State to levy 1 pc labour cess on new construction projects from July

From July, all new public and private construction projects that employ manual labourers will have to pay 1 per cent labour cess to the state government. In line with the Central legislation, the Building and the Other Construction Workers Cess Act, 1996, the state government will start collecting this levy stringently to fund welfare schemes for more than 20 lakh construction labourers. The cess will be charged on the construction cost of the project (minus the land cost) and it would only nominally pinch your pocket when you buy a new home or office. "The collected cess will go to a welfare board, which will work out schemes such as health insurance, training, crches for construction workers. The 1 per cent cess can bring in an estimated Rs 1,000 crore annually,'' said Kavita Gupta, labour secretary. The state cabinet had cleared the proposal to implement the law stringently in May. A high-powered committee, chaired by Chief Secretary J.P. Dange, then worked out modalities to charge this tax. The committee recommended that building and project authorising agencies, such as the Urban Development Department, housing department and municipal bodies, will have to ensure that the cess is collected and deposited in a specially created bank account before handing out any commencement certificates for the project. Developers who pay the cess will be given an unique identification number of the challan (receipt), which would also be enumerated on the commencement certificate to foolproof this system. The government resolution stating the same was issued last week. For contractors, who carry out the public work, 1 per cent cess would be deducted from their payment by the various government agencies such as the Public Works Department. But the developers' lobby is not in favour of this cess. "There is no confidence among contractors or builders that the cess collected will be utilised for the welfare of labourers. On ground, there is no machinery or training centers to implement these so-called welfare schemes,'' said Anand Gupta, general secretary, Builders' Association of India. He added that other states, like Andhra Pradesh, that had implemented the law had at least created training centres for the labourers.