PREFACE

1. General Financial Rules (GFRs) are a compilation of rules and orders of Government of India to be followed by
all while dealing with matters involving public finances. These rules and orders are treated as executive
instructions to be observed by all Departments and Organisations under the Government and specified Bodies
except otherwise provided for in these Rules.
2. General Financial Rules were issued for the first time in 1947 bringing together in one place all existing orders
and instructions pertaining to financial matters. These have subsequently been modified and issued as GFRs
1963 and GFRs 2005.
3. In the last few years, Government has made many innovative changes in the way it conducts its business. Reforms
in Government budgeting like removal of distinction in non-plan and plan expenditure, merger of Railway
Budget with General Budget, focusing on outcomes through an improved Outcome Budget document, all
needed to be reflected in the GFRs. Increased focus on Public Finance Management System(PFMS), reliance on
the Direct Benefit Transfer (DBT) Scheme to ensure efficient delivery of entitlements, introduction of new e-sites
like Central Public Procurement Portal, Government e-Marketing (GeM) Portal, Non-Tax Revenue Portal have
also necessitated revision of the existing GFRs to keep them in tune with the changing business environment. The
objective was to make the GFRs facilitate efficiency rather than create impediments in smooth and timely
implementation while following principles of accountability and procedures of financial discipline and
administrative due diligence. The Expenditure Management Commission set up in 2014 to recommend ways in
which efficiency of public expenditure could be increased has also made several recommendations especially
with respect to Autonomous Bodies. New rules on non-tax revenues, user charges, e-receipts portal have been
added in addition to the manner in which Autonomous Bodies are run.
4. The PAC in April 2015, Group of Secretaries in February 2016 and EMC in March 2016 has recommended
setting up a Task Force to review the GFRs so as to frame comprehensive rules to address the issues as highlighted
in the above para.
5. GFRs, 2017 have evolved as a result of wide consultations with Central Government Ministries and
Departments, some State Governments and other stakeholders at the Task Force stage and thereafter. The
Discussion Draft was also uploaded on the MoF’s website. Secretaries of each Department/ Ministry of
Government of India were asked to give their views for additions/ modifications, keeping in view their specific
requirements of their domain. Detailed deliberations were also carried out within the Ministry. C&AG’s
comments on the draft GFRs have also been taken into consideration.
6. The aim of any rule is to provide a framework within which an organization manages its business in a financially
prudent manner without compromising its flexibility to deal with varied situations. The GFRs 2005 have been very
comprehensively reviewed with the aim of promoting simplicity and transparency in the Government financial
system and procedures. It is expected that the new GFRs 2017 will enable an improved, efficient and effective
framework of fiscal management while providing the necessary flexibility to facilitate timely delivery of services.
7. Department of Expenditure would like to place on record the exceptional work done by the Task Force on Review
of GFRs, the office of the C&AG, the office of the CGA, Budget Division of Department of Economic Affairs, the
Ministries and Departments for their valuable inputs and its own officers for assiduously and meticulously
completing this vital and challenging exercise in a time bound manner.

(ASHOK LAVASA)
Finance Secretary &
Secretary(Expenditure)
Department of Expenditure
Ministry of Finance
North Block, New Delhi
Dated: 11th February, 2017
 CONTENTS
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

TABLE OF CONTENTS
Chapter Name of the Chapter Page
No. No.

1 Introduction 9
2 General System of Financial Management 11
I. General Principles relating to expenditure and payment of money 12
II. Defalcation and losses 15
III.Submission of records & information 16
3 Budget formulation and implementation. 17
4 Government Accounts 25
5 Works 38
6 Procurement of Goods and Services 41
I. Procurement of Goods 41
II. Procurement of Services 54
7 Inventory Management 58
8 Contract Management 63
9 Grants-in-aid and Loans 67
10 Budgeting and Accounting for Externally Aided Projects 85
11 Government Guarantees 89
12 Miscellaneous Subjects 94
I. Establishment 94
II. Refund of revenue 96
III. Debt and misc. obligations of Govt. 97
IV. Security deposits 98
V. Transfer of land and buildings 99
VI. Charitable endowments and other trusts 99
VII. Local bodies 99
VIII. Maintenance of records 100
IX. Contingent and Miscellaneous Expenditure. 100

5
 CONTENTS
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

APPENDIX

Appendix Subject Page

No. No.
1 Instructions for regulating the Enforcement of 102
Responsibility for losses, etc.,
2 Procedure for the preparation of Detailed Estimates of Receipts 103
3 Instructions for the preparation of Detailed Estimates of 105
expenditure from the Consolidated Fund
4 Procedure for compilation of Detailed Demands for Grants 112
5 Procedure to be followed in connection with the Demands for 115
Supplementary Grants
6 The Contingency Fund of India Rules 117
7 Transfer of Land and Buildings between the Union and 120
State Governments
8 Charitable Endowments and other Trusts 122
9 Destruction of Office Records connected with Accounts. 135
10 Check against provision of funds 144
11 Formula for Price Variation Clause 145
12 Rates of Guarantee Fee 146

FORMS
Form Description Page
Serial No. No.
GFR 1 Application for an Additional Appropriation 147
GFR 2 Revenue Receipts 148
GFR 2 - A Estimates of foreign grants 149
GFR 2 - B Estimates of interest receipts and loan repayments 150
GFR 3 Liability Register 151
GFR 3 - A Liability Statement 153
GFR 4 Statement of proposals for pre-budget discussions 156
GFR 5 Register showing expenses by Heads of Account 158
GFR 6 Broadsheet for watching receipt of account from Disbursing Officers 159
GFR 7 Compilation Sheet 160

6
 CONTENTS
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

Form Description Page

Serial No. No.
GFR 8 Consolidated Accounts 161
GFR 9 Broadsheet for watching Receipt of the Returns from the Heads of 162
Departments under a Department of the Central Government
GFR 10 Report of Surplus, Obsolete and Unserviceable Stores for Disposal 163
GFR 11 Sale Account 164
GFR 12 - A Form of Utilization Certificate (Autonomous Bodies) 165
GFR 12 - B Form of Utilization Certificate (For Loans) 167
GFR 12 - C Form of Utilization Certificate (State Governments)) 168
GFR 13 Statement of aggregate balance of loan(s) outstanding as on 169
31st March and details of defaults
GFR 14 Form of Security Bond (Fidelity Bond Deposited as Security) 170
GFR 15 Form of Written Undertaking to be executed by an Undertaking/ 172
Corporation wholly owned by the Central Government at the
time of sanctioning of a loan.
GFR 16 Certificate of transfer of charge 173
GFR 16 - A Joining Report 175
GFR 17 Fidelity Guarantee Policy 176
GFR 18 Accession Register 179
GFR 19 Notice to borrower about the due date for repayment of 180
loan and interest thereon
GFR 20 Register of Policy Holder 181
GFR 21 Register of Grants to be maintained by the sanctioning Authority. 182
GFR 22 Register of Fixed Assets 183
GFR 23 Stock Register of consumables such as Stationery, Chemicals, 184
Spare parts etc.
GFR 24 Register of Assets of Historical /Artistic value. 185
GFR 25 Government Guarantees. 186
GFR 26 Furnishing of data regarding Guarantees to Ministry of Finance. 187
CONCORDANCE TABLE 188

7
8
 Chapter – 1
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

INTRODUCTION
Rule 1 Short Title and Commencement: These responsibility of controlling the
came rules may be called General Financial Rules, incurring of expenditure and/or the
into force 2017 and they shall come into force at once collection of revenue. The term shall
8.3.2017 and shall be applicable to all Central include a Head of Department and
Government Ministries/Departments, also an Administrator;
attached and subordinate bodies. The (xi) “Department of the Government of
provisions contained in GFRs are deemed to India” means any of the Ministries,
w.e.f. be applicable to Autonomous Bodies except Departments, Secretariats and Offices
8.3.2017 to the extent the bye-laws of an Autonomous as notified from time to time and listed
Body provides for separate Financial Rules in the First Schedule to the
which have been approved by the Government of India (Allocation of
Government. Business Rules);
Rule 2 Definition : In these rules, unless the context (xii) “Drawing and Disbursing Officer”
otherwise requires- means a Head of Office and also any
R.3(g)+R.14
(i) “Accounts Officer ” means the DFPR other Gazetted Officer so designated
Head of an Office of Accounts or the by a Department of the Central
Head of a Pay and Accounts Government, a Head of Department
R.3(f)+Sch. I
Office set up under the scheme of DFPR or an Administrator, to draw bills and
departmentalization of accounts; make payments on behalf of the
(ii) “A d m i n i s t r a t o r ” m e a n s Central Government. The term shall
Administrator of a Union Territory, by also include a Head of Department or
whatever name designated; an Administrator where he himself
(iii) “A p p r o p r i a t i o n” m e a n s t h e discharges such function;
assignment, to meet specified (xiii) “Ministry of Finance” means the
expenditure, of funds included in a Ministry of Finance of the Central
primary unit of appropriation; Government;
(iv) “Audit Officer” means the Head of (xiv) “Financial Year” means the year
an Office of Audit; beginning on the 1st of April and
(v) “Competent Authority” means, in ending on the 31st of March
respect of the power to be exercised following;
under any of these Rules, the President (xv) “Government” means the Central
or such other authority to which the Government;
power is delegated by or under these (xvi) “Government Account” means the
Rules, Delegation of Financial Power account relating to the Consolidated
Rules or any other general or special Fund, the Contingency Fund and the
orders issued by the Government of Public Account; as defined in these
India; rules;
(vi) “ C o m p t r o l l e r a n d A u d i t o r (xvii) “Head of the Department’ means
Art. 148
General” means the Comptroller an authority or person (not below the
and Auditor General of India; rank of a Deputy Secretary to the
(vii) “Consolidated Fund” means the Government of India), declared by the
Consolidated Fund of India referred concerned Department in the
Art. 266 to in Article 266 (1) of the Government of India as a Head of
Constitution; Department in relation to an
(viii) “ C o n s t i t u t i o n ” m e a n s t h e identifiable establishment or
Constitution of India; establishments to exercise the
delegated financial powers under
(ix) “Contingency Fund” means the
these Rules;
Contingency Fund of India
Art. 267 established under the Contingency (xviii) “Head of Office” means (a) a
Fund of India Act, 1950, in terms of Gazetted Officer declared as such in
Article 267 (1) of the Constitution; the Delegation of Financial Powers
Rules and (b) any other authority
(x) “Controlling Officer” means an
declared as such under any general or
officer entrusted by a Department of
special orders of the competent
the Central Government with the

9
 Chapter – 1
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

authority; (xxxi) CAPEX model: In the CAPEX Model,

(xix) “Local Body” means an authority Capital expenditures is used by the
legally entitled or specially buyer to straightway purchase goods
empowered by Government to followed by procurement of
administer a local fund; consumables, arranging
(xx) “Local Fund” means a local fund as comprehensive maintenance contact
defined in Rule 652 of the Treasury after warranty period and finally
Rules; disposing the product after useful life;
(xxi) “Non-recurring expenditure” (xxxii) OPEX model: In the OPEX model, the
means expenditure other than Seller provides the goods, maintains it
recurring expenditure; and also provides the consumables as
required and finally takes back the
(xxii) “President” means the President of goods after useful / contracted life.
India; The expenditure is made by the Buyer
(xxiii) “Primary unit of appropriation” in a staggered manner as per the
means a primary unit of terms and conditions of the contract.
appropriation referred to in Rule 8 of Rule 3 Interdepartmental consultations: When
the Delegation of Financial Powers the subject of a case concerns more than one
Rules; Department, no order shall be issued until all
(xxiv) “Public Account” means the Public such Departments have concurred, or, failing
Account of India referred to in Article such concurrence, a decision has been taken
266 (2) of the Constitution; by or under the authority of the Cabinet. In
(xxv) “Public Works” means civil/ this regard it is clarified that every case in
electrical works including public which a decision, if taken in one Department,
buildings, public services, transport is likely to affect the transaction of business
infrastructure etc., both original and allotted to another Department, shall also be
repair works and any other project, deemed to be a case which concerns more
including infrastructure which is for than one Department.
the use of general public; Rule 4 Departmental Regulations of financial
(xxvi) “Re-appropriation” means the character: All Departmental regulations, in
transfer of funds from one primary so far as they embody orders or instructions
unit of appropriation to another such of a financial character or have important
unit; financial bearing, must invariably be made
(xxvii) “Recurring expenditure” means the by, or with the approval of the Ministry of
expenditure which is incurred at Finance.
periodical intervals for the same Rule 5 Removal of Doubts: Where a doubt arises
purpose. Expenditures other than as to the interpretation of any of the
recurring expenditure are non- provisions of these Rules, the matter shall be
recurring expenditure; referred to the Ministry of Finance for
(xxviii)“Reserve Bank” means the Reserve decision.
Bank of India or any office or agency Rule 6 Modifications:
of the Reserve Bank of India and (1) The systems and procedures
includes any Bank acting as the agent established by these Rules are subject
of the Reserve Bank of India in to general or special instructions/
accordance with the provisions of the orders, which the Ministry of Finance
Reserve Bank of India Act, 1934 (Act II may issue from time to time.
of 1934); (2) The systems and procedures
(xxix) “Subordinate authority” means a established by these Rules may be
Department of the Central modified by any other authority only
Government or any authority with the express approval of the
subordinate to the President; Ministry of Finance.
(xxx) “Treasury Rules” means the Treasury
Rules of the Central Government;

10
 Chapter – 2
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

GENERAL SYSTEM OF FINANCIAL MANAGEMENT

Rule 7 All moneys received by or on behalf of the receipts shall be laid down in the regulations
Government either as dues of Government or of the Department responsible for the same
for deposit, remittance or otherwise, shall be Rule 11 (2) In Departments in which officers are
brought into Government Account without required to receive moneys on behalf of
delay, in accordance with such general or Government and issue receipts therefor in
special rules as may be issued under Articles Form GAR-6 the departmental regulations
150 and 283 (1) of the Constitution. should provide for the maintenance of a
Rule 8 (1) proper account of the receipt and issue of the
(I) Under Article 284 of the Constitution all receipt books, the number of receipt books to
moneys received by or deposited with be issued at a time to each officer and a check
any officer employed in connection with with the officer’s accounts of the used books
the affairs of the Union in his capacity as when returned.
such, other than revenues or public Rule 12 Amounts due to Government shall not be left
moneys raised or received by outstanding without sufficient reasons.
Government, shall be paid into the Where such amounts appear to be
Public Account. irrecoverable, the orders of the competent
(ii) All moneys received by or deposited with authority shall be obtained for their
the Supreme Court of India or with any adjustment.
other Court, other than a High Court, Rule 13 Unless specially authorized by any rule or
within a Union Territory, shall also be order made by competent authority, no sums
dealt with in accordance with Clause (i) shall be credited as revenue by debit to a
of sub-rule (1). suspense head. The credit must follow and
Rule 8 (2) The Head of Account to which such not precede actual realization.
moneys shall be credited and the withdrawal Rule 14 Subject to any general or special orders
of moneys therefrom shall be governed by the issued by a Department of the Central
relevant provisions of Government Government, an Administrator or a Head of a
Accounting Rules 1990 and the Central Department responsible for the collection of
Government Account (Receipts and revenue shall keep the Finance Ministry fully
Payments) Rules, 1983 or such other general informed of the progress of collection of
or special orders as may be issued in this revenue under his control and of all
behalf. important variations in such collections as
Rule 9 It is the duty of the Department of the Central compared with the Budget Estimates.
Government concerned to ensure that the Rule 15 (1) Rents of buildings and lands. When
receipts and dues of the Government are the maintenance of any rentable building is
correctly and promptly assessed, collected entrusted to a civil department, other than the
and duly credited to the Consolidated Fund Central Public Works Department, the
or Public Account as the case may be. Administrator or the Head of the Department
Rule 10 The Controlling Officer shall arrange to concerned shall be responsible for the due
obtain from his subordinate officers monthly recovery of the rent thereof.
accounts and returns in suitable form Rule 15 (2) The procedure for the assessment and
claiming credit for the amounts paid into the recovery of rent of any building hired out will
treasury or bank as the case may be, or be regulated generally by the rules applicable
otherwise accounted for, and compare them to buildings under the direct charge of the
with the statements of credits furnished by the Central Public Works Department.
Accounts Officer to see that the amounts Rule 15 (3) The detailed rules and procedure,
reported as collected have been duly regarding the demand and recovery of rent of
credited. Accordingly, each Accounts Officer Government buildings and lands, are
will send an extract from his accounts contained in the departmental regulations of
showing the amounts brought to credit in the the departments in charge of those buildings.
accounts in each month to the Controlling Rule 16 (1) Fines . Every authority having the power
Officer concerned. to impose and/ or realize a fine shall ensure
Rule 11 (1) Detailed rules and procedure regarding that the money is realized, duly checked and
assessment, collection, allocation, remission deposited into a treasury or bank as the case
and abandonment of revenue and other may be.

11
 Chapter – 2
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

Rule 16 (2) Every authority having the power to officer should also enforce financial order
refund fines shall ensure that the refunds are and strict economy and see that all relevant
checked and no double refunds of amounts financial rules and regulations are observed,
of fines collected or refunds of fines not by his own office and by subordinate
actually paid into a treasury or bank as the disbursing officers. Among the principles on
case may be, are made which emphasis is generally laid are the
Rule 17 Miscellaneous Demands. Accounts following :-
Officers shall watch the realization of (i) Every officer is expected to exercise the
miscellaneous demands of Government, not same vigilance in respect of
falling under the ordinary revenue Alertness expenditure incurred from public
administration, such as contributions from moneys as a person of ordinary
State Governments, Local Funds, contractors prudence would exercise in respect of
and others towards establishment charges. expenditure of his own money.
Rule 18 Remission of Revenue. A claim to revenue (ii) The expenditure should not be prima
shall not be remitted or abandoned save with Bargaining facie more than the occasion
the sanction of the competent authority. demands.
Rule 19 (1) Subject to any general or special orders (iii) No authority should exercise its
issued by the Government Departments of No powers of sanctioning expenditure to
the Central Government, Administrators and Personal pass an order which will be directly or
Heads of Departments, other than those in Interest
indirectly to its own advantage.
the Department of Posts, shall submit (iv) Expenditure from public moneys
annually on the 1st of June to the Audit should not be incurred for the benefit
Officer and the Accounts Officer concerned, of a particular person or a section of
Right
statements showing the remissions of Target the people, unless –
revenue and abandonment of claims to Oriented
(a) a claim for the amount could be
revenue sanctioned during the preceding
enforced in a Court of Law, or
year by competent authorities in exercise of
the discretionary powers vested in them (b) the expenditure is in pursuance of
otherwise than by law or rule having the force a recognized policy or custom.
Not included Indv. of law, provided that individual remissions Rule 22 Expenditure from Public Funds. No
Remission below below Rupees one thousand need not be authority may incur any expenditure or enter
Rs. 1000 into any liability involving expenditure or
included in the statements.
Rule 19 (2) For inclusion in the statements referred to transfer of moneys for investment or deposit
in Rule 19 (1) above, remissions and from public funds (Consolidated Fund /
abandonments should be classified broadly Contingency Fund and the Public Accounts)
with reference to the grounds on which they unless the same has been sanctioned by a
were sanctioned and a total figure should be competent authority
given for each class. A brief explanation of Rule 23 Delegation of Financial Powers. The
the circumstances leading to the remission financial powers of the Government have
should be added in the case of each class. been delegated to various subordinate
Rule 20 Departments of the Central Government and authorities vide Delegation of Financial
Administrators may make rules defining Powers Rules as amended from time to time.
remissions and abandonments of revenue The financial powers of the Government,
for the purpose of Rule 19 above. which have not been delegated to a
subordinate authority, shall vest in the
Finance Ministry.
I. GENERAL PRINCIPLES RELATING TO
Rule 24 Consultation with Financial Advisers. All
EXPENDITURE AND PAYMENT OF
draft memoranda for Expenditure Finance
MONEY
Committee or Public Investment Bureau or
Committee on Establishment Expenditure
Rule 21 Standards of financial propriety. Every and Cabinet Committee for Economic Affairs
officer incurring or authorizing expenditure or Cabinet shall be circulated by the Ministry
from public moneys should be guided by or Department concerned after consultation
high standards of financial propriety. Every with the concerned Financial Adviser of the

