New tax effect: BMC to scrap 1,500 tenders

Mumbai: Several civic development works are likely to be delayed, as the Brihanmumbai Municipal Corporation (BMC) will be forced to scrap around 1,500 tenders worth Rs 5,000-6,000 crore after the state government issued a directive to cancel tenders that do not mention the newly implemented Goods and Services Tax (GST) system.

The state government’s circular says that tenders issued between July 2 and August 22 should be cancelled, as they do not mention the newly launched tax regime.

The circular has further said that tenders need to be scrapped only if the work orders have not been issued to the contractor but the lowest bidder has been finalised. Though emergency works such as road repairs, health etc., have been excluded from the move, the BMC has been asked to bring down their costs through negotiations.

The state has further instructed the civic body to invite short-notice tenders, which would be opened within a week or two.

A senior BMC official from the chief accountant (finance) department, said, “Short-notice tenders will be issued soon, so that there is not much delay in allotting civic development works tocontractors.”

Shiv Sena’s civic group leader Yashwant Jadhav expressed displeasure, saying that the move will delay civic development projects.

“The state government has issued the circular to prevent its own loss, but it is going to cost BMC heavily,” Mr Jadhav said.

“While the GST system came into effect from July 1, the BMC received the circular only on September 6. The delay was more than two months, due to which about 1,500 tenders will have to be scrapped,” Mr Jadhav further added.

As a result of the government’s circular, the civic administration was forced to withdraw some of the proposals from the civic standing committee on Wednesday.

According to civic officials, the circular is likely to affect civic development projects, whose works start from October after the monsoon gets over.

“For re-issuing of tenders, fresh cost evaluation will have to be carried out, which will take some time,” said the official.

State officials said when the GST was implemented on July 1, GST on government contracts was notified at 18 per cent. However, the GST Council on August 22 changed the rate to 12 per cent, which necessitated reworking of tenders.