If you are a small business, a startup, MSMEs, or a contractor in India, then you must have struggled while bidding for the government tenders just because of the lack of understanding of GST (Good & Service Tax).
As government tenders offer many opportunities over time for all businesses in India, many companies lose money or get rejected because they don’t understand how GST applies to the tender fees, contracts, and invoicing.
That’s where we bring you the complete easy guide on GS rates for government tenders in 2026 in a very sorted way. Well, grab your notepad or take a screenshot of all this information we have mentioned in this blog because it will help you quote correctly, stay compliant, and win more bids.
Why GST Matters in Government Tenders?
GST applies to most transactions with government departments. However, the government is not automatically exempt from GST. The thing that matters is:
- Depends on what you are supplying: Goods, services, or a work contract.
- Whether the money is charged: Tender fee, contract value, service charges.
- The nature of the supply under the GST law.
In short, GST is usually involved from paying tender fees to supplying goods after winning the bid.
GST Applicable on Tender Fees
The tender fee or bid document fee is the non-refundable amount charged by the government department to allow bidders to download or access tender documents.
Does GST Apply to Tender Fees?
Yes, under the GST law, tender fees are treated as a supply of service by the government authority to the bidder.
GST Rate on Tender Fees (2026)
Well, 18% GST is the standard rate charged on the tender fees in 2026.
Let’s suppose-
>> The tender fee is Rs. 1000
>>GST applied 18%: Rs. 180
>> Now the total payable: Rs. 1,180.
Who Pays the GST?
Well, the government department collects GST along with the tender fee.
>> The bidder does not pay under reverse charge in the normal scenario.
>> If the tender is for business purposes and you are GST registered, then you may claim ITC (Input Tax Credit).
GST Rates After Winning a Government Tender
If you win the tender contract so the GST applies based on your supplies, like:
GST on Goods Supplied to Government
If your contract is for supplying goods like:
>> Machinery
>> Equipment
>> Medicines
>> Furniture
>> Raw Materials, etc.
Also, the GST rate depends on the HSN code of the goods. Mostly it is 5% or 18%.
Note: Consider checking the correct HSN code before quoting.
GST on Services Supplied to Government
If your contract is to provide service like-
>> IT services.
>> Security services.
>> Housekeeping.
>> Consultancy.
>> Transport or logistics.
So, the GST rate will be 18%.
Note: Some specific government services may be exempt, but these are limited and must be checked over time.
GST on Works Contracts
If you win the work contracts, including both goods and services, like-
>> Roads, bridges, buildings.
>> Electrical installation.
>> Civil construction.
>> Water supply projects.
| Work Contract | GST Rate (2026) |
| General works contracts | 18% |
| Affordable housing or Govt housing | 12% |
| Infrastructure projects | 5%- 12% |
Note: Before quoting, make sure to read the tender conditions and relevant GST notifications.
How to Quote GST in Tender Bids: The Important Steps
This is the most crucial step, in which many bidders get rejected because of an incorrect GST quote.
STEP 1: Know what you are supplying
Firstly, you must know what you supply, like goods, services, or work contact.
STEP 2: Find the Correct HSN or SAC code
Now, apply the right HSN and SAC code:
>> HSN for Goods.
>> SAC for Services.
STEP 3: Check the Applicable GST Rate
Based on your supplies, check the applicable GST Rate like 5%,12%, 18%.
STEP 4: Read tender pricing instructions
Always read the tender pricing criteria properly, because some tenders ask for GST inclusive prices. While others require GST to be shown separately.
Avoid These GST Mistakes Bidders When Applying for Government Tender
These are the frequent mistakes which bidders make, so try to avoid them:
- Quoting the wrong GST rate.
- Using an incorrect HSN or SAC code.
- Calculating the bid price without including GST.
- Forgot to claim ITC (Input Tax Credit)
- Missing GST return deadlines.
Effective Tips for Businesses Applying for Government Tenders
Here are the tips you can implement to win the government tenders:
- Always check the GST rate before submitting your bid.
- Keep your GST returns updated.
- Maintain clean invoicing records.
- Consult a tax expert for large value contracts.
- You can track GST council notifications regularly.
- To avoid last minute payment disputes, always include GST correctly.
Sum Up
In conclusion, GST is a really complicated subject to talk about when it comes to tender fees, goods, and services. But we try to make things easier through this guide, and make it simpler to understand the GST rates for government tenders in 2026. From paying tender fees to executing contracts and receiving payments, everything includes GST rates.