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    Finance Ministry to levy 1% late payment interest on government e-marketplace

    Synopsis

    “It is decided that whenever a Consignee Receipt and Acceptance Certificate (CRAC) is auto-generated or issued by a buyer and payment is not made 10 days hereafter, the buyer organisation will have to pay penal interest @ 1% per month for the delayed payment,” said finance minister Nirmala Sitharaman’s office in an update via Twitter on Friday.

    Agencies
    The order comes at a time when most MSMEs are facing a severe liquidity crunch owing to the pandemic and lockdown.
    Aimed at improving the discipline and timeliness of payments to vendors, especially micro, small and medium enterprises (MSMEs), the government decided to levy a 1% interest per month on late payments for purchases made on the government e-marketplace (GeM).

    “It is decided that whenever a Consignee Receipt and Acceptance Certificate (CRAC) is auto-generated or issued by a buyer and payment is not made 10 days hereafter, the buyer organisation will have to pay penal interest @ 1% per month for the delayed payment,” said finance minister Nirmala Sitharaman’s office in an update via Twitter on Friday.

    The order comes at a time when most MSMEs are facing a severe liquidity crunch owing to the pandemic and lockdown. “Government has been repeatedly emphasising the need for prompt payment to vendors specially MSME vendors,” the order dated Friday said.

    As per rule 149 of the General Financial Rules 2017, buyers are mandated to make payments within ten calendar days after the CRAC has been generated in the GeM.

    According to the directive, interest will be charged from the first day beyond the ten day period until the payment is made. The late payment levy shall be over and above any other interest charges applicable as per the contract between the buyer and seller, it said.

    The amount collected from the late payment levy would be deposited in an account maintained by the GeM and shall be used for the education of sellers and buyers or any other purposes related to GeM or public procurement, the order said.
    (Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)

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    4 Comments on this Story

    Pramendra Khokher30 days ago
    & why should not the money be paid out to the seller, who has to pay interest to their bank or NBFC ? Even if it is purchase by a government body, the penal interest should only accrue to the seller. How well the government has spent such cess already being collected is a matter of public record. How greedy can the government get ? Do they not realise that all this just increases costs for the common man directly or indirectly ? The very same common man who has elected them & is depending upon them for efficient governance ? Then why are we at the receiving end of everything they think of ?
    Ravie Gupta30 days ago
    not only this, concerned officials should be punished for this loss / additional costs.
    Kumar 31 days ago
    What education to sellers and buyers? Its wastage of collected money. Instead, the same can be spent on some specified public welfare activities like Primary health cnetres and village drinking water schemes etc.
    The Economic Times