Rs 2,358 cr I-T paid by building workers’ board was ‘avoidable,’ says CAG report

The Karnataka Building and Other Construction Workers’ Welfare Board paid an “avoidable” Rs 2,358 crore as income tax, the money that could have been used for the betterment of labourers and workers, a Comptroller & Auditor-General (CAG) audit has found.

“The fact remains that at the end of March 2019, the Board had to bear an additional liability of Rs 2,358.94 crore including penal interest of Rs 755.07 crore towards income tax, which could have been averted had the Board followed the provisions available in the I-T Act for availing tax exemption,” the audit, whose report was tabled in the Assembly on Wednesday, said.

The Board has 15.69 lakh registered workers and the government relied on the Board during the Covid-19 lockdown to help the workers. But the audit has revealed glaring ineffectiveness in the Board’s functioning.

“The much bigger area of concern is that if the Board has to pay the entire liability amount (without getting any exemption) towards income tax, it has to be borne from the receipts of the Board, which are meant for implementation of the welfare schemes of the construction workers,” the audit said.

The Board reported a closing balance of Rs 7,151.26 crore as of March 2019. Its major source of fund is the collection of cess at 1% of the cost of construction incurred by those who employ the labourers.

“The Board had utilised a mere 5% of the funds available at its disposal on welfare schemes during the period 2014-15 to 2018-19,” the report said, attributing this to “shortfall in registration of beneficiaries, absence of database of registered workers, rigidity and inconsistencies in rules, inordinate time taken to process claims, insufficient publicity, etc.”

The CAG pointed out many instances of “inadmissible” and “unfruitful” expenditure of the Board running into crores of rupees.

This included acquisition of 128 acres of land costing Rs 65 crore and development of a software (Karmika-I) at Rs 1.21 crore.

A beneficiary survey of 286 out of 1,136 workers at 30 construction sites in six districts found that 60% were migrants and only 27% were registered.

The audit concluded that the Board “suffered from systemic deficiencies.”