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Para 6.7 - GST in Procurement | KartavyaDesk

Goods Manual

Original Rule Text

b) Bidder should be registered under GST and furnish their GSTIN number and GST Registration Certificate in their offer unless they are specifically exempted from registration under a specific notification/ circular/ section/ rule issued by statutory authorities. c) If the bidder has multiple business verticals in a state and has separate registrations for each vertical, the GSTIN of each vertical concerned with the supply and service involved, as per the scope of the Schedule of Requirements and Price Schedule, shall be quoted. d) If the supply/ service is from multiple states, the bidder should mention GST registration numbers for each state separately. e) Composition scheme: If the Bidder has opted for a composition levy under Section 10 of CGST, he should declare the fact while bidding along with GSTIN and GST registration certificate. f) Exemption from Registration: If a bidder is not liable to take GST registration, i.e., having turnover below threshold, he shall submit undertaking/ indemnification against tax liability. The bidder claiming exemption in this respect shall submit a valid certificate from a practising Chartered Accountant (CA)/ Cost Accountant with the Unique Document Identification Number (DIN) to the effect that the bidder fulfils all conditions prescribed in notification exempting him from registration. Such bidder/ dealer shall not charge any GST and/ or GST Cess in the bill/ invoice. In such case, applicable GST shall be deposited under Reverse Charge Mechanism (RCM) or otherwise as per GST Act by the Procuring Entity directly to concerned authorities. Bidder should note that his offer would be loaded with the payable GST under the RCM. Further, the bidder should notify and submit to the Procuring Entity within 15 days of becoming liable for registration under GST. g) Bidders must also consider the benefits of input tax credit under the GST legislation, as amended from time to time, on Input goods/Capital goods / Input Services while quoting the prices. h) In their bids, the bidders shall indicate the details of their GST Jurisdictional Assessing Officers (Designation, address, email ID). In case of a contract award, the Purchaser shall immediately forward a copy of the LOA/Purchase Order to the Jurisdictional Assessing Officer mentioned in the bidder’s bid. i) The Procuring Entity's state-wise GSTINs shall be indicated in Tender Documents.

What This Means

Para 6.7 of the Manual for Procurement of Goods, 2017, focuses on how Goods and Services Tax (GST) applies to government procurement. It essentially ensures that all bidders are transparent about their GST status. This includes providing their GSTIN (GST Identification Number) and registration certificate if they are registered under GST. The rule also covers situations where bidders have multiple business locations, are under the composition scheme, or are exempt from GST registration due to low turnover. It's all about making sure the government knows who is responsible for GST and how it will be handled during the procurement process.

This rule applies to all bidders participating in government tenders and procurement processes. It affects both the bidders, who need to provide accurate GST information, and the procuring entities (government departments), who need to understand and apply the GST rules correctly. The rule also highlights the importance of bidders considering input tax credit benefits when quoting prices. Ultimately, it aims to ensure compliance with GST regulations and facilitate smooth and transparent procurement transactions.

Furthermore, the rule mandates that bidders provide details of their GST Jurisdictional Assessing Officers, allowing the procuring entity to inform them of contract awards. It also requires the procuring entity to state their own state-wise GSTINs in the tender documents, ensuring clarity and proper documentation for all parties involved.

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

Key Points

  • •Bidders must provide their GSTIN and registration certificate unless specifically exempt.
  • •Bidders with multiple business verticals must quote the GSTIN of each vertical involved.
  • •Bidders under the composition scheme must declare this fact.
  • •Bidders exempt from GST registration must provide an undertaking and a certificate from a CA/Cost Accountant with a Unique Document Identification Number (DIN).
  • •Bidders must consider input tax credit benefits when quoting prices.

Practical Example

The Ministry of Textiles issues a tender for the supply of cotton yarn. Three companies, 'WeaveWell Ltd.', 'ThreadMasters Inc.', and 'SpinRight Co.', submit bids. WeaveWell Ltd. is registered under GST with a GSTIN of 29AAACC1234B1Z7 and provides its registration certificate. ThreadMasters Inc. has multiple units across different states and provides the GSTINs for each state from which it will supply the yarn. SpinRight Co. has a turnover below the GST threshold and submits an undertaking along with a certificate from a Chartered Accountant, Mr. Sharma (DIN: ABC123456789), confirming their exemption. The Ministry evaluates the bids, considering the GST implications and ensuring that SpinRight Co.'s bid is loaded with the applicable GST under Reverse Charge Mechanism (RCM).

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

Frequently Asked Questions

What happens if a bidder doesn't provide their GSTIN?▼
If a bidder fails to provide their GSTIN when required, their bid may be rejected as non-compliant with the tender requirements.
What is Reverse Charge Mechanism (RCM) and how does it apply here?▼
RCM means the recipient of goods or services (in this case, the government) is liable to pay GST instead of the supplier. This applies when the supplier is exempt from GST registration. The procuring entity will deposit the applicable GST directly to the concerned authorities.
If a bidder has multiple GST registrations, which one should they provide?▼
The bidder should provide the GSTIN of each business vertical or state involved in the supply of goods or services as per the scope of the tender.
What is the significance of the Unique Document Identification Number (DIN) from the CA/Cost Accountant?▼
The DIN ensures the authenticity of the certificate provided by the CA/Cost Accountant, preventing fraudulent claims of GST exemption.
Why does the procuring entity need the bidder's GST Jurisdictional Assessing Officer details?▼
The procuring entity needs these details to inform the Assessing Officer about the contract award, ensuring proper tracking and compliance with GST regulations.

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

Test Your Knowledge

Question 1 of 3

According to Para 6.7 of the Manual for Procurement of Goods, 2017, what documentation must a bidder claiming exemption from GST registration due to turnover being below the threshold provide?

Related Rules

Para 9.4Manual for Procurement of Goods, 2024 - Para 9.4 - Chapter 9Para 9.5.5Manual for Procurement of Goods, 2024 - Para 9.5.5 - Chapter 9Para 1.8.2Manual for Procurement of Goods, 2024 - Para 1.8.2 - Chapter 1Para 2.2.2Manual for Procurement of Goods, 2024 - Para 2.2.2 - Chapter 2Para 2.2Manual for Procurement of Goods, 2024 - Para 2.2 - Chapter 2

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