The government on Friday announced that it will levy interest on late payment to vendors on Government e-Marketplace (GeM). Buyers are mandated to make payments within ten calendar days after generation (including auto generation) of Consignee Receipt and Acceptance Certificate (CRAC) in the GeM, the Ministry of Finance said.
The decision is aimed at improving the discipline and timeliness of payments to vendors, especially micro, small and medium enterprises (MSMEs)."Buyer organisation will be required to pay penal interest at 1 per cent per month for delaying payment beyond the prescribed timeline till the date of such payment," it added.
Union Minister Nitin Gadkari recently raised the issue of late payments to MSMEs with Finance Minister Nirmala Sitharaman.The amount collected would be deposited in an account maintained by the GeM.
"Interest will not be paid to the vendor and will be kept by GeM in a separate account which will be used only for education of sellers or buyers etc. or other purposes related to GeM or public procurement with the prior approval of the Department of Expenditure," the FinMin said.
The new rule will be applicable for all procurements from October 1, 2020.Recently, the government said that it is mandatory to mention country of origin while registering all new products on GeM. In addition, the sellers, who had already uploaded their products before the introduction of this new feature will now have to update the given details. The products shall be removed from GeM if sellers fail to update the same, it noted.
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today