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 rates?
Yes. The cess, including advance payment, may be collected at uniform rates based on the quantum of construction work, subject to final assessment.
What happens if an employer delays payment of cess?
If an employer fails to pay the cess within the prescribed time, they are liable to pay interest.
How is the interest calculated?
Interest is payable at the rate prescribed by the Central Government, calculated from the due date of payment until the actual payment is made.
Can any employer be exempted from paying cess?
Yes. The appropriate Government may exempt any employer or class of employers in a State if such cess is already levied and payable under another corresponding law in that State.
How is cess assessed and paid by the employer?
The employer must, within sixty days of completion of each construction project (or within a notified period), pay the cess based on self-assessment of the cost of construction, after adjusting any advance cess already paid.
What must the employer do after paying the cess?
The employer must file a return in the prescribed manner after making the payment.
What happens if discrepancies are found in self-assessment?
If the authority finds discrepancies between the self-assessment and the return, it may conduct an inquiry and make an appropriate assessment order.
What does the assessment order specify?
The assessment order specifies the date by which any payable cess must be paid by the employer.
What happens if cess is not paid within the specified time after assessment?
The unpaid amount is treated as arrears.
Can a penalty be imposed for such non-payment?
Yes. The prescribed authority may impose a penalty up to the amount of the cess.
Is the employer given an opportunity to be heard before penalty?
Yes. The employer must be given a reasonable opportunity of being heard.
Can penalty be avoided?
Yes. If the authority is satisfied that the default occurred for good and sufficient reasons, no penalty will be imposed.
Can an employer appeal against assessment or penalty orders?
Yes. An employer aggrieved by such orders may file an appeal within the prescribed time and in the prescribed manner.
Is any fee required for filing an appeal?
Yes. The appeal must be accompanied by the prescribed fee.
What is the procedure followed by the appellate authority?
The appellate authority provides the appellant an opportunity of being heard and disposes of the appeal as expeditiously as possible.
Is the decision of the appellate authority final?
Yes. The order passed in appeal is final and cannot be challenged in any court of law.
Who can be registered as a beneficiary?
A building worker who:
(a)
Has completed eighteen years of age but not sixty years; and
(b)
Has worked for at least ninety days in building or construction work during the preceding twelve months.
Who registers such workers?
The authorised officer of the Building Workers’ Welfare Board registers eligible workers in the prescribed manner.
When does a registered beneficiary cease to be a beneficiary?
A worker ceases to be a beneficiary when:
(a)
They attain sixty years of age; or
(b)
They do not work for at least ninety days in a year.
Are there any exceptions while calculating the ninety days?
Yes. Periods of absence due to personal injury caused by an accident arising out of and in the course of employment are excluded.
Can a worker continue to receive benefits after sixty years of age?
Yes. If a worker has been a beneficiary for at least three continuous years before attaining sixty years, they remain eligible for prescribed benefits.
How is the three-year period calculated?
The period includes time spent as a beneficiary with other Welfare Boards immediately before registration with the current Board.
Is there a fund for building workers’ welfare?
Yes. A fund called the Building and Other Construction Workers’ Welfare Fund is constituted by the Welfare Board.
What amounts are credited to this fund?
The fund includes:
(a) Cess collected;
(b)
Grants and loans from the Central Government; and
(c)
Other sums received from sources as decided by the Central Government.
How is the fund utilised?
The fund is used for:
(a)
Expenses of the Welfare Board in performing its functions;
(b)
Salaries, allowances, and remuneration of members, officers, and employees; and
(c)
Other authorised purposes under the law.
Is there any limit on administrative expenses of the Welfare Board?
Yes. Administrative expenses, including salaries and allowances, must not exceed five per cent of the total expenses of the Board in a financial year.
Therefore, the cess-based framework under the Code represents a focused effort to secure financial and social protection for construction workers. By combining employer contributions with regulated fund utilisation and worker registration, it aims to strengthen welfare delivery. Its effectiveness, however, will depend on proper implementation and efficient administration.
Muneeb Rashid Malik is an Advocate. He tweets @muneebmalikrash.