12
 Chapter – 2
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

Ministry or Department. A confirmation to the President, a subordinate authority shall

this effect shall be included in the draft not, without the previous consent of the
memorandum at the circulation stage. Finance Ministry, issue an order which -
Rule 25 (1) Provision of funds for sanction. All (i) involves any grant of land, or
sanctions to the expenditure shall indicate the assignment of revenue, or concession,
details of the provisions in the relevant grant grant, lease or licence of mineral or
or appropriation wherefrom such forest rights, or rights to water, power
expenditure is to be met. or any easement or privilege of such
Rule 25 (2) All proposals for sanction to expenditure, concessions, or
shall indicate whether such expenditure can (ii) involves relinquishment of revenue in
be met by valid appropriation or re- any way
appropriation. Rule 29 Procedure for communication of
Rule 25 (3) In cases where it becomes necessary to sanctions. All financial sanctions and orders
issue a sanction to expenditure before funds issued by a competent authority shall be
are communicated, the sanction should communicated to the Audit Officer and the
specify that such expenditure is subjected to Accounts Officer. The procedure to be
funds being communicated in the budget of followed for communication of financial
the year. sanctions and orders will be as under :-
Rule 26 Responsibility of Controlling Officer in (i) All financial sanctions issued by a
respect of Budget allocation. The duties Department of the Central
and responsibilities of a controlling officer in Government which relate to a matter
respect of funds placed at his disposal are to concerning the Department proper
ensure : and on the basis of which payment is
(i) that the expenditure does not exceed to be made or authorized by the
the budget allocation. Accounts Officer, should be addressed
(ii) that the expenditure is incurred for the to him.
purpose for which funds have been (ii) All other sanctions should be accorded
provided. in the form of an Order, which need
(iii) that the expenditure is incurred in not be addressed to any authority, but
public interest. a copy thereof should be endorsed to
the Accounts Officer concerned.
(iv) that adequate control mechanism is
functioning in his Department for (iii) In the case of non-recurring
prevention, detection of errors and contingent and miscellaneous
irregularities in the financial expenditure, the sanctioning authority
proceedings of his subordinate offices may, where required, accord sanction
and to guard against waste and loss by signing or countersigning the bill or
of public money, voucher, whether before or after the
money is drawn, instead of by a
Rule 27 (1) Date of effect of sanction. Subject to separate sanction.
fulfilment of the provisions as contained in
the Delegation of Financial Powers Rules, all (iv) All financial sanctions and orders
rules, sanctions or orders shall come into issued by a Department of the Central
force from the date of issue unless any other Government with the concurrence of
date from which they shall come into force is the Internal Finance Wing or Finance
specified therein. Ministry, as applicable, should be
communicated to the Accounts Officer
Rule 27 (2) Date of creation to be indicated in in accordance with the procedure laid
sanctions for temporary posts. Orders down in the Delegation of Financial
sanctioning the creation of a temporary post Powers Rules, and orders issued
should, in addition to the sanctioned thereunder from time to time.
duration, invariably specify the date from
which it is to be created (v) All financial sanctions and orders
issued by a Department with the
Rule 28 Powers in regard to certain special matters.— concurrence of the Ministry of Home
Except in pursuance of the general Affairs or Comptroller and Auditor
delegation made by, or with the approval of General of India or Department of

13
 Chapter – 2
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

Personnel should specify that the concurrence of the Comptroller and

sanction or orders are issued with the Auditor General of India shall be
concurrence of that Department supplied to the Comptroller and
along with the number and date of Auditor General of India.
relevant communication of that (xi) Copies of all sanctions or orders other
Department wherein the concurrence NOT to than the following types should be
was conveyed. be sent endorsed to the Audit Officers:-
to Audit
(vi) All orders conveying sanctions to Officer (a) Sanctions relating to grant to
expenditure of a definite amount or advances to Central Government
upto a specific limit should express employees.
both in words and figures the amount (b) Sanctions relating to appointment
of expenditure sanctioned. or promotion or transfer of
(vii) Sanctions accorded by a Head of Gazetted and non- Gazetted
Department may be communicated to Officers.
the Accounts Officer by an authorized (c) All sanctions relating to creation or
Gazetted Officer of his Office duly continuation or abolition of posts.
signed by him for the Head of
Department or conveyed in the name (d) Sanctions for handing over charge
of the Head of the Department. and taking over charge, etc.
(viii) All orders conveying sanctions to the (e) Sanctions relating to payment or
grant of additions to pay such as withdrawal of General Provident
Special Allowance, Personal Pay, etc., Fund advances to Government
should contain a brief summary of the servants.
reasons for the grant of such (f) S a n c t i o n s o f c o n t i n g e n t
additions to pay so as to enable the expenditure incurred under the
Accounts Officer to see that it is powers of Head of Offices.
correctly termed as Special (g) Other sanctions of routine nature
Allowance, Personal Pay, etc., as the issued by Heads of Subordinate
case may be. Officers (other than those issued by
(ix) Orders issued by a Department of a Ministries or Departments proper
Union Territory Government where and under powers of a Head of
Audit and Accounts (a) have not been Department).
separated shall be communicated (xii) Sanctions accorded by competent
direct to the Audit authority; (b) have authority to grants of land and
been separated, copies shall be alienation of land revenue, other than
endorsed to the Audit authorities. those in which assignments of land
In case of sanctions in respect of revenue are treated as cash payment,
matters, where reference was made to shall be communicated to the Audit
the Central Government under the and/ or the Accounts Officer, as the
Rules of Business framed under case may be, in a consolidated
Section 46 of the Government of monthly return giving the necessary
Union Territory Act, 1963, the details.
following clause shall be added in the Rule 30 Lapse of Sanctions. A sanction for any fresh
sanction endorsed to Audit:- charge shall, unless it is specifically renewed,
“A reference had been made in this lapse if no payment in whole or in part has
case to the Central Government and been made during a period of twelve months
the above order/letter conforms to the from the date of issue of such sanction.
decision of the Central Government Provided that -
vide Government of India, (i) when the period of currency of the
Ministry/Department of...........Letter sanction is prescribed in the
No…………dated…………..”. departmental regulations or is
(x) Copies of all General Financial specified in the sanction itself, it shall
Orders issued by a Department of the lapse on the expiry of such periods; or
Central Government with the (ii) when there is a specific provision in a

14
 Chapter – 2
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

sanction that the expenditure would (b) under assessments which are due
be met from the Budget provision of a to interpretation of the law by the
specified financial year, it shall lapse local authority being overruled by
at the close of that financial year; or higher authority after the expiry of
(iii) in the case of purchase of stores, a the time-limit prescribed under the
sanction shall not lapse, if tenders law, and
have been accepted (in the case of (c) refunds allowed on the ground that
local or direct purchase of stores) or the claims were time-barred:
the indent has been placed (in the (ii) Petty losses of value not exceeding
case of Central Purchases) on the Rupees ten thousand. Rs. 10,000
Central Purchase Organization within Rule 33 (2) Cases involving serious irregularities shall
the period of one year of the date of be brought to the notice of Financial Adviser
issue of that sanction, even if the FA, CAA,
Dept, & or Chief Accounting Authority of the Ministry
actual payment in whole or in part has CGA. or Department concerned and the Controller
not been made during the said General of Accounts, Ministry of Finance.
period.
Rule 33 (3) Report of loss contemplated in sub-rule
Rule 31 Notwithstanding anything contained in (1) & (2) shall be made at two stages.—
Rule 30, a sanction in respect of an addition
to a permanent establishment, made from (i) An initial report should be made as
year to year under a general scheme by a soon as a suspicion arises that a loss
competent authority, or in respect of an has taken place.
allowance sanctioned for a post or for a class (ii) The final report should be sent to
of Government servants, but not drawn by authorities indicated in sub rule (1) &
the officer(s) concerned, shall not lapse. (2) after investigation indicating
Rule 32 Remission of disallowances by Audit and nature and extent of loss, errors or
writing off of overpayment made to neglect of rules by which the loss has
Government servants. The remission of been caused and the prospects of
disallowances by Audit and writing off of recovery.
overpayments made to Government servants Rule 33 (4) The complete report contemplated in sub-
by competent authorities shall be in rule 3, shall reach through proper channels
accordance with the provisions of the to the Head of the Department, who shall
Delegation of Financial Powers Rules, and finally dispose of the same under the powers
instructions issued thereunder. delegated to him under the Delegation of
Financial Power Rules. The reports, which he
cannot finally dispose of under the delegated
II. DEFALCATION AND LOSSES powers, shall be submitted to the Finance
Ministry.
Rule 33 (1) Report of Losses. Any loss or shortage of Rule 33 (5) An amount lost through
public moneys, departmental revenue or misappropriation, defalcation,
receipts, stamps, opium, stores or other embezzlement, etc., may be redrawn on a
property held by, or on behalf of, simple receipt pending investigation,
Government irrespective of the cause of loss recovery or write-off with the approval of the
and manner of detection, shall be authority competent to write-off the loss in
immediately reported by the subordinate question.
authority concerned to the next higher Rule 33 (6) In cases of loss to Government on account
authority as well as to the Statutory Audit of culpability of Government servants, the
Officer and to the concerned Principal loss should be borne by the Central
Accounts Officer, even when such loss has Government Department or State
been made good by the party responsible for Government concerned with the transaction.
it. However the following losses need not be Similarly, if any recoveries are made from the
reported: erring Government officials in cash, the
(i) Cases involving losses of revenue due to receipt will be credited to the Central
(a) mistakes in assessments which are Government Department or the State
discovered too late to permit a Government who sustained the loss.
supplementary claim being made, Rule 33 (7) All cases involving loss of Government

15
 Chapter – 2
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

money arising from erroneous or irregular assessment of responsibility for the loss shall
issue of cheques or irregular accounting of be conducted according to the instructions
receipts will be reported to the Controller contained in Appendix 1 and those issued by
General of Accounts along with the the Ministry of Personnel from time to time.
circumstances leading to the loss, so that he Rule 38 Prompt disposal of cases of loss. Action at
can take steps to remedy defects in rules or each stage of detection, reporting, write off,
procedures, if any, connected therewith. final disposal, in cases of losses including
Rule 34 Loss of Government Property due to fire, action against delinquents and remedial
theft, fraud. Departmental Officers shall, in measures should be completed promptly with
addition to taking action as prescribed in special attention to action against
Rule 33, follow the provisions indicated delinquents and remedial measures, taken to
below in cases involving material loss or strengthen the control system
destruction of Government property as a
result of fire, theft, fraud, etc. III. SUBMISSION OF RECORDS AND
All losses above the value of Rupees Fifty INFORMATION
Govt. Prop. Loss thousand due to suspected fire, theft, fraud,
> 50,000 etc., shall be invariably reported to the Police
Rule 39 Demand for information by Audit or
→ Police Invstg. for investigation as early as possible.
Accounts Officer. A subordinate authority
Once the matter is reported to the Police shall afford all reasonable facilities to the
Authorities, all concerned should assist the Audit Officer and Pay and Accounts Officer
Police in their investigation. A formal for the discharge of his functions, and furnish
investigation report should be obtained from fullest possible information required by him
the Police Authorities in all cases, which are for the preparation of any official account or
referred to them. report, payments and internal audit.
Rule 35 Loss of immovable property by fire, flood Rule 40 A subordinate authority shall not withhold
etc. All loss of immovable property any information, books or other documents
Immov. Prop. exceeding Rupees fifty thousand , such as required by the Audit Officer or Accounts
Loss > 50,000 buildings, communications, or other works, Officer.
→ Police Invstg. caused by fire, flood, cyclone, earthquake or
any other natural cause, shall be reported at Rule 41 If the contents of any file are categorized as
once by the subordinate authority concerned ‘Secret’ or ‘Top Secret’ the file maybe sent
to Government through the usual channel. personally to the Head of the Audit Office
All other losses should be immediately specifying this fact, who will then deal with it
brought to the notice of the next higher in accordance with the standing instructions
authority. for handling and custody of such classified
documents.
Rule 36 Report to Audit and Accounts Officers.
After a full enquiry as to the cause and the
Detailed Report extent of the loss has been made, the detailed
→ Govt. report should be sent by the subordinate
authority concerned to Government through
Report copy →
Audit Officer,
the proper channel; a copy of the report or an
PAO abstract thereof being simultaneously
forwarded to the Audit officer and Pay and
Accounts Officer
Rule 37 Responsibility of losses. An officer shall be
→ Direct
held personally responsible for any loss
Personal sustained by the Government through fraud
Responsibility or negligence on his part. He will also be held
personally responsible for any loss arising
→ Indirect from fraud or negligence of any other officer
Personal to the extent to which it may be shown that he
Responsibility
contributed to the loss by his own action or
→ Dept.
negligence.
Proceedings: The departmental proceedings for
Appendix 1,
DoPT

16
 Chapter – 3
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

BUDGET FORMULATION AND IMPLEMENTATION

Rule 42 Financial Year. Financial year of the wise classification, it may be ensured that
Break up Accounti
Government shall commence on the 1st day item wise break-up of all major items of tax ng Heads
of Major
of April of each year and end on the 31st day Items→ and non-tax revenues are clearly identified for
of March of the following year. Tax & and depicted in the receipt estimates. This is Major tax
Rule 43 (1)Presentation of Budget to Parliament. Non-Tax required to highlight all individual items of & Non-Tax
Revenues significance. Any major variation in estimates Rev.→
In accordance with the provisions of Article
Art. 112(1) CoI with reference to past actuals or/and Budget prescribe
112 (1) of the Constitution, the Finance by Admn
Minister shall arrange to lay before both the Estimates shall be supported by cogent
Min+Bud
BUDGET Houses of Parliament, an Annual Financial reasons. The accounting heads under which get Div,
→ Annual major tax and non-tax revenues are collected
Statement also known as the ‘Budget’ MoF
Financial
showing the estimated receipts and shall be prescribed by the administrative
Statement (AFS)
expenditure of the Central Government in Ministry in consultation with the Budget
respect of a financial year, before the Division in the Finance Ministry.
commencement of that year. Rule 46 Non-Tax Revenues. While the tax revenues, Non-Tax
Rule 43 (2) The receipts and expenditure of the Tax Rev., non-debt capital receipts including Rev.→
non-debt disinvestments and borrowings are managed Collected
Merger of Railway Railways being a departmental commercial
capital by the various Departments of the Ministry of thru All
Budget with organization form part of the Government’s Min./Dept.,
receipts Finance, the non-tax revenues are collected
General Budget receipts and expenditure and are included in Autonono
incl. disinv through all Ministries/Departments and other
→ w.e.f. 2017-18 the Annual Financial Statement. With the mous
& borrown
merger of Railway Budget with the General autonomous bodies and implementing Bodies,
managed
Budget, the Demands for Grants and the s
by D /o agencies and comprise an important source Impl.
Statement of Budget Estimates of Railways MoF of revenue for the Government. Agency
shall also be part of the General Budget with Rule 47 User Charges. ‘User Charges’ is an
effect from 2017-18. important component of the non-tax User
Rule 43 (3) The provisions for preparation, revenues. Each Ministry/Department may Charges
formulation and submission of budget to the undertake an exercise to identify the ‘user →
Art. 112--116
Parliament are contained in Articles 112 to charges’ levied by it and publish the same on Compone
CoI
116 of the Constitution of India. its website. nt of N-T
Rev.
Rule 43 (4) The Ministry of Finance, Budget Division, (i) While fixing the rates of user charges,
Guidelines for BE shall issue guidelines for preparation of the Ministries/Departments must
preparation budget estimates from time to time. All the ensure that the user charges recover
→ MoF, Budget Ministries/Departments shall comply in full the current cost of providing services
Division with these guidelines. with reasonable return on capital
Rule 44 The budget shall contain the following :- investment.
(i) Estimates of all revenues expected to (ii) Any deviation from these principles
Budget= Estimates
be raised during the financial year to shall be specifically recorded with
of→
which the budget relates ; reasons justifying the setting of user
REVENUE,
EXPENDITURE, charges lower than the cost recovery
(ii) Estimates of all expenditure for each norms, if any.
INTEREST & DEBT
programme, scheme and project in
CHARGES,
that financial year; (iii) The rates of user charges should be
LOAN REPAYS, linked with appropriate price indices
ETC. (iii) Estimates of all interest and debt and reviewed at least every three
servicing charges and any repayments years.
on loans in that financial year; User
Art. 112--116 (iv) In order to enable ease of revision of Charges
CoI (iv) Any other information as may be user charges, the rate of user charges →
prescribed. shall be fixed, whereever possible Compone
Rule 45 Receipt Estimates. The detailed estimates of nt of N-T
through Rules or executive orders and
receipts shall be prepared by the estimating Rev.
REs→ not through a statute.
Prep. by Estimating authorities separately for each Major Head Rule 48 Dividends and Profits. Dividends and
Authorities of Account in the prescribed form. For each profits including the transfer of surplus from
Div. &
Separately for each Major Head, the estimating authority shall Profits→
Reserve Bank of India is a major component Compone
Major Head give the break-up of the Minor/Subhead/
Break-up of Minor/ of the non-tax revenues. The payment of nt of N-T
Detailed wise estimate along with actuals of dividends/profits etc. by the Central Public Rev.
Subhead/Detailed
the past three years. While doing the head Sector Enterprises shall not be delayed and
wise
With Actuals of past
3Y

17
 Chapter – 3
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

Art. 112--116
CoI Art. 113(2): Exp. for which Vote of Parl. needed
(Demands for Grants)

must be paid within an appropriate time expenditure for which vote of Lok Sabha is
frame immediately after the decision on required shall be in the form of Demand for
dividend is taken in the AGM. Ministries or Grants.
Departments shall monitor timely payments Rule 51 (2) Generally, one Demand for Grant is
of dividends and profits. The dividend shall presented in respect of each Ministry or
be payable as per the guidelines issued by Department. However, in respect of large
DIPAM in this regards. Ministries or Departments, more than one
Rule 49 Receipts Portal. The Government has Demand may be presented. Each Demand
provided a public portal for online collection normally includes provisions required for a
of various non-tax revenues including service, i.e. provisions on account of revenue
various fees and user charges through e- expenditure, capital expenditure, grants to
Receipts. All Ministries/Departments,shall the State and Union Territory Governments
take prompt measures for migration to e- and also Loans and Advances relating to the
Receipts, to ensure customer convenience service.
and immediate credit of receipts to the Rule 51 (3) The Demand for Grants shall be Presentati
Government account. presented to Parliament at two levels. The on of DfG
Rule 50 (1) Expenditure estimates. The main Demand for Grants shall be presented → 2 Levels
expenditure estimates shall show separately to Parliament by the Ministry of Finance, L1: Main
Art. 112(3): Exp. DoG by
charged on CFI
the sums required to meet the expenditure Budget Division along with the Annual
BD, MoF
Charged on the Consolidated Fund under Financial Statement while the Detailed
to Parl.
Art. 113(2): Exp. for Article 112 (3) of the Constitution and sums Demands for Grants, for consideration by the L2:
which Vote of Parl. required to meet other expenditure for which “Departmentally Related Standing Detailed
needed (Demands a vote of the Lok Sabha is required under Committee” (DRSC) of the Parliament, are DoG by
for Grants)
Article 113(2) of the Constitution. laid on the Table of the Lok Sabha by the Min. conc.
Rule 50 (2) The estimates shall also distinguish concerned Ministries/ Departments, as per on ToLS
dates approved from time to time. for DRSC
provisions for expenditure on revenue
account from capital account, including on Rule 52 (1) Form of Annual Financial Statement Form of
loans by the Government and for repayment and Demands for Grant. The form of the AFS &
of loans, treasury bills, cash management Annual Financial Statement and Demands DfG → laid
bills and ways and means advances. for Grants shall be laid down by the Finance by MoF
Rule 50 (3) The detailed estimates of expenditure Ministry and no alteration of arrangement or
shall be prepared by the estimating classification shall be made without the
authorities up to the final unit of approval of that Ministry.
appropriation (Object head) under the Rule 52 (2) The heads under which provision for Exp.
prescribed Major and Minor Heads of expenditure shall be made in the Demands Heads in
Accounts for both Revenue and Capital for Grants or Appropriation shall be DfG/
expenditure. Estimates shall include suitable prescribed by the Finance Ministry in Appropn.
provision for liabilities of the previous years consultation with the Administrative Ministry →
prescribed
that is to be discharged during the year. or Department. The authorized heads for
by
Rule 50 (4) The estimates of scheme related and expenditure in a year shall be as shown in the MoF+Adm
other expenditures shall be processed in Detailed Demands for Grants passed by nv. Min./
consultation with the Budget Division, Parliament and no change shall be made Dept
Ministry of Finance in accordance with the therein without the formal approval of the
instructions issued by it. Finance Ministry.
Rule 50 (5) The Revised and Budget Estimates of both Rule 52 (3) The major head wise provisions in the
Revenue and Capital expenditure after being Detailed Demands for Grants shall match
Revised Budget
scrutinized by the Financial Advisers and with the provision made in the Demands for
Estimates:
scrutinized by FA approved by the Secretary of the Grants presented by Budget Division, as the
approved by Sec. Administrative Ministry or Department appropriations are sought on the basis of
Admnv. Min./ Dept concerned shall be forwarded to the Budget Demands for Grants.
Forwarded to Division in the Ministry of Finance in such NOTE: Detailed instructions for preparation
Budget Division, manner and forms as may be prescribed by it of the budget are available in Appendix 2, 3
MoF
from time to time. and 4.
Rule 51 (1) Demands for Grants. The estimates for Rule 53 (1) Acceptance and inclusion of

