India GST on Contract Employees: Tax Rates & Compliance Needs
Learn how India’s GST applies to contract employees, covering key differences like salaries, applicable tax rates, ITC rules, & compliance essentials.
In India, staffing services and contract employees are essential for industries ranging from information & technology (IT) to manufacturing and logistics.
For foreign investors and compliance managers, however, the goods and services tax (GST) treatment of contract employee remuneration often raises questions.
Unlike salaries paid to permanent employees, which are exempt from goods and services tax (GST), remuneration for contract employees – whether supplied directly or through staffing agencies – falls under the GST regime.
The distinction is critical because it directly affects costs, eligibility for input tax credit (ITC), and overall compliance obligations.
Author summary: GST applies to contract employees in India.