Rytvae Consulting · Think Right · Invest Right
BG & LC Commission Calculator
Result
Chart
Show formula & working
Commission per quarter = higher of (Amount × rate ÷ 4, minimum); × number of quarters (a part quarter counted as a full one, or pro rata)
GST = 18% of commission and other charges
Cost of cash margin = Margin × (Cost of funds − Deposit rate) × months ÷ 12
Details
GST on loan processing and similar fees: rates and rules as of 28-Oct-2026 · Source: GST rate schedule for services, heading 9971 (CGST 9% + SGST 9%); CBIC Circular 218/12/2024-GST on processing fees. Every figure based on it stays editable.
How this works
A bank guarantee or LC does not use the bank's money unless it is invoked or paid, so the bank charges commission for the commitment — usually per quarter, in advance.
The cash margin is often the bigger hidden cost: that money is locked in a deposit earning less than what it costs your business.
Frequently asked questions
Why is a part quarter charged in full?
Many banks' schedules charge commission per quarter or part thereof. Some charge pro rata — pick the option that matches your bank.
Can the cash margin be reduced?
Banks set the margin by the customer's limits, track record and collateral. A sanctioned non-fund-based limit with lower margin can cut the cost sharply.
Using bills, LCs or guarantees?
The cheapest structure depends on your buyers, suppliers and banking limits. Talk to Rytvae.