HSN Code for Labour Charges

Labour charges do not have an HSN code, because labour is not a good. What you need is a service accounting code, and which one depends on a question most invoices never ask: are you supplying people, or are you supplying work? Manpower supply sits in heading 9985. Work done on someone else's goods is job work under 9988. Work done on a building is construction service under 9954. Three different codes, three different treatments, and the same one-line description on the invoice.

Labour charges do not have an HSN code

The Customs Tariff classifies goods across Chapters 1 to 98. Services are classified separately, under the service accounting codes in Chapter 99, which are built on a different hierarchy: a two-digit chapter, a four-digit heading, a five-digit group and a six-digit service code. GSTR-1 and the invoice rules treat both as "HSN" for reporting purposes, which is why the question gets asked in HSN terms — but you will not find labour anywhere in the goods chapters. Our SAC code reference sets out the structure.

Three questions that decide the code

1. Who directs the work? If the recipient tells your workers what to do each day, you are supplying manpower — 9985. If you decide how the work is done and are answerable for the result, you are supplying a service defined by that result.
2. Is there goods involved, and whose are they? Work performed on goods belonging to another registered person is job work under 9988. Work performed on your own goods, sold on, is a supply of goods.
3. Is the thing being worked on immovable? Anything done to land or a building is a construction service under 9954, whether or not you also supply material.

The billing basis is the most reliable tell. Per person per month is manpower. Per piece, per kilogram or per metre is job work. Per square foot of built area, or a lump sum against a scope, is construction.

Group 9985: manpower and labour supply

998519 is a residual line, which is why it carries so much traffic. Use a more specific code where one fits: a recruitment fee is 998512, not 998519, and getting that right costs nothing.

When labour belongs somewhere else

• 9988 — job work. Machining, stitching, printing, galvanising, packing or assembling another registered person's goods. See our guide to job work classification.
• 9954 — construction services. Masonry, plastering, painting, tiling, electrical installation and plumbing on a building all sit in this heading, with a specific six-digit code per trade. See works contract and construction services.
• 9987 — maintenance, repair and installation. Servicing machinery or equipment that is not immovable property.
• 9983 — professional and technical services. Where you are selling expertise rather than hours of manual work.
• 9986 / 9989 — support services to agriculture, mining and manufacturing, and other manufacturing services, for specialised operational labour.

Pure labour contracts and the exemption question

The exemption notification contains entries for pure labour contract services. Two are commonly relied on: services of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a civil structure or original works under specified government housing and infrastructure schemes; and services by way of pure labour contracts of construction and related work in relation to a single residential unit otherwise than as part of a residential complex.

Both are narrow. "Pure labour" means the contract involves no supply of goods at all — the moment you bring material, however small, the exemption argument weakens. The single-residential-unit entry turns on what counts as part of a residential complex, which has been litigated. These entries have also been amended over time. Read the current text of the notification against your actual contract, and take advice if the amount is material.

Reverse charge: what actually applies

Manpower supply is widely but wrongly believed to be a reverse charge service across the board. It is not. What the reverse charge notification does contain, among other entries, is security services supplied by a person other than a body corporate to a registered person — which is why a security agency constituted as a proprietorship and one constituted as a private limited company bill the same customer differently. Supplies received from unregistered persons attract reverse charge only in the specified situations.

Because these entries have been amended more than once and carry carve-outs, check the current version of the notification on the CBIC GST portal rather than a summary. Our explainer on the reverse charge mechanism covers how the liability works once it applies.

Invoicing labour correctly

Labour contracting is a low-margin, high-volume business with thin documentation, and it draws attention for exactly that reason.

1. Describe the supply, not the payment. "Labour charges" tells a reader nothing. "Contract staffing — 14 operators, March 2026" identifies the supply and supports the code.
2. Keep the code consistent with the contract. If the agreement is a piece-rate job work agreement, the invoice should not say manpower.
3. Report at the required digit level for your aggregate annual turnover; see the digit rules.
4. Verify the principal's GSTIN before you start supplying. Labour contractors carry significant unsecured exposure to a single customer, and a customer whose registration has been suspended cannot take credit on your invoices — which is usually the point at which they stop paying them. A check against live registration data at onboarding, as covered in our vendor verification guide, is a credit control measure as much as a compliance one.

Frequently asked questions