Solvency Certificate in India

The amount is decided before the document is drafted, and usually by someone other than you. A tender names the sum a bidder must cover, a court fixes what a surety must stand for, and a bank guarantee application sets its own figure. Getting that number wrong is what causes a resubmission, and by then the window that mattered has usually closed on the bidder.

Fixing the sum is the whole exercise. It has to be large enough to satisfy the requirement and small enough that the evidence carries it. That is why it is rarely the largest figure your papers could be made to support. Where a charge already sits on them, assets are not freely available to meet other liabilities, so the certificate reflects that instead of ignoring it. Professional standards behind the signature are published by the ICAI.

Everything below is source material rather than a summary, because each figure in the statement is traced back to the record that governs it.

• The tender document, court order or bank letter that names the sum and the date
• Income tax returns with the computation of income for the last three years
• Bank statements and balance confirmations for every account
• Fixed deposit receipts, together with details of any lien noted on them
• Registered title documents for the immovable property being offered
• Encumbrance certificate for each property being offered
• Statement for every existing loan, showing the security held against it
• Details of any guarantee given for another person or business
• Audited financial statements, where the applicant is a company, firm or LLP
• Statement of statutory dues outstanding, including any GST or income tax demand

• The fee covers one certificate speaking to one date. A later date is a fresh engagement on updated records, not a re-dating of the first.
• Goods and services tax and any government charge are additional, as the footnote on the table states.
• Where records have to be reconstructed before certification can begin, that work is quoted separately and agreed before it starts.
• City pages carry the same fee as the national service. Certification does not cost more in one city than in another.
• An On quote row means the scope decides the fee. It is not a higher tier waiting to be sold; some engagements simply cannot be priced before the records are seen.

All fees listed are indicative only and do not constitute a binding offer. The final amount depends on the scope of records to be examined.

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• What tender documents actually specifyA tender sets the requirement and it is rarely a round number. The condition names a sum, sometimes as a fixed amount and sometimes as a percentage of the estimated contract value, and it frequently names a date the certificate must not predate. Both come from the tender document rather than from experience of the last bid. A certificate written to an assumed figure is set aside without the evidence behind it being read.
• A bank solvency certificate against a CA solvency certificateTender conditions specify one or the other and occasionally accept either. A bank issues its solvency certificate from what it can see of your accounts with it, which is a partial view limited to that relationship. A chartered accountant certifies from the whole position across every asset and liability, with the basis stated. Where the condition permits either, the CA certificate is usually the stronger document because it covers more; where the condition names a bank certificate, no CA document substitutes for it.
• Validity against the bid dateThere is no statutory validity period for a solvency certificate in India. What exists is whatever recency the tender condition imposes, commonly that the certificate be dated within one, three or six months of the bid submission. That window is read off the tender document the day it arrives, because a certificate obtained too early is as useless as one obtained too late.
• Earnest money and performance guaranteesThe sum a solvency certificate is written to is often tied to the earnest money deposit, the bid security or the performance guarantee. It is rarely the contract value itself. Where a bank guarantee is to be issued, the issuing branch has its own view of the applicant's standing and may ask for the certificate separately from the tender authority. Establishing which figure is being tested, and by whom, comes before any evidence is gathered.
• Bidding as a joint ventureWhere a bid is submitted by a consortium, each member is usually assessed separately and the tender states how their positions combine. A single certificate covering the venture does not exist, because the venture holds nothing in its own name until it is formed. Each member is certified on its own accounts, and the certificates are read together against whatever aggregation rule the tender sets out.

Enter the sum you have been asked to prove and the assets you would rely on. The calculator sets aside anything already charged and shows what remains against the figure, which is the narrow question a solvency certificate answers.

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Go deeper:

A solvency certificate answers a narrower question than a net worth certificate: whether a stated sum can be met on a stated date. No statute defines it, so what governs is the professional framework it is issued under and the registries that establish what is genuinely free.

The distinction that matters legally is between owning an asset and having it available. An asset already charged is still owned, and the provisions below are how that is established rather than assumed.

• CERSAI, the Central Registry of Securitisation Asset Reconstruction and Security Interestrecords security interests over property, and is searched to establish what is already pledged. An asset under charge cannot answer for a second obligation, and it is disclosed rather than dropped from the statement.
• Section 17, Registration Act 1908makes the registered instrument the evidence of title for property offered as security, and the encumbrance position is read from the same registry.
• ICAI Guidance Note on Reports or Certificates for Special Purposes (Revised 2016)governs the certificate, including the written representation that all liabilities, guarantees given and contingent obligations have been disclosed.
• ICAI Council direction on UDIN, mandatory from 1 February 2019lets a tender committee or court registry confirm the certificate on the ICAI portal, which is what makes it worth attaching to a bid.
• Section 73, Central Goods and Services Tax Act 2017provides for determination of tax not paid, and a demand raised under it ranks as a liability that reduces what is available to answer the sum certified.
• Section 129, Companies Act 2013governs the audited accounts an incorporated applicant is certified from, and tender committees routinely check them against what has been filed publicly.

Official sources: ICAI · ICAI UDIN Portal · Ministry of Corporate Affairs · Income Tax Department

Tender conditions frequently specify how recent the certificate has to be, and one dated outside that window is set aside without being read. Check the condition the day the document arrives, not the week the bid is due. Call or WhatsApp +91 94594 56700 with the tender papers and we will confirm the sum and the date it must carry.

A solvency certificate answers one narrow question, and it cannot be written until the sum and the date are both known. Take those from the document that set them rather than from memory. A certificate written to an assumed figure is set aside before the evidence behind it is read. Send us the tender condition, the court direction or the bank's letter, and we will tell you what will carry that figure.