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TMI BlogLabour Cess applicable on cost of construction without GSt or gross costX X X X Extracts X X X X X X X X Extracts X X X X ..... Labour Cess applicable on cost of construction without GSt or gross cost X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. but not on GSt . Rate is @1%. He may add gst on solar etc. but not on cost of construction. Further he has to pay it directly as per contractor this has nothing to do with him as this is assessment now. Client is not registered under GSt. Kindly advise. Reply By KASTURI SETHI: The Reply: Extract of FAQ of BOCWW Cess. Q. No.2 What is labour cess Ans. In the truest sense, there is no ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss called Labour Cess. It is Building & Other Construction Workers' Welfare Cess [BOCWW Cess). 2. As per Section 15 (2) (a) of CGST Act, Any Cess shall be included in the value of supply. For more details go through the following Issue IDs on TMI in this forum:- (i) 115480 dated 2.10.19 (ii) 115489 dated 4.10.19 (iii) 118312 dated 4.1.23. 3. Also go through the definition of 'Total Cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Construction' as per Cess Act. FAQ 5 Is this cess another tax levied on the labour portion of a contract ? Ans. No. The levy of Cess on the cost of construction incurred by the employers on the building and other construction works is a means for ensuring sufficient funds for the Welfare Boards to undertake social security schemes and welfare measures for building and other construction w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orkers. In this connection, the Hon'ble Supreme Court in the case of Dewan Chand Builders and Contractors v. Union of India and Other 2011 (11) TMI 405 - SUPREME COURT] has said that: "The fund, so collected, is directed to specific ends spelt out in the BOCW Act. Therefore, applying the principle laid down in the aforesaid decisions of this Court, it is clear that the said levy is a 'fee' a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not 'tax'. The said fund is set apart and appropriated specifically for the performance of specified purpose; it is not merged in the public revenues for the benefit of the general public and as such the nexus between the Cess and the purpose for which it is levied gets established, satisfying the element of quid pro quo in the scheme. With these features of the Cess Act in view, the subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t levy has to be construed as 'fee' and not a 'tax'. X X X X Extracts X X X X X X X X Extracts X X X X
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