Payments in Government e-Marketplace (GeM)

 Payments in Government e-Marketplace (GeM)

-Dr. Lalit Kumar Setia

The GeM buyers are usually notified in the login that the payments to sellers or service providers are still payable. Most of the time, I receive queries regarding practical problems in making payments of GeM purchases. This content, I hope will help the readers to understand how payments are processed on the GeM portal.

Approvals for purchases in GeM

In Government, for each purchase, two approvals are generally sought i.e. Administrative approval and financial approval. GeM also considers both the approvals in the process at the initial stage of purchases by the Buyer. For getting financial approval, there is a need to have a budget provision in a specific head of budget during the financial year in which the purchase is required to be done.

e-Signing of Contracts in GeM

The sellers require a sanction order which is generated by the GeM portal, further, the supply order is e-signed by the buyer. While making payment of a particular purchase, the sanction order/supply order is always available to the user ‘payment authority or DDO’ in the GeM portal.

Payment by DDO/PAO/PA

This is the duty of the primary user to supervise the activities of secondary users as per the rules of GeM. The Drawing and Disbursing Officer (DDO) or Principal Accounts Officer (PAO) in GeM, is the secondary user for the organizations, who opt for connecting PFMS in GeM for payment purposes, generally in the case of departments. For organizations other than the Government department connected with PFMS; the paying authority is responsible for making payments.

What to do if the amount is blocked or not provided due to Budget restrictions

In Government, there are chances or practical problems that the amount is sanctioned initially but at the time of payment, the specified budget head is blocked to release the payment. In such circumstances, the participants are curious to know the optimum solution.

The sellers/service providers are bound with the terms and conditions of the contract with the buyers. In case, the payment is delayed due to blocking of the budget head, the sellers/service providers expect amendment in the contract to avoid the loss or cancellation of the contract if required. The GeM portal automatically provides options to select, for making such decisions in the login of DDO/PAO/Paying Authority.

Payment using Public Financial Management System (PFMS)

Within 10 days after generation of CRAC or deemed CRAC; the buyer prepares the ‘payment advice’ and the GeM portal generates claims for payment. The same is available when the DDO user login on GeM. The DDO generates the bill and forwards it to the PAO/PA for payment of the purchase.

Payment Using other modes

In Haryana and other state governments, the organizations are not connected with PFMS. The payments can be made as in cases of purchases without using GeM. However, if the payment is required to be made using direct payment in the bank account of the seller/service provider; then the details can be entered in GeM's online payment method. In cases when the buyer wants to make payment by using any application such as e-Billing in Haryana; then also the payment can be made. However, in such cases, it is required to ensure TDS or any other deduction before making the payment. After making the payment, the details should be entered in the PAO/PA login of GeM.

What to do if the bill is returned?

The PAO/PA is responsible to ensure accurate payment to the seller/service provider. In case, there are discrepancies in the purchase, the same may be pointed out by the PAO/PA and the bill is returned (after taking approval of competent authority) to the DDO (in case of PFMS) or Buyer (in case of organizations not connected with PFMS).

Who is responsible for the delay in payment on GeM?

The terms and conditions of GeM, states that there should be timely payment of purchases to the seller/service provider. After generating CRAC, within 10 days the payment should be made. For fixing the responsibility of delay in the payment of Buyer or Consignee or DDO or PAO or PA; the time limit of 10 days is further segregated as under:

Buyer – 2 Working days

Concerned DDO – 1 working day

Concerned PAO/PA – 2 working days

In case of return of Bill – 1 working day to DDO/Buyer

Again concerned PAO/PA – 1 working day.

If there are still discrepancies – 24 hours to sort out issues at a higher level.  

In the entire process, a total of 10 calendar days (including holidays).

If you still have any queries, then kindly raise your query in the comment box. All the best!

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved. 

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published on 28th September 2021 and last updated on 28th September 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

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Payment and Status of Income Tax

Payment and Status of Income Tax 

Recent directions (as on 26.06.2021) to extend the due dates in Tax Compliance:

Tax Collection by Government:

The Government collects income tax in three ways i.e. Tax Deduction at Source (TDS), Tax Collection at Source (TCS) and Voluntary Payments by Taxpayers i.e. Advance Tax and Self Assessment Tax. It is the responsibility of each citizen, each trader / firm / company to compute and deposit the tax within the prescribed time limits. The taxable amount can be paid in banks by filing the desired challan form and the bank returns the information duly stamped by bank stating BSR (Bankers Serial of Receipt), CIN (Challan Identification Number) and date of payment. The assessee can also check the status of challan by visiting www.tin-nsdl.com and click upon Challan Status Enquiry. Apart from it, the 26AS statement of the assessee will also show the credit of TDS/TCS/Advance Tax/Self Assessment Tax deposited by the assessee.

Tax on Regular Assessment:

The income tax department checks the self-assessed income tax paid by the assessee and in case, it is less than the actual tax then the department raise the demand which is known as tax on regular assessment-400.

Advance Tax:

Advance Tax is calculated on the basis of expected tax liability and it is required to be paid in installments i.e. upto 15% by 15^th June, 45% by 15^th September, 75% by 15^th December, and 100% by 15^th March of the Financial Year. The advance tax is deposited through Challan ITNS 280.

What to do if 26AS is not showing accurate tax credit?

The tax credit is shown on real-time basis in 26AS if payment of the self-assessment tax or advance tax is made. In case of TDS/TCS, the tax credit is shown when the deductor or collector file his TDS/TCS statement by quoting accurate PAN number of the assessee whom tax is deducted or collected at source. In case, the deductor or collector made errors in quoting accurate PAN then the tax credit will not be reflected and in such cases, it is required to file PAN correction statement or to furnish a correction statement by the banker/deductor/collector.

