Timely delivery is one of the most critical obligations for sellers on the Government e-Marketplace (GeM). However, situations like buyer delays, supply chain issues, or unforeseen events can make it difficult to deliver goods or services on time.
That’s where the GeM Delivery Period Extension and Liquidated Damages (LD) rules come into play. Knowing how these rules work can help sellers avoid unnecessary penalties and maintain good business relationships with buyers.
In this blog, we’ll break down:
- When and how delivery periods can be extended.
- How Liquidated Damages are calculated.
- The role of Force Majeure conditions.
- Practical examples for sellers.
- Tips to avoid penalties.
Also read: GeM MSME Benefits 2025 to learn how MSMEs get special exemptions on GeM.
What is GeM Delivery Period Extension?
The GeM Delivery Period Extension allows buyers to extend the delivery timeline beyond the original contract date.
There are two main cases:
1. Without Liquidated Damages (LD):
- If the delay is due to buyer’s fault (e.g., consignee not ready, payment issues).
- Or due to Force Majeure events (like natural disasters, strikes, pandemics).
- In such cases, the delivery date can be extended without penalty.
2. With Liquidated Damages (LD):
- If the delay is the seller’s fault (e.g., late dispatch, vendor issue, planning failure).
- Delivery is allowed, but penalty is imposed as per GeM rules.
What are Liquidated Damages (LD) in GeM?
Liquidated Damages (LD) are pre-estimated penalties charged when a seller fails to deliver within the agreed timeline.
- Rate: 0.5% of the contract value of delayed quantity per week (or part of the week).
- Maximum Deduction: Up to 5% of total contract value.
- Inordinate Delay: If delay >25% of contract period, LD may go up to 10% of total contract value.
- No price increase allowed during the extended delivery period.
- Buyer benefits from tax reductions: If GST rates decrease during extension, buyer pays less.
Example 1 – LD Calculation
- Contract Value = ₹10,00,000
- Delay = 3 weeks
- LD = 0.5% × 3 = 1.5% of ₹10,00,000 = ₹15,000 penalty
Example 2 – Inordinate Delay
- Contract Value = ₹20,00,000
- Delay = 2 months beyond 25% contract period
- LD capped at 10% = ₹2,00,000 penalty
Sellers should avoid such situations by requesting extension in time.
Force Majeure in GeM Contracts
Sometimes delays are beyond anyone’s control. That’s why GeM includes Force Majeure (FM) conditions.
Force Majeure Events Include:
- War, hostility, civil commotion, sabotage.
- Floods, fires, explosions, natural disasters.
- Epidemics, quarantine restrictions (like COVID-19).
- Strikes and lockouts.
Not Counted as FM:
- Seasonal rains, negligence, or predictable delays.
Important Rule:
- Seller must notify the buyer within 10 days of the FM event with supporting documents.
- If delay >90 days due to FM, either party can terminate the contract.
Practical Scenarios for Sellers
- Case 1: Delay Due to Buyer
A consignee warehouse is closed for repairs, preventing delivery.
Delivery extension approved without LD.
- Case 2: Seller Fault
Seller failed to procure raw material on time.
Delivery extension granted, but LD imposed @0.5% per week.
- Case 3: Force Majeure
Floods in the seller’s region caused transport breakdown.
Delivery extension approved without LD, provided seller informed within 10 days.
Tips to Avoid Liquidated Damages on GeM
- Always monitor your delivery timeline on the GeM dashboard.
- Request extension before contract expiry, not after.
- Keep documentary proof for delays (emails, transport receipts).
- Use valid NIC codes and ensure inventory readiness.
- Communicate clearly with the buyer to avoid disputes.
For smoother compliance, also check: GeM Procurement Options 2025
FAQs on GeM Delivery Period Extension & LD
Q1. How do I request a delivery extension on GeM?
Login to seller dashboard → Orders → Request Extension → Provide reason + documents.
Q2. Can LD go beyond 5%?
Yes, in cases of inordinate delay, penalty can be up to 10% of total contract value.
Q3. What is considered Force Majeure on GeM?
Events like floods, pandemics, strikes, etc. Not seasonal rain or negligence.
Q4. If buyer delays, will LD apply?
No. If delay is due to buyer/consignee, extension is granted without penalty.
Q5. Can price be revised in extended period?
No. Sellers cannot increase price, but buyers benefit from any GST reduction.
Conclusion
The GeM Delivery Period Extension rules give sellers flexibility when delays are genuine and unavoidable. However, when delays are due to seller negligence, Liquidated Damages can eat into profits.
By understanding the LD structure (0.5% per week, up to 10%), keeping track of Force Majeure conditions, and requesting extensions properly, sellers can protect themselves from heavy penalties and continue building credibility on GeM.
Disclaimer
This blog is for educational purposes only. My Avinya is not affiliated with GeM or Government of India. Please refer to the official GeM Portal for the latest rules and updates.