Para 6.2 - Payment Clauses | KartavyaDesk

Original Rule Text

6.2. Payment Clause 1. The elements of price included in the quotation of a bidder depend on the nature of the goods to be supplied and the allied services to be performed, the location of the supplier, the location of the user, terms of delivery, extant rules and regulations about taxes, duties, and so on, of the seller's country and the buyer's country. 2. In the case of indigenous goods, the main elements of price may include raw material, production cost, overhead, packing and forwarding charges, margin of profit, transit insurance, excise duty and other taxes and duties as applicable. In the case of imported goods, in addition to elements of price similar to the above (other than excise duty and taxes), there may be elements of customs duty, import duty, landing and clearing charges, and commission to Indian agents. Further, depending on the nature of the goods (whether domestic or imported), there may be cost elements towards installation and commissioning, operator's training, and so on. 3. Elements of Price: Where the price has several components, such as the price of the goods, cost of installation and commissioning, operators’ training, and so on, bidders should be asked to furnish a cost break-up indicating the applicable prices and taxes for each of such components along with the overall price. The payment schedule and terms will be linked to this cost break-up. 4. Currency: The tender documents are to specify the currency (currencies) in which the tenders are to be priced. For domestic bidding, regardless of whether the bidder is foreign or Indian, the currency of the bid and payment should be entirely in Indian Rupees. In GTE (Global Tender Enquiry), foreign bidders have the flexibility to quote prices and receive payments in either Indian Rupees or freely convertible currencies such as US Dollars, Euros, Pound Sterling, Yen, other relevant currencies104, or a combination thereof. However, prices for goods works, or services (including Agency Commission) performed or sourced in India must be quoted and paid for in Indian Rupees. Indian bidders are required to quote in INR only. During the evaluation, all quoted prices are converted into Indian Rupees as per the procedure mentioned in para 7.5.2-1. 5. As a general rule, domestic bidders are to quote and accept their payment in Indian currency; Indian agents of foreign suppliers are to receive their agency commission in Indian currency; costs of imported goods, which are directly imported against the contract, may be quoted in foreign currency (currencies) and paid accordingly in that currency; and the portion of the allied work and services, which are to be undertaken in India (like installation and commissioning of equipment) are to be quoted and paid in Indian currency. 6. Payment to Suppliers: In a supply contract, the delivery of goods is the essence of the contract for the purchaser. Similarly, receiving timely payment for the supplies is the essence of the seller's contract. A healthy buyer-supplier relationship is based on the twin foundation of timely and quality supply on the one hand and prompt and full payment to the supplier on the other. It should be ensured that all payments due to the firm, including

What This Means

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

• •Price quotations must include a detailed cost breakdown of all components (e.g., raw materials, taxes, installation).
• •For domestic bids, payment must be in Indian Rupees (INR), regardless of the bidder's nationality.
• •In Global Tender Enquiries (GTE), foreign bidders can quote and receive payments in INR or freely convertible currencies, but work done in India must be paid in INR.
• •Delivery of goods is crucial for the buyer, and timely payment is crucial for the seller.
• •The tender document must specify the currency or currencies in which the tenders are to be priced.

Practical Example

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.