Performance bank guarantee value

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ashok subhedar (Querist)
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18 November 2014 Hello !

We are a manufacturing company and would like to know the following

1. If we have received an order from a MNC ( who have received an order from any PSU in India ), are we obliged to provide counter PBG to MNC that matches all terms as they have guaranteed to PSU - Note that they have to supply, install and maintain while we have to supply only a part of the product and that to containing RM ( for us ) only 20 % while balance is Free Issued
2. If yes, should the value include or exclude taxes ( should it be a % of basic order value ? )
3. Are there any documents to substantiate
4. Are there any remedies for MSME's

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 November 2014 All PSUs insist for PBG. You are obliged to provide counter PBG to MNC at 10% of contract Value.
If your contract includes taxes and duties then the PBG should include taxes and duties. Normally it is based on total contract value.
It is the normal practice but during negotiation you may insist for lower value or not submitting PBG it depends upon your competition.

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