In a significant move to enhance transparency, traceability and GST compliance, the Finance Department of Jammu and Kashmir has mandated that all government payments to contractors and suppliers be made strictly to bank accounts linked with their respective GSTINs.
The directive, issued via an official circular, applies to all Government Departments, Public Sector Undertakings (PSUs), Autonomous Bodies and Agencies operating in the Union Territory (UT). The order emphasizes that this step is vital to safeguard revenue, improve monitoring of financial transactions, and prevent tax leakage.
Payments Only to GSTIN-Linked Bank Accounts
The circular highlights that the Goods and Services Tax (GST) collected on government procurement of goods and services constitutes a major source of revenue for the Union Territory. Under Section 51 of the CGST Act, 2017 and the J&K GST Act, 2017, a Tax Deducted at Source (TDS) at the rate of 2% (1% CGST and 1% SGST) is applicable when the contract value exceeds Rs 2.5 lakh.
To track this effectively, Drawing and Disbursing Officers (DDOs) are required to file monthly returns in Form GSTR-7. However, it was found that many payments were being made to bank accounts not linked to the contractor's GST registration, which has hindered the tracking of transactions and potentially caused revenue loss to the exchequer.
Mandatory Disclosure at Bid Submission Stage
Going forward, all government departments and agencies must ensure that their e-tendering documents include a mandatory clause requiring participating contractors and suppliers to disclose the GSTIN-linked bank account number at the time of bid submission. Only the disclosed and verified bank account will be eligible to receive payments.
"No payments shall be released by any Government Department or Agency to any other bank account except the one linked with the GSTIN of the successful bidder," the circular states.
Immediate Implementation and Strict Enforcement
All departments have been instructed to immediately update tender documents and bidding conditions in accordance with this directive. The Finance Department has also directed Heads of Departments, PSUs, and other autonomous bodies to ensure strict compliance in both letter and spirit.
This initiative is part of the government's larger goal to enforce GST regulations more robustly and promote greater fiscal discipline in public procurement processes.
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