SAC Code for Manpower Supply: 998519 Explained

Manpower supply falls under heading 9985, support services, and specifically the group covering employment services including personnel search, referral and labour supply, with 998519 the six-digit code most commonly used for general labour and staff supply that does not fit the more specific search-and-referral entries. That code is the easy part. The hard part, and the reason manpower supply is one of the most misclassified services in GST, is drawing the boundary between it and job work, works contracts, security services and secondment — each of which looks similar on an invoice and carries a different treatment underneath.

The SAC for manpower supply: 998519

In the Scheme of Classification of Services annexed to the services rate notification, the codes read downward: Heading 9985 — Support services, then Group 99851 — Employment services including personnel search, referral service and labour supply service, then the six-digit entries beneath it. General manpower and labour supply lands on 998519 — Other employment and labour supply services nowhere else classified.

Because the classification depends on exactly what is being supplied — ongoing staff, a one-time placement, or something narrower — it is worth confirming the precise sub-code for your arrangement rather than defaulting to one code across a whole client base. The group table below is the place to do that: several arrangements people bill as "manpower supply" actually belong on 998513, 998514 or 998515.

Is 998519 an HSN code or a SAC?

It is a SAC, a Service Accounting Code. Searching for "HSN 998519" is extremely common and the search is not wrong in spirit — GST return forms and most accounting software label the field "HSN/SAC" and accept both in the same column, so people reasonably call every code in that column an HSN code.

The distinction that matters is the source document, not the label. Goods are classified against the Customs Tariff; services are classified against the Scheme of Classification of Services annexed to the rate notification, which is a GST-specific document. Every service code begins 99 — which is the quickest test there is. If a code starts with 99, it is a service code, and 998519 does. Nothing goes wrong if you call it an HSN code in conversation; what goes wrong is looking the code up in the wrong document.

The full 99851 employment-services group

All eight six-digit codes in the group, as they appear in the Scheme of Classification of Services. Most misclassification in this sector is a staffing arrangement sitting on 998519 when a more specific entry describes it exactly.

Two neighbouring groups under the same 9985 heading come up constantly in the same contracts, and they are separate groups rather than entries within 99851 — which is exactly why a staffing agency's security or housekeeping line cannot simply inherit 998519:

How the SAC scheme is structured

If your item master is built around HSN codes for goods, the Service Accounting Code needs a slightly different mental model. Every service takes a six-digit code beginning with 99, and beneath that the digits step down through chapter, heading, group and service level in the same way an HSN code steps down through chapter, heading and sub-heading — but the source document is different. Goods are classified against the Customs Tariff. Services are classified against the scheme of classification annexed to the rate notification itself, which is a GST-specific document rather than a customs one. Our SAC code reference for services covers the full structure of Chapter 99 in more detail, so this article does not repeat it — it goes straight to where manpower supply sits and where readers actually go wrong.

Manpower supply versus job work

This is the boundary that generates the most disputes, because the commercial arrangements can look almost identical on paper. A factory that "sends its own men" to a vendor's premises and a factory that "sends raw material for processing" can both be described in a purchase order as a labour arrangement, but they are different supplies under GST.

Manpower supply is a supply of people. The recipient directs what the workers do, supervises them day to day, and typically provides the tools, materials and workplace. The supplier's deliverable is the availability of labour — a headcount for a period, working under someone else's control. Job work, by contrast, is a supply of a process. The principal sends goods to the job worker, the job worker applies a treatment or process using its own workforce and know-how, and returns processed goods. The job worker's deliverable is an outcome on goods, not hours of labour under the principal's direction.

The practical test is control and the deliverable: who directs the work, and what is being handed back — bodies, or an outcome. A contract that reads "supply of 20 workers to operate the client's production line under the client's supervisor" is manpower supply. A contract that reads "process 10,000 units of the client's fabric into finished garments" is job work, even if the job worker's own staff happen to be physically present at the client's factory to do it. Job work sits under a different heading with its own rate structure, so misreading this boundary does not just mislabel an invoice — it can put the wrong rate on the supply entirely. Our guide to the HSN and SAC treatment of job work sets out that side in full, and our note on labour charges more generally is useful where the arrangement is described loosely as "labour" without saying which of the two it actually is.

Manpower supply versus a works contract and pure labour

A second boundary sits alongside the first. A works contract under GST is specifically a contract for building, construction, fabrication, or a similar activity involving a transfer of property in goods, carried out in relation to immovable property — the contractor supplies both material and labour, and title in the material passes to the client as it is incorporated into the structure. A labour-only arrangement for the same construction project, where the contractor supplies only workers and the client supplies or owns the materials, is not a works contract. It is manpower supply, or a pure labour contract, and it does not carry the works contract's composite treatment. Our works contract guide covers where that transfer-of-property test comes from.

Within pure labour arrangements there is a further, narrower question that construction-sector readers ask often: whether an exemption applies to pure labour services supplied in relation to the construction, repair, or renovation of a single residential unit that is otherwise than as part of a residential complex, or in relation to certain government housing schemes. Such an exemption entry does structurally exist in the services notification, conditioned on the nature of the structure and the scheme involved, but the exact wording, the housing schemes covered, and the scope of "single residential unit" have been points of interpretation. Do not assume a labour contract qualifies simply because it is described as a residential job — confirm the current entry and its conditions before relying on it.

Security services and their own reverse charge entry

Security services are a manpower-adjacent supply — guards, watchmen and security personnel are, functionally, supplied labour — but GST treats them as a named service in their own right with a specific reverse charge treatment, and this is the single most common RCM trap in this whole area.

