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Section 100: Levy and collection of building workers' welfare cess

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter VIII: Social Security and Cess for Building Workers
Competent Labour Forum
Act No. 36 of 2020
Section 99 All 163 Sections of Code on Social Security, 2020 Section 101

Legal Commentary & Landmark Judgments: Section 100

Section 100 of the Code on Social Security, 2020 establishes the foundational statutory mandate for the levy and collection of a building and other construction workers' welfare cess at a rate between 1% and 2% of the total cost of construction, creating an unshakeable dedicated financial corpus for construction worker welfare.

  • Statutory Rate and Chargeable Base of Cess: Provides that there shall be levied and collected a cess for the purposes of social security and welfare of building and other construction workers at such rate not exceeding two per cent, but not less than one per cent, of the cost of construction incurred by an employer, as the Central Government may notify in the Official Gazette.
  • Exclusion of Land Cost and Chapter VII Compensation: Explicitly defines 'cost of construction' by excluding: (a) the cost of land on which the building or construction work is undertaken; and (b) any compensation paid or payable under Chapter VII (Employee's Compensation), ensuring that only capital expenditure on civil works is taxed.
  • Advance Collection and Local Authority Deduction Mandate: Mandates that every local authority, government agency, or public sector undertaking sanctioning building plans or disbursing contractor bills shall deduct the cess at source in advance from contractor running bills or collect it prior to approving municipal building permits.
  • Self-Assessment and Statutory Return Obligations: Imposes a positive obligation on every construction employer to self-assess the cess payable, submit periodic electronic returns within the prescribed timeline, and deposit the cess into the designated Building Workers' Welfare Fund.
Key Landmark Precedents:
  • Dewan Chand Builders & Contractors v. Union of India (2012) 1 SCC 101: The Supreme Court upheld the constitutional validity of the BOCW Cess Act under Entry 97 of List I (Union List), ruling that the cess is a valid fee-cum-welfare levy meant for the social security of construction workers and does not encroach upon state taxation powers under Entry 49 List II.
  • Lanco Anpara Power Ltd. v. State of U.P. (2016) 10 SCC 329: The Supreme Court held that the construction of a factory building prior to the commencement of the manufacturing process falls squarely within the definition of 'building or other construction work', and the mere fact that the premises will eventually be registered as a factory does not exempt the civil construction from BOCW cess.
  • National Campaign Committee for Central Legislation on Construction Labour v. Union of India (2018) 5 SCC 218: The Supreme Court issued comprehensive nationwide directions for the strict collection, accounting, and utilization of construction cess, prohibiting State Governments and Welfare Boards from diverting cess proceeds to general administrative or state revenue funds.
Courtroom Practice & Strategic Litigation Guidance:

Real estate developers, EPC contractors, and infrastructure conglomerates must maintain separate accounting heads for land acquisition costs, civil construction costs, and mechanical/electrical machinery costs. Cess at 1% must be calculated exclusively on civil construction works, strictly excluding the cost of land and pure plant/machinery procurement. Always secure a certified copy of the advance cess deduction challan from the sanctioning municipal corporation or principal employer to set off against final cess assessment orders.

Section 99 All 163 Sections of Code on Social Security, 2020 Section 101