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When a tender announcement is made by a government department, bank or large organisation, there are multiple requirements that a bidding company needs to fulfil. Along with other necessary documents submissions, bidders may have to make a couple of payments. These include tender fees and Earnest Money Deposit (EMD). Are you aware of the reason behind charging a tender fee? Do you know the difference between tender fees and EMD? Here are answers for some of the frequently asked questions about tender fees its rules. First let’s understand the meaning if tender fees.
What is tender fee?
Depending on the scope of work, many buyers that float tender notices charge a tender fee. It is a tender processing fee meaning it is charged towards bid processing or bid evaluation. In case the tender fee is involved, the tender notice clearly mentions the amount to be paid and the mode of payment. Many a times, deposit receipt of tender fee payment needs to be submitted along with submission of other necessary documents. In addition to the tender fee, you may also have to pay Earnest Money Deposit.
Is it mandatory to pay tender fees?
Yes, if it is mentioned in the tender announcement that a bidder needs to pay a certain amount as tender fee, it is mandatory to deposit it. If you do not make payment of a tender fee, your bid will not be opened. If you submit all the documents on time, but fail to deposit tender fee on time, your bid will be considered as delayed and hence will be outrightly rejected. In fact, CPP platform does not allow late submissions.
Since now a day the tendering process has moved online (eTendering), in most cases the tender fees have to be submitted online. It is therefore recommended to pay the tender fees online in advance than wait till the last day, to avoid any tech glitches.
Is the tender document fee is refunded?
Since the tender fee is charged against evaluation of documents, it is not refunded by the buyer.
What is the difference between tender fee and earnest money deposit
Depending on the scope of the project, the buyer may charge tender fee or EMD or both. Hence, it is recommended to read the tender announcement carefully, and accordingly pay the charges.
Tender fee vs earnest money deposit
|Tender fee is a cost charged for documents evaluation process.||EMD also known as bid security is charged to ensure that the bidder does not change the offer or withdraws after the contract is awarded to them.|
|It is non-refundable regardless the contract is awarded to you or not.||If your bid is rejected, the buyer refunds EMD within specified time. However, it is not refunded in case the bidder withdraws or amends the offer after winning the contract.|
|If a bidder fails to deposit, the bid document will not be opened or considered.||If a bidder fails to deposit, the bid document will not be opened or considered.|
Is GST applicable on tender fee?
According to a report, GST rate on tender documentation fees is 18%.
While you are preparing the tender response document, always make a to-do list. This should consist of list of documents to be submitted and deposits to be made along with the deadlines. Make timely payments of tender fee and EMD, and procure receipts for the same. This will ensure timely submission of complete bid documents.