The tendering fees charged by government for online and offline tenders are GST leviable transactions and therefore GST would be payable on tender fees or charges collected by the government.
The same has been confirmed through a recent ruling passed by Maharashtra Authority of Advance Ruling (AAR) in the case regarding Navi Mumbai Municipal Corporation.
CA Tanu Rastogi, Co-Founder of Taxpyramid.com, says that Maharashtra Authority of Advance Ruling has given a right ruling by confirming that tender fees collected by Government is to be covered under GST ambit. Most of the PSUs are already collecting GST on Tendering Fees or Registration Charges for quoting Tenders. If there was any confusion, whatsoever it has been put to rest by the recent advance ruling in the matter.
As per the ruling, both Online and Offline Tendering are to be considered as ‘supply of services’. The consideration charged against it would be liable to GST levy.
The tendering fees charged is booked as ‘Other income’ by the receiving entity. Since it is not in form of any deposit and GST charging on the same is justifiable.
In case of limited tender floating, vendors are registered for certain period by the companies on payment of registration fees and satisfaction of some laid down PQRs (Pre Qualification Requirements). Such Registration fees shall also be liable to GST levy.
During online tendering process, Tenders are floated online with charges or fees against them are also payable online by Tender participants.
After the ruling, it is hopeful that in cases where government departments would collect these charges related to Tender process along with GST and deposit the same to exchequer in turn.
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