A government tender can ask for three separate payments, and they are not the same thing. Tender fee is a non-refundable charge for the tender document. EMD, Earnest Money Deposit, is a refundable deposit that guarantees your bid. Security deposit, also called performance security, is furnished after you win to guarantee you complete the work.
Mixing these up costs bidders money and, sometimes, the tender itself, when someone pays the wrong amount in the wrong form to the wrong payee. This guide separates the three cleanly: what each one is, when in the process you pay it, and whether you ever see it again.
Tender fee: what it is
Tender fee is the price of the tender document, or of the right to participate. It is a small, non-refundable charge the authority levies to cover the cost of issuing the tender and to filter out non-serious applicants. You pay it upfront, before or at the time of bidding, in the form the tender states.
The defining feature is that it does not come back. Win or lose, the tender fee is gone; it is a cost of entry, not a deposit. Many tenders keep it modest, and on GeM, micro and small Udyam-registered manufacturers and service providers (not medium enterprises or traders) are frequently exempt from it. Always pay the exact amount stated and keep the reference, because a missing or short tender fee can make a bid non-responsive.
EMD: what it is
EMD, Earnest Money Deposit, is a refundable deposit you submit with your bid to show you are serious and will stand behind your offer. It is usually a small percentage of the estimated tender value or a fixed amount, stated in the tender, and paid as an online payment, demand draft, bank guarantee or fixed deposit receipt in the authority's favour.
Because it is refundable, you get it back — on GeM, unsuccessful bidders within 15 days of award or bid-validity expiry, whichever is earlier, and the winner within 15 days of furnishing the ePBG. But it is money at risk: authorities forfeit EMD if you withdraw or change your bid during its validity, refuse the work after being selected, or fail to furnish performance security. On GeM, only micro and small Udyam-registered manufacturers and service providers (not medium enterprises or traders) are exempt from EMD. For the full detail on amounts, exemptions and refunds, see the dedicated EMD guide.
Security deposit or performance security: what it is
Security deposit, more precisely performance security, is furnished only by the winning bidder, after award and before or at contract signing. It guarantees delivery: if you fail to complete the work as agreed, the authority can recover its loss from it. It is a larger amount than EMD, commonly a percentage of the contract value stated in the tender.
It is furnished as a bank guarantee, fixed deposit receipt or online deposit, and on GeM and many state tenders as an ePBG, an electronic Performance Bank Guarantee, fixed by the buyer at 3% to 5% of the contract value and due within 15 days of award. It is refundable, but only after you complete the contract satisfactorily and any warranty or defect-liability period ends, and it must stay valid throughout. Because it locks up capital for the contract's life, price it in before you quote.
Side by side: which you pay, when, and whether it comes back
The three payments differ on three axes: purpose, timing and refundability.
Tender fee pays for the tender document, is paid upfront with your bid, and is not refundable. EMD guarantees your bid, is paid with your bid, and is refunded after the tender is decided. Security deposit, or performance security, guarantees delivery of the work, is furnished only after you win, and is refunded after you complete the contract satisfactorily and any warranty period ends.
Two more distinctions are worth holding. Only the winner ever pays security deposit; every bidder pays tender fee and, unless exempt, EMD. On GeM, only micro and small Udyam-registered manufacturers and service providers are frequently exempt from tender fee and EMD, but performance security still applies once you win, because it protects the actual delivery.
Frequently asked questions
What is the difference between tender fee and EMD?
Tender fee is a non-refundable charge for the tender document, paid upfront by every bidder. EMD is a refundable deposit that guarantees your bid is serious and is returned after the tender is decided. One is a cost you never recover; the other is a deposit you get back unless you default.
Is EMD the same as security deposit?
No. EMD is a smaller deposit paid with your bid to guarantee the offer, and every bidder pays it unless exempt. Security deposit, or performance security, is larger, furnished only by the winner after award, and guarantees you complete the work. EMD is usually released once security is in place.
Which tender payments are refundable?
EMD and security deposit are refundable; tender fee is not. EMD comes back after the tender is decided (on GeM, within 15 days of award or bid-validity expiry), and security deposit after you complete the contract and any warranty period ends. Tender fee is a non-refundable cost of participating. On GeM, micro and small Udyam-registered manufacturers and service providers are often exempt from tender fee and EMD entirely.
Bidding on a government tender?
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