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Korgaonkar K A
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Dear Expert
Pls Urgently throw light on below query. How I Calculate correct Cess? as below mentioned.
A) If Total amt for cess calculation Rs 1000/-, 1% cess on ( Rs 1000/-)= Rs 10
Paid Compensation under W.C Rs 2/-
Net Cess Payable =(Rs. 10 - Rs.02)
= Rs 08
Or
B) If amt for cess Calculation Rs 1000/-,
Paid Compensation under W.C Rs 5/-,Total Amt for cess Calculation (1000-5)=995
1% cess payable on Rs 995= Rs 9.95
Which one is correct. A or B
Regards
Sacheein

Dear Sacheein
The workmen compensation is entirely different from the BOCWW Cess. The WC can be reimbursed if your company holds the WC Policy. The BOCWW Cess must be paid a minimum of 1% and Maximum of 2% of the Contract Value.
The only thing is some state government is insisting the payment from the Contractors and some state government is insisting from the Principal employer.

BOCW Act 1996 is different, it says that the 1% of Cess is to be deducted from the contractors bills and the same is to be deposited to the Welfare Board. This is to be calculated of the construction cost of the project (except the Land and expenditure occurred on labour welfare.) .
The Rs.10/- is the different, as the amount is depositing from each employees and employer for their welfare only.
Sudhir Bhardwaj

Dear Sacheein,

Your query is on how to calculate cess under BOCW Act.

Calculation of cess is depending upon the procedure laid down by the appropriate government / cess collection and assessment authority.

Cess is payable at 1% on cost of construction which includes all expenditure incurred by an employer in connection with the building or other construction work excluding (i) cost of land and (ii) any compensation paid or payable to a worker or his kin under the Employees Compensation Act 1923.

It seems you are from Mumbai. Mumbai i.e. in Maharashtra the Cess is payable from 01.01.2008 onwards as per Notification No. BCA 12007/ 788 / Labour 7 dated 21.04.2008 by Govt. of Maharashtra.

Cess Collecting and assessment authority in Mumbai Municipal Area is MCGM. MCGM has started collecting the cess from 01.07.2010 vide its circular dated 30.09.2011. The said circular is attached herewith for your ready reference.

According to my understanding, the construction value is being calculated by MCGM on the basis of index rate of land as per ready recknor and construction area. This is as per the circular of MCGM dated 30.09.2011.

The cess is payable at 1% on this construction value as calculated above.

In case you have paid any compensation to any employee under Employee Compensation Act, such amount should be subtracted from the construction value calculated as above.

Attached Files
 Membership is required for download. Create An Account First CESS CIRCULAR BY MCGM.pdf (1.21 MB, 1578 views)

Kindly help me in getting following GR and Circulars as earlya as possible
Govt.Circular No. BCA 12007/P.K.788/Labour7 dated 21/04/2008
Govt.Circular No. BCA 12007/P.K.788/Labour7 dated 26/10/2009
Govt.Circular No. BCA 2009/P.K.108/Labour7A dated 21/07/2011
Thanks & Regards
Deepak Deshpande
9870010989
For Deshpande Associates

TN ask for only 0.3% of civil construction cost from principal employer. Pon
can anyone provide updates on labour cess applicability on diplomatic building construction in new delhi most of the taxes are exempted on diplomats
Dear HR Folks,
I have an question on BOCWW Act - 1998..?( General).
Why did act exempted on Cost of Land & compensation paid or payable to a worker or his kin under the Employees Compensation Act 1923 for calculation of cess ???

Dear STM,
This question you should ask to the Law makers and not HR Folk. HR Folk will not have answer to it.
As per law, cess is payable on construction cost excluding land cost and compensation paid under EC Act.
Today the builders are reluctant to pay the cess on construction cost as stated above. If land cost and compensation cost paid under EC Act is also included in to the cess, what will happend?

Dear STM
The cost of construction is ascertained by the authorities after due inspection and from the Work Orders issued by the Employer. Normally the Work Orders will not have the valuation of the Land as the same is inappropriate to show in the WO and the cost of land varies with location & from time to time. The Compensation paid will not be predicted and the cost of compensation as per EC Act, 1923 will be paid to the worker / legal heir and it does not add any value to the construction.
Hence the both are not added in the BOCWW Cess.
Hope you understood the logic behind the law making. If you have any other doubt, please do inform so that our learned members can clarify you.

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