💼 Threshold: Service providers with turnover below Rs 20 lakh are exempt from GST registration
• 💼 ITC Available: Businesses receiving labour services can claim full ITC
• 💼 Billing: Labour contractor must charge 18% GST and issue GST invoice

Calculation Examples (18% GST):

• 👷 Construction labour bill Rs 50,000: Rs 50,000 + Rs 9,000 GST = Rs 59,000 total
• 👷 Factory labour Rs 1,00,000: Rs 1,00,000 + Rs 18,000 GST = Rs 1,18,000 total
• 👷 Loading services Rs 10,000: Rs 10,000 + Rs 1,800 GST = Rs 11,800 total
• 👷 Security services Rs 30,000/month: Rs 30,000 + Rs 5,400 GST = Rs 35,400 total

Who Pays GST?

• ✅ Labour contractor charges 18% GST from the client (forward charge)
• ✅ Client (business) pays the GST and claims ITC
• ✅ Contractor deposits collected GST to government

Answer: ALL professional services including Chartered Accountants, lawyers, engineers, architects, and consultants attract 18% GST. There is no differentiation based on the type of professional or the value of services - the rate is uniformly 18%.

Professional Services GST Rates (All 18%):

Professional Service	SAC Code	GST Rate	Services Covered
Legal Services	998211	18%	Lawyers, advocates, legal consultants, litigation, drafting
CA Services	998212	18%	Auditing, accounting, bookkeeping, financial statements
Tax Consultancy	998213	18%	GST filing, income tax returns, tax planning, advisory
Engineering Services	998311	18%	Civil, mechanical, electrical, project management
Architectural Services	998312	18%	Building design, architectural plans, interior design

Service Fee Examples (18% GST):

• ⚖️ Legal consultation fees (Rs 50,000): Rs 50,000 + Rs 9,000 GST = Rs 59,000 total
• 📊 CA audit fees (Rs 1,00,000): Rs 1,00,000 + Rs 18,000 GST = Rs 1,18,000 total
• 💰 Monthly GST return filing (Rs 5,000): Rs 5,000 + Rs 900 GST = Rs 5,900 total
• 🏗️ Engineering consultancy (Rs 2,00,000): Rs 2,00,000 + Rs 36,000 GST = Rs 2,36,000 total
• 🏛️ Architectural design (Rs 3,00,000): Rs 3,00,000 + Rs 54,000 GST = Rs 3,54,000 total

Special Considerations:

• 💼 Individual professionals must register if turnover exceeds Rs 20 lakh
• 💼 Partnership firms and companies must register regardless of turnover
• 💼 Clients can claim full ITC on professional services received
• 💼 Export of professional services is zero-rated (0% GST)

Common Scenarios:

• 📋 Business hiring CA for tax filing: CA charges 18% GST, business claims ITC
• 📋 Company hiring lawyer for litigation: Lawyer charges 18% GST
• 📋 Developer hiring architect: Architect charges 18% GST on design fees

Answer: Manpower supply services and temporary staffing attract 18% GST. This includes providing contract workers, temporary employees, security guards, housekeeping staff, and all types of outsourced personnel to businesses.

Manpower Supply Services (18% GST):

Service Type	SAC Code	Description	GST Rate
Manpower Supply	998521	Contract labour supply, staff augmentation	18%
Temporary Staffing	998514	Temporary workers, seasonal staff, event staff	18%
Security Services	998519	Security guards, watchmen provided on contract	18%
Housekeeping Services	998519	Cleaning staff, maintenance workers	18%

How Manpower Supply GST Works:

• 💼 Manpower agency provides workers to client company
• 💼 Agency charges service fee (worker cost + margin) + 18% GST
• 💼 Client company pays GST and claims ITC
• 💼 Agency deposits GST collected to government

Billing Structure Examples:

• 👥 10 Factory Workers @ Rs 20,000 each:
• - Total wages: Rs 2,00,000
• - Agency margin (say 10%): Rs 20,000
• - Subtotal: Rs 2,20,000
• - GST @ 18%: Rs 39,600
• - Total Invoice: Rs 2,59,600

• 👥 5 Security Guards @ Rs 15,000 each:
• - Total wages: Rs 75,000
• - Agency margin (10%): Rs 7,500
• - Subtotal: Rs 82,500
• - GST @ 18%: Rs 14,850
• - Total Invoice: Rs 97,350

Important Notes:

• ⚠️ GST is charged on the TOTAL amount (worker cost + agency margin)
• ⚠️ Client cannot directly pay workers - payment through agency maintains GST compliance
• ⚠️ Agency must maintain proper attendance and salary records
• ⚠️ Client can claim full ITC on manpower supply GST paid

Answer: Manufacturing services provided on physical inputs owned by others (commonly called job work) attract 18% GST. The job worker charges GST only on the service component (processing charges), not on the value of raw materials which belong to the principal manufacturer.

