WHAT IS EARNEST MONEY DEPOSIT

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ravinder singh rawat (Querist)

20 October 2008 DEAR EXPERTS,
PLEASE CLARIFY ME WHAT IS EARNEST MONEY DEPOSIT IN RESPECT OF CONSTRUCTION AREA
WHAT 'S THE OBJECTIVES OF EARNEST MONEY DEPSOIT.

THANKS & REGARDS
RAVINDER

CA Gaurav Khanna

CA Gaurav Khanna (Expert)

20 October 2008 It is the amount of deposit given by the byer to the seller as deposit. The amount is generally paid to show the seriousness in the transaction from the buyer side.

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CA. C V SURYAM

CA. C V SURYAM (Expert)

21 October 2008 EMD is the refundable amount paid while quoting for a tender. It differs from client to client. If the contract is awarded, this EMD amount can be adjusted against any other security deposits that are to be kept with the client till certain period depending upon the nature of retention money. If the contract is not awarded, the contractor is entitled to get refund of EMD paid alongwith tender but without interest which is normal practice. To cut short cash outflow, the contractor may submit BG instead of cash deposit, if tender terms allow.

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