Sellers to Pay Annual Milestone Charge in GeM Portal

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The Government of India has now announced the new revenue policy of GeM portal, wherein the sellers will have to pay the Annual milestone charge in GeM portal based on the Seller Merchandise Value (SMV). The SMV and the Annual milestone charge in GeM are new terms for sellers on Government e-Marketplace.

Let us learn about all the details of the new revenue policy of GeM.

 

When will the new revenue policy of GeM apply?

This new revenue policy of GeM portal will be implemented with effect from 1st June 2020 for all buyers and sellers having GeM Registration.

 

The New Revenue Policy of GeM

GeM Sellers have been notified that a new revenue policy of GeM will apply for levying annual milestone charges that shall become applicable with effect from 01.06.2020. The GeM annual milestone charges in the new model comprise of two components:

  • A fixed one-time fee of ₹10,000 shall be payable when the seller exceeds an annual threshold of Seller Merchandise Value (SMV) of ₹20 lakhs on the GeM portal.
  • For the sellers who have exceeded the threshold SMV, a Transaction Charge at the different rates shall be levied on all orders equal to or above ₹5 lakhs.

 

Annual Milestone Charge in GeM

Here are the stepwise details of the new revenue policy of GeM:-

  • The SMV (Seller Merchandise Value) will be in the calculation as a progressive total. That includes order values placed and accepted by a seller per financial year.
  • One time charge will be imposed on all sellers registering SMV of ₹20 Lakhs in each financial year. This one-time charge is known as “Annual Milestone Charge.” It will be levied at the rate of 5%.
  • “Annual Milestone Charge” will be recovered from the seller. It will be during the same time as the Seller Merchandise Value clocks ₹20 Lakhs threshold.
  • The transaction charge will be different for different thresholds. The following are the charges for sellers who have clocked the threshold Seller Merchandise Value.                                      
               Product Order Value(₹)                Transaction Fee Slab(₹)
Order ≥5lacs <50 Cr. 0.5%
Order ≥50cr but <100 Cr. 0.5% for 50cr (25 lacs) + 0.4% of value above 50 Cr.
Order ≥l00cr but <200 Cr. 0.5% for 50cr (25 lacs) + 0.4% for next 50 Cr. (20 lacs) + 0.3% of value above 100 Cr.
Order ≥200 Cr. 0.5% for 50cr (25 lacs) + 0.4% for next 50 Cr. (20 lacs) + 0.3% for next 100 Cr. (30 lacs) + 0.2% of value above 200 Cr.

 

Annual Milestone Charges in GeM: Important tips

Here are the key points to note regarding the annual milestone charges:

  • A seller shall pay the transaction fee to GeM at the time of acceptance of the concerned order.
  • To measure Seller Merchandise Value(SMV), the date of placement for the order shall be taken into account.
  • The proposed revenue model applies to all the bids published on GeM’s portal on or after June 01, 2020.
  • The annual milestone charges in GeM are subject to government levy (e.g., GST), as applicable.

 

Annual Milestone Charges in GeM: Exceptions

No transactional charges are applicable-

  1. For order less than ₹5 lakhs in value.
  2. Orders that are placed and accepted by the seller before reaching SMV of INR 20 Lakhs.

Note: GeM Portal will treat each financial year as a separate and non-fungible unit.

 

Refund of annual milestone charges in GeM

If seller and buyer mutually agree on the cancellation of the contract, the seller is eligible for a refund of annual milestone charges in the following cases-

  1. Mistakenly selection of Goods or Services by Buyer.
  2. Product/service not required or partially required, as the purchaser refused some or all of the product/service or requested that the service(s) be discontinued in the middle of a contract.
  3. Consignee not available to receive the product/service.
  4. Any other reason(s) for the seller to be explicitly justified.

 

Exception for a refund of annual milestone charges in GeM

No reimbursement of annual milestone charges in case the buyer cancels the contract due to the seller’s failure to fulfill any contractual obligations. Else, due to omission/misleading/false information provided on GeM Portal by seller/service provider.

This revenue policy of GeM is necessary and beneficial for all the buyers and sellers having GeM Registration to work efficiently.

In case you require any sort of assistance regarding the GeM registration, please feel free to contact us at 8881-069-069.

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