BOCW Act Dilemma: Do All Subcontractors Need Separate Registrations?

Dear All, this is John from Chennai. This question is related to the BOCW Act of 1996. As per BOCW, it is mandatory to obtain BOCW registration along with a CL license and ISMW license, either by the principal employer or contractor, or by both.

Case Study:

a. Principal Employer is X

b. Subcontractor is Y. Here, the subcontractor has registered in BOCW for all his subcontractors. Under subcontractor Y, contractors a, b, c, and d are working.

Now, do all these contractors (a, b, c, d) need to obtain BOCW registration or not?

Kindly revert to us to clarify this matter.

Thanks in advance.

BOCW Act 1996: Registration Requirements

As per the BOCW Act 1996, an individual contractor requires registration if they employ construction workers involved in a construction project exceeding Rs. 10 lakh in cost.

Definition of Establishment

Section 2(j) defines an establishment as follows:

- Establishment means any establishment belonging to or under the control of the Government, any body corporate or firm, an individual or association, or another body of individuals that employs building workers in any building or other construction work. It includes an establishment belonging to a contractor but excludes an individual who employs such workers for construction work related to their own residence, where the total cost of construction does not exceed ten lakh rupees.

Cess Compliance and Accountability

Regarding the cess payable under the BOCW Cess Act 1996, compliance by Y suffices for ABCD contractors. Therefore, it is legal and appropriate to require BOCW registration for ABCD contractors if they are carrying out works exceeding Rs. 10 lakh. Otherwise, as the Principal Employer, you may be held accountable for their actions.

Dear John,

Section 2(1)(g) of the BOCW Act, 1996, while defining the term "contractor," specifically includes a subcontractor as well. Therefore, as subcontractors to Y, the contractor of X, a, b, c, and d have to comply with the provisions for registration under the Act.

Subcontractors and BOCW Registration

What I guess is that a, b, c, and d are subcontractors to Contractor Y. As per the BOCW Act, if Contractor Y is registered under the act, the same registration would cover all subcontractors' workmen, and thus, individual subcontractors need not take separate registration. As far as the payment of CESS under the act is concerned, Contractor Y shall have to pay based on the sum total value of subcontracted work. If Y is executing some work directly without subletting it, CESS would be charged on the value of said work as well. He may, however, recover CESS paid proportionately from subcontractors subject to subcontracting conditions.

Regards,

Dear All,

Thank you for all your valuable explanations regarding the BOCW Act.

Continuing with one more query, please clarify the following scenario:

Case Study: 2

a. Principal Employer is X
b. Subcontractor is Y, which has already obtained BOCW approval. The subcontractor is paying 1% for the Cess Amount in BOCW for all his subcontractors a, b, c, d. After the registration of a, b, c, d in BOCW, are they now required to pay the Cess Amount as well?

I am eagerly awaiting a prompt response from all the experts. Thank you in advance, sirs.

Dear John, since the Principal Employer, Contractor, and Sub-Contractor are considered employers for the purpose of the Act, cess must be collected from each of them. However, this does not mean that each party's share has to be determined based on the value of the work they have completed. Therefore, if the Principal Employer or the Contractor pays some advance cess at a certain rate of the total estimated cost, they can recover it from the other party or parties as applicable. In such a situation, my opinion is that not everyone needs to pay the cess, as it would result in multiple payments.

Is it possible for the principal employer to deposit the cess yearly or half-yearly?