The ISF said in a representation to Finance Minister Pankaj Chaudhary, a member of the GST Council during the last week’s meeting, “5% can encourage GST demand demand, can potentially increase employees up to 15-20 million within a few years, formulate more jobs formally and with national employment goals.”
ET has seen a copy of the letter.
More than six months after the final meeting was held in December 2024, the 56th GST Council meeting of this month is expected to be held, although no official date has been announced yet. ISF 137 member contracts are the top body of organized staffing companies representing more than 1.8 million contract workers working in contract staffing companies. It states that a decrease in rate of 5% will help manage “perception” about formal employment services, which is currently seen as “additional costs” in some industries, especially with GST in a range of 5–18%, including e-commerce, healthcare, retail, pharmacologicals and tourism. The ISF argued that the rate reduction would not have significant revenue effects, given the low contribution of 0.15% to the overall GST collection of employment services. “Looking at the small portion, it seems that the government may tolerate it to promote employment without significant revenue effects, especially with the immediate sharp adoption of adoption of a large industry,” the ISF said, “the ISF said.
According to the ISF, a lower slab rate of 5% will benefit the government and at the same time it will enable further formalization of jobs, additional employment generation and the possibility of increasing people of income tax, apart from increasing social security coverage.
