Labour cess 1% deducted from our payment


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A party has deducted 1% Labour Cess from a payment for environmental services, which is new to the recipient. They are seeking clarification on what Labour Cess is, why it was deducted when no construction work was performed, and if they can claim it. The deduction is typically for labour welfare funds and is levied on construction costs, suggesting it may not be applicable if the services provided are purely environmental and not related to construction.

09 November 2022 Dear Expert,

One of our parties has deducted Labour Cess @ 1 per cent from our payment. This is new to us, we don't know about it,

we have some questions/queries about it.

1) What is Labour Cess @ 1% and why is the party deducted from our payment?
2) Our job was to provide environmental services to the party, not do any construction work.
3) Can we take input/claim for Labour Cess @ 1%?

09 November 2022 1 It's payable to the government for labour welfare fund.
2 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 workers.
3 Charge it as expenses to p and l.

11 November 2022 Dear mr. Seetharaman,

We provide services only, if we do not do any construction work, then how can the party deduct labor cess 1%. Please explain and confirm.

11 November 2022 Are you providing services to construction work.
If not question the deduction of such cess.


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