The Centre extends the benefit concerning the reduced performance security of 3% for all government contracts and tenders till 31 March 2023. This move aims to render additional liquidity to firms for project execution.
The Centre reduced the quantum of performance security to 3% of the value of the contract; earlier, it was 5% to 10%. The reduction was initiated as a part of the various liquidity measures introduced to fight the economic disruptions caused by the COVID-19 pandemic. Earlier, the relief was accessible for all tenders and contracts issued on 31 December 2021.
Industrial bodies, including sectors such as manufacturing, services, and construction, had indicated the need for extending the reduction in performance security benefit, at least in the short term.
The industry will be able to use additional resources in project execution as the industry’s economic and timely project execution is essential for high-speed development of infrastructure as visualised via the National Infrastructure Pipeline (NIP).
This relief has benefitted the manufacturing, construction, and service sectors. With this relief, industries can respond enthusiastically to the government’s demands for systematic project execution.
For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in
Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.
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