Hyderabad: Infra firms fail to pay labour cess

Hyderabad: Major infrastructure companies, including those in the public sector, have evaded Rs 958.67 crore in labour cess. The state Vigilance and Enforcement (V&E) department has alerted the labour department to evasion by 62 firms in Ranga Reddy district, 35 in Hyderabad district and six in Warangal district. Despite the alerts, labour officials who are hand-in-glove with political leaders and infrastructure companies have been turning a blind eye.

Interestingly, the private firm that constructed Pragathi Bhavan also evaded labour cess.

According to the Building and Other Construction Workers Cess Act, 1996, any construction above `10 lakh has to pay one per cent labour cess to the department for the welfare of construction workers. The vigilance report says that private agencies that executed Mission Bhagiratha and Mission Kakatiya in Ranga Reddy district have evaded Rs 366 crore; Metro Rail projects evaded Rs 163 crore; and telecom companies evaded Rs 15 crore.

This apart, as many as 35 major infrastructure companies have evaded `134.71 crore labour cess during a span of five years. Sources said that several other well-known firms have evaded labour cess. For instance, a Shamshabad firm has evaded Rs 100 crore. The department will send notices to soon.

Surprisingly, the labour department has collected a  cess of `2,042 crore in the past five years but has spent a mere `383 crore for the welfare of building and construction labour. Though the vigilance and enforcement department has regularly sent alerts, the labour department turned a blind eye to the defaulters.

M. Srinivas, an activist and city secretary of the communist party of India (marxist), said that when he asked for the details of tax evasion under the Right to Information (RTI) law, the labour department replied that his request was not in the public interest. He said current cess evasion was just the tip of the iceberg.  

“The state government collected Rs 800 crore from contractors who executed irrigation projects like Kaleshwaram,” Srinivas pointed out.

“The government has executed `80,000 crore in five years but failed to collect a penny towards labour cess.” The CPM leader stressed that there are thousands of unregistered companies in Hyderabad and Ranga Reddy districts that executed projects and shut them down without paying labour cess.

However, if the labour department wakes up, it can collect over `1,000 crore labour cess with ongoing constructions, he said. “The contractor who executed the Pragathi Bhavan also evaded labour cess and I demand a probe into the multi-crore evasion scam,” he added.