As we are the contractor, we had engaged contract labor for the work in a rural area. In this case, we had paid a security deposit along with the license fee and obtained a CLRA license and ISMW license, respectively.
On this note, we are asked to pay panchayat tax to the local president of the panchayat for engaging contract labor in their area. Do we really have to pay any panchayat tax? If so, are there any provisions or statutory liabilities stated in the Tamil Nadu Panchayat Act? If so, please share the details and provide advice on this matter.
Thanks in advance.
From India, New Delhi
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5On this note, we are asked to pay panchayat tax to the local president of the panchayat for engaging contract labor in their area. Do we really have to pay any panchayat tax? If so, are there any provisions or statutory liabilities stated in the Tamil Nadu Panchayat Act? If so, please share the details and provide advice on this matter.
Thanks in advance.
From India, New Delhi
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Dear John,
As far as I know, the Contract Labor (Regulation & Abolition) Act, 1970 is the only act dealing with the issuance of a license for engaging contract labor in any activity analogous to industrial activity and the collection thereof of license fees fixed under the respective rules by the appropriate government. I have not heard of the local Panchayat collecting any fees or charges in this regard.
It might be better to ask the President to quote the relevant authority.
From India, Salem
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As far as I know, the Contract Labor (Regulation & Abolition) Act, 1970 is the only act dealing with the issuance of a license for engaging contract labor in any activity analogous to industrial activity and the collection thereof of license fees fixed under the respective rules by the appropriate government. I have not heard of the local Panchayat collecting any fees or charges in this regard.
It might be better to ask the President to quote the relevant authority.
From India, Salem
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Dear Colleague,
The Contract Labour R&A Act is a special enactment under which a license is issued to the contractor on payment of a certain fee. The purpose of the Act is to regulate the working conditions, safety, and other facilities of the contract workers, which are inspected by the Licensing authority from time to time.
Regarding Professional Tax, it is a tax to the Local Body that needs to be paid on behalf of the employees who are engaged in a particular Village Panchayat under the provisions of the Profession Tax Act, prevailing in a few states (not all states). This tax applies to all kinds of professions, trades, and employment, and is levied based on the income derived from such profession, trade, or employment. It is imposed on employees, individuals carrying on business, including freelancers and professionals, based on income exceeding any monetary threshold. Both the employer and employees are required to pay this tax to the local body, making it obligatory for both the contractor and the workers.
I recommend reading the article on Profession Tax available at: [https://cleartax.in/s/professional-tax](https://cleartax.in/s/professional-tax)
All the Best, God bless,
Dr. P. Sivakumar
Doctor Siva Global HR
Tamil Nadu
From India, Chennai
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The Contract Labour R&A Act is a special enactment under which a license is issued to the contractor on payment of a certain fee. The purpose of the Act is to regulate the working conditions, safety, and other facilities of the contract workers, which are inspected by the Licensing authority from time to time.
Regarding Professional Tax, it is a tax to the Local Body that needs to be paid on behalf of the employees who are engaged in a particular Village Panchayat under the provisions of the Profession Tax Act, prevailing in a few states (not all states). This tax applies to all kinds of professions, trades, and employment, and is levied based on the income derived from such profession, trade, or employment. It is imposed on employees, individuals carrying on business, including freelancers and professionals, based on income exceeding any monetary threshold. Both the employer and employees are required to pay this tax to the local body, making it obligatory for both the contractor and the workers.
I recommend reading the article on Profession Tax available at: [https://cleartax.in/s/professional-tax](https://cleartax.in/s/professional-tax)
All the Best, God bless,
Dr. P. Sivakumar
Doctor Siva Global HR
Tamil Nadu
From India, Chennai
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Is there any demand for payment of the said tax in writing? If so, you may seek the relevant information, especially as to the authority of the law for exacting the tax, under the provisions of the RTI Act. No tax is leviable save with the authority of the law. And the Panchayat is not a legislative body.
From India, Kochi
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From India, Kochi
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Thank you so much, dear sirs, for your prompt response.
In continuation, we had insisted on paying commercial building tax for our workmen's camp. As part of welfare compliance, we had rented land from a tenant and constructed a temporary fabricated shed for our workmen. We are paying monthly rent to the landowners based on our mutual agreements. The Panchayat president is now asking for permission to construct, and he insists on paying commercial building tax for our workmen's shed.
Do we really have to pay according to any provision or clause?
Please advise, my dear seniors.
Thanks & Regards,
John Peter.S
From India, New Delhi
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In continuation, we had insisted on paying commercial building tax for our workmen's camp. As part of welfare compliance, we had rented land from a tenant and constructed a temporary fabricated shed for our workmen. We are paying monthly rent to the landowners based on our mutual agreements. The Panchayat president is now asking for permission to construct, and he insists on paying commercial building tax for our workmen's shed.
Do we really have to pay according to any provision or clause?
Please advise, my dear seniors.
Thanks & Regards,
John Peter.S
From India, New Delhi
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Dear Colleague,
Any building construction or shed construction on land is governed by the Panchayat Acts. Normally, any construction done needs approval from the Local Body as per the Panchayat Acts. However, the landowner needs to pay such tax, and also the approval for such shed needs to be obtained by the landowner. You are only a tenant in my view.
My second thought is whether "renting out" amounts to a "commercial building" also needs to be examined in this subject. Hence, my humble view is that this requires a clear opinion from a good Civil Legal Practitioner in your city or location, and proceed after obtaining their views. Or you may consult a retired Commissioner of Panchayat or Corporation who will have more clarity on the provisions applicable to your location and the local laws of Panchayat, Panchayat Raj, District GOs, and so on.
From India, Chennai
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Any building construction or shed construction on land is governed by the Panchayat Acts. Normally, any construction done needs approval from the Local Body as per the Panchayat Acts. However, the landowner needs to pay such tax, and also the approval for such shed needs to be obtained by the landowner. You are only a tenant in my view.
My second thought is whether "renting out" amounts to a "commercial building" also needs to be examined in this subject. Hence, my humble view is that this requires a clear opinion from a good Civil Legal Practitioner in your city or location, and proceed after obtaining their views. Or you may consult a retired Commissioner of Panchayat or Corporation who will have more clarity on the provisions applicable to your location and the local laws of Panchayat, Panchayat Raj, District GOs, and so on.
From India, Chennai
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Circular No 1-2018 Processing of income-tax returns under section 143(1) of the Income-tax Act .pdf
P-TAX.csv