18
 Chapter – 3
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

estimates. The estimates of receipts and Rule 56 Communication and distribution of

expenditure of each Ministry/Department grants and appropriations. After the
shall be scrutinized in the Budget Division of Appropriation Bill relating to Budget is
the Ministry of Finance. Secretary passed, the Ministry of Finance shall
(Expenditure) may hold meetings with communicate the same to the Ministries /
Secretaries or Financial Advisers of Departments which, in turn, shall distribute
Administrative Ministries or Departments to the same to their subordinate formations. The
discuss the totality of the requirements of distribution so made shall also be
funds for various programmes and schemes, communicated to the respective Pay and
along with receipts of the Ministries or Accounts Officers who shall exercise check
Departments. against the allocation to each subordinate
Rule 53 (2) The estimates initially submitted by the authority.
Departments may undergo some changes as
Pre-Budget
Meetings: bet.
a result of scrutiny in the Budget Division, II. CONTROL OF EXPENDITURE AGAINST
Sec(Exp.)+Sec./FA Ministry of Finance and deliberations in the BUDGET
of Dept concerned pre-budget meetings between the Secretary
(Expenditure) and the Secretary or Financial
Adviser of the Department concerned. The Rule 57 (1) Responsibility for control of
Control of
final estimates arrived at on the basis of Expenditure. The Departments of the Exp →
scrutiny and pre-budget meetings shall be Central Government shall be responsible for Dept thru
incorporated in the Budget documents. the control of expenditure against the HoDs,
sanctioned grants and appropriations placed other
Rule 54 Outcome Budget. After finalization of the at their disposal. The control shall be Controlling
OB Statement:
estimates for budgetary allocations, the exercised through the Heads of Departments Officers,
prep by DoE+NITI Department of Expenditure in consultation and other Controlling Officers, if any, and Disbursing
Aayog+Min. concr n with NITI Aayog and the concerned Ministries Disbursing Officers subordinate to them.
Officers
Output: in shall prepare an Outcome Budget statement
measurable terms linking outlays against each scheme/project Rule 57 (2) A Grant or Appropriation can be utilised Grant/
Performance: basis with the outputs/deliverables and medium only to cover the charges (including liabilities, Appro:
for continuation of
term outcomes. The outputs/deliverables if any, of the past year) which are to be paid utilised for
Scheme/quantum of
shall be mandatorily given in during the financial year of the Grant or charges
Budget Alloc. Appropriation and adjusted in the account of during the
measurable/quantitative terms on the basis FY of
of parameters and deliverables decided in the year. No charges against a Grant or
Appropriation can be authorized after the Grant/
advance, on the basis of projections made in Appro
the Medium Term Expenditure Framework expiry of the financial year.
(MTEF) Statement. Allocations for each Rule 57 (3) No expenditure shall be incurred which No expd.
scheme/project shall be against a firm set of may have the effect of exceeding the total > Total
deliverables which shall be adhered to. The grant or appropriation authorized by Grant/
performance against specified outcomes Parliament by law for a financial year, except Appro
after obtaining a supplementary grant or except
would form the basis of deciding on the Suppl.
continuation of the scheme and the quantum appropriation or an advance from the Grant/
of budget allocation. Contingency Fund. Since voted and charged Approp/
portions as also the revenue and capital Advance
Rule 55 Vote on Account. If the Appropriation Bill frm
seeking authorization of the Parliament to sections of a Grant/Appropriation are distinct Contigency
VoA(Art.116): MoF and re-appropriation inter se is not
make expenditure in consonance with the Fund
may need to obtain
Budget proposal is likely to be passed after permissible, an excess in any one portion or
VoA to cover expd.
for abrief period. the start of the financial year to which it section is treated as an excess in the
Funds under VoA corresponds then pending the completion of Grant/Appropriation.
not to be utilized the procedure prescribed in Article 113 of the Rule 57 (4) To have effective control over expenditure
on New Service by the Departments, Controlling and
Constitution for the passing of the Budget,
the Finance Ministry may need to obtain a Disbursing Officers subordinate to them shall
‘Vote on Account’ to cover expenditure for follow the procedure as given below :-
abrief period in accordance with the (i) For drawal of money the Drawing and
provisions of Article 116 of the Constitution. Disbursing Officer shall (a)
Funds made available under Vote on Prepare and present bills for
Account are not to be utilized for expenditure “charged” and “voted” expenditure
on a ‘New Service’.
Art.116: Vote on Account
Art.115(1): Supplementary Grant 19
Art.150: Forms of Accounts of Union & States
 Chapter – 3
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

separately. (b) Enter on each bill the Controlling Officer finds defects in
complete accounts classifications any of these respects, he shall take
Charges falling from major head down to the object steps to rectify the defect.
under 2 or more head of account. When a single bill (vi) When all the returns from the
Object heads: the includes charges falling under two or Disbursing Officers for a particular
charges shall be
more object heads, the charges shall month have been received and found
distributed
accurately over the be distributed accurately over the to be in order, the Controlling Officer
respective heads. (c) Enter on each bill Controlling shall compile a statement in Form
resp. heads.
Officer: GFR 7
the progressive total of expenditure GFR 7, in which he shall incorporate -
up-to-date under the primary unit of (a) the totals of the figures supplied by
appropriation to which the bill relates, Disbursing Officers;
including the amount of the bill on
(b) the totals taken from his own
which the entry is made.
registers in Form GFR 5;
(ii) All drawing and disbursing officers
(c) the totals of such adjustments
shall maintain separate registers in
DDO: GFR 5 under the various detailed heads
Fo r m G F R 5 , p h y s i c a l l y o r
for allocation under each as communicated to him by the
electronically for allocation under
minor/sub-head of A/c Accounts Officer on account of
each minor or sub-head of account
transfer entries and expenditure
with which they are concerned.
debited to the grant as a result of
(iii) On the third day of each month, a settlement of inward account
copy of the entries made in this claims and not reckoned by his
register during the preceding month DDOs.
shall be sent by the officer
(vii). If any adjustment communicated by
maintaining it, to the Head of the
the Accounts Officer affects the
Department or other designated
appropriation at the disposal of a
Controlling Officer. This statement
subordinate Disbursing Officer, the
shall also include adjustment of an
fact that the adjustment has been
inward claim, etc., communicated by
made shall be communicated by the
Pay and Accounts Officer directly to
Controlling Officer to the Disbursing
the DDO (and not to his Grant
Officer concerned.
Controlling Officer). If there are no
entries in the register in any month, a (viii). On receipt of all the necessary returns,
‘nil’ statement shall be sent. HoD: GFR 8
the Head of the Department shall
prep a prepare a consolidated account in
(iv) The Controlling Officer will maintain
consolidated Form GFR 8, showing the complete
a broadsheet in Form GFR 6 to
Controlling Officer: GFR 6 A/c showing expenditure from the grant or
monitor the receipt of the return
broadsheet to monitor the complete expd. appropriation at his disposal upto the
prescribed in the foregoing sub-
receipt of the return end of the preceding month.
clause
Rule 57 (5) The Head of the Department and the HoD & A/c.
(v). On receipt of the returns from
Accounts Officer shall be jointly responsible Officer:
Disbursing Officers, the Controlling
for the monthly reconciliation of the figures jointly resp.
Officer shall examine them and satisfy
given in the accounts maintained by the Head for monthly
himself :-
of the Department with those appearing in reconc of
(a) that the accounts classification the Accounts Officer’s books. The procedure figures
has been properly given; for reconciliation shall be as follows :- given in the
a/cs
(b) that progressive expenditure has (I). DDOs shall maintain a Bill Register in maintained
been properly noted and the Form TR 28-A, and note all bills by HoD
available balances worked out presented for payment to the PAO in with A/c
correctly; the register. As soon as cheques for the Officer's
(c) that expenditure up-to-date is bills presented for payment are book
within the grant or appropriation; received, and/or status of e-payments
and are verified from the reports available
(d) that the returns have been signed with DDO on PFMS portal these shall
by Disbursing Officers. Where the be noted in the appropriate column of
the Bill Register and the DDOs shall

20
Chapter – 3
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

ensure that the amounts of cheques Principal Accounts Officers (or the
tally with the net amount of the bills PAO concerned) for reconciliation.
presented. In case any retrenchment The Head of the Department shall
is made by the PAO, a note of such furnish a quarterly certificate to the
retrenchments shall be kept against Principal Accounts Officer certifying
the bill in the remarks column in TR the correctness of the figures for the
28-A. quarter by the 15th of the second
(ii) The PAOs shall furnish to each of the following month after the end of
DDOs including Cheque –drawing quarters April-June, July-September,
DDOs, an extract from the October-December and January-
expenditure control register or from March.
the Compilation Sheet every month Rule 57 (6) The Departments of the Central
indicating the expenditure relating to Government shall obtain from their Heads of
grants controlled by him classified Departments and other offices under them
under the various major-minor the departmental figures of expenditure in
detailed head of accounts. The Form GFR 8 by the 15th of the month
statements for May to March shall also following the month to which the returns
contain Progressive Figures. relate. The figures relating to Revenue and
(iii). On receipt of these extracts from the Capital expenditure shall be separately
PAOs, the DDOs shall tally the figures shown in these returns. The information so
received, excluding book obtained shall be posted in register(s) kept for
adjustments, with the expenditure watching the flow of expenditure against the
worked out for the month in the GFR 5 sanctioned grant or appropriation.
register. Discrepancies, if any, Progressive totals of expenditure shall be
between the two sets of figures shall worked out for the purpose. If the
be promptly investigated by the DDO departmental figures obtained in Form
in consultation with the PAO. He shall GFR 8 and posted in the register(s), require
also note in the GFR 5 register correction in a subsequent month, Heads of
particulars of book adjustments Departments or other offices shall make such
advised by the PAO through the corrections by making plus or minus entries in
monthly statement. Thereafter, the the progressive totals. In case the Accounts
DDO shall furnish to the PAO a Office figures which subsequently become
certificate of agreement of the figures available are found to be higher than
as per his books with those indicated departmental figures, the former shall be
by the PAOs by the last day of the assumed to be the correct figures, as
month following the month of appropriation accounts are prepared on the
accounts. basis of the figures booked in the accounts.
(iv). The Principal Accounts Officer (or PAO Rule 57 (7) The Departments of Central Government
wherever payments, relating to a shall also obtain from the Heads of
grant are handled wholly by a PAO) of Departments and other authorities under
each Ministry, shall send a monthly them, statements showing the details of the
statement showing the expenditure physical progress of the schemes for which
vis-à-vis the Budget provision under they are responsible. This statement shall
the various heads of accounts, in the show the name of the scheme, the Budget
prescribed pro forma, to the Heads of provision for each scheme, the progressive
Departments responsible for overall expenditure on each scheme, the progress of
control of expenditure against grant the scheme in physical terms and the detailed
of the Ministry as a whole. The figures reasons for any shortfalls or excess, both
so communicated by the Principal against physical and financial targets.
Accounts Officer (or the PAO Rule 57 (8) A Broadsheet in Form GFR 9 shall be
concerned) shall be compared by the maintained by the Departments of Central
Heads of Departments with those Government or each Head of Department
consolidated in Form GFR 8 and and other authorities directly under them, to
differences, if any, shall be taken up watch the prompt receipt of the various
by the Heads of Departments with the returns mentioned above from month to
DoCG/ HoDs/Authorities subordinate: GFR 9
A Broadsheet to watch prompt receipt of various
21 returns monthly; take measures for defaults
 Chapter – 3
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

month and to take necessary measures for financial year, all the anticipated savings
rectifying any defaults noticed. noticed in the Grants or Appropriations
Rule 58 Maintenance of Liability Register for controlled by them. The Finance Ministry shall
effecting proper control over communicate the acceptance of such Unutilised
GFR 3-A: Controlling surrenders as are accepted by it to the
expenditure. In order to maintain proper fund after
Officer shall obtain Accounts Officer, before the close of the year.
Liability Statement
control over expenditure, a Controlling close of
Officer shall obtain from the spending The funds provided during the financial year FY: stands
from spending
Authority from Oct. authorities liability statements in Form GFR 3- and not utilized before the close of that lapsed

onwards A every month, starting from the month of financial year shall stand lapsed at the close
GFR 3: Liability October in each financial year. The of the financial year.
Register maintained Controlling Officer shall also maintain a Rule 62 (2) The savings as well as provisions that Saving:
by Controlling Officer
Liability Register in Form GFR 3. cannot be profitably utilised shall be shall be
Rule 59 Personal attention of the Head of surrendered to Government immediately surrendrd to
they are foreseen without waiting till the end Govt.
Department /Controlling Officer
immed. w/o
required to estimate savings or excesses. of the year. No savings shall be held in
waiting FY
A Head of Department or Controlling Officer reserve for possible future excesses. end
shall be in a position to estimate the Rule 62 (3) Rush of expenditure, particularly in the
likelihood of savings or excesses every month closing months of the Financial year, shall be Rush of
expd in
and to regularize them in accordance with regarded as a breach of financial propriety
last month
the instructions laid down in Rule 62. and shall be avoided. The Financial Advisers of FY:
Rule 60 C o n t r o l o f ex p e n d i t u r e a g a i n s t of the Ministries/Departments shall ensure Breach of
Ultimate resp for any grant/appropriation and ultimate adherence to the stipulated Monthly Financial
disproportionate responsibility of the authority Expenditure Plan and the guidelines issued in Propriety
expn: the authority administering it. The Accounts Officer this regard by the Budget Division,
administering a grant/ shall report to the Head of the Department Department of Economic Affairs, from time to Monthly
approp. & not the A/c time.
concerned immediately on the first Expd Plan
Officer.
A/c Officer shall report
appearance of any disproportionate Rule 62 (4) The Financial Advisers of the Ministries/ &
expenditure, particularly in respect of Departments shall ensure adherence to the Quarterly
to the HoD the same.
recurring items of expenditure under any stipulated Quarterly Expenditure Plan and the Expd
Plan:monit
grant or appropriation or a primary unit of guidelines issued in this regard by Ministry of
ered by
appropriation thereof. However, the Finance from time to time. FAs of Min/
authority administering a grant/ Rule 63 Expenditure on New Service. No Dept
appropriation is ultimately responsible for expenditure shall be incurred during a
the control of expenditure against the financial year on a “New Service” not
grant/appropriation and not the Accounts contemplated in the Annual Budget for the
Officer. year except after obtaining a supplementary
Rule 61 Excess Expenditure. grant or appropriation or an advance from
Excess Expd: Not 1. The Accounts Officer shall not allow the Contingency Fund during that year. The
allowed by A/c Officer any payment against sanctions in guidelines to determine cases of “New
Allowed by approval excess of the Budget provisions unless Service”/”New Instrument of Service” are
of CAA, if funds there is specific approval of the Chief contained in Annexure-1 to Appendix -3.
available thru Reappr/ Accounting Authority. Rule 64 (1) Additional Allotment for excess
Suppl DfG
2. The Financial Advisers and Chief expenditure. A subordinate authority GFR 3:
FAs & CAA shall incurring the expenditure shall be responsible
A c c o u n t i n g A u t h o r i t y, b e f o r e Liability
ensure availability of
funds for excess expd. according concurrence for excess for seeing that the allotment placed at its Register
disposal is not exceeded. Where any excess maintained
thru Reappr/ Suppl under any Head, shall ensure
by
DfG availability of funds through over the allotment is apprehended, the
subordinate
Reappropriation/ Supplementary subordinate authority shall obtain additional authority
Demands for Grants. allotment before incurring the excess
(Refer Appendix 10) expenditure. For this purpose, the authorities
Rule 62 (1) Surrender of savings. Departments of incurring expenditure shall maintain a
the Central Government shall surrender to ‘Liability Register’ in Form GFR 3.
the Finance Ministry, by the dates prescribed Rule 64 (2) A Disbursing Officer may not, on his own
by that Ministry before the close of the authority, authorize any payment in excess of

Surrender of Savings: by DoCG to MoF by prescribed

dates before close of FY
Acceptance of surrender by MoF communicated to A/ 22
c Officer concrn
 Chapter – 3
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

the funds placed at his disposal. If the Instrument of Service” not provided in the
Disbursing Officer is called upon to honour a budget, necessary Supplementary Grant or
claim, which is certain to produce an excess Appropriation in accordance with Article 115
over the allotment or appropriation at his (1) of the Constitution shall be obtained
disposal, he shall take the orders of the before payment is authorized (Refer to
administrative authority to which he is Appendix 5).
subordinate before authorizing payment of Rule 67 (1) Advance from Contingency Fund.
the claim in question. The administrative When a need arises to incur unforeseen
authority shall then arrange to provide funds expenditure in excess of the sanctioned grant
either by reappropriation or by obtaining a or appropriation or on a new service not
Supplementary Grant or Appropriation or an provided in Budget and there is not sufficient
advance from the Contingency Fund. time for the voting of the Supplementary
Instructions contained in Note below Demand and the passing of the connected
Appendix 10 may also be kept in view. appropriation bill before close of the
Rule 65 (1) Re-appropriation of Funds. Subject to financial year, an advance from the
the provisions of Rule 10 of the Delegation of Contingency Fund set up under Article 267
Financial Powers Rules, and also subject to (1) of the Constitution shall be obtained
such other general or specific restrictions as before incurring the expenditure.
may be imposed by the Finance Ministry in Rule 67 (2) An advance from the Contingency Fund
this behalf, re-appropriation of funds from shall also be obtained to meet expenditure in
one primary unit of appropriation to another excess of the provisions for the service
such unit within a grant or appropriation, included in an Appropriation (Vote on
may be sanctioned by a competent authority Account) Act.
at any time before the close of the financial Rule 67 (3) The application for an advance from the
year to which such grant or appropriation Contingency Fund shall indicate inter alia the
relates. The Primary unit in this regard shall particulars of the additional expenditure
be the final unit of appropriation i.e. the involved and the sanction to the advance has
Object head of account. also to indicate the sub-head and the primary
Rule 65 (2) Re-appropriation of funds shall be made unit of the Grant to which the expenditure
only when it is known or anticipated that the appropriately relates. In case, however, any
appropriation for the unit from which funds difficulty is felt, the matter shall be referred to
are to be transferred shall not be utilized in the Finance Ministry for clarification.
full or that savings can be effected in the Rule 67 (4) The procedure for obtaining an advance
appropriation for the said unit. from the Contingency Fund and recoupment
*Amended:
Rule 65 (3) Funds shall not be re-appropriated from Contingency of the Fund shall be as laid down in the
a unit with the intention of restoring the Fund of Contingency Fund of India Rules, 1952, as
diverted appropriation to that unit when India(Amend amended from time to time. For ready
savings become available under other units ment) Rules, reference, rules have been placed at
later in the year. 2021
Appendix - 6 to this volume. *see Amended Appendix-6
Rule 65 (4) An application for re-appropriation of Rule 68 Inevitable Payments.
funds shall ordinarily be supported by a (i) Subject to the provisions of Article 114
statement in Form GFR 1 or any other special (3) of the Constitution, money
form authorized by departmental regulations indisputably payable by Government
showing how the excess is proposed to be shall not ordinarily be left unpaid.
met. In all orders, sanctioning
reappropriation, the reasons for saving and (ii) Suitable provision for anticipated
excess of Rupees 1 lakh or over and the liabilities shall invariably be made in
primary units (secondary units, wherever Demands for Grants to be placed
necessary), affected shall be invariably before Parliament.
stated. The authority sanctioning the Rule 69 For easy reference an extract relating to
reappropriation shall endorse a copy of the procedures followed in the Accounts Office
order to the Accounts Officer. for check against provision of funds as a part
Rule 66 Supplementary Grants. If savings are not of pre-check of bills has been placed at
available within the Grant to which the Appendix 10.
payment is required to be debited, or if the Rule 70 Duties and Responsibilities of the Chief
expenditure is on “New Service” or “New

23
 Chapter – 3
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

Accounting Authority. The Secretary of a Chief Accounting Authority: Secretary of Min/Dept.

