The Government e-Marketplace (GeM) has emerged as a transformative initiative of the Indian Government, aimed at reforming and streamlining public procurement. Central to GeM's operational effectiveness is its Revenue Policy, a structured approach designed to ensure transparency, sustainability, and equitable revenue generation while maintaining ease of procurement.
The latest version of the GeM Revenue Policy, effective from August 9, 2024, outlines specific transaction charges and additional charges applicable to sellers on the platform:
- Orders up to ₹10 lakh: No transaction charges are levied, encouraging participation from Micro, Small, and Medium Enterprises (MSMEs).
- Orders above ₹10 lakh and up to ₹10 crore: A transaction fee of 0.30% of the order value is charged, reduced from the previous 0.45%.
- Orders above ₹10 crore: The transaction charges are capped at ₹3 lakh, significantly lowered from the earlier cap of ₹72.5 lakh.
Additionally, the policy includes an Annual Milestone Charge:
- A one-time annual charge of ₹10,000 plus applicable taxes is levied on sellers when their total Seller Merchandise Value crosses ₹20 lakh within a financial year.
- Transaction charges apply only after crossing this ₹20 lakh threshold. Orders placed before reaching this threshold are exempted from transaction charges.
Sellers must generate invoices for transaction and milestone charges within 5 days of being awarded a contract. If not generated within this timeframe, GeM auto-generates these invoices. Payment for these charges must be made within 15 days of the contract award or before raising the first invoice to the buyer or before the due date of the first delivery, whichever is earliest.
Additional Important Considerations:#
- Taxes and Financial Year: Annual Milestone Charges and Transaction Charges are subject to applicable government taxes, such as GST. Each financial year is treated as a separate and independent unit, meaning charges and thresholds reset annually.
- Consequences of Non-payment: Sellers failing to pay Transaction Charges or Annual Milestone Charges within specified timelines will face action under GeM’s Incident Management Policy. Seller accounts will be resumed only after clearing all pending charges.
- Forward Auction Charges: For Forward Auction Orders on GeM, a transaction charge of 0.30% of the order value is applicable, capped at a maximum of ₹3, 00,000. No transaction charges apply for auctions below ₹20,000.
- Business Cockpit Charges: GeM's "Business Cockpit," an enhanced service offering OEMs deeper business insights and detailed analytics, is available at an annual subscription fee of ₹6,00,000 plus applicable taxes.
- Rate Contract Charges: For Rate Contract orders, a transaction charge of 0.30% of the order value is applicable, subject to a maximum limit of ₹3,00,000 per order.
GeM has structured a progressive fee model that incentivizes large-volume transactions by offering a lower percentage fee on higher-value transactions. This approach not only encourages vendors and government entities to transact in larger quantities but also promotes sustained participation by ensuring significant cost savings in procurement processes.
Another critical component of the revenue policy is the Bid Participation Fee, applicable in specific bidding processes. This nominal fee ensures genuine and serious vendor participation, filtering out frivolous or non-serious bids, thus promoting transparency and integrity within procurement practices.
The policy also clearly outlines conditions for refunds, including incorrect selection of goods by the buyer, erroneous orders, or partial/non-requirement of products, services, and the Consignee is not available to receive the Product/Service. Refund requests must be submitted within 90 days from the termination of the contract by the buyer.
Additionally, specific exemptions are outlined for contracts involving government bodies or Central Public Sector Enterprises (CPSE). Transaction charges are exempted in contracts exclusively between government entities or between the government and CPSEs unless private entities are also allowed to participate in the bidding process.
The policy clearly defines exemptions and relaxations for specific categories, such as startups, MSMEs, and women entrepreneurs, ensuring inclusivity and fostering an equitable business environment. Such relaxations are instrumental in promoting wider participation from diverse sectors, empowering these entities, and stimulating broader economic growth.
Furthermore, the Revenue Policy supports the government’s larger digitalization agenda. GeM's integration with advanced digital technologies and automated processes contributes to improved efficiency, accuracy, and real-time monitoring capabilities in procurement activities.
Periodic reviews and updates to the Revenue Policy ensure it remains responsive to market realities and technological advancements. Stakeholder feedback mechanisms are actively integrated, promoting a collaborative and responsive policy framework.
For detailed information, sellers and buyers are encouraged to refer to the official GeM Revenue Policy document available on the GeM portal.
In conclusion, the GeM Revenue Policy significantly contributes to the Indian government's objective of achieving streamlined, transparent, and economically beneficial procurement. By charging modest fees, incentivizing high-value transactions, and promoting inclusivity, GeM has successfully transformed public procurement in India.
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