Do You Know

If any taxpayer is giving any amount in "Income from other sources", and paying income tax upon it. Even in such case, he / she requires to maintain proof of the earning and the necessary records as per the provisions of income tax. Merely declaring an income under other sources, cannot be used to make black money transformed in white.

Even if there are no prescribed provision for maintaining any record in any case, then also it's duty of taxpayer who is mentioning an amount as income, to maintain reasonable record to support the claim of income.

Extended due dates by Income Tax Department

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*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.

Tax Deduction under Section 80C

Tax Deduction under Section 80C

Saving and Deductions in 80C

Tax Deductions under Section 80C

This article is in continuation of earlier part-1 entitled, “Tax Saving under Section 80C”.

(e) National Saving Certificate (NSC), Senior Citizen Savings Scheme (SCSS), 5-year Time Deposit (TD) in Post Office, Kisan Vikas Patra (KVP) and 5-Year tax-saving Fixed Deposit (FD) in Banks:

The term of above stated investments is at least 5 years. The investments can be claimed as deduction under section 80C.

Here the point is whether the interest earned on NSC, KVP, SCSS, TDs, FDs is taxable or not?

The interest earned on NSC, KVP, SCSS, TDs, and FDs are liable to tax and will be included in income of the recipient as ‘income from other sources’.

(f) Equity Linked Saving Scheme of Mutual Funds under section 80C:

The investments in mutual funds with lock-in period of at least 3 years are eligible for deduction under section 80C. The investments in Mutual Funds are subject to market risk and the returns are determined on the basis of performance of the stock market during the years of investment.

Here the point is whether the returns on such mutual fund investments are taxable or not?

The income from sale of investments in mutual fund after the lock-in period of 3 years are considered as Long Term Capital Gain (LTCG) and such income is taxable in the hands of recipient.

(g) Repayment of Home Loan (Principal Component) under section 80C:

In case, an individual took a home loan for the purchase or construction of residential house and the construction of the property is completed or possession of property is taken during the financial year; then the amount of repayment of principal component of the home loan can be claimed under section 80C. Any payment made to the Government Development Authorities for purchase of residential house is also eligible as deduction under section 80C.

(h) Payment of Tuition Fees of two children under section 80C:

The amount paid as tuition fees during the financial year can be claimed as deduction under section 80C. However, the portion of payment comprises development charges, library charges, and other such charges are not counted as tuition fees. The tuition fees should be paid for children’s education to the school or college or university located in India only.

(i) Payment of Stamp Duty or Registration Charges for purchase or construction of residential house:

Whenever a residential property is purchased, the buyer pays stamp duty and registration charges to the Government. After completing the construction of house property or taking possession of the same, the charges can be claimed as deduction under section 80C.

(j) Payments or Investments in Pension Plans under section 80CCC:

The financial institutions, insurance companies and banks offer various types of pension or annuity plans offering monthly pension after the date of retirement or age of 60; are eligible for claiming the deduction under section 80CCC came under the overall limit of section 80C.

Here, the point is whether the returns from such pension plan in the form of monthly pension or in form of interest or bonus are taxable or not?

The monthly pension received after the maturity of the pension or annuity plan, is taxable in the hands of recipient. In case, the plan is surrendered before maturity and amount is received, that will be taxable including interest or bonus received upon it.

(k) Payment or contribution to Government Pension Scheme under section 80CCD (1):

The salaried people or employees can contribute up to 10% of their salary in notified government pension account (i.e. National Pension Scheme or Atal Pension Yojana). The self-employed taxpayers can also contribute up to 20% of their gross total income or Rs. 1,50,000 whichever is less; to claim deduction under section 80CCD(1).

(L) Payment or Contribution to Government Pension Scheme under section 80CCD (1B):

The salaried people or employees can also claim additional deduction of Rs. 50,000 above the overall limit of 80C (i.e. Rs. 1,50,000) for their contribution to notified pension scheme (i.e. National Pension Scheme or Atal Pension Yojana) under section 80CCD (1B).

The 80CCD (1) is included in the overall limit of 80C i.e. Rs. 1,50,000 while the 80CCD(1B) is additional deduction up to Rs. 50000 for contribution in notified Government Pension Scheme. The total deduction can be claimed including 80CCD (1B) Rs. 150000 plus Rs. 50000 that is Rs. 200000.

However, the deduction under section 80 CCD (1B) is for contribution in Tier – 1 account of the National Pension Scheme or Atal Pension Yojana.

(M) Payment or Contribution to Government Pension Scheme under section 80CCD (2):

The employers can also contribute to the employee’s pension scheme to the extent of 10% of the employee’s salary. In case, this amount is disbursed to the employee for depositing into his pension account; then this amount received from employer will be deposited into the employee’s pension account and deduction can be claimed under section 80CCD(2). This deduction will be additional to 80C and 80CCD(1B).

Here salary includes the Basic Pay and Dearness Allowance.  

When does an individual or HUF cannot claim deduction under section 80C:

In case, the individual or HUF earned income only from capital gains i.e. on sale of long-term assets or securities then 80C deduction cannot be claimed to reduce the tax liability.

Overall limit of deduction under section 80C:

Section 80CCE of income tax details that the amount of deduction under section 80C, 80CCC, and 80CCD (1) cannot exceed more than Rs. 1,50,000.

It is worth to mention here that the deduction of 80CCG which was started for investments under a government approved equity savings scheme (Rajiv Gandhi Equity Saving Scheme) had been discontinued from the Financial Year 2017-18.

 *Copyright © 2018 Dr. Lalit Kumar. All rights reserved. 

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