Ministry/Department who is the Chief
Accounting Authority of the Ministry/
Department shall: —
(i) be responsible and accountable for
financial management of his Ministry
or Department.
(ii) ensure that the public funds
appropriated to the Ministry or
Department are used for the purpose
for which they were meant.
(iii) be responsible for the effective,
efficient, economical and transparent
use of the resources of the Ministry or
Department in achieving the stated
project objectives of that Ministry or
Department, whilst complying with
performance standards.
(iv) appear before the Committee on
Public Accounts and any other
Pa r l i a m e n t a r y C o m m i t t e e f o r
examination.
(v) review and monitor regularly the
performance of the programmes and
projects assigned to his Ministry to
determine whether stated objectives
are achieved.
(vi) be responsible for preparation of
expenditure and other statements
relating to his Ministry or Department
as required by regulations, guidelines
or directives issued by Ministry of
Finance.
(vii) shall ensure that his Ministry or
Department maintains full and proper
records of financial transactions and
adopts systems and procedures that
shall at all times afford internal
controls.
(viii) shall ensure that his Ministry or
Department follows the Government
procurement procedure for execution
of works, as well as for procurement of
services and supplies, and
implements it in a fair, equitable,
transparent, competitive and cost-
effective manner;
(ix) shall take effective and appropriate
steps to ensure his Ministry or
Department : -
(a) collects all moneys due to the
Government and
(b) avoids unauthorized, irregular and
wasteful expenditure.

24
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

GOVERNMENT ACCOUNTS
Rule 71 Preparation and presentation of Comptroller and Auditor General of India,
A/cs of Union Govt
Accounts. Accounts of the Union the transactions in Government accounts
Government shall be prepared every year shall represent the actual cash receipts and
Prepd every year
showing the receipts and disbursements disbursements during a financial year as
shows receipts, for the year, surplus or deficit generated distinguished from amounts due to or by
disbursements, surplus or
deficit, changes in Govt. during the year and changes in Government during the same period.
liabilities & assest in FY Government liabilities and assets. The Rule 75 Period of Accounts. The annual accounts
Prepd by CGA, certified accounts shall be prepared by Controller Period of of the Central Government shall record
by C&AG General of Accounts, certified by the A/cs: 1st transactions which take place during a
A/cs+C&AG report on A/ Comptroller and Auditor General of India Apr. to 31 financial year running from the 1st April to
cs: submitd to the and along with the report of the Mar the 31st March thereof.
President within 6 months Comptroller and Auditor General of India Rule 76 Currency in which Accounts are kept.
frm close of FY on these accounts, shall be submitted to
President cause them Currency The accounts of Government shall be
the President of India, preferably within six of A/cs: maintained in Indian Rupees. All foreign
laid b4 each house of Parl
months of close of the Financial Year, who Indian currency transactions and foreign aid shall
shall cause them to be laid before each Rupees be brought into account after conversion
House of Parliament. into Indian Rupees.
Rule 72 Form of Accounts. By virtue of the Rule 77 Main Divisions and structure of
Form of A/cs of Union provisions of Article 150 of the Accounts. The accounts of Government
Govt (Art. 150) Constitution, the Accounts of the Union shall be kept in three parts, Consolidated
A/cs of Union & States: Government shall be kept in such form as Fund (Part-I), Contingency Fund (Part-II)
Form prescribed by the President may, on the advice of the and Public Account (Part-III).
President on advice of Comptroller and Auditor General of India,
C&AG (Art. 150) prescribe. Part-I – Consolidated Fund is divided into
In actual prescrd by two Divisions, namely, ‘Revenue’ and
The Controller General of Accounts in the ‘Capital’ divisions. The Revenue Division
CGA, MoF(DoExp) on Ministry of Finance (Department of
behalf of President on comprises the following sections:
Expenditure) is responsible for prescribing
advice of C&AG (Art.
the form of accounts of the Union and ‘Receipt Heads (Revenue Account)’ dealing
150) with the proceeds of taxation and other
States, and to frame, or revise, rules and
manuals relating thereto on behalf of the receipts classified as revenue and the
President of India in terms of Article 150 of section ‘Expenditure Heads (Revenue
the Constitution of India, on the advice of Account)’ dealing with the revenue
the Comptroller and Auditor General of expenditure met therefrom. The Capital
India. Division comprises three sections, viz.,
‘Receipt Heads (Capital Account)’,
Rule 73 Principles of Accounting. The main ‘Expenditure Heads (Capital Account)’ and
Main Principles for Govt. principles according to which the accounts ‘Public Debt, Loans and Advances, etc.’.
A/cs: of the Government of India shall be These sections are in turn divided into
Govt Accounting Rules, maintained are contained in Government sectors such as ‘General Services’, ‘Social
1990 Accounting Rules, 1990; Accounting Rules and Community Services’, ‘Economic
Accounting Rules for for Treasuries; and Account Code Volume- Services’, etc., under which specific
Treasuries, & III. Detailed rules and instructions relating
Account Code Volume-III functions or services are grouped
to the forms of the initial and subsidiary corresponding to the sectors of
Detailed Rules & accounts to be kept and rendered by
Instructions for Initial &
classification and which are represented by
officers of the Department of Posts and Major Heads (comprising Sub-Major
Subsidiary A/cs:
other technical departments are laid down Heads wherever necessary).
Account Manuals /
Departmental
in the respective Accounts Manuals or in
the departmental regulations relating to In Part-II – Contingency Fund- are
Regulations of resp.
the Departments concerned. recorded transactions connected with the
Depts.
Contingency Fund set up by the
Rule 74 Cash based Accounting. Government Government of India under Article 267 of
Govt. A/cs: shall be prepd accounts shall be prepared on cash basis. the Constitution or Section 48 of
on cash basis
With the exception of such book Government of Union Territories Act,
adjustments as may be authorised by
Transactions in Govt. A/ 1963. There shall be a single Major Head
Government Accounting Rules, 1990 or by to record the transactions thereunder,
cs: shall be the actual
cash receipts and
any general or special order issued by the which will be followed by Minor, Sub
disbursements during a Central Government on the advice of the and/or Detailed Heads.
FY
Exception: As authorised by Govt.
Accounting Rules, 1990, Any General of
Special order on advice of C&AG 25
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

In Part-III – Public Account- transactions them in consultation with the Budget

relating to debt (other than those included Division of the Ministry of Finance. Their
in Part-I), reserve funds, deposits, Principal Accounts Offices may open
advances, suspense, remittances and cash Sub/Detailed Heads required under the
balances shall be recorded. Minor Heads falling within the Public
Rule 78 Classification of transactions in Account of India subject to the above
Classification of Government Accounts. As a general stipulations.
transactions in Govt. A/cs: rule, classification of transactions in The Object Heads have been prescribed
Represented by 6-tier Government Accounts, shall have closer under Government of India’s Orders
structure of a unique 15 reference to functions, programmes and below Rule 8 of Delegation of Financial
digit numeric code.
activities of the Government and the object Power Rules. The power to amend or
1. Major Heads of revenue or expenditure, rather than the modify these Object heads and to open
2. Sub-Major department in which the revenue or new Object Heads rest with Department of
Head, if expenditure occurs. Expenditure of Ministry of Finance on the
necessary
Major Heads (comprising Sub-Major advice of the Comptroller and Auditor
3. Minor Head
4. Sub Heads Heads wherever necessary) are divided General of India.
5. Detailed Heads into Minor Heads. Minor Heads may have Rule 80 Conformity of budget heads with rules
6. Object Heads a number of subordinate heads, generally of classification. Budget Heads exhibited
Major Heads: correspond known as Sub Heads. The Sub Heads are in estimates of receipts and expenditure
to functions of Govt. further divided into Detailed Heads framed by the Government or in any
Minor Heads: identify the followed by Object Heads. appropriation order shall conform to the
programmes The Major Heads of account, falling within prescribed rules of classification.
undertaken to achieve
the objectives of the the sectors for expenditure heads, Rule 81 Responsibility of Departmental
functions represented by generally correspond to functions of officers. Every officer responsible for the
the Major Head Government, while the Minor Heads collection of Government dues or
Sub Head: denotes identify the programmes undertaken to expenditure of Government money shall
schemes achieve the objectives of the functions see that proper accounts of the receipts
Detailed Head: denotes represented by the Major Head. The Sub and expenditure, as the case may be, are
sub scheme Head represents schemes, the Detailed maintained in such form as may have been
Object Head: the primary Head denotes sub scheme and Object prescribed for the financial transactions of
unit of appropriation Head represent the primary unit of Government with which he is concerned
showing the economic
nature of expenditure
appropriation showing the economic and tender accurately and promptly all
such as salaries and nature of expenditure such as salaries and such accounts and returns relating to them
wages, office expenses, wages, office expenses, travel expenses, as may be required by Government,
travel expenses, professional services, grants-in-aid, etc. Controlling Officer or Accounts Officer, as
professional services,
grants-in-aid, etc. The above six tiers are represented by a the case may be.
unique 15 digit numeric code. Rule 82 Classification should be recorded in all
Rule79 Authority to open a new Head of the bills and challans by Drawing
Account. The List of Major and Minor Doubts in Officers. Suitable classification shall be
Power to add new head Heads of Accounts of Union and States is head of recorded by Drawing Officers on all bills
of A/c: Transaction:
maintained by the Ministry of Finance drawn by them. Similarly, classification on
Major/Minor Heads: MoF (Department of Expenditure – Controller Matter will be challans crediting Government money into
(D/o Exp. –CGA) on referred to
advice of C&AG
General of Accounts) which is authorised the Bank shall be indicated or recorded by
Pr.AO for
to open a new head of account on the clarification of
Departmental Officers responsible for the
Sub Head/Detailed Head:
Min./Dept. in consultation advice of the Comptroller and Auditor MoF & CGA. collection of Government dues, etc. In
with Budget Division, General of India under the powers flowing cases of doubt regarding the Head under
MoF. Pr. A/c Office may from Article 150 of the Constitution. It which a transaction should be accounted,
open such a/c.
contains General Directions for opening the matter shall be referred to the Principal
Object Head: D/o Exp., Heads of Accounts and a complete list of Accounts Officer of the Ministry/
MoF on advice of C&AG
(R.8, DFPR)
the Sectors, Major, Sub-Major and Minor Department concerned for clarification of
Heads of Accounts and also some the Ministry of Finance and the Controller
Sub/detailed heads, authorised to be so General of Accounts, wherever necessary.
opened. Rule 83 Charged or Voted Expenditure. The
Ministries/Departments may open Sub- expenditure covered under Article 112 (3)
Heads and Detailed Heads as required by of the Constitution of India is charged on

26
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

the Consolidated Fund of India and is not laid down in the Memoranda of
subject to vote by the legislature. All other Instructions issued by the Reserve Bank of
expenditure met out of the Consolidated India.
Fund of India is treated as Voted Rule 86 Public Financial Management System
e x p e n d i t u r e . C h a r g e d o r Vo t e d (PFMS).—
Expenditure shall be shown separately in (1) Public Financial Management System
the accounts as well as in the Budget (PFMS), an integrated Financial
documents. Management System of Controller
Rule 84 Capital or Revenue Expenditure. General of Accounts, Government of
Significant expenditure incurred with the India, shall be used for sanction
object of acquiring tangible assets of a preparation, bill processing, payment,
permanent nature (for use in the receipt management, Direct Benefit
organisation and not for sale in the Transfer, fund flow management and
ordinary course of business) or enhancing financial reporting.
the utility of existing assets, shall broadly (2) All the ministries sanctioning grant-in-
be defined as Capital expenditure. aid shall register all implementing
Subsequent charges on maintenance, agencies till last level of
repair, upkeep and working expenses, implementation on PFMS to track fund
which are required to maintain the assets flow and unspent balances.
in a running order as also all other (3) All the payment, to the extent possible,
expenses incurred for the day to day shall be released ‘just-in-time’ by the
running of the organisation, including Ministries through PFMS.
establishment and administrative
expenses shall be classified as Revenue (4) Detailed Demand for Grants (DDG),
expenditure. Capital and Revenue as approved, must be uploaded on
expenditure shall be shown separately in PFMS at the start of each Financial
the Accounts. Year.
Rule 85 Banking Arrangements. The Reserve (5) All the re-appropriation orders,
Bank of India (RBI) shall be the banker to surrender order shall be generated
the Government. It shall maintain cash through PFMS system.
balance of the Government and provide (6) All grantee institutions shall submit
banking facilities to the Ministries and Utilisation Certificates on PFMS.
subordinate or attached offices either Rule 87 Direct Benefit Transfer.
directly through its own offices or through (1) Transfer of benefits should be done
its agent banks. For this purpose, RBI shall, directly to beneficiaries under various
in consultation with the Controller General Government Schemes and
of Accounts, nominate a bank to function Programmes using Information and
as Accredited Bank of a Ministry or Communication Technology (ICT).
Department. Pay & Accounts offices and Necessary process reengineering to
Cheque Drawing and Disbursing Officer minimise intermediary levels and to
shall have assignment accounts with the reduce delay in payments to intended
identified branches of the Accredited Bank beneficiaries with the objective of
of the Ministry. All payments shall be made minimising pilferage and duplication
through these identified bank branches. should be done for all Government
These branches shall also collect Schemes and Programmes. The
departmental and other receipts. Tax process for implementation of DBT as
revenues of the Government shall be prescribed should be adopted.
collected by the RBI through its own offices (2) DBT should include in-kind and cash
or through the nominated branches of its transfers to beneficiaries as well as
agent banks. transfers/honorariums given to
Note: Detailed procedure to be followed various enablers of government
for remittance of Government receipts into schemes like community workers, etc.
Government cash balance and for successful implementation of the
reimbursement of payments made on schemes.
behalf of Government by the banks are

27
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

▪ Appr. A/c of
(3) Transfer of cash benefits from D/o Posts &
be submitted to Parliament, shall be
Ministries/Departments should be Defence prepared annually by the Controller
done (a) directly to beneficiaries from Services: prep General of Accounts by consolidating the
Ministries/Departments; (b) through & signed by aforesaid Appropriation Accounts.
State Treasury Account; or (c) through Secretaries to Appropriation Accounts pertaining to
GoI in Post/
any Implementing Agency as Departments of Posts and Defence Services
Defence
appointed by Centre/State shall be prepared and signed by the
Governments. ▪ Appr. A/c of Secretaries to the Government of India in
Railways: prep the Department of Posts and Ministry of
(4) In-kind Transfer to Individual by Chairman,
Beneficiary/ Household/Service Defence respectively and that of Ministry of
Railway Board
provider includes schemes or Railways by the Chairman, Railway Board.
components of schemes where in-kind Rule 89 Finance Accounts. Annual accounts of
benefits are given by the Government Annual A/cs of the Government of India (including
or through any Implementing Agency GoI: prep & transactions of Department of Posts and
as appointed by Centre/State signed by Ministries of Defence and Railways and
Governments to Individual CGA, and transactions under Public Account of India
Beneficiary/Household/Service countersigned of Union Territory Governments), showing
by Secretary,
providers. under the respective Heads the annual
DoE, MoF
(5) Ministries/Departments will use PFMS receipts and disbursements and statement
platform for processing of payments of balances for the purpose of the Union,
for cash / in kind transfers to called Finance Accounts, shall be prepared
individual beneficiaries as per and signed by the Controller General of
framework laid down by Department Accounts countersigned by the Secretary
of Expenditure, Ministry of Finance. (Expenditure), Ministry of Finance.
(6) I m p l e m e n t i n g A g e n c i e s s h a l l Rule 90 Presentation of Annual accounts. The
generate Electronic Utilisation Appropriation and Finance accounts
Certificate (E-UCs) on PFMS portal mentioned above, shall be prepared by the
and submit them online. E-UCs shall respective authorities on the dates mutually
be used to certify that money was agreed upon with the Comptroller and
actually utilized for the purpose for Auditor General of India, in the forms
which it was sanctioned to eliminate prescribed by the President on the advice of
the need for physical generation of the Comptroller and Auditor General of
UCs. India and sent to the latter for recording
(7) Transaction charges for the financial his/her certificate. The certified Annual
intermediaries facilitating DBT Accounts and the Reports relating to the
payments shall be paid as stipulated accounts shall be submitted by the
by Ministry of Finance. Comptroller and Auditor General of India
to the President in accordance with the
provisions of Section 11 of the Comptroller
II. ANNUAL ACCOUNTS and Auditor General’s (Duties, Powers and
Conditions of Service) Act, 1971 and
Rule 88 Appropriation Accounts. Appropriation Clause (1) of Article 151 of the Constitution
Appr. A/cs prep by Pr.AO Accounts of Central Ministries (other than of India.
of Min/Dept (u.g/s.o. Ministry of Railways) and of Central Civil Rule 91 Administrative Ministries / PSUs /
CGA) & signed by CAA/ Departments (excluding Department of Subordinate / Statutory / Autonomous
Secretaries Min/Dept: Posts and Defence Services) shall be Bodies may have financial stakes in Public
▪ Appr. A/c of Central
Min. except Railways
prepared by the Principal Accounts Private Partnerships (PPP)/ Production
▪ Appr. A/c of Central Officers of the respective Ministries and Sharing Contracts (PSCs)/ Joint Ventures
Civil Dept. except D/o Departments (under the guidance and (JV’s)/ Subsidiary companies etc. In such
Posts & Defence supervision of the Controller General of case details of the financial stakes of the
Services Accounts) and signed by their respective Government or other entities mentioned
Chief Accounting Authorities i.e., the above, should be disclosed in the Annual
Union Govt. Appr. A/c Secretaries in the concerned Ministries or Report of the Administrative Ministry.
(Civil)
▪ Prep by CGA annually
Departments. Union Government
by consolidating above Appropriation Accounts (Civil) required to
appr. a/cs
▪ submitted to Parliament
28
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

III. PROFORMA ACCOUNTS Rule 95 Maintenance and submission of

Rule 92 Subsidiary Accounts of Government subsidiary accounts and statements by
Departments undertaking commercial department units. The Head of the unit
activities. Where the operations of certain shall arrange to obtain the orders of
Government Departments working on a Government regarding the nature and
commercial or quasi-commercial basis form of subsidiary accounts and
e.g., an industrial factory or a store cannot statements, if any. Such accounts and
be suitably brought within the cash based statements shall be submitted to the
Government accounting system, the Head Accounts Officer on such date as may be
of the units shall be required to maintain required by him. The same shall be
such subsidiary proforma accounts in appended to the Appropriation Accounts
commercial form as may be agreed of each year.
between Government and Comptroller
and Auditor General of India. This IV. PERSONAL DEPOSIT ACCOUNTS
includes the maintenance of suitable
Manufacturing, Trading, Profit & Loss
Accounts and Balance Sheet. Rule 96 Personal Deposit Account. Personal
Deposit Account is a device intended to
Rule 93 Methods and principles on which facilitate the Designated Officer thereof to
subsidiary accounts in commercial credit receipts into and effect withdrawals
form are to be kept. The methods and directly from the account, subject to an
principles in accordance with which overall check being exercised by the bank
subsidiary and proforma accounts in in which the account is authorised to be
commercial form are to be kept shall be opened. The Designated Officer shall
regulated by orders and instructions ensure (with the help of a personal ledger
issued by Government in each case. account to be maintained by the bank for
Note 1. Proforma accounts of regular the purpose) that no withdrawal will result
Government Workshops and Factories in a minus balance therein. Only
shall be kept in accordance with the Government officers acting in their official
detailed rules and procedure prescribed in or any other capacity shall be the
the departmental regulations. Proforma Designated Officer thereof.
accounts relating to Public Works shall be Rule 97 (1) Authority to open Personal Deposit
prepared by the Accounts Officers in Account. The Personal Deposit Account
accordance with the instructions contained shall be authorised to be opened by a
in Account Code for Accountants General. special order by the concerned Ministry or
Note 2. The Heads of Account (which Department in consultation with the
should, as far as possible, be common to Controller General of Accounts. Such
the Government accounts and the special order or permission shall be issued
General Ledger maintained by a or granted by the Ministry or Department
Commercial Undertaking) shall be concerned after it is satisfied that the initial
selected with due regard to the principles accounts of the moneys to be held in a
of Governmental and Commercial personal deposit account and disbursed,
accounting so that the monthly classified shall be arranged to be maintained
account of income and expenditure of the properly and shall be subject to audit.
undertaking may be prepared readily Every personal deposit account so
from the General Ledger maintained by it. authorised to be opened, shall form part of
Rule 94 Adequate regulations to be framed to the Government Account and be located in
ensure cost deduced is accurate and the Public Account thereof. The provisions
true. Where commercial accounts are relating to “Personal Deposit Account” are
maintained for the purpose of assessment contained in para 16.7 of Civil Accounts
of the cost of an article or service, the Head Manual and Rule 191 to 194 of Central
of the unit shall ensure that adequate Government Account (Receipts and
regulations are framed with the approval Payments) Rules.
of Government in order to ensure that the Rule 97 (2) Personal Deposit accounts shall
cost deduced from the accounts is generally be authorised to be opened in
accurate and true. the following types of cases:

