Hi, Please help me to understand the cost of construction under the BOCW act. If the contract value is said 5 Cr including 18% GST. So, for calculating BOCW cess. Is the Cess calculated on Basic value or total Contract Value?
Please reply
From India, Gurgaon
Please reply
From India, Gurgaon
Dear Nobendu-Nath,
Cess under the BOCW Act is payable at one percent on the ‘cost of construction’ incurred by an employer.
‘Cost of Construction’ means all expenditure incurred by an employer in connection with the building or other construction work which excludes i) cost of land, and ii) any compensation paid or payable to under the EC Act, 1923.
Now, this Cess is payable to, or collected by the State Board under this Act. Every State Board has its own procedure and rules for assessment of it and collection of it. The employer has to furnish a return to the concerned assessment officer or authority and that officer or authority is obliged to make an assessment of the amount of cess payable by the employer.
Some States make the assessment in the beginning of the project when you apply for IOD.
Some States have laid down the procedure to collect it on the basis of labour billing by the contractors and filling make the assessment at the end of project.
Somewhere the project cost is calculated on the basis of area of plot and index value per sq mtr.
There are number of judicial interventions as to the interpretation of ‘cost of construction’ and whether the cost of supply component, ancillary activities, procurement of equipment and machinery etc. are included into it or not.
You need to approach the concern authority for you in your area and understand from it. There is huge corruption level in every State. NAMOs corruption free India is only on paper. Only NAMO is honest will not make India corruption free.
If you want my view then I will say that cess is levied on the ‘cost of construction’ which should be restricted to ‘building or other construction work’. What is ‘building or other construction work’ is
well narrowed in Section 2(1)(d) of the BOCW Act in which ancillary activity such as supply / procurement of equipment and machinery is not included. Therefore, in my view cess should be restricted to specific construction related activities and activities beyond this scope i.e. supply of equipments and ancillary activities should not attract the provisions of Cess Act and Cess Rules in relation to levy of cess.
From India, Mumbai
183Cess under the BOCW Act is payable at one percent on the ‘cost of construction’ incurred by an employer.
‘Cost of Construction’ means all expenditure incurred by an employer in connection with the building or other construction work which excludes i) cost of land, and ii) any compensation paid or payable to under the EC Act, 1923.
Now, this Cess is payable to, or collected by the State Board under this Act. Every State Board has its own procedure and rules for assessment of it and collection of it. The employer has to furnish a return to the concerned assessment officer or authority and that officer or authority is obliged to make an assessment of the amount of cess payable by the employer.
Some States make the assessment in the beginning of the project when you apply for IOD.
Some States have laid down the procedure to collect it on the basis of labour billing by the contractors and filling make the assessment at the end of project.
Somewhere the project cost is calculated on the basis of area of plot and index value per sq mtr.
There are number of judicial interventions as to the interpretation of ‘cost of construction’ and whether the cost of supply component, ancillary activities, procurement of equipment and machinery etc. are included into it or not.
You need to approach the concern authority for you in your area and understand from it. There is huge corruption level in every State. NAMOs corruption free India is only on paper. Only NAMO is honest will not make India corruption free.
If you want my view then I will say that cess is levied on the ‘cost of construction’ which should be restricted to ‘building or other construction work’. What is ‘building or other construction work’ is
well narrowed in Section 2(1)(d) of the BOCW Act in which ancillary activity such as supply / procurement of equipment and machinery is not included. Therefore, in my view cess should be restricted to specific construction related activities and activities beyond this scope i.e. supply of equipments and ancillary activities should not attract the provisions of Cess Act and Cess Rules in relation to levy of cess.
From India, Mumbai
Query : Is the BOCW Cess applicable for company which undertakes repairs , servicing of pipelines for ONGC, etc.?
Because from what I see ONGC comes under "Building constructions category in Central wage sphere. Since our company undertakes work for them, we are asked to comply with the same wage requirements.
From India, Mumbai
Because from what I see ONGC comes under "Building constructions category in Central wage sphere. Since our company undertakes work for them, we are asked to comply with the same wage requirements.
From India, Mumbai
Dear Deenajag,
Certainly the work undertaken for ONGC of repairs of pipelines will fall under the scope of meaning Building and other Construction Work and if you engaged more than 10 workers on this work, you need to obtain RC under the Act.
Please read the definition of "building or other construction work" section 2(d) which clearly says that "building or other construction work" means the construction, alteration, repairs, maintenance or demolition, or, in relation, to buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works (including storm water drainage works), generation, transmission an distribution of power, water works (including channels for distribution of water), oil and gas installations, electric lines, wireless, radio, television, telephone, telegraph and overseas communications, dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aqueducts, pipelines, towers, cooling towers, transmission towers....
From India, Mumbai
Certainly the work undertaken for ONGC of repairs of pipelines will fall under the scope of meaning Building and other Construction Work and if you engaged more than 10 workers on this work, you need to obtain RC under the Act.
Please read the definition of "building or other construction work" section 2(d) which clearly says that "building or other construction work" means the construction, alteration, repairs, maintenance or demolition, or, in relation, to buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works (including storm water drainage works), generation, transmission an distribution of power, water works (including channels for distribution of water), oil and gas installations, electric lines, wireless, radio, television, telephone, telegraph and overseas communications, dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aqueducts, pipelines, towers, cooling towers, transmission towers....
From India, Mumbai
Dear Mr Akhil Bhartiya,
Many thanks for giving clarity on the definition & details.
A follow up query: In maharashtra where /who do we contact for registration Submission of BOCW cess?
Warm regards,
Deena Jagasia
From India, Mumbai
Many thanks for giving clarity on the definition & details.
A follow up query: In maharashtra where /who do we contact for registration Submission of BOCW cess?
Warm regards,
Deena Jagasia
From India, Mumbai
Dear Deenajag,
In Maharashtra, the registration of establishment lies with Assistant Commissioner of Labour. Under Central sphere Assistant Labour Commissioner (C).
Cess assessment authority is with in Mumbai Municipal Area is BMC building department whereas in other places it is a district collector.
Cess is paid in the account of State Welfare Board under the Act.
There is huge corruption level in every authority in entire Maharashtra. Mumbai is extra ordinary even though NAMO has restricted on cash transaction and the approvals are online.
From India, Mumbai
In Maharashtra, the registration of establishment lies with Assistant Commissioner of Labour. Under Central sphere Assistant Labour Commissioner (C).
Cess assessment authority is with in Mumbai Municipal Area is BMC building department whereas in other places it is a district collector.
Cess is paid in the account of State Welfare Board under the Act.
There is huge corruption level in every authority in entire Maharashtra. Mumbai is extra ordinary even though NAMO has restricted on cash transaction and the approvals are online.
From India, Mumbai
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