(1)Advance payment to supplier. - Ordinarily, payments for services rendered or supplies made should be released only after the services have been rendered or supplies made. However, it may become necessary to make advance payments in the following types of cases :-(i)Advance payment demanded by firms holding maintenance contracts for servicing of Air-conditioners, computers, other costly equipment, etc.(ii)Advance payment demanded by firms against fabrication contracts, turn-key contracts etc Such advance payments should not exceed the following limits:-(i)Thirty per cent, of the contract value to private firms;(ii)Forty per cent, of the contract value to a State or Central Government agency or a Public Sector Undertaking; or(iii)In case of maintenance contract, the amount should not exceed the amount payable for six months under the contract.Departments may relax, in consulation with Internal Finance Advisor/Finance Department concerned, the ceilings (including percentage laid down for advance payment for private firms) mentioned above. While making any advance payment as above, adequate safeguards in the form of bank guarantee etc should be obtained from the firm.(2)Part payment to suppliers : Depending on the terms of delivery incorporated in a contract, part payment to the supplier may be released after it despatches the goods from its premises in terms of the contract.