29
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

(a) in favour of a Designated Officer considered as a capital expenditure and

appointed for the purpose of shall not, except in cases specifically
administering monies tendered by or authorised by the President on the advice
on behalf of wards and attached of the Comptroller and Auditor General of
estates under Government India, be debited to a Capital Head.
management. It shall also be ensured Capital expenditure is generally met from
that proper arrangements are made receipts of capital nature, as distinguished
for the maintenance and audit of from ordinary revenues derived from
connected initial accounts; taxes, duties, fees, fines and similar items
(b) in relation to Civil and Criminal of current income including extraordinary
Courts’ deposits, in favour of the receipts. It is open to the Government to
Chief Judicial Authority concerned; meet capital expenditure from ordinary
revenues, provided there are sufficient
(c) where, under certain regulatory
revenue resources to cover this liability.
activities of the Government, receipts
are realised and credited to a Fund or Expenditure of a Capital nature as defined
Account under the provisions of an Act above, shall not be classed as Capital
to be utilised towards expenditure expenditure in the Government Accounts
thereunder and no outgo from the unless the classification has been expressly
Consolidated Fund is involved. authorised by general or special orders of
Government.
(d) where a personal deposit account is
required to be created by a law or Expenditure of a Capital nature shall be
rules having the force of law and distinguished from the Revenue
certain liabilities devolve on the Expenditure both in the Budget Estimates
Government out of the special and in Government Accounts.
enactments; Rule 99 Principles for allocation of expenditure
(e) officers commanding units and others between Capital and Revenue. The
concerned in the administration of following are the main principles
public funds in the Defence governing the allocation of expenditure
Departments can be authorised to between Revenue and Capital:
open personal deposit accounts for (a) Capital shall bear all charges for the (i)
such funds. first construction and equipment of a
project as well as charges for
(ii)
intermediate maintenance of the work
V. CAPITAL AND REVENUE ACCOUNTS
while not yet opened for service. It
shall also bear charges for such (iii)
Rule 98 Capital Expenditure. Significant further additions and improvements,
Already
expenditure incurred with the object of which enhance the useful life of the
discussed acquiring tangible assets of a permanent asset, as may be sanctioned under
in Rule 84 nature (for use in the organisation and not rules made by competent authority.
for sale in the ordinary course of business) (b) Subject to Clause (c) below, revenue
or enhancing the utility of existing assets, shall bear subsequent charges for (i)
shall broadly be defined as Capital maintenance and all working
expenditure. Subsequent, charges on expenses. These embrace all
maintenance, repair, upkeep and working expenditure on the working and
expenses, which are required to maintain (ii)
upkeep of the project and also on
the assets in a running order as also all renewals and replacements and
other expenses incurred for the day to day additions, improvements or (iii)
running of the organisation, including extensions that are revenue in nature
establishment and administrative as per rules made by Government.
expenses, shall be classified as Revenue
(c) In the case of works of renewal and
expenditure. Capital and Revenue
replacement, which partake
expenditure shall be shown separately in
expenditure both of a capital and
the Accounts.
revenue nature, the allocation of
Note:
Expenditure on a temporary asset or on expenditure shall be regulated by the
grants-in-aid cannot ordinarily be

30
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

broad principle that Revenue should Rule 101 Capital receipts during construction
pay or provide a fund for the mainly to be utilised in reduction of
adequate re- placement of all capital expenditure :
wastage or depreciation of property Capital receipts in so far they relate to
originally provided out of capital expenditure previously debited to Capital
grants. Only the cost of genuine accruing during the process of construction
improvements, which enhance the of a project, shall be utilised in reduction of
useful life of the asset whether capital expenditure. Thereafter their
determined by prescribed rules or treatment in the accounts will depend on
formulae, or under special orders of circumstances, but except under special
Government, may be debited to rule or order of Government, they shall not
Capital. Where under special orders be credited to the revenue account of the
of Government, a Depreciation or department or undertaking.
Renewals Reserve Fund is established Rule 102 Receipts and recoveries representing
for renewing assets of any commercial recoveries of expenditure previously
department or undertaking, the debited to Capital Major Head: Receipts
distribution of expenditure on and recoveries on Capital Account in so far
renewals and replacements between as they represent recoveries of expenditure
Capital and the Fund shall be so previously debited to a Capital Major
regulated as to guard against Head shall be taken in reduction of
overcapitalisation on the one hand expenditure under the Major Head
and excessive withdrawals from the concerned except where, under the rules of
Fund on the other. allocation applicable to a particular
(d) Expenditure on account of reparation department, such receipts have to be taken
of damage caused by extraordinary to Revenue.
calamities such as flood, fire, Rule 103 Conversion of outstanding loans into
earthquake, enemy action, etc., shall equity investments or grants-in-aid.
be charged to Capital, or to Revenue, Government takes from time to time,
or divided between them, depending suitable measures to strengthen/
upon whether such expenditure results restructure the Capital base of public
in creation/acquisition of new assets sector enterprises so that these enterprises
or whether it is only for restoring the can improve their performance and
condition of the existing assets, as productivity. As a part of the package
may be determined by Government scheme, financial relief in the form of
according to the circumstance of each conversion of outstanding loans into equity
case. investments or grants-in-aid are also
(e) Expenditure on a temporary asset agreed to.
cannot ordinarily be considered as a Where loans outstanding against Public
Already
discussed
capital expenditure and shall not, Sector Undertakings are proposed to be
in Rule 98 except in cases specifically authorised converted into equity investments in or as
by the President on the advice of the grants-in-aid to the Public Sector
Comptroller and Auditor General of Undertakings, the approval of the
India, be debited to a Capital Head. Parliament to such proposals, shall be
Rule 100 Allocation between capital and obtained by including a token provision in
revenue expenditure : The allocation the relevant Demands for Grants or
between capital and revenue expenditure Supplementary Demands for Grants as
on a Capital Scheme for which separate may be found expedient. The details of
Capital and Revenue Accounts are to be such conversion of loans may be explained
kept, shall be determined in accordance in the relevant Budget/Supplementary
with such general or special orders as may Demand documents. After obtaining the
be prescribed by the Government after approval of the Parliament, the balances
consultation with the Comptroller and under loans and the progressive
Auditor General of India. expenditure of the Capital Heads of
Accounts shall be corrected proforma in
the relevant Accounts of the Union

31
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

Government, under the Loan/Capital VII. ADJUSTMENT WITH GOVERNMENT

Major Heads concerned. DEPARTMENTS ETC

VI. INTEREST ON CAPITAL Rule 108 Adjustments with State Governments.

Subject to the relevant provision of the
Rule 104 Interest rate. Except in special cases Constitution or of law made by Parliament
regulated by special orders of or any orders issued thereunder,
Government, interest at such rates as may adjustments in respect of financial
be specified from time to time shall be transactions with State Governments shall,
charged in the accounts of all Commercial unless otherwise provided for, be made in
Departments or units for which separate such manner, and to such extent as may be
capital and revenue accounts are mutually agreed upon between the Central
maintained within the Government Government and the State Government
accounts. concerned. However, adjustments with
State Government in respect of the matters
Rule 105 (1) Charging of interest on capital
mentioned below shall be regulated by the
outlay met out of specific loans raised
rules contained in Appendix-5 to the
by Government. For capital outlay met
Government Accounting Rules, 1990. The
out of specific loans raised by
rules are based on reciprocal
Government, the interest shall be charged
arrangements made with the State
at such rate as may be prescribed by
Governments and are, therefore, binding
Government, having regard to the rate of
on all of them:-
interest actually paid on such loans and
the incidental charges incurred in raising (i) Pay and Allowances, other than Leave
and managing them. Salaries.
By specific loans are meant loans that are (ii) Leave Salaries.
raised in the open market for one specific (iii) Pensions.
purpose which is clearly specified in the (iv) Expenditure involved in Audit and
prospectus and in regard to which definite keeping Accounts.
information is given at the time of raising (v) Cost of Police functions on Railways
of the loans. including the cost of protecting
Rule 105 (2) For capital outlay provided otherwise, Railway Bridges.
interest shall be charged at the rate of (vi) Cost of Forest Surveys carried out by
interest to be determined each year by the the Survey of India, and Forest maps
Department of Economic Affairs, Ministry prepared by that Department.
of Finance.
(vii) L e a v e S a l a r y a n d P e n s i o n
Rule 106 Method of calculation of interest. The Contributions recovered in respect of
interest shall be calculated on the direct Government servants lent on Foreign
capital outlay at the end of the previous Service
year plus half the outlay of the year itself,
Rule 109 Re-audit. As a convention, a period of
irrespective of whether such outlay has
three years has been accepted by the
been met from current revenues or from
Central and State Governments for the re-
other sources.
audit of past transactions involving errors
Rule 107 How interest charged to capital is to be in classification
written back. When under any special
Rule 110 W h e n a d j u s t m e n t n e c e s s a r y.
orders of Government, charges for interest
Adjustment shall always be made unless
during the process of construction of a
otherwise agreed upon —
project are temporarily met from capital,
the writing back of capitalised interest shall (a) If a commercial department or
form the first charge on any capital undertaking or a regularly organised
receipts or surplus revenue derived from store department or store section of a
the project when opened for working. department is concerned, or
(b) If under the operation of any rule or
order, an adjustment would have been
made if the particular transaction with

32
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

State Government were a transaction of the Governments incurring the

between two departments of the expenditure initially
Central Government. Rule 114 Claims of State Governments on
Rule 111 Petty and isolated claims for services account of the extra cost of agency
Petty & rendered not to be preferred. The functions. Claims of State Governments,
isolated Central Government (which includes on account of the extra cost of agency
claims worth Union Territories) and the State functions entrusted to them under Article
under
Governments have agreed under 258 of the Constitution shall be dealt with
₹10,000 not
to be reciprocal arrangements not to prefer and settled in accordance with such
preferred petty and isolated claims for an amount directions as may be issued by the
against each not exceeding Rupees ten thousand President in this regard from time to time
other against one another Rule 115 The following principles shall be generally
Rule 112 Criteria in determining whether a observed in dealing with claims preferred
particular claim is covered by the by State Governments under Clause (3) of
reciprocal arrangement. The significant Article 258 of the Constitution: —
criterion in determining whether a (i) If the agency work involves the
particular claim is covered by the employment of a State Commercial
reciprocal arrangement mentioned Department, it would be open to that
above, will be that the claim shall be both department to charge its normal
petty and of an occasional character and commercial costs.
shall cover services rendered and not
(ii) Public Works Department agency costs
supplies made unless the latter forms part
shall be represented by such
of service. The term “service rendered” will
percentage charges on the cost of
be taken to mean an individual act of
Central Works executed by the State as
service, like providing police escort to a
may be agreed between the Central
high dignitary and will not apply to supply
and the State Government concerned,
of stores etc. Claims relating to
works outlay being treated as an
Commercial undertakings under the
amount placed at the disposal of the
Government of India or the State
State Government for actual
Governments such as those of the
expenditure on the execution of the
Railways, the Department of Post, the
work.
Electrical undertakings, etc., shall fall
outside the purview of the proposed (iii) The cost of regular joint establishment
reciprocal arrangements and shall shall be shared as far as practicable
continue to be settled as hitherto. on the basis of fixed annual sums
settled in agreement with the State
If a doubt arises as to whether a particular
Government concerned.
claim would fall within or outside the
purview of the proposed arrangement, it (iv) In other cases, the following
shall be decided by mutual consultation. procedure shall be adopted unless
The above arrangements will remain in there are special orders to the
force without any time limit in respect of all contrary:-
State Governments. (a) Details of claims preferred by
Rule 113 Projects jointly executed by several State Governments shall be
State Governments. In the case of ascertained.
Projects, jointly executed by several (b) If the work has been performed by
Governments, where the expenditure is to the State Government in the past,
be shared by the participating the charges shall be compared
Governments in agreed proportions, but with those charged in the past but
the expenditure is ab-initio incurred by one it is not necessary to be meticulous
Government and shares of other in the matter.
participating Governments recovered (c) If the charges are found to be
subsequently; such recoveries from other reasonable and do not exceed
Governments shall be exhibited as Rupees Fifty thousand per annum
abatement of charges under the relevant for any individual item (or
expenditure Head of Account in the books connected group of items), a five

33
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

years contract shall be offered to concerned Demand of the Ministry

the State Government during administratively concerned with the
which the Central Government subject. In computing the extra cost,
would pay the fixed sum per the element of leave and pensionary
annum for the work. The amount charges can also be included,
will be subjected to review at the provided the relevant service and
end of each period of five years. financial rules of the State
(d) If the amount agreed upon Governments provide for this.
exceeds Rupees Fifty thousand, it (ii) The expenditure on work entrusted
shall be necessary to have an to the State Government, such as
annual statement of proposed expenditure on construction and
charges from the State maintenance of National
Government at the time of Highways, expenditure on Defence
preparation of the Budget. Works, Aviation Works, etc.-The
However, if in any individual case, expenditure directly connected with
the charges are obviously static, the execution of the scheme or work
then the contract system may be entrusted to the State Government
adopted in these cases also. such as expenditure on the
(v) In exceptional cases in which construction or maintenance of
arbitration has to be resorted to, the National Highways etc., will be
Ministry of Finance will make the adjusted direct in the accounts of the
requisite arrangement in the matter. Central Government under the
(vi) The Ministry of Finance shall be relevant Head of Account. The
consulted on all matters arising under question of including the estimates in
Article 258 (3) of the Constitution. this regard in the Budget of the State
Governments and subjecting them to
Rule 116 Principles governing transactions in
the vote of the State Legislature will not
connection with the agency functions
arise. The expenditure will be adjusted
entrusted to State Government. The
under the Head “8658 – Suspense
following procedure shall be followed in
Accounts –PAO Suspense” in the
regard to transactions arising in
Remittance Section of the State
connection with the agency functions
Accounts in the first instance pending
entrusted to the State Governments under
their eventual clearance in accordance
Article 258 of the Constitution:
with the prescribed procedure.
(i) The expenditure on extra staff or
Note: In the converse case relating to the
contingencies which the State
entrustment of a State function to the
Government have to incur-The
Central Government under Article258-A
extra cost to the State Government
of the Constitution, a procedure similar to
arising mainly in respect of the
that indicated in the Rule 116 above shall
additional staff employed or
be followed. The extra cost on staff and
contingent and other expenditure, as
other contingent expenditure, etc., will
in the case of work devolving on the
accordingly have to be provided in the
State Governments in connection with
Budget of the Central Government in the
the administration of the Census Act,
usual manner and recovery made in
is reimbursable under Article 258 (3)
lumpsum from the State Government
of the Constitution. Expenditure in this
concerned. The other expenditure on
regard shall be provided in the State
execution of the work proper should be
Budget in the first instance and
debited to the State Government
adjusted in the accounts of the State
concerned directly and the question of
Governments under the normal
obtaining a vote of the Parliament for the
Heads of Accounts. These will be
same will not arise.
reimbursed in lumpsum to the State
Governments, necessary provision Rule 117 Crucial date for closure of Inter-
being made under a distinct sub-head Governmental adjustments. Inter-
”Amounts paid to other Governments, Governmental adjustments can be carried
Departments, etc.”, under the out upto the 15th of April on which date the

34
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

books of the Reserve Bank are closed for country is regulated by the following
the month of March. Every endeavour principles;
must, therefore, be made to settle as far as (i) Maintenance – Half the maintenance
possible all transactions with State charges will be borne by the Central
Governments before the close of the year. Government, the other half being
Rule 118 Adjustments with foreign recovered, as far as practicable, from
Governments, outside bodies, etc. the foreign country, failing which the
Unless exempted by Government by foreign country’s share will also be
general or special orders, services shall borne by the Central Government.
not be rendered to any foreign (iii) Demarcation and Disputes – Charges
Government or non-Government body or relating to demarcation of boundaries
institution or to a separate fund constituted and boundary disputes will be borne
as such except on payment. by the Central Government under
Rule 119 Recoveries of expenditure for services Entry 10 of the Union List, subject to
rendered to non-Government parties. such recovery as shall be made from
Recoveries of expenditure for services the Foreign Country.
rendered or supplies made to non- (iii) Where streams or other watercourses
Government parties or other form the boundaries and where the
Governments (including local funds and ordinary principle of median line
Governments outside India), shall in all applies, the Government concerned
cases, be classified as receipts of the (i.e., Foreign Country or India) will
Government rendering such services. bear the cost of maintenance of the
Rule 120 Recoveries of expenditure for services boundary line on its side. Where a
rendered as an agent. When a separate set of survey marks is
Government undertakes a service merely maintained by each of the two
as an agent of a private body, the entire Governments on its side, the cost of
cost of the service shall be recovered from maintenance of the survey marks shall
that body so that the net cost to be borne by the Government
Government is nil. The recoveries shall be concerned.
taken as reduction of expenditure. Exception:
Explanation: The term ‘recovery’ is used (a) The arrangement in (i) above in its
in these rules to denote repayment of, or application to Nepal will be
payment by non-Government parties or subject to special arrangements
other Governments towards charges worked out in consultation with
initially incurred and classified by a the Nepal Government.
Central Government Department in the
(b) The share of the Bhutan
account, as final expenditure by debit to a
Government for maintenance
Revenue or Capital Head of Account.
and demarcation of and disputes
Recoveries towards establishment
over boundaries will be borne by
charges, tools and plants, fees for
the Central Government for the
procurement of inspection of stores or
present
both etc., effected at percentage rates or
otherwise, are some examples.
Rule 121 Payments to outside body or fund to be VIII. INTER-DEPARTMENTAL
through grant-in-aid. Any relief in ADJUSTMENTS
respect of payment for services rendered
or supplies made to any outside body or Rule 123 Inter-Departmental Adjustments. Save
fund shall ordinarily be given through a as expressly provided by any general or
grant-in-aid rather than by remission of special orders, a Service Department shall
dues. not charge other Departments for services
Rule 122 Charges relating to the maintenance rendered or supplies made which falls
and demarcations and disputes over within the class of duties for which the
boundaries. The incidence of charges former Department is constituted.
relating to the maintenance and However, a commercial Department or
demarcations and disputes over
boundaries between India and a foreign

