The Finance Department of Jammu and Kashmir, in a move to improve clarity, traceability, and GST compliance, has mandated that all the government payments to contractors and suppliers be made before the bank accounts linked with their respective GSTINs via Circular No.01 (Adm) FD of 2025.
Through an official circular, the issued directive applies to all the Government Departments, Public Sector Undertakings (PSUs), Autonomous Bodies, and Agencies operating in the Union Territory (UT). The order outlines that the same step is crucial to secure the revenue, enhance the tracking of financial transactions, and avert tax leakage.
All Payments Must Be Made to GSTIN-Linked Bank Accounts
The circular shows that the Goods and Services Tax (GST) collected on government procurement of goods and services forms a significant source of revenue for the Union Territory. A Tax Deducted at Source (TDS) at the rate of 2% (1% CGST and 1% SGST) is applicable when the contract value surpasses Rs 2.5 lakh u/s 51 of the CGST Act, 2017, and the J&K GST Act, 2017.
Drawing and Disbursing Officers (DDOs) for monitoring the same are needed to submit monthly returns in Form GSTR-7. Most of the payments were made before the bank accounts that were not linked to the GST registration of the contractor, which has restricted the tracking of transactions and potentially caused revenue loss to the exchequer.
Compulsory Disclosure Required at Time of Bid Submission
All government departments and agencies should ensure that their e-tendering documents contain an obligatory clause demanding that participating contractors and suppliers reveal the GSTIN-linked bank account number at the time of bid submission. Solely the disclosed and verified bank account will be qualified 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 Enforcement and Mandatory Compliance
By this directive, all departments have been advised to update tender documents and bidding conditions. The Finance Department has directed Heads of Departments, PSUs, and other autonomous bodies to confirm stringent compliance in both letter and spirit.
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The same initiative is a part of the bigger objective of the government to legislate the GST norms effectively and promote financial discipline in the public procurement procedure.
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