The Building and Other Construction Workers Cess Act, 1996 (“Cess Act”, hereinafter) was enacted by the Parliament owing to the necessity to levy cess on the cost of construction incurred by the employers on a building and on other construction works, in order to generate funds for the Welfare Boards to enable such Welfare Boards to undertake social security schemes and welfare measures for building and construction workers. As per Section 3 of the Cess Act, the Cess which is to be levied and collected can be at maximum of 2% but not less than 1% of the cost of construction incurred by an employer. The Central Government has notified the Cess amount to be levied at 1% of the cost of construction. The liability to pay Cess under the Cess Act falls upon the ’employer’. The term ’employer’ includes both the owner of the building/establishment and a “contractor”, who supplies the workers. Therefore, the liability to pay Cess falls not only on the owner of a building or establishment, but also upon the contractor. This has been held by...
Labour Law
Is GST To Be Included While Calculating Labour Cess?
GST is to be charged on cess and as such cess is not to be charged on GST. GST is to be calculated on the total amount of the cost of construction including the cess levied under the Cess Act. As a sequitur, cess cannot be levied or be payable on GST amount involved in a construction contract.