35
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

undertaking shall ordinarily charge and departmental adjustments. The

be charged for any supplies made and s e t t l e m e n t o f i n t e r- d e p a r t m e n t a l
services rendered to, or by, other adjustments shall be regulated by the
departments of Government. directions contained in Chapter 4 of
Rule 124 Principles for division of Departments Government Accounting Rules, 1990.
for purposes of inter-departmental Rule 127 Inter-departmental and other
payments. For purposes of inter- adjustments to be made in the account
Departmental payments, the Departments year. Under the directions contained in the
of a Government shall be divided into Account Code for Accountants General,
service Departments and commercial Inter-departmental and other adjustments
departments according to the following are not to be made in the accounts of the
principles:- past year, if they could not have been
(i) Service Departments. -These are reasonably anticipated in time for funds
constituted for the discharge of those being obtained from the proper authority.
functions which either- In all cases, where the adjustment could
have reasonably been anticipated as, for
(a) Are inseparable from and form example, recurring payments to another
part of the idea of Government Government or department and payments
e.g. Departments of which, though not of fixed amount, are of a
Administration of Justice, Jails, fixed character, etc., the Accounts Officer
Police, Education, Medical, Public will automatically make the adjustment in
Health, Forest, Defence; or the accounts before they are finally closed.
(b) Are necessary to, and form part The onus of proving that the adjustments
of, the general conduct of the could not have been reasonably
business of Government e.g. anticipated should lie with the Controlling
D e p a r t m e n t s o f S u r v e y, Officer.
Government Printing, Stationery, As between different Departments of the
Public Works (Building and Roads same Government, the recoveries effected
Branch), Central Purchase for services rendered shall be classified as
Organisation (Director-General deductions from the gross expenditure.
of Supplies and Disposals, New However, recoveries made by a
Delhi). Commercial Department, e.g., Railways,
(ii) C o m m e r c i a l D e p a r t m e n t s o r Posts or a departmental commercial
Undertakings.-These are established undertaking in respect of services rendered
mainly for the purposes of rendering in pursuance of the functions for which the
services or providing supplies, of Commercial Department is constituted
certain special kinds, on payment for shall be treated as receipts of the
the services rendered or for the Department but where it acts as an agent
articles supplied. They perform for the discharge of functions not germane
functions, which are not necessarily to the essential purpose of the Department,
governmental functions. They are the recoveries shall be taken as reduction
required to work to a financial result of expenditure.
determined through accounts Exception.-Recoveries of fees for
maintained on commercial principles. purchase, inspection, etc., effected by the
Rule 125 Period for preferment of claims. All Central Purchase Organizations of
claims shall ordinarily be preferred Government of India, are treated as
between Departments, both commercial receipts of the Department concerned.
and non-commercial of the Central NOTE 1.-The term ‘recovery’ is used in this
Government, within the same financial rule to denote repayment of/or payment by
year and not beyond three years from the one Department of the same Government
date of transaction. This limitation, towards charges initially incurred and
however, may be waived in specific cases classified by another Department in its
by mutual agreement between the accounts as final expenditure by debit to a
departments concerned. Revenue or Capital Head of Account.
Rule 126 Procedure for settlement of inter- Recoveries towards establishment charges,

36
 Chapter – 4
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

tools and plants, fees for procurement or pension as prescribed in the appropriate
inspection of stores or both, etc., effected order issued from time to time under
at percentage rates or otherwise, are some Appendix-II of Fundamental and
examples. Supplementary Rules.
NOTE 2.-Recoveries effected from another
Department of the same Government
which are to be classified as deduction
from the gross expenditure, shall be shown
in the relevant Demand for Grant as
“below the line” recovery under the
appropriate Major Head of Account etc.
Recovery actually effected, irrespective of
the year to which it relates shall be
adjusted in accounts in the schedule of
recovery to be attached to the
Appropriation Account of the year in which
the recovery is effected.
Rule 128 Adjustment of Pensionary Charges of
certain Commercial Departments.
Except as otherwise provided, the
pensionary liability of commercial
departments and undertakings, for which
pro forma commercial accounts are
maintained, shall be assessed on a
contribution basis at such rates as may be
fixed by Government from time to time. In
the case of departments and
undertakings, for which no regular
commercial accounts are maintained
either within or outside the regular
Government accounts but which are
allowed to charge for their products or
services rendered, the pensionary liability
shall be taken into account in the estimate
of overhead charges and manufacturing
costs for the purpose of calculating the
issue price of goods manufactured or fees
for services rendered. The calculation shall
be made at rates prescribed for the
purpose by Government.
NOTE: The Railways, Posts and Defence
Departments are regarded as separate
Governments for the purpose of
adjustment of pensionary charges.
Rule: 129 Pensionary liability in the case of
Government Departments/
Undertakings declared as commercial.
In the case of Government Departments
and Undertakings declared as
commercial, adjustment of Pensionary
liability shall be made in the regular
accounts by charging the average of the
percentage for 15th year of service based
on the rates of monthly contribution of

37
 Chapter – 5
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

WORKS
Rule 130 Original works means all new estimated to cost above Rupees thirty Lakhs
Min./ Dept.
constructions, site preparation, additions may award and original works of any value to:
and alterations to existing works, special repair works (i) any Public Sector Undertaking set up
repairs to newly purchased or previously above ₹ 30 by the Central or State Government to
abandoned buildings or structures, Lakhs &
original/ minor
carry out civil or electrical works or
including remodelling or replacement. (ii) t o a n y o t h e r C e n t r a l / S t a t e
works of any
Minor works mean works which add value to: Government organisation /PSU which
capital value to existing assets but do not i. PSU to carry may be notified by the Ministry of
create new assets. out civil/
electrical Urban Development (MoUD) for such
Repair works means works undertaken to works or purpose after evaluating their
maintain building and fixtures. Works will ii. any other financial strength and technical
also include services or goods incidental Central/State competence.
Govt.
or consequential to the original or repair For the award of work under this sub-rule,
organisation/
works. PSU notified the Ministry/ Department shall ensure
Rule 131 Administrative control of works by MoUD competition among such PSUs/
includes: Organisations. This competition shall be
(i) assumption of full responsibility for essentially on the lump sum service
construction, maintenance and charges to be claimed for execution of
upkeep; work.
(ii) proper utilization of buildings and In exceptional cases, for award of work
allied works; under (i) and (ii) above, on nomination
(iii) provision of funds for execution of basis, the conditions contained in Rule 194
these functions. would apply. The work under these
circumstances shall also be awarded only
Rule 132 Powers to sanction works. The powers on the basis of lump sum service charge
delegated to various subordinate
authorities to accord administrative Rule 134 Work under the administrative control
approval, sanction expenditure and re- of the Public Works Departments.
appropriate funds for works are regulated Works not specifically allotted to any
by the Delegation of Financial Powers Ministry or Department shall be included in
Rules, and other orders contained in the the Grants for Civil Works to be
respective departmental regulations. administered by Central Public Works
Department. No such work may be
Rule 133 (1) A Ministry or Department at its financed partly from funds provided in
Min./ Dept. may directly
discretion may directly execute repair departmental budget and partly from the
execute repair works: works estimated to cost up to Rupees Thirty budget for Civil works as mentioned
Upto ₹ 30 Lakhs Lakhs after following due procedure above.
indicated in Rule 139, 159 & 160.
Rule 135 (1) General Rules. Subject to the
Rule 133 (2) A Ministry or Department may, at its observance of these general rules,
Min./ Dept. may assign discretion, assign repair works estimated (including Rule 144)the initiation,
repair works above ₹ 30 to cost above Rupees thirty Lakhs and authorization and execution of works
Lakhs & original/ minor original/minor works of any value to any allotted to a particular Ministry or
works of any value to Public Works Organisation (PWO) such as
PWO Department shall be regulated by detailed
Central Public Works Department rules and orders contained in the
(CPWD), State Public Works Department, respective departmental regulations and
Rule 139: Procedure for others Central Government organisations by other special orders applicable to them.
Execution of Works authorised to carry out civil or electrical
works such as Military Engineering Service Rule 135 (2) Ministry or Department shall put in
Rule 159: E-Publishing place, as far as possible, empowered
(MES), Border Roads Organisation (BRO),
Rule 160: E-Procument etc. or Ministry/Department’s construction project teams for all large value projects
wings of Ministries of Railways, Defence, and these teams should be tasked only with
Environment & Forests, Information & project execution and not given other
Broadcasting and Departments of Posts, operational duties.
and Space etc. Rule 136 (1) No works shall be commenced or
Rule 133 (3) As an alternative to 133(2), a Ministry liability incurred in connection with it until:
or Department may award repair works (i) administrative approval has been

38
 Chapter – 5
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

obtained from the appropriate applied to carry out additional work not
authority in each case. contemplated in the original project.
(ii) sanction to incur expenditure has Rule 139 Procedure for Execution of Works. The
been obtained from the competent broad procedure to be followed by a
authority. Ministry or Department for execution of
(iii) a properly detailed design has been works under its own arrangements shall be
sanctioned; while designing the as under :-
projects etc, principles of Life Cycle (i) the detailed procedure relating to
cost may also be considered. expenditure on such works shall be
(iv) estimates containing the detailed prescribed by departmental
specifications and quantities of regulations framed in consultation
various items have been prepared on with the Accounts Officer, generally
the basis of the Schedule of Rates based on the procedures and the
maintained by CPWD or other Public principles underlying the financial and
Works Organisations and sanctioned. accounting rules prescribed for similar
(v) funds to cover the charge during the works carried out by the Central Public
year have been provided by Works Department (CPWD);
competent authority. (ii) preparation of detailed design and
(vi) tenders invited and processed in estimates shall precede any sanction
accordance with rules. for works;
(vii) a Work Order issued. (iii) no work shall be undertaken before
Rule 136 (2) On grounds of urgency or otherwise, if Issue of Administrative Approval and
it becomes necessary to carry out a work or Expenditure Sanction by the competent
incur a liability under circumstances when Authority on the basis of estimates
the provisions set out under sub rule 1 of framed;
rule 136 cannot be complied with, the Less than (iv) Open tenders will be called for works
concerned executive officer may do so on ₹ 5 lakh costing Rs. Five lakh to Rs. Thirty lakh;
his own judgement and responsibility. works: (v) limited tenders will be called for works
Limited
Simultaneously, he should initiate action to Tenders
costing less than Rupees five lakhs;
obtain approval from the competent (vi) execution of Contract Agreement or
authority and also to intimate the ₹ 5 to 30 Award of work should be done before
concerned Accounts Officer. lakh
commencement of the work;
works:
Rule 136 (3) Any development of a project Open (vii) final payment for work shall be made
considered necessary while a work is in Tenders only on the Personal Certificate of the
progress, which is not contingent on the Officer-in-charge of execution of the
execution of work as first sanctioned, shall work in the format given below:
have to be covered by a supplementary
“I …... Executing Officer of (Name of
estimate.
the Work), am personally satisfied that
Rule 137 For purpose of approval and sanctions, a the work has been executed as per the
group of works which forms one project, specifications laid down in the
shall be considered as one work. The Contract Agreement and the
necessity for obtaining approval or workmanship is up to the standards
sanction of higher authority to a project followed in the Industry.”
which consists of such a group of work
Rule 140 For original/minor works and repair works
should not be avoided because of the fact
entrusted as per Rule 133(2) or Rule
that the cost of each particular work in the
133(3), the Administrative Approval and
project is within the powers of such
Expenditure Sanction shall be accorded
approval or sanction of a lower authority.
and funds allotted by the concerned
This provision, however, shall not apply in
authority under these rules and in
case of works of similar nature which are
accordance with the Delegation of
independent of each other.
Financial Power Rules. The Public Works
Rule 138 Any anticipated or actual savings from a Organisation or the Public Sector
sanctioned estimate for a definite project, Undertaking or any Organisation allotted
shall not, without special authority, be

39
 Chapter – 5
GENERAL FINANCIAL RULES 2017
Ministry of Finance
Department of Expenditure

work shall then execute the work entrusted

to it in accordance with the rules and
procedures prescribed in that
organisation. A Memorandum of
Understanding (MoU) may be drawn with
Public Works Organisation or the Public
Sector Undertaking for proper execution
of work.
Rule 141 Review of Projects. After a project costing Project costing ₹ 100 Cr. or above:
Rs. 100 crore or above is approved, the Review Committee to be set up by Admn. Min/
Administrative Ministry or Department will Dept.
i. consist of Representative from Admn. Min,
set up a Review Committee consisting of a
Finance (IF Wing) & Executing Agency.
representative each from the ii. Powers to accept variation within 10% of the
Administrative Ministry, Finance (Internal approved estimates
Finance Wing) and the Executing Agency
to review the progress of the work. The Work costing less than ₹ 100 Cr.: discretion
of the Administrative Min./Dept. to set up a
Review Committee shall have the powers
suitable mechanism for review and acceptance
to accept variation within 10% of the of variation within 10% of the approved
approved estimates. For works costing estimates.
less than Rs. 100 crore, it will be at the
discretion of the Administrative
Ministry/Department to set up a suitable
mechanism for review and acceptance of
variation within 10% of the approved
estimates.

40
 Ch.-6 - PROCUREMENT OF GOODS AND SERVICES
PROCUREMENT OF GOODS name or brand.
(ii) the specifications in terms of
Rule 142 This chapter contains the general rules quality, type etc., as also quantity
Rule 142:
applicable to all Ministries or Departments, This chapter contains
of goods to be procured, should be
regarding procurement of goods required General Rules of PoGs clearly spelt out keeping in view
for use in the public service. Detailed the specific needs of the procuring
instructions relating to procurement of Detailed rules: issued by organisations. The specifications
goods may be issued by the procuring Procuring Dept. in so worked out should meet the
departments broadly in conformity with the conformity with General basic needs of the organisation
Rules of PoGs here
general rules contained in this Chapter. without including superfluous and
Rule 143 Definition of Goods. The term 'goods' used non-essential features, which may
Goods includes in this chapter includes all articles, result in unwarranted expenditure.
material, commodity, livestock, furniture, (iii) Where applicable, the technical
fixtures, raw material, spares, instruments, specifications shall, to the extent
machinery, equipment, industrial plant, practicable, be based on the
vehicles, aircraft, ships, medicines, railway national technical regulations or
rolling stock, assemblies, subassemblies, recognized national standards or
accessories, a group of machineries building codes, wherever such
comprising of an integrated production standards exist, and in their
process or such other category of goods or absence, be based on the relevant
intangible products like software, international standards. In case of
technology transfer, licenses, patents or Government of India funded
other intellectual properties purchased or projects abroad, the technical
otherwise acquired for the use of specifications may be framed
*Goods does not Government but excludes books, based on requirements and
include publications, periodicals, etc. for a library. standards of the host beneficiary
Goods includes
The term 'goods' also includes works and Government, where such
services which are incidental or standards exist.
consequential to the supply of such goods, Provided that a procuring entity
such as, transportation, insurance, may, for reasons to be recorded in
installation, commissioning, training and writing, adopt any other technical
maintenance. specification.
Rule 144 Fundamental principles of public (iv) Care should also be taken to avoid
Characteristics of buying (for all procurements including purchasing quantities in excess of
Authority delegated procurement of works). Every authority requirement to avoid inventory
financial powers of delegated with the financial powers of carrying costs.
procuring goods:
Responsible
procuring goods in public interest shall (v) offers should be invited following a
Accountable have the responsibility and accountability fair, transparent and reasonable
Bring E-E-T to bring efficiency, economy, and procedure.
Fair and Equitable transparency in matters relating to public (vi) the procuring authority should be
treatment of procurement and for fair and equitable satisfied that the selected offer
suppliers treatment of suppliers and promotion of adequately meets the requirement
Promotion of
competition in public procurement. in all respects.
competition
The procedure to be followed in making (vii) the procuring authority should
Procedure in making
public procurement must conform to the satisfy itself that the price of the
public procurement: following yardsticks :- selected offer is reasonable and
i. Description of (i) The description of the subject consistent with the quality
subject matter of matter of procurement to the required.
procmnt extent practicable should - (viii) at each stage of procurement the
ii.specifications of (a) be objective, functional, concerned procuring authority
quality, type,
generic and measurable and must place on record, in precise
quantity of goods
etc. specify technical, qualitative terms, the considerations which
and performance weighed with it while taking the
procurement
characteristics. decision.
(b) not indicate a requirement for (ix) a complete schedule of
a particular trade mark, trade procurement cycle from date of

32
 issuing the tender to date of prospective suppliers. The Procurement of
issuing the contract should be Goods and Services by Ministries or
published when the tender is Departments will be mandatory for Goods
issued. or Services available on GeM. The
(x) All Ministries/Departments shall credentials of suppliers on GeM shall be
prepare Annual Procurement Plan certified by GeM SPV. The procuring
before the commencement of the authorities will certify the reasonability of
year and the same should also be rates. The GeM portal shall be utilized by
placed on their website. the Government buyers for direct on-line
[Notwithstanding anything purchases as under:
6
contained in these Rules, (i) Up to {Rs.25,000/-} through any of
Department of Expenditure may, Upto ₹ 25,000: Any the available suppliers on the
by order in writing, impose supplier on GeM GeM, meeting the requisite quality,
restrictions, including prior specification and delivery period.
registration and/or screening, on (ii) Above Rs.25,000/- and up to
procurement from bidders from a ₹ 25,000 - 5 Lakh : Thru Rs.5,00,000/- through the GeM
country or countries, or a class of GeM seller, lowest Seller having lowest price amongst
countries, on grounds of defence price, Atleast 3 the available sellers (excluding
of India, or matters directly or manufacturers, Meeting Automobiles where current limit of
indirectly related thereto including requisite quality, 30 lakh will continue), of at least
specification, delivery
national security; no procurement period.
three different manufacturers, on
shall be made in violation of such GeM, meeting the requisite quality,
3
restrictions.] Online Bidding & specification and delivery period.
Rule 145 Authorities competent to purchase Online Reverse The tools for online bidding and
Auction: Available on
goods. An authority which is competent to online reverse auction available on
GeM for procurement
incur expenditure may sanction the upto ₹5 Lakh
GeM can be used by the Buyer
purchase of goods required for use in even for procurements less than
public service in accordance with Rs 5,00,000.
provisions in the Delegation of Financial (iii) Above Rs.5,00,000/- through the
Powers Rules, following the general Above ₹ 5 Lakh : Thru supplier having lowest price
procedure contained in the following rules. supplier having LP, meeting the requisite quality,
Rule 146 Procurement of goods required on Meeting requisite quality, specification and delivery period
mobilisation Procurement of goods specification, delivery after mandatorily obtaining bids,
period, After mandatorily
required on mobilisation and/ or during the using online bidding or reverse
obtaining Bids (Online
continuance of Military operations shall be Bidding or Reverse auction tool provided on GeM
regulated by special rules and orders Auction) (excluding Automobiles where
issued by the Government on this behalf Excluding Automobiles current limit of 30 lakh will
7
from time to time. upto 30 Lakh continue).]
**Imp Rule 147 Powers for procurement of goods. [The (iv) The invitation for the online e-
Common use
Full power for Ministries or Departments have been Goods and bidding/reverse auction will be
delegated full powers to make their own Services available to all the existing Sellers
procurement of
available on
goods & services, arrangements for procurement of goods GeM:
or other Sellers registered on the
not available on and services, that are not available on Mandatorily to portal and who have offered their
GeM: Delegated to- GeM. Common use Goods and Services be procured goods/services under the particular
Mins or Depts through GeM
available on GeM are required to be product/service category, as per
(GFR 149)
procured mandatorily through GeM as per terms and conditions of GeM.
4
Rule 149.] (v) The above mentioned monetary
5
Rule 148 Deleted Above Monetary ceiling only ceiling is applicable only for
Rule 149 Government e-Market place (GeM). for purchases from GeM purchases made through GeM. For
Government of India has established the Outside GeM, relevant GFR purchases, if any, outside GeM,
Government e-Marketplace (GeM) for Rules shall apply. relevant GFR Rules shall apply.
common use Goods and Services. GeM (vi) The Ministries/Departments shall
SPV will ensure adequate publicity work out their procurement
including periodic advertisement of the requirements of Goods and
items to be procured through GeM for the Services on either "OPEX" model

3 6
Inserted vide Department of Expenditure (DoE), Ministry of Finance In case of procurement of Automobiles only, the ceiling of direct
(MoF) OM No. F.6/18/2019-PPD dated 23.07.2020. purchase will be Rs. 30,00,000/- instead of Rs. 25,000/-. Refer DoE
4
Amended vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019. OM No. F.1/26/2018-PPD dated 09.08.2021.
5 7
Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019. Amended vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.