The consequence of getting this wrong runs both ways. A registered recipient who fails to self-assess GST under reverse charge on a non-corporate security agency's bill has an unpaid tax exposure. A security agency that is itself a body corporate, on the other hand, falls outside this specific entry and charges GST under forward charge in the ordinary way. Our broader explainer on the reverse charge mechanism covers how RCM self-assessment and the related credit work in general.

Housekeeping through an e-commerce operator

Housekeeping and cleaning services — a close cousin of manpower supply, since these are also personnel supplied to work at the client's premises — have their own wrinkle where the booking happens through a digital platform. Under Section 9(5) of the CGST Act, the government can notify categories of services supplied through an electronic commerce operator where the operator itself is made liable to pay the tax, as if it were the supplier, instead of the actual service provider. Housekeeping services such as plumbing, carpentry and cleaning booked through such a platform have been brought within this mechanism. The practical effect is that a homeowner or business booking cleaning staff through an app may see GST charged by the platform rather than by the individual worker or small agency actually doing the job — which is a different flow again from both ordinary forward charge and supplier-side reverse charge, and worth recognising as a third category rather than folding it into either.

Deputation, secondment and the intra-group question

A related and genuinely unsettled area is the deputation or secondment of employees within a corporate group — one group company lending an employee to another, often on the seconding company's payroll with the cost cross-charged or reimbursed. The question is whether this arrangement amounts to a taxable supply of manpower services between the two entities, or whether it is simply an employer-employee arrangement that falls outside the scope of "supply" because the seconded employee remains, in substance, an employee of the group.

This question has been litigated up through the courts, including at the Supreme Court, and departmental positions and case law have moved over time as different fact patterns — secondment cost reimbursed at actuals, versus arrangements carrying a mark-up, versus expatriate secondment into India — have been tested. The significance for group companies is real: getting this wrong on a routine intra-group secondment can surface years later as a large retrospective demand across every group entity that used the same structure. This is not an area to resolve from a general article — if your group runs secondment arrangements, look at the current judicial and departmental position on your specific fact pattern rather than assuming either "it's just an employee, so it's outside GST" or "it's manpower supply, so it's always taxable" is settled law.

Contract staffing versus payroll outsourcing versus recruitment

Staffing businesses commonly offer three services that get billed under one commercial relationship but are not the same supply:

• Contract staffing — the agency employs the workers and deploys them to work under the client's day-to-day supervision. This is manpower supply in the fullest sense, and it is what 998519 is built for.
• Payroll outsourcing — the workers are already the client's own employees; the agency merely runs payroll processing, statutory filings and compliance on the client's behalf. No personnel are being supplied, so this is an administrative or accounting-adjacent service, not labour supply, and it is coded and priced accordingly.
• Recruitment and placement — the agency's role ends once a candidate is placed onto the client's own payroll. This is a search-and-placement service, billed typically as a one-time fee, and it sits in a different sub-group of the same employment-services family from ongoing staffing.

A staffing company offering all three to the same client is making three different supplies and should not default to one SAC across its whole invoice book.

Valuation: gross billing or the pure agent question

The classification question gets the attention, but valuation is where the real money moves. A typical manpower supply invoice itemises the workers' wages, employer contributions to PF and ESI, and the agency's service fee or margin, sometimes on separate lines. The question readers ask is whether GST is due on the whole billed amount or only on the service fee.

The general position is that it is due on the whole billed amount. The workers are the agency's own employees, not the client's, so wages, PF and ESI are the agency's own cost of running its business and supplying labour — not a reimbursement made on the client's behalf. Rule 33 of the CGST Rules provides a narrow exclusion for a genuine pure agent: an amount paid by the supplier to a third party on the recipient's authorisation, where the recipient contracts for that third-party supply separately, the supplier neither uses nor holds title in what is procured, and it merely receives back what it actually paid, without mark-up, shown separately on the invoice. A manpower agency's wage bill fails most of these conditions on the facts, because the agency is the employer, not a pass-through payer on the client's behalf. Treating the wage component as a pure agent reimbursement to shrink the taxable value is one of the most common valuation errors in this sector, and it does not usually survive scrutiny.

Reverse charge exposure across these services

Because this cluster of services spans several different treatments, it helps to see them side by side.

Confirm every row against the current notification text before you rely on it operationally — reverse charge entries are amended and carry conditions this table intentionally does not attempt to reproduce in full.

Getting the invoice right

On the invoicing side, three things matter more than they might appear to. First, the SAC on the invoice should describe the specific service supplied — general staffing, security, or housekeeping through a platform are not interchangeable, and the code should follow which one actually happened. Second, the description line should say what was supplied in plain terms, since a vague description such as "manpower charges" gives an assessing officer nothing to check the code against. Third, and this is worth stating plainly: a wrong SAC paired with the correct rate is a smaller problem than a wrong rate, because the tax collected is still correct even if the classification label is off. But both a wrong code and a wrong rate surface in the same place — return scrutiny and reconciliation against the recipient's GSTR-2B — so neither is worth being careless about. Our guide to GST invoice format and rules covers the mandatory fields in full, and the digit-level reporting obligation on your invoices depends on your turnover, covered in our note on HSN and SAC digit requirements by turnover. It is also worth verifying a new staffing vendor's GSTIN before the first invoice, since a suspended or cancelled registration on a labour bill denies the recipient credit on exactly the kind of high-volume, recurring spend that manpower contracts tend to be.

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