Confused About BOCW Cess Deductions on Mechanical Work Invoices? Let's Discuss!

Dear All,

Please guide us on the following issue: Our organization is working on a project for HPCL (Mechanical Work); however, there is Civil work included in the Mechanical work order. The Schedule of Rates (SOR) mentions step-by-step work for the scope of work for Civil as well.

The Civil site is still not hardcovered, so we have started the Mechanical works and raised an invoice for the same Mechanical work. Now, they are calculating Building and Other Construction Workers (BOCW) Cess on the whole amount of the invoice, including GST, even though the invoice does not pertain to the Civil works.

Please guide us and kindly refer to any laws related to this. Is it valid to deduct BOCW cess without Civil work being completed, especially when they have not yet handed over the Civil site? Also, is the BOCW cess calculated on the gross amount of the invoice, including GST?

Thank you.

GST and Cess Payment on Construction Work

The GST is to be paid at a fixed rate on Cess, which is calculated at 1% of the cost of construction invoiced to the employer. This cost of construction may be for Mechanical, Civil, and Electrical work done by the contractor.

The contractor has to pay for the cost of Cess at 1% on the work order value as per which the registration is obtained. You should ask the employer to issue the work order for the Civil work if the work is not included in the work order.

Definition of Construction Work

Please see the definition of construction work.

As per Section 2(d) of the BOCW Act, "building or other construction work" includes "the construction, alteration, repairs, maintenance or demolition of or, in relation to, buildings, streets, roads, railways, tramways, airfields, irrigation, drainage, embankment and navigation works, flood control works (including channels for distribution of water), oil and gas installations, electric lines, wireless, radio; television, telephone, telegraph and overseas communication dams, canals, reservoirs, watercourses, tunnels, bridges, viaducts, aqueducts, pipelines, towers, cooling towers, transmission towers and such other work as may be specified in this behalf by the appropriate Government, by notification but does not include any building or other construction work to which the provisions of the Factories Act, 1948 (63 of 1948), or the Mines Act, 1952 (35 of 1952), apply.

See the nature of your work and evaluate whether the specific items mentioned above fit your activity.

Thank you for the information. I have another query: will BOCW Cess be calculated based on the amount of the invoice generated with GST or the base amount (without GST)?