Job Work Services (18% GST):

Job Work Type	SAC Code	Examples
Manufacturing on physical inputs	998811	Processing, fabrication, assembly, machining
Processing and treatment	998812	Heat treatment, coating, plating, painting
Assembly and packaging	998813	Product assembly, packaging, labeling

Common Job Work Scenarios (18% GST):

• 🏭 Textile Processing: Customer provides fabric, job worker does dyeing/printing
• 🏭 Metal Fabrication: Customer provides metal sheets, job worker cuts/bends/welds
• 🏭 Plastic Molding: Customer provides plastic granules, job worker molds products
• 🏭 Packaging Services: Customer provides finished products, job worker packages them
• 🏭 Surface Treatment: Customer provides components, job worker applies coating/plating

GST Calculation on Job Work:

• ✅ Job work charges (labour + overheads): Rs 50,000
• ✅ GST @ 18%: Rs 9,000
• ✅ Total invoice to principal: Rs 59,000
• ✅ (Raw material value NOT included as it belongs to principal)

Job Work Under GST - Key Points:

• 📋 Principal manufacturer sends goods to job worker under challan
• 📋 Job worker charges 18% GST on processing charges only
• 📋 Principal can claim ITC on job work GST paid
• 📋 Goods can remain with job worker for up to 1 year (3 years for moulds/dies)
• 📋 Job worker can send goods directly to customer (without returning to principal)

Documentation Required:

• 📋 Job work challan when sending goods to job worker
• 📋 GST invoice from job worker for services provided
• 📋 Proper records of goods sent and received
• 📋 ITC reconciliation in GST returns

Answer: Yes, businesses can claim FULL ITC (Input Tax Credit) on services received for business purposes, including labour charges, professional services, consulting, manpower supply, and other business services. ITC effectively reduces the net GST burden through the credit mechanism.

ITC Eligibility on Services:

Service Category	ITC Available?	Conditions
Labour Charges (Construction/Manufacturing)	✅ YES	Used for business purposes
Professional Services (CA, Legal)	✅ YES	For taxable business activities
Consulting Services	✅ YES	Related to business operations
Manpower Supply	✅ YES	Workers used in business
Job Work Services	✅ YES	On goods meant for business
Construction of Immovable Property	❌ NO (Blocked)	ITC blocked under Section 17(5)
Food & Beverages, Outdoor Catering	❌ NO (Blocked)	ITC blocked under Section 17(5)

ITC Mechanism Example:

• 🏭 Manufacturer hires contract labour:
• - Labour charges: Rs 1,00,000
• - GST @ 18%: Rs 18,000 (paid to labour contractor)
• - Manufacturer claims Rs 18,000 as ITC
• - This ITC offsets against output GST on products sold
• - Effective cost: Rs 1,00,000 (GST recovered)

Conditions for Claiming ITC:

• ✅ Business must be GST registered
• ✅ Must have valid GST invoice from service provider
• ✅ Service must be used for business purposes (taxable supplies)
• ✅ GST must be actually paid by service provider to government
• ✅ Service provider's details must reflect in GSTR-2A/2B

ITC Not Available (Blocked Items - Section 17(5)):

• ❌ Construction services for immovable property (building construction)
• ❌ Food and beverages, outdoor catering (except for re-supply)
• ❌ Membership of clubs, health/fitness centers
• ❌ Travel benefits to employees (unless for business travel)
• ❌ Life insurance, health insurance of employees

ITC Flow Example:

• 📊 Services received (Rs 5,00,000) + GST paid (Rs 90,000)
• 📊 Products/services sold (Rs 10,00,000) + GST collected (Rs 1,80,000)
• 📊 ITC claimed: Rs 90,000
• 📊 Net GST payable: Rs 1,80,000 - Rs 90,000 = Rs 90,000

Answer: Service providers must register for GST if their aggregate turnover exceeds Rs 20 lakh in a financial year (Rs 10 lakh for special category states). Below this threshold, GST registration is optional but can be obtained voluntarily.

GST Registration Thresholds (Services):

State Category	Threshold Limit	States Covered
Normal States	Rs 20 lakh	All states except special category states
Special Category States	Rs 10 lakh	Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, Uttarakhand

Who Must Register (Regardless of Threshold)?

• ✅ Inter-state service providers (supplying services across state borders)
• ✅ E-commerce operators and sellers on e-commerce platforms
• ✅ Persons liable to pay GST under reverse charge mechanism
• ✅ Non-resident taxable persons
• ✅ Input service distributors
• ✅ TDS/TCS deductors under GST

Composition Scheme for Services:

• 💼 Turnover up to Rs 50 lakh: Can opt for composition scheme
• 💼 GST rate under composition: 6% (for services)
• 💼 Simplified compliance (quarterly returns instead of monthly)
• 💼 Cannot claim ITC under composition scheme
• 💼 Cannot make inter-state supplies

Examples:

• 👷 Labour contractor (annual turnover Rs 15 lakh): No registration needed (below Rs 20 lakh)
• 👷 CA (annual fees Rs 25 lakh): Must register (exceeds Rs 20 lakh)
• 👷 Consultant (turnover Rs 18 lakh but inter-state clients): Must register (inter-state supply)
• 👷 Small service provider (Rs 40 lakh turnover): Can opt for composition (pay 6% GST)

Benefits of Voluntary Registration (Below Threshold):

• ✅ Can claim ITC on input services and goods
• ✅ Can supply services to GST-registered businesses (they need GST invoice for ITC)
• ✅ Easier to participate in tenders and government contracts
• ✅ Better business credibility and professional image