Cess

Meaning & Definition 

The Cess is a tax collected by the Indian Government in addition to the regular taxes for specific purposes. The cess collected in India is earmarked for certain development or welfare programs such as education and health and cannot be used for normal operations of the government.

Importance in HR, Payroll & Compliance

• Income tax will affect how payroll is calculated.
• It also provides funds for social welfare and employee-related programs.
• For certain industries, such as construction, tax will add to the employer’s labour costs.
• It is important to have accurate payroll calculations and to make sure that applicable taxes are filed on time.
• Employers that do not comply with income tax laws may incur penalties and face legal action.

Legal & Regulatory Considerations

The Health and Education Cess (4%) is a tax that is added to your total income tax under the Income Tax Act, 1961. The Building and Other Construction Workers (BOCW) act is a law that requires employers in the building and construction industries to pay a Labour welfare cess for their workers. 

The GST Cess Act applies to certain specified items in the GST system. The work and use of the different types of taxes are governed by the nature of the tax itself, the type of business, and the requirements of the employer.