The Code on Social Security, 2020 (“Code”) consolidates India’s labour welfare laws and introduces a structured framework for the social security of building and other construction workers. Given the hazardous and largely informal nature of this sector, the Code provides for the levy of a cess on construction activities to fund welfare measures. This mechanism ensures that employers contribute directly towards the social protection of workers through dedicated Welfare Boards.

Is any cess levied for the welfare of building workers?

Yes. A cess is levied and collected for the purposes of social security and welfare of building workers.

What is the rate of such cess?

The cess is levied at a rate not exceeding two per cent but not less than one per cent of the cost of construction, as specified by the Central Government through notification from time to time.

What is included in the cost of construction for calculating cess?

The cost of construction excludes:

(a) The cost of land; and

(b) Any compensation paid or payable to an employee or their kin.

From whom is the cess collected and how?

The cess is collected from every employer undertaking building or other construction work. It is collected in the prescribed manner and at the prescribed time, which may include:

(a) Deduction at source for Government or public sector projects; and

(b) Advance collection through a local authority or other notified authority where approval is required.

Where is the collected cess deposited?

The collected cess is deposited by the local authority or notified authority with the Building Workers’ Welfare Board in the prescribed manner.

Can cess be collected in advance or at uniform........

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