How to make a client bill for manpower supply with GST
A manpower bill is more than wages. It also has your PF and ESI cost, your service charge and GST. This guide shows how to build one, with an example.
What goes into the bill
- Wages: the pay you gave the workers at this client for the month
- Employer PF: your share of PF, plus EDLI and admin charges
- Employer ESI: your 3.25% share of ESI
- Service charge: your fee, as agreed with the client
- Taxable value: all the above added together
- GST: usually 18% on the taxable value
- Bill total: taxable value plus GST
GST is usually 18% on the full bill value. That means wages, PF, ESI and your service charge, not only your fee. Check with your auditor.
Build the bill step by step
- Close the salary first. Finish and check the month's salary for this client. The bill must come from the same figures.
- Add up the wages. Take the total wages of all workers at this site.
- Add employer PF and ESI. Take the employer share from the same salary sheet.
- Add the service charge. Use the rate in your contract, for example a percent of wages.
- Find the taxable value. Add wages, PF, ESI and service charge.
- Add GST. Work out 18% of the taxable value and add it.
Example bill
Example: 10 workers at one factory. Each earns ₹18,000 for the month. Here PF wages and gross wages are the same, to keep it simple. Service charge is 10% of wages.
| Line | How it is worked out | Amount |
|---|---|---|
| Wages | 10 × ₹18,000 | ₹1,80,000 |
| Employer PF | 13% of wages (12% + EDLI 0.5% + admin 0.5%) | ₹23,400 |
| Employer ESI | 3.25% of wages | ₹5,850 |
| Service charge | 10% of wages | ₹18,000 |
| Taxable value | Sum of the four lines | ₹2,27,250 |
| GST | 18% of ₹2,27,250 | ₹40,905 |
| Bill total | Taxable value + GST | ₹2,68,155 |
Example only. Your PF and ESI lines depend on each worker's wages and limits. See how to calculate PF.
Match the bill to the salary
Clients often check your bill line by line. If the bill and salary do not match, payment gets held up.
| Check this | Against this |
|---|---|
| Number of workers on the bill | Workers paid in the salary sheet |
| Wages total | Total wages in the salary sheet |
| Employer PF and ESI | Employer share in the salary sheet |
| Days and OT hours | The client's attendance for the month |
Attach a salary statement to every bill. This is a worker-wise list of days, wages, PF and ESI. Many clients ask for it in their own format.
Security agencies: a GST note
Security services have a special rule. Say your agency is NOT a company, for example a proprietor or a partnership. And the client is a registered business company. Then the client usually pays the GST under reverse charge (RCM).
Under RCM, you do not collect GST on the bill. The client pays it to the government. Check with your auditor before you change your bill.
Make bills from your salary in one go
ContractPay makes the client bill with wages, service charge and GST from the same month's salary. It also makes the salary statement in the client's format. Each client has its own bill settings. See client billing software for manpower supply.
Questions people ask
Is GST charged only on my service charge?
Usually no. GST is usually 18% on the full bill value, including wages, PF, ESI and service charge. Check with your auditor.
Should I attach anything with the bill?
Yes. Attach a salary statement that shows each worker's days, wages, PF and ESI. It helps the client check and pay faster.
Does reverse charge apply to all manpower bills?
No. It usually applies to security services when the agency is not a company and the client is a registered business company. Check with your auditor.
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