On March 7, 2025, the Government of Madhya Pradesh issued new guidelines to ensure the effective assessment and recovery of the Building and Other Construction Workers Welfare Cess. This directive comes in response to concerns over the inefficiency and delay in the cess collection process, particularly regarding the non-compliance with set timelines and incomplete assessments.
Issues Identified in Cess Assessment
The government’s review highlighted several challenges in the assessment and recovery process:
Incomplete Registration: Many construction works have not been properly recorded for cess assessment.
Delay in Assessment: In registered cases, the assessment of cess is often not completed within the prescribed 5-month limit under the M.P. Public Service Guarantee Act, 2010.
Failure in Recovery: The recovery of cess in cases where orders have been passed remains unsatisfactory.
The Building and Other Construction Workers Welfare Cess Act, 1996, mandates a 1% cess on the construction cost for various construction projects. Local bodies are responsible for collecting this cess and transferring it to the Madhya Pradesh Building and Other Construction Workers Welfare Board, Bhopal. However, issues have been raised regarding the timely transfer of cess to the Board.
Challenges with Urban Bodies
The government’s review further revealed discrepancies in urban areas where:
- Construction permits are issued by urban bodies only after cess is deposited, but the transfer to the Board often happens late, sometimes only at the end of the financial year, rather than within the 30-day window as prescribed by Rule 5 (3) of the Building and Other Construction Workers Welfare Cess Rules, 1998.
- Some urban bodies have been found depositing less than the required cess amount.
New Directives for Cess Assessment and Recovery
To address these challenges, the government has outlined several action steps for local bodies and cess assessment officers:
Timely Transfer: Ensure the cess collected for construction works is transferred to the Board within the 30-day limit.
Verification of Cess Assessment: Review whether cess assessments have been properly conducted for construction works listed in the provided details.
Immediate Registration: For construction works where cess has not been assessed or the cost was undervalued, immediate registration should be done, and the assessment must be completed within the stipulated time frame.
Action Plan and Deadline
Local bodies are urged to coordinate closely with authorities to rectify any outstanding issues, and a report on the progress must be submitted by March 25, 2025. This will include detailed information on the actions taken to ensure compliance, along with the necessary updates in the attached Appendix.
The government’s renewed focus on these guidelines aims to streamline the cess collection process, ensure timely compliance, and guarantee that the welfare of construction workers is adequately supported through the effective use of the cess fund.
