Tender Money

Dear Friends,

I have a query and would request you all to respond. We have a EU supported project and as part of the guielines we have to float a International Open Tender for procurement. My point is as follows:
“We will be receiving Tender Guarantee Money from the bidders. Where shuould be the money parked if the money is received from foreign supplier? Should it go to LC account or FC?”

Thanks and regards,

B V Soma Sastry
Centre for World Solidarity
12-13-438, Street No. 1, Tarnaka
Secunderabad 500 017
Andhra Pradesh

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3 Responses to Tender Money

  1. Subhash Mittal says:

    Dear Soma,

    A very interesting question and very frankly it does not have easy answers.

    In my view any money accepted towards EMD from bidders, is not a grant or donation for ‘social purposes’, but compliance for the purposes of a commercial transaction, hence the amount should not be treated as FCRA.

    One answer given by Rajat Goyal that all EMDs should not be deposited but kept in hand (hopefully your decision will be made within 3 months since cheques will be valid only for 3 months) is very practical. However these days FCRA penalises Foreign Contribution cheques accepted even if not deposited, hence you still need to take a decision wheter EMD is a FC or not.

    Wish you all the best.

    subhash mitttal

  2. Jnanshekar says:

    Guarantee money should be credited to FC Account.


    IFA, Bangalore

  3. rajat goyal says:

    Dear Mr. Soma

    When your organization receive EMD from the vendors you need not to encash it and keep it with you till the time tender proposes and then release the same document to unsucessful bidders and convert the EMD into security deposit of sucessful bidder and deposit it into your bank account and keep it as security deposit.

    No need to deposit the EMD of unsucessful bidders.


    With Warm Regards
    CA Rajat Goyal
    FCA, CIA, (D)ISA
    K R A & Co.
    Chartered Accountants
    H-1/208, Garg Tower,
    Netaji Subhash Palace,
    Pitampura, New Delhi, India.
    “Difficult will be done immediately but impossible will take SOME time.”

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