33
 or "CAPEX" model as per their at anytime, provided they fulfill all
requirement/ suitability at the time the required conditions.
of preparation of Budget Estimates (iv) Performance and conduct of every
(BE) and shall project their Annual registered supplier is to be
Procurement Plan of goods and watched by the concerned Ministry
services on GeM portal within 30 or Department. The registered
days of Budget approval. supplier(s) are liable to be
(vii) The Government Buyers may removed from the list of approved
ascertain the reasonableness of suppliers if they fail to abide by the
prices before placement of order terms and conditions of the
using the Business Analytics (BA) registration or fail to supply the
tools available on GeM including goods on time or supply
the Last Purchase Price on GeM, substandard goods or make any
Department's own Last Purchase false declaration to any
Price etc. Government agency or for any
(viii) A demand for goods shall not be ground which, in the opinion of the
divided into small quantities to Government, is not in public
make piecemeal purchases to interest.
avoid procurement through L-1 (v) [The list of registered suppliers for
Buying / bidding / reverse auction the subject matter of procurement
on GeM or the necessity of be exhibited on websites of the
obtaining the sanction of higher Procuring Entity/ their e-
9
authorities required with reference Procurement portals.]
to the estimated value of the total Rule 151 Debarment from bidding.
demand. (i) A bidder shall be debarred if he has
Rule 150 Registration of Suppliers been convicted of an offence –
Debarment of
(i) [For goods and services not Bidder: If convicted (a) under the Prevention of
Goods and Services available on GeM, Head of of offence under Corruption Act, 1988; or
not available on Ministry/ Department may also Prevention of (b) the Indian Penal Code or any
GeM: HoD may register suppliers of goods and Corruption Act, IPC other law for the time being in
register suppliers or any other law for
for G&S services which are specifically lose of life, property, force, for causing any loss of
required by that Department or threat to public life or property or causing a
Office, periodically. Registration of health threat to public health as part of
the supplier should be done execution of a public
following a fair, transparent and procurement contract.
reasonable procedure and after (ii) A bidder debarred under sub-section
giving due publicity. Such Debarment of (i) or any successor of the bidder
registered suppliers should be Bidder for shall not be eligible to participate in
boarded on GeM as and when the conviction of a procurement process of any
item or service gets listed on offences: procuring entity for a period not
8
GeM.] Not exceeding 3 exceeding three years commencing
(ii) Credentials, manufacturing years from date of from the date of debarment.
capability, quality control systems, debarment. Department of Commerce (DGS&D)
DoC maintains such
past performance, after-sales list. Displayed on will maintain such list which will also
service, financial background etc. website of DGS&D & be displayed on the website of
of the supplier(s) should be CPPP DGS&D as well as Central Public
carefully verified before Procurement Portal.
registration. (iii) A procuring entity may debar a
(iii) The supplier(s) will be registered Debarment of bidder or any of its successors, from
for a fixed period (between 1 to 3 Bidder for breach of participating in any procurement
Suppliers will be code of integrity:
registered on GeM: years) depending on the nature of process undertaken by it, for a
for fixed period bet. the goods. At the end of this Not exceeding 2 period not exceeding two years, if it
1 to 3 years period, the registered supplier(s) years from date of determines that the bidder has
depending upon willing to continue with registration debarment. breached the code of integrity. The
nature of goods. Min./ Dept. maintains
are to apply afresh for renewal of such list. Displayed Ministry/Department will maintain
registration. New supplier(s) may on their website. such list which will also be displayed
also be considered for registration on their website.

8 9
Amended vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019. Amended vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.

34
 (iv) The bidder shall not be debarred made without inviting quotations or bids on
unless such bidder has been given a the basis of a certificate to be recorded by
reasonable opportunity to represent the competent authority in the following
against such debarment format.
Rule 152 Enlistment of Indian Agents: [Ministries / "I„ am personally satisfied that these goods
Departments if they so require, may enlist purchased are of the requisite quality and
Indian agents, who desire to quote directly specification and have been purchased
10
on behalf of their foreign principals.] from a reliable supplier at a reasonable
Rule 153 Reserved Items and other Purchase/ price."
Price Preference Policy. Rule 155 Purchase of goods by Purchase
(i) [The Central Government, through ₹ 25,000 to 2.5 L: Committee. [In case a certain item is not
13
Mandatory: administrative instructions, has on each available on the GeM portal,] Purchase of
Procurement of at least reserved all items of hand spun occasion, on goods costing above [Rs.25,000 (Rupees
20% from handloom and hand-woven textiles (khadi reccomnd of twenty five thousand only) and upto
origin, from KVIC / goods) for exclusive purchase Local Purchase Rs.2,50,000/- (Rupees two lakh and fifty
Handloom Clusters/ Committee (3 14
Weavers having from Khadi Village Industries thousand only)] on each occasion may
appr level
pehchan cards commission (KVIC). Of all items of members, be made on the recommendations of a
textiles required by Central decided by HoD) duly constituted Local Purchase
Government departments, it shall when the item is Committee consisting of three members of
be mandatory to make not available on an appropriate level as decided by the
procurement of at least 20% from GeM Head of the Department. The committee
amongst items of handloom origin, will survey the market to ascertain the
for exclusive purchase from KVIC reasonableness of rate, quality and
and/ or Handloom Clusters such specifications and identify the appropriate
as Co-Operative Societies, Self supplier. Before recommending placement
Help Group (SHG) Federations, of the purchase order, the members of the
Joint Liability Group (JLG), committee will jointly record a certificate as
Producer Companies (PC), under:
Corporations etc. including "Certified that we, members of the
Weavers having Pehchan purchase committee are jointly and
11
Cards.] individually satisfied that the goods
(ii) Ministry of Micro, Small and recommended for purchase are of the
MSME Procurement
Medium Enterprises (MSME) have requisite specification and quality, priced at
Policy: Micro, Small and notified procurement policy under the prevailing market rate and the supplier
Medium Enterprises section 11 of the Micro, Small and recommended is reliable and competent to
Development Act, 2006 Medium Enterprises Development supply the goods in question, and it is not
(Sec. 11)
Ad, 2006. debarred by Department of Commerce or
(iii) The Central Government may, by Ministry/ Department concerned."]
15
notification, provide for mandatory Rule 156 Deleted.
Vocal for local Policy procurement of any goods or Rule 157 A demand for goods should not be divided
services from any category of No piecemeal into small quantities to make piecemeal
purchases to avoid
bidders, or provide for preference sanction of higher
purchases to avoid the necessity of
to bidders on the grounds of authority
promotion of locally manufactured 01.09.2021 and OM No. F.20/42/2021-PPD(Pt.) dated
goods or locally provided services. 24.09.2021.Note: These powers are to be used only when the
Rule 154 Purchase of goods without quotation required goods are not available on Government e-Marketplace (GeM)
as stipulated in this Department OM No. 6/1/2018-PPD dated
Upto ₹ 25,000: on Purchase of goods upto the value of Rs.
19.01.2018.
each occasion, w/o 25,000 (Rupees twenty five thousand) 13
12 Inserted vide OM No. F.1/26/2018-PPD dated 02.04.2019.
Bids/Quotation, only] only on each occasion may be 14
based on certificate Replace with “Rs. 50,000 (Rupees Fifty thousand) or one lakh and
upto 10 lakh” in case of Scientific Ministries/ Departments which are
10
Amended vide DoE OM No. F.26/2/2016-PPD dated 25.07.2017. Department of Science and Technology, Department of Bio-
11
Amended vide DoE OM No. F.10/2/2019-PPD(Pt.) dated technology, Department of Scientific and Industrial Research,
17.02.2020. Department of Atomic Energy, Department of Space, Ministry of Earth
12
Replace with “Rs. 50,000 (Rupees Fifty thousand) only for common Sciences, Defence Research and Development Organisation and
use goods and Rs. One lakh for scientific equipments and computers” Indian Council of Agricultural Research (ICAR); refer DoE OM No.
in case of Scientific Ministries/ Departments which are Department of F.20/42/2021-PPD dated 01.09.2021 and OM No. F.20/42/2021-
Science and Technology, Department of Bio-technology, Department PPD(Pt.) dated 24.09.2021.Note: These powers are to be used only
of Scientific and Industrial Research, Department of Atomic Energy, when the required goods are not available on Government e-
Department of Space, Ministry of Earth Sciences, Defence Research Marketplace (GeM) as stipulated in this Department OM No.
and Development Organisation and Indian Council of Agricultural 6/1/2018-PPD dated 19.01.2018.
15
Research (ICAR); refer DoE OM No. F.20/42/2021-PPD dated Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.

35
 GFR. 158: Standard Methods of obtaining Bids
(i) Advertised Tender Enquiry (GFR 161)
(ii) Limited Tender Enquiry (GFR 162)
(iii) Two-Stage Bidding (GFR 164)
-Above instructions would NOT apply to:
(iv) Single Tender Enquiry (GFR 166)
provisions of
(v) Electronic Reverse Auctions (GFR 167)
Rule 154 (Purchase of goods without
Power conferred on Min/Dept. by Rule 147 quotations) or
Exception: Rule 154 & 155 Rule 155 (Purchase of goods by purchase
committee)
16
obtaining the sanction of higher authority (iv) Deleted.
required with reference to the estimated (v) These instructions would not apply
value of the total demand to procurements made in terms of
Rule 158 Purchase of goods by obtaining bids. provisions of Rules 154 (Purchase
Except in cases covered under Rule of goods without quotations) or
154,155, and 156(1), Ministries or 155 (Purchase of goods by
Departments shall procure goods under purchase committee) of General
the powers referred to in Rule 147 above Financial Rules.
by following the standard method of Rule 160 E -Procurement
obtaining bids in: (i) It is mandatory for Ministries/
(i) Advertised Tender Enquiry Mandatory to receive all bids Departments to receive all bids
(ii) Limited Tender Enquiry through e-procurement through e-procurement portals in
(iii) Two-Stage Bidding portals respect of all procurements.
(iv) Single Tender Enquiry (ii) Ministries/ Departments which do
(v) Electronic Reverse Auctions not have a large volume of
Rule 159 E-Publishing procurement or carry out
(i) It is mandatory for all Ministries/ procurements required only for
Central Public Departments of the Central day-to-day running of offices and
Procurment Portal Government, their attached and also have not initiated e-
(CPPP): Mandatory to Subordinate Offices and procurement through any other
publish- Autonomous /Statutory Bodies to solution provided so far, may use
-Tender enquiries
publish their tender enquiries, e-procurement solution developed
-Corrigenda thereon
-Details of bid awards corrigenda thereon and details of by NIC. Other Ministries/
bid awards on the Central Public Departments may either use e-
Procurement Portal (CPPP). procurement solution developed
(ii) Individual cases where by NIC or engage any other
confidentiality is required, for service provider following due
-Exemption from e- reasons of national security, would process.
17
publishing: Individual be exempted from the mandatory (iii) Deleted.
cases, due to national e-publishing requirement. The (iv) In individual case where national
security & confidentiality
decision to exempt any case on *Exemption from e-pro: security and strategic
-Decision to exempt:
Approval of Secretary the said grounds should be Individual cases, due to considerations demands
(Min./Dept) + Financial approved by the Secretary of the national security & confidentiality, Ministries/
Advisor Ministry/ Department with the confidentiality Departments may exempt such
*Decision to exempt:
-In case of concurrence of the concerned cases from e-procurement after
Autonomous/ statutory Approval of Secretary (Min./
Financial Advisor. In the case of Dept) + Financial Advisor seeking approval of concerned
bodies: Head of the Body
Autonomous Bodies and Statutory Secretary and with concurrence of
+ Head of the Finance
-Statistical Information Bodies' approval of the Head of Financial Advisers.
of exempted cases: the Body with the concurrence of (v) In case of tenders floated by
intimated on Quarterly the Head of the Finance should be *Tender floated by Indian Indian Missions Abroad,
basis to MoF(DoE) obtained in each such case. Missions Abroad: Comptent Competent Authority to decide the
Statistical information on the Authority to decide tender tender, may exempt such case
number of cases in which may exempt e-pro from e-procurement.
exemption was granted and the Rule161 Advertised Tender Enquiry
value of the concerned contract (i) Subject to exceptions incorporated
should be intimated on a Quarterly ₹ 25L & above: Invitation to under Rule154, 155,162 and 166,
basis to the Ministry of Finance, tenders by advertisement invitation to tenders by
Department of Expenditure. *Advt. on: CPPP advertisement should be used for
(iii) The above instructions apply to all www.eprocure.gov.in, GeM procurement of goods of estimated
& organisation website
-Above instructions apply Tender Enquiries, Requests for value of Rs. 25 lakhs (Rupees
to: Proposals, Requests for Twenty Five Lakh) and above.
*Tender Enquiries, Expressions of Interest, Notice for Advertisement in such cases
*Requests for Proposals,
pre Qualification/ Registration or should be given on Central Public
*Requests for Expressions of
Interest,
any other notice inviting bids or Procurement Portal (CPPP) at
*Notice for pre Qualification/ proposals in any form whether www.eprocure.gov.in and on GeM.
Registration or they are advertised, issued to An organisation having its own
*Any other notice inviting bids limited number of parties or to a
or proposals in any form single party.
16
Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.
17
Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.

36
 website should also publish all its be charged for the tender
advertised tender enquiries on the documents downloaded by the
website. bidders.
(ii) The organisation should also post (vi) Ordinarily, the minimum time to be
the complete bidding document in *Min. Time allowed for allowed for submission of bids
its website and on CPPP to enable submission of Bids should be three weeks from the
prospective bidders to make use of Domestic Bidding: 3 weeks date of publication of the tender
the document by downloading from Domestic+Foreign Bidding: notice or availability of the bidding
4 weeks; from date of
the web site. publication of the tender
document for sale, whichever is
(iii) The advertisements for invitation of notice/ availability of bidding later. Where the Department also
tenders should give the complete document for sale, whichever contemplates obtaining bids from
web address from where the is later. abroad, the minimum period
bidding documents can be should be kept as four weeks for
downloaded. both domestic and foreign bidders.
(iv) [Global Tender Enquiry (GTE): Rule 162 Limited Tender Enquiry
(a) Where the Ministry or (i) This method may be adopted
Department feels that the Upto ₹ 25L: LTE method to when estimated value of the goods
*GTE for tenders above
goods of the required quality, be adopted. to be procured is up to Rupees
₹200 Cr.:
specifications etc., may not be *Copies of bidding docu: sent Twenty five Lakhs. Copies of the
*where required goods not
directly to firms on the list of
available in India & looking available in the country and it bidding document should be sent
registered suppliers for
for suitable offers from is necessary to also look for goods required (GFR 150) directly by speed post/registered
abroad suitable competitive offers *No. of suppliers: more than post/courier/ email to firms which
*Min/Dept may circulate
from abroad, the Ministry or 3; efforts for more suppliers are borne on the list of registered
tender notice to- Indian
Embassies abroad/ Foreign
Department may send copies *E-publish: as per GFR 159 suppliers for the goods in question
of the tender notice to the *Unsolicited Bid: should not as referred under Rule 150 above.
Embassies in India
be accepted.
*Selection of Embassies: Indian Embassies abroad as The number of supplier firms in
*Submission of Bid: sufficient
depend on possibility of well as to the Foreign time should be given. Limited Tender Enquiry should be
availability of required goods Embassies in India. The more than three. Efforts should be
in such countries selection of embassies will made to identify a higher number
*Exemption from e-pro [GFR
160]
depend on the possibility of of approved suppliers to obtain
availability of the required more responsive bids on
goods in such countries. In competitive basis.
such cases e-procurement as Further, an organisation should
per Rule 160 may not be publish its limited tender enquiries
insisted. on Central Public Procurement
(b) No Global Tender Enquiry Portal (CPPP) as per Rule 159.
*In exceptional case- GTE (GTE), however shall be Apart from CPPP, the
for tenders below ₹200 Cr. invited for tenders up to Rs organisations should publish the
*when there are special 200 crore or such limit as may tender enquiries on the
reasons for GTE be prescribed by the Department's or Ministry's web
*Min/Dept may record
Department of Expenditure site.
detailed justification & seek
approval of Competent from time to time. Provided (ii) The unsolicited bids should not be
Authority (specified by DoE) that for tenders below such accepted. However Ministries/
limit, in exceptional cases, Departments should evolve a
where the Ministry or system by which interested firms
Department feels that there can register and bid in next round
are special reasons for GTE, of tendering.
it may record its detailed (iii) Purchase through Limited Tender
justification and seek prior Exceptional circumstances Enquiry may be adopted even
approval for relaxation to the for LTE above ₹ 25L: where the estimated value of the
above rule from the I. Urgency: when demand is procurement is more than Rupees
Competent Authority specified urgent; *additional expd. twenty-five Lakhs, in the following
justified due to urgency;
by the Department of circumstances.
18 *nature of urgency recorded
Expenditure.] s
*above cond certified by (a) The competent authority in
(v) In order to promote wider Comp. Auth. in Min/Dept. the Ministry or Department
participation and ease of bidding, II. when ATE not in public certifies that the demand is
no cost of tender document may interest: sufficient reasons urgent and any additional
recorded in writing by C.A. expenditure involved by not
III. when sources of supply
18
procuring through advertised
Amended vide DoE OM No. F.12/17/2019-PPD dated 15.05.2020. definitely known & possibility
of fresh source(s) is remote.

37
 tender enquiry is justified in 2-SB Procurement is
identify specific characteristics
view of urgency. The Ministry used when: for the subject matter of
or Department should also put *Not possible to formulate procurement, without
on record the nature of the detailed spec./specific receiving inputs regarding its
urgency and reasons why the characteristics of proc. technical aspects from
procurement could not be sub. matter w/o receiving bidders; or
inputs on tech. aspect
anticipated. from bidders
(b) the character of the subject
(b) There are sufficient reasons, *Character of sub. matter: matter of procurement is
to be recorded in writing by s.t. rapid tech. advances/ subject to rapid technological
the competent authority, market fluctuations advances or market
indicating that it will not be in *Contract for purpose of fluctuations or both; or
public interest to procure the research, experiment, (c) Ministry/Department seeks to
study or development
goods through advertised *Bidder carry out a
enter into a contract for the
tender enquiry. detailed survey/ purpose of research,
(c) The sources of supply are investigation & undertake experiment, study or
definitely known and a comprehensive development, except where
possibility of fresh source(s) assessment of risks, costs the contract includes the
beyond those being tapped is and obligations assoc. production of items in
with the procurement.
remote. quantities sufficient to
(iv) Sufficient time should be allowed establish their commercial
for submission of bids in Limited viability or to recover research
Tender Enquiry cases. and development costs; or
Rule 163 Two bid system (simultaneous receipt (d) The bidder is expected to
2-BS: for purchasing of separate technical and financial carry out a detailed survey or
high value plant, bids): For purchasing high value plant, investigation and undertake a
machinery etc.; machinery etc. of a complex and technical comprehensive assessment
complex & technical nature, bids may be obtained in two parts of risks, costs and obligations
nature; Bids obtd in asunder: associated with the particular
2 parts:
I. Technical Bid:
(i) Technical bid consisting of all procurement.
consist of all technical technical details along with (ii) The procedure for two stage
details & commercial commercial terms and conditions; 2-SB Procedure: bidding shall include the following,
terms & condns and I Stage:Min/Dept invite bids namely:—
II.Financial Bid: (ii) Financial bid indicating item-wise thru advertised tender w/o (a) in the first stage of the bidding
indicate item-wise a bid price; eligible bids are
price for the items mentioned in process, the
price of items in evaluated by a committee
technical bid.
the technical bid. which may hold discussions Ministry/Department shall
The technical bid and the financial bid with bidders; procuring invite bids through advertised
TB & FB: to be should be sealed by the bidder in separate entity shall not modify the tender containing the
sealed in separate covers duly super-scribed and both these fundamental nature of the technical aspects and
covers; then put in procurement itself.
sealed covers are to be put in a bigger contractual terms and
bigger cover; sealed II Stage: Procuring
& super-scribed. cover which should also be sealed and conditions of the proposed
entity invite bids from all
I Stage: TB opened duly super-scribed. The technical bids are eligible bidders of first
procurement without a bid
by purchasing Min/ to be opened by the purchasing Ministry or stage to present final bid price;
Dept; evaluated by a Department at the first instance and with bid prices in response (b) all first stage bids, which are
competent committee evaluated by a competent committee or to a revised set of T&C of otherwise eligible, shall be
or autho the procurement; any
authority. At the second stage financial evaluated through an
II Stage: FB of only bidder not in a position to
technically acceptable bids of only these technically acceptable supply the procurement
appropriate committee
offers opened for offers should be opened after intimating matter due to modification
constituted by the Ministry/
further eval., ranking them the date and time of opening the in the specifications/ T&C Department;
& award of contract. financial bid for further evaluation and may withdraw from the (c) the committee may hold
ranking before awarding the contract. bidding proceedings discussions with the bidders
Rule 164 Two-Stage Bidding (Obtain bids in two without forfeiting any bid and if any such discussion is
security or being penalised
2-SB:Bids obtained stages with receipt of financial bids after in any way, by declaring his
held, equal opportunity shall
in 2 stages. receipt and evaluation of technical bids) intention to withdraw with
be given to all bidders to
TB: received first & (i) Ministry/Department may procure adequate justification. participate in the discussions;
evaluated. the subject matter of procurement (d) in revising the relevant terms
FB: received second. by the method of two-stage and conditions of the
bidding, if procurement, the procuring
(a) it is not feasible to formulate entity shall not modify the
detailed specifications or fundamental nature of the

