Varnasrama-dharma is a system prescribed in the Vedas to regulate human activities. It is not spiritual in itself, but serves as a stepping stone for one trying to practice spiritual principles because it teaches how one can live in a pious way, and at the same time offer a way to satisfy material desires one is not able to give up. As mentioned on BG 3.5, na hi kaścit kṣaṇam api/ jātu tiṣṭhaty akarma-kṛt/ kāryate hy avaśaḥ karma/ sarvaḥ prakṛti-jair guṇaiḥ. “Everyone is forced to act helplessly according to the qualities he has acquired from the modes of material nature; therefore no one can refrain from doing something, not even for a moment”. Everyone is forced to act, and Varnasrama is the system that regulates such activities in ways that lead one to gradually elevate his consciousness.
For regular people, Varnasrama works like a stairway, that elevates them to a platform of piety from which they can progress further. For a transcendentalist, Varnasrama works as a safety net, to which one may fall back in case the plan of becoming fully renounced doesn’t work as planned. Without Varnasrama, regular people will have a difficult time climbing directly to a fully renounced platform, and transcendentalists risk falling down all the way to a sinful life if they are not capable of following a renounced life. We can see that both Srila Bhaktivinoda Thakura and Srila Prabhupada put a lot of stress in trying to establish the Varnasrama system not only inside our spiritual society but in human society at large.
Varnasrama is based on occupations based on one’s natural propensities. Such duties come as a package. A Ksatriya manages, but also fights, a Brahmana accepts charity but is also renounced, and so on. One can’t just accept what he wants but has to accept the whole package of the asrama he fits in. Bg 3.35: “It is far better to discharge one’s prescribed duties, even though faultily, than another’s duties perfectly. Destruction in the course of performing one’s own duty is better than engaging in another’s duties, for to follow another’s path is dangerous.”
One who does not follow the rules of the Varnasrama system, but is also incapable of elevating himself to a renounced platform, risks ultimately wasting his human life, by just acting in a sinful platform. This is hinted at in Bg 3.16: “My dear Arjuna, one who does not follow in human life the cycle of sacrifice thus established by the Vedas certainly leads a life full of sin. Living only for the satisfaction of the senses, such a person lives in vain.”
The perfection of the Varnasrama system is however to raise oneself to a platform of devotional service to the Lord. In the beginning, one may execute his duties out of attachment to the result and gradually progress into a platform of detached action where he just acts out of duty, acting for the satisfaction of the Lord and setting a good example for others to follow (Whatever action a great man performs, common men follow. And whatever standards he sets by exemplary acts, all the world pursues Bg 3.21). Krsna Himself, although the Supreme Personality of Godhead, performs different duties in His incarnations, not out of attachment, but for the sake of giving the proper example for others to follow (O son of Pṛthā, there is no work prescribed for Me within all the three planetary systems. Nor am I in want of anything, nor have I a need to obtain anything – and yet I am engaged in prescribed duties, Bg 3.22).
When one elevates himself to a truly transcendental platform, there is no need to observe the rules of the Varnasrama system, because in such a platform there is no more propensity to act sinfully and one just acts for the satisfaction of Krsna, which is the ultimate goal of the Varnasrama system. That’s why it’s said that Krsna Consciousness is transcendental to the duties of the Varnasrama system since it allows one to be elevated to such a platform, as mentioned later in the Bhagavad-Gita, on 14.26, and still later on 18.65-66. As Prabhupada mentioned in a lecture on SB 7.6.1 (Madras, January 2, 1976): “So this Kṛṣṇa consciousness movement is that it is giving immediate lift to everyone to come to the transcendental platform, brahma-bhūyāya kalpate. But general state is varṇāśrama-dharma.”
On 3.17, he concludes: “A person who is fully Kṛṣṇa conscious, and is fully satisfied by his acts in Kṛṣṇa consciousness, no longer has any duty to perform. Due to his being Kṛṣṇa conscious, all impiety within is instantly cleansed, an effect of many, many thousands of yajña performances. By such clearing of consciousness, one becomes fully confident of his eternal position in relationship with the Supreme. His duty thus becomes self-illuminated by the grace of the Lord, and therefore he no longer has any obligations to the Vedic injunctions.”