Sections 100 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 100 levies a cess on the cost of construction to fund social security and welfare of building workers. Section 101 charges interest on late payment, and section 102 lets the appropriate Government exempt employers who already pay a corresponding State cess.
The cess is levied at a rate not exceeding two per cent and not less than one per cent of the cost of construction incurred by an employer, at the rate the Central Government notifies (s.100(1)). The cost of land and compensation under Chapter VII are excluded. It is collected from every employer undertaking building or other construction work, including deduction at source for Government and public sector works. Late payment attracts interest (s.101), and an employer already paying a corresponding State-law cess may be exempted (s.102).
Why it matters
Developers, contractors and owners who build for their own use need to know what the cess is charged on and when it is due. Getting the cost base wrong leads to assessment, interest and penalty. Our labour law compliance team can map your projects to the cess, registration and record requirements. This series continues from sections 93 to 95 and sections 96 to 99 in Chapter VII.
Section 100: levy and collection
| Sub-section | Content |
|---|---|
| (1) | Cess for social security and welfare of building workers, at a rate not more than 2% and not less than 1% of the cost of construction incurred by an employer, as notified by the Central Government |
| Explanation | Cost of construction does not include (a) the cost of land and (b) any compensation paid or payable to an employee or his kin under Chapter VII |
| (2) | Collected from every employer undertaking building or other construction work, in the manner and at the time the Central Government prescribes, including deduction at source for Government or public sector works, or advance collection through a local authority where its approval is required |
| (3) | The local authority or other authority notified by the State Government deposits the proceeds with the Building Workers' Welfare Board |
| (4) | Cess, including advance payment, may be collected at a uniform rate prescribed by the Central Government on the quantum of work, subject to final assessment |
The Code itself does not fix the actual rate within the 1% to 2% band; it is whatever the Central Government notifies. Check the current notification before computing.
What the Central Rules add: rule 41 (summary)
Where the Central Government is the appropriate Government, rule 41 of the Code on Social Security (Central) Rules, 2026 sets the mechanics. Among other things:
- an employer furnishes information in Form XV to the assessing officer within sixty days of commencing work or paying cess, and reports changes within thirty days;
- cess is paid in advance on a self-assessment certified by a chartered engineer, at approval or before work begins, using PWD, CPWD or other applicable schedule of rates (or RERA figures where applicable), in Form XVI;
- where a local authority's approval is needed, the application carries proof of online payment to the State Building Workers' Welfare Board; and
- Government and public sector works are subject to deduction from bills, deposited with the Board within thirty days.
Detailed treatment of the assessment and appeal stages follows in sections 103 to 105. Where the State Government is the appropriate Government, its own rules apply.
Section 101: interest on delay
If an employer fails to pay cess within the time prescribed by the appropriate Government, the employer is liable to interest at the rate the Central Government prescribes, on the amount of cess, from the due date until actual payment. Rule 42(2) of the Central Rules prescribes one per cent per month or part of a month for cess not paid within the time specified in the assessment order.
Section 102: exemption where a State cess already applies
Notwithstanding anything in the Chapter, the appropriate Government may, by notification, exempt any employer or class of employers in a State from the cess where the cess is already levied and payable under a corresponding law in force in that State. Rule 47(4) of the Central Rules says an employer seeking this applies to the Director General of Labour Welfare, with details of works, the corresponding law and proof of cess actually paid; assessment proceedings stop for thirty days from receipt of the application's copy or until the order is conveyed, whichever is earlier.
A worked example
A builder's project has a total outlay including land. The construction cost, excluding the price of the land and any compensation paid to injured workers under Chapter VII, is what the cess rate applies to. If the notified rate were, say, 1%, the cess would be 1% of that cost base (rate illustrative only; use the notified rate). The builder pays advance cess on a chartered engineer's certified self-assessment before the local authority approves the plan, and the amount is adjusted at final assessment. (Illustrative.)
Need help with the building workers cess?
Working out the cost base, the advance payment and the later return needs care, especially on multi-year projects. Our labour law compliance team can help you plan cess payments and keep the supporting records ready for assessment.
Key takeaways
- Cess is 1% to 2% of the cost of construction, at the notified rate.
- Land cost and Chapter VII compensation are excluded from the base.
- Collected from every employer doing construction work; Government and PSU works suffer deduction at source.
- Proceeds go to the Building Workers' Welfare Board.
- Interest runs from the due date; Central Rules: 1% per month or part of a month.
- Exemption is possible where a corresponding State cess is already payable.
Read next
- Sections 103 to 105: Self-assessment, penalty and appeal on cess
- Sections 106 to 108: Building worker beneficiaries and welfare fund
- BOCW Act: Latest amendments and labour codes impact
- ESI for construction workers: Special provisions
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.