Staffing industry urges finance ministry to lower GST slab to 5%

New Delhi: The Indian Staffing Federation (ISF) has urged the finance ministry to move it to the 5% slab from 18% under the GST for employment services, arguing that this will help create more formal employment in the country and enhance the staffing industry's competitiveness. "The reduction to 5% GST could stimulate demand, potentially increasing the workforce to 15-20 million within a few years, formalising more jobs and aligning with national employment goals," the ISF said in a representation to the minister of state for finance Pankaj Chaudhary, a member of the GST Council, during their meeting last week.ET has seen a copy of the letter.The 56th GST Council meeting is expected to be held this month, more than six months after the last meeting was held in December 2024, although no official date has been announced yet. The ISF is the apex body of organised staffing companies representing more than 1.8 million contract workers employed across 137 member contract staffing companies. It said that the rate reduction to 5% would help manage "perception" regarding formal employment services, which are currently seen as "additional cost" in some industries, especially those with GST in the range of 5-18%, including e-commerce, healthcare, retail, pharmaceuticals and tourism. The ISF argued that given the employment services' low contribution of 0.15% to the overall GST collection, a rate reduction will not have a significant revenue impact. "Given the small share, it seems likely the government can afford this to promote employment without significant revenue impact, especially with immediate uptake coming from larger industry adoptions that would have overall collections growing," ISF said.According to the ISF, a lower slab rate of 5% will benefit the government as well as it will enable further formalisation of jobs, additional job creation and possibility of increased people in income tax ambit, besides increasing the social security coverage.