1pc welfare cess on constructions | mumbai | Hindustan Times
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1pc welfare cess on constructions

mumbai Updated: Jan 08, 2010 00:56 IST
Ketaki Ghoge

The state labour department will soon start levying a 1 per cent cess on all private and public construction projects in the state.

In line with the central legislation, Building and the Other Construction Workers Cess Act, 1996, the state will stringently implement the tax to fund welfare schemes for more than 20 lakh construction labourers.

The cess charged on all developers of buildings, infrastructure projects will ultimately pinch your pocket, but only nominally, say officials.

Developers will be charged one per cent of the project cost minus the land cost to work out the cess for welfare of labourers.

“The collected cess will go to a Welfare Board, which will work out schemes like health insurance, training, crèches for children of construction workers. The one per cent cess will bring in crores of rupees annually,” said Kavita Gupta, labour secretary.

The labour department has changed procedure to collect the cess, which will be made applicable retrospectively from November 1, 2009.

The procedure also lays the responsibility of collecting the cess on authorising agencies such as the civic body, the Maharashtra Housing and Area Development Authority (MHADA), the Public Works Department.

Commencement certificates for construction project will now have a unique identification number linked to the payment of the cess. The builders’ lobby has not welcomed the move.

“The intention of the law is good but in practice the money is rarely used for the intended beneficiaries. In the past state government has used the cess to pay salaries of the welfare board staffers, that’s all,” said Anand Gupta, general secretary of the Builders Association.

Gupta added that states such as Andhra Pradesh, Chattisgarh, have implemented the law but have not seen desirable results.

Moreover, there is opposition to the suggestion within the state government itself.

“It will unnecessarily pinch the tax payer, for the supposed welfare of labourers,’’ said a bureaucrat, on condition of anonymity.

The new procedure and its implementation is likely to be discussed in the state cabinet on Friday.