Understanding The Flexi Staffing Industry: Growth, Taxation, And Benefits
Expert notes a 5.9% rise in flexi staffing jobs in FY24-25, boosted by GST, tax relief, social security, and upskilling.
Authored by Lohit Bhatia, President of Indian Staffing Federation (ISF): Flexi staffing, commonly known as temporary workforce or contractual workforce, are those who are hired for a particular time period. In recent times, the new employment in the flexi staffing industry has surged massively. In the second quarter of FY24-25, the number increased to 5.9%, which shows a positive rise in new job opportunities. It attracts new talents to work with a dynamic and evolving workforce. In addition to the increased job demands, the flexi-staffing industry offers several benefits to its workers in terms of tax relief, social security, long-term financial benefits and more.
Taxation framework
Flexi-staffing companies, as service providers, are subject to the Goods and Services Tax (GST) regime in India. Research indicates that manpower supply services, including those provided by flexi-staffing firms, attract a GST rate of 18%. The introduction of GST has been a boon for the industry, with input tax credits enabling companies to reduce costs, thereby boosting growth. The staffing industry reported a 60% growth post-GST rollout, attributed to formalization and tax compliance incentives.
advetisement
However, with moving times, and GST collections doubling up, it's time to revisit the category of taxation for the staffing industry, thereby allowing more sectors to adopt formal employment structures, if they are using contract staffing, albeit with informal players. The Indian Staffing Federation (ISF) has engaged with policymakers, discussing reduced GST rates, indicating ongoing efforts to optimize tax structures. ISF reports suggest significant contributions, with member companies contributing to provident fund and ESIC, indirectly supporting tax collections.
Other benefits
For employees, the staffing industry offers opportunities to gain experience across multiple companies and projects, enhancing employability and career growth. Notably, the industry facilitates upskilling, particularly for freshers and dropouts, making them industry ready. Employees also benefit from formal employment perks, including registration under the Employees' Provident Fund Organization (EPFO) and Employee State Insurance Corporation (ESIC), ensuring social security and standard wages, distinguishing them from gig workers. Employers on the other hand benefit by engaging with formal players who ensure compliance and manage the workforce employed on their behalf.
Conclusion
Navigating the fiscal landscape of the flexi staffing industry requires a comprehensive understanding of tax obligations and other benefits. Moreover, the staffing companies play the critical role of matching job seekers and job givers free of charge to employees and enable mobilization, skilling, deployment and then compliances of such personnel.
It is authored by Lohit Bhatia, President of Indian Staffing Federation (ISF).
The views expressed in this article are those of the author and do not represent the stand of this publication.
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First Published:
May 12, 2025, 15:08 IST
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