38
 procurement itself, but may goods from a single source under the
add, amend or omit any provision of sub Rule 166 (i) and 166 (iii)
specification of the subject as applicable.
matter of procurement or (i) The indented goods are
criterion for evaluation; manufactured by M/s …………
(e) in the second stage of the (ii) No other make or model is
bidding process, the procuring acceptable for the following
entity shall invite bids from all reasons:
those bidders whose bids at ……………………………………….
the first stage were not (iii) Concurrence of finance wing to the
rejected, to present final bid proposal
with bid prices in response to vide:…………………………………
a revised set of terms and (iv) Approval of the competent
conditions of the procurement; authority vide:
(f) any bidder, invited to bid but (Signature with date and
not in a position to supply the designation of the indenting officer)
subject matter of procurement Rule 167 Electronic Reverse Auction
due to modification in the (i) Electronic Reverse Auction means
specifications or terms and an online real-time purchasing
conditions, may withdraw from technique utilised by the procuring
the bidding proceedings entity to select the successful bid,
without forfeiting any bid which involves presentation by
security that he may have bidders of successively more
been required to provide or favourable bids during a scheduled
being penalised in any way, period of time and automatic
by declaring his intention to evaluation of bids;
withdraw from the (ii) A procuring entity may choose to
procurement proceedings with procure a subject matter of
adequate justification. procurement by the electronic
Rule 165 Late Bids. In the case of advertised tender reverse auction method, if:
Late Bids of ATE/ enquiry or limited tender enquiry, late bids (a) It is feasible for the procuring
LTE should not be (i.e. bids received after the specified date entity to formulate a detailed
considered. and time for receipt of bids) should not be description of the subject
considered. matter of the procurement;
Rule 166 Single Tender Enquiry. Procurement (b) There is a competitive market
STE procurement from a single source may be resorted to in of bidders anticipated to be
circumstances: the following circumstances : qualified to participate in the
i. only a particular (i) It is in the knowledge of the user electronic reverse auction, so
firm is the department that only a particular that effective competition is
manufacturer of the
required goods firm is the manufacturer of the ensured;
ii.due to emergency, required goods (c) The criteria to be used by the
required goods are (ii) In a case of emergency, the procuring entity in determining
necessarily to be required goods are necessarily to the successful bid are
purchased from a
particular source be purchased from a particular quantifiable and can be
iii. For standardisatn source and the reason for such expressed in monetary terms;
of machinery / spare decision is to be recorded and and
parts to be approval of competent authority (iii) The procedure for electronic
compatible to the
existing sets of obtained. reverse auction shall include the
equipment the (iii) For standardisation of machinery following, namely:
required item is to be or spare parts to be compatible to (a) The procuring entity shall
purchased only from the existing sets of equipment (on solicit bids through an
a selected firm
the advice of a competent invitation to the electronic
Proprietary Article technical expert and approved by reverse auction to be
Certificate to be the competent authority), the published or communicated in
provided by the required item is to be purchased accordance with the
Min./Dept before
procuring thru STE only from a selected firm provisions similar to e-
Note: Proprietary Article Certificate in the procurement; and
following form is to be provided by the (b) The invitation shall, in addition
Ministry/Department before procuring the to the information as specified

39
 *Imp.
Terminologies
1. Request for
19
proposal in e-procurement, include (DPIIT)] . The bidders should be
2.Tender details relating to access to asked to furnish bid security along
3. Bid and registration for the with their bids. Amount of bid
4. Diff bet. Tender &
Bid
auction, opening and closing security should ordinarily range
of the auction and Norms for between two percent to five
conduct of the auction. percent of the estimated value of
Rule 168 Contents of Bidding Document the goods to be procured. The
1: Instructions to Bidders. All the terms, conditions, stipulations and amount of bid security should be
2: Conditions of Contract.
3: Schedule of information to be incorporated in the determined accordingly by the
Requirements bidding document are to be shown in the Ministry or Department and
4:Specifications and allied
Technical Details. appropriate chapters as below:- indicated in the bidding
5: Price Schedule (for Chapter - 1: Instructions to Bidders. documents. The bid security may
bidders for quoting prices).
6: Contract Form. Chapter - 2: Conditions of Contract. be accepted in the form of
20
7: Other Standard Forms, if
any.
Chapter - 3: Schedule of Requirements. [Insurance Surety Bonds] ,
Chapter-4:Specifications and allied Account Payee Demand Draft,
Technical Details. Fixed Deposit Receipt, Banker's
Chapter - 5: Price Schedule (to be utilised Cheque or Bank Guarantee from
by the bidders for quoting their prices). any of the Commercial Banks or
Chapter - 6: Contract Form. payment online in an acceptable
Chapter-7: Other Standard Forms, if any, form, safeguarding the purchaser's
to be utilised by the purchaser and the interest in all respects. The bid
bidders. security is normally to remain valid
Rule 169 Maintenance Contract. Depending on the for a period of forty-five days
Maintenance cost and nature of the goods to be beyond the final bid validity period.
Contract: entered purchased, it may also be necessary to (ii) Bid securities of the unsuccessful
depending on the enter into maintenance contract(s) of Bid securities of bidders should be returned to them
cost & nature of the suitable period either with the supplier of Unsuccessful bidders: at the earliest after expiry of the
goods purchased; returned to them
the goods or with any other competent final bid validity and latest on or
either with- supplier of at the earliest after expiry
goods or other firm, not necessarily the supplier of the before the 30th day after the award
of the final bid validity &
competent firm; esp. subject goods. Such maintenance latest on or before 30th
of the contract. However, in case
needed for contracts are especially needed for day after the award of the of two packet or two stage bidding,
sophisticated & costly sophisticated and costly equipment and contract Bid securities of unsuccessful
equipment & machinery. It may, however, be kept in In case of 2-SB: within 30 bidders during first stage i.e.
machinery. Paid days of declaration of
mind that the equipment or machinery is technical evaluation etc should be
maintenace shall result of Ist stage/ tech.
start only after
maintained free of charge by the supplier returned within 30 days of
eval.
warranty period. during its warranty period or such other declaration of results of first stage
21
extended periods as the contract terms i.e. technical evaluation etc.]
may provide and the paid maintenance (iii) In place of a Bid security, the
should commence only thereafter. In place of a Bid security, Ministries/ Departments may
Rule 170 Bid Security Min/ Dept may require require Bidders to sign a Bid
or Earnest Money * (i) To safeguard against a bidder's Bidders to sign a Bid securing declaration accepting that
withdrawing or altering its bid securing declaration. if they withdraw or modify their
safeguard against bidder's Suspended in case of
withdrawal/alteration of bid
during the bid validity period in the Bids during the period of validity,
default to sign contract or
terms during bid validity period case of advertised or limited tender submit a performance
or if they are awarded the contract
in ATE/LTE. enquiry, Bid Security (also known security. and they fail to sign the contract, or
Exempted: MSEs defined in as Earnest Money) is to be to submit a performance security
MSE Procurement Policy or obtained from the bidders except before the deadline defined in the
registered with CPO/Min/Dept. Micro and Small Enterprises request for bids document, they
or Startups recognised by
DPIIT.
(MSEs) as defined in MSE will be suspended for the period of
Furnished with Bid. Procurement Policy issued by time specified in the request for
2-5% of estimated value of Department of Micro, Small and bids document from being eligible
goods to be procured. Medium Enterprises (MSME) or to submit Bids for contracts with
Indicated in the bidding are registered with the Central the entity that invited the Bids.
documents. Purchase Organisation or the Rule 171 Performance Security
Accepted in the form of-
concerned Ministry or Department (i) To ensure due performance of the
Insurance Surety Bonds,
A/c Payee Demand Draft, [or Startups as recognized by contract, Performance Security is
Fixed Deposit Receipt, Department for Promotion of
19
Banker's Cheque or Industry and Internal Trade Inserted vide DoE OM No. F.20/2/2014-PPD(Pt.) dated 25.07.2017.
20
Bank Guarantee (incl. e-bank Inserted vide DoE OM No. F.1/1/2022-PPD dated 02.02.2022.
21
guarantee) from any of the Amended vide DoE OM No. F.1/2/2022-PPD dated 01.04.2022.
Remains valid for 45
Commercial Banks or days beyond the final
payment online in an bid validity period
acceptable form 40
Performance Security: To to be obtained from the successful not exceed the amount
ensure due performance of the
contract awarded to successful
bidder awarded the contract. payable for six months under
bidder. Unlike contracts of Works and the contract.
In case of contracts for Plants, in case of contracts for Min/ Dept + FAs may Ministries or Departments of
goods: PS depends on-Market goods, the need for the relax the ceilings (including the Central Government may
conditions & commercial Performance Security depends on % laid down for advance relax, in consultation with their
practice the market conditions and payment for private firms). Financial Advisers concerned,
5-10% of value of contract. While making any advance
commercial practice for the the ceilings (including
Indicated in the bidding payment, adequate
documents. particular kind of goods. percentage laid down for
safeguards in the form of
Furnished in the form of- Performance Security should be bank guarantee etc. to be advance payment for private
Insurance Surety Bonds, for an amount of five to ten per obtained from the firm. firms) mentioned above.
A/c Payee Demand Draft, cent. of the value of the contract Part payment to the While making any advance
Fixed Deposit Receipt, as specified in the bid documents. supplier may be released payment as above, adequate
Banker's Cheque or after it dispatches the
Performance Security may be safeguards in the form of
Bank Guarantee (incl. e-bank goods from its premises in
guarantee) from any of the furnished in the form of [Insurance bank guarantee etc. should be
22 terms of the contract.
Commercial Banks or Surety Bonds] , Account Payee obtained from the firm.
payment online in an Demand Draft, Fixed Deposit Rule 172 (2)Part payment to suppliers: Depending
acceptable form Receipt from a Commercial bank, on the terms of delivery incorporated in a
Remains valid for 60 days Bank Guarantee from a contract, part payment to the supplier may
beyond completion of all
Commercial bank or online be released after it dispatches the goods
contractual obligations.
Bid security refunded on
payment in an acceptable form from its premises in terms of the contract.
receipt of Performance security. safeguarding the purchaser's Rule 173 Transparency, competition, fairness
interest in all respects. and elimination of arbitrariness in the
(ii) Performance Security should procurement process. All government
remain valid for a period of sixty purchases should be made in a
days beyond the date of transparent, competitive and fair manner,
completion of all contractual to secure best value for money. This will
obligations of the supplier also enable the prospective bidders to
including warranty obligations. formulate and send their competitive bids
(iii) Bid security should be refunded to with confidence. Some of the measures for
the successful bidder on receipt of ensuring the above are as follows:-
Performance Security. (i) the text of the bidding document
Rule 172 (1)Advance payment to supplier should be self-contained and
Ordinarily: Payments Ordinarily, payments for services rendered comprehensive without any
only after services or supplies made should be released only ambiguities. All essential
rendered & supplies after the services have been rendered or information, which a bidder needs
made. supplies made. However, it may become for sending responsive bid, should
In exceptional necessary to make advance payments for be clearly spelt out in the bidding
situations, Advance
payments can be
example in the following types of cases :- document in simple language. The
made for: (i) Advance payment demanded by condition of prior turnover and
i. Maintenance firms holding maintenance prior experience may be relaxed
contracts for servicing contracts for servicing of Air- for Startups (as defined by
of ACs, computers, conditioners, computers, other Department for Promotion of
other costly costly equipment, etc. Industry and Internal Trade)
equipment, etc.
ii.Fabrication
(ii) Advance payment demanded by subject to meeting of quality &
contracts, turn-key firms against fabrication contracts, technical specifications and
contracts etc. with turn-key contracts etc. making suitable provisions in the
following limits: Such advance payments should bidding document. The bidding
Private Firms-30% of not exceed the following limits: document should contain, interalia.
the contract (a) Thirty percent. of the contract (a) Description and Specifications
State/Central Govt./
value to private firms; of goods including the nature,
PSUs-40% of the
contract (b) Forty percent. of the contract quantity, time and place or
Maintenance value to a State or Central places of delivery.
Contract-Amount Government agency or a (b) the criteria for eligibility and
payable for 6 months Public Sector Undertaking; or qualifications to be met by the
under the contract (c) in case of maintenance bidders such as minimum
contract, the amount should level of experience, past
performance, technical
22
capability, manufacturing
Inserted vide DoE OM No. F.1/1/2022-PPD dated 02.02.2022.

41
 facilities and financial position resubmit it, as the case may
etc or limitation for be, or withdraw such bid in
participation of the bidders, if case the modification to
any. bidding document materially
(c) eligibility criteria for goods affect the essential terms of
indicating any legal the procurement, within the
restrictions or conditions period initially allotted or such
about the origin of goods etc extended time as may be
which may required to be met allowed for submission of
by the successful bidder. bids, after the modifications
(d) the procedure as well as date, are made to the bidding
time and place for sending the document by the procuring
bids. entity:
(e) date, time and place of Provided that the bid last
opening of the bid. submitted or the bid as
(f) Criteria for evaluation of bids modified by the bidder shall
(g) special terms affecting be considered for evaluation
performance, if any. (iv) Suitable provision should be kept
(h) Essential terms of the in the bidding document to enable
procurement contract. a bidder to question the bidding
(i) Bidding Documents should conditions, bidding process and/ or
If a firm quotes NIL
include a clause that "if a firm rejection of its bid. The reasons for
charges/ consideration, the
bid shall be treated as quotes NIL charges/ rejecting a tender or non-issuing a
unresponsive & will not be consideration, the bid shall be tender document to a prospective
considered. treated as unresponsive and bidder must be disclosed where
will not be considered". enquiries are made by the bidder.
(ii) Any other information which the (v) Suitable provision for settlement of
procuring entity considers disputes, if any, emanating from
necessary for the bidders to the resultant contract, should be
submit their bids. kept in the bidding document.
(iii) Modification to bidding document: (vi) The bidding document should
(a) In case any modification is indicate clearly that the resultant
made to the bidding document contract will be interpreted under
or any clarification is issued Indian Laws.
which materially affects the (vii) The bidders should be given
terms contained in the bidding reasonable time to prepare and
document, the procuring entity send their bids.
shall publish or communicate (viii) The bids should be opened in
such modification or public and authorised
clarification in the same representatives of the bidders
manner as the publication or should be permitted to attend the
communication of the initial bid opening.
bidding document was made. (ix) The specifications of the required
(b) In case a clarification or goods should be clearly stated
modification is issued to the without any ambiguity so that the
bidding document, the prospective bidders can send
procuring entity shall, before meaningful bids. In order to attract
the last date for submission of sufficient number of bidders, the
bids, extend such time limit, if, specification should be broad
in its opinion more time is based to the extent feasible.
required by bidders to take (x) Pre-bid conference: In case of
into account the clarification turn-key contract(s) or contract(s)
or modification, as the case of special nature for procurement
may be, while submitting their of sophisticated and costly
bids. equipment or wherever felt
(c) Any bidder who has submitted necessary, a suitable provision is
his bid in response to the to be kept in the bidding
original invitation shall have documents for one or more rounds
the opportunity to modify or of pre-bid conference for clarifying

42
 issues and clearing doubts, if any, bidder whose bid has been found
about the specifications and other to be responsive and who is
allied technical details of the plant, eligible and qualified to perform
equipment and machinery etc. the contract satisfactorily as per
projected in the bidding document. the terms and conditions
The date, time and place of pre-bid incorporated in the corresponding
conference should be indicated in bidding document. However,
the bidding document. This date where the lowest acceptable
should be sufficiently ahead of bid bidder against ad-hoc requirement
opening date. The records of such is not in a position to supply the full
conference shall be intimated to all quantity required, the remaining
bidders and, shall also be quantity, as far as possible, be
exhibited on the website(s) where ordered from the next higher
tender was published. responsive bidder at the rates
(xi) Criteria for determining offered by the lowest responsive
responsiveness are to be taken bidder.
into account for evaluating the bids (xvii) Procurement of Energy Efficient
such as: Electrical Appliances: Ministries/
(a) time of delivery. Departments while procuring
(b) Performance/ efficiency/ electrical appliances notified by
environmental characteristics. Department of Expenditure shall
(c) the terms of payment and of ensure that they carry the notified
guarantees in respect of the threshold or higher Star Rating of
subject matter of Bureau of Energy Efficiency
procurement. (BEE).
(d) price. (xviii) The name of the successful bidder
(e) cost of operating, maintaining awarded the contract should be
and repairing etc. mentioned in the CPPP, Ministries
(xii) Bids received should be evaluated or Departments website and their
in terms of the conditions already notice board or bulletin.
incorporated in the bidding (xix) Rejection of all Bids is justified
documents; No new condition when
which was not incorporated in the (a) effective competition is
bidding documents should be lacking.
brought in for evaluation of the (b) all Bids and Proposals are not
bids. Determination of a bid's substantially responsive to the
responsiveness should be based requirements of the
on the contents of the bid itself Procurement Documents.
without recourse to extrinsic (c) the Bids'/Proposals' prices are
evidence. substantially higher that the
(xiii) Bidders should not be permitted to updated cost estimate or
alter or modify their bids after available budget; or
expiry of the deadline for receipt of (d) none of the technical
bids. Proposals meets the minimum
(xiv) Negotiation with bidders after bid technical qualifying score.
opening must be severely (xx) Lack of competition in rule 173(xix)
discouraged. However, in shall not be determined solely on
exceptional circumstances where the basis of the number of Bidders.
price negotiation against an ad- Even when only one Bid is
hoc procurement is necessary due submitted, the process may be
to some unavoidable considered valid provided following
circumstances, the same may be conditions are satisfied:
resorted to only with the lowest (a) the procurement was
evaluated responsive bidder. satisfactorily advertised and
23
(xv) Deleted. sufficient time was given for
(xvi) Contract should ordinarily be submission of bids.
awarded to the lowest evaluated (b) the qualification criteria were
not unduly restrictive; and
23
(c) prices are reasonable in
Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.

43
 comparison to market values so that financial or other
(xxi)
When a limited or open tender benefit may be obtained or an
results in only one effective offer, it obligation avoided.
shall be treated as a single tender (c) any collusion, bid rigging or
contract. anticompetitive behavior that
* (xxii) In case a purchase Committee is may impair the transparency,
constituted to purchase or fairness and the progress of
recommend the procurement, no the procurement process.
member of the purchase (d) improper use of information
Committee should be reporting provided by the procuring
directly to any other member of entity to the bidder with an
such Committee in case estimated intent to gain unfair advantage
value of procurement exceeds Rs. in the procurement process or
25 lakhs. for personal gain.
Rule 174 Efficiency, Economy and Accountability (e) any financial or business
in Public Procurement System. Public transactions between the
procurement procedure should ensure bidder and any official of the
efficiency, economy and accountability in procuring entity related to
the system. To achieve the same, the tender or execution process of
following keys areas should be addressed: contract; which can affect the
(i) To reduce delay, appropriate time decision of the procuring
frame for each stage of entity directly or indirectly.
procurement should be prescribed (f) any coercion or any threat to
by the Ministry or Department. impair or harm, directly or
(ii) To minimise the time needed for indirectly, any party or its
decision making and placement of property to influence the
contract, every procurement process.
Ministry/Department, with the (g) obstruction of any
approval of the competent investigation or auditing of a
authority, may delegate, wherever procurement process.
necessary, appropriate purchasing (h) making false declaration or
powers to the lower functionaries. providing false information for
(iii) The Ministries or Departments participation in a tender
should ensure placement of process or to secure a
contract within the original validity contract;
of the bids. Extension of bid (ii) disclosure of conflict of interest.
validity must be discouraged and (iii) Disclosure by the bidder of any
resorted to only in exceptional previous transgressions made in
circumstances. respect of the provisions of sub-
24
(iv) Deleted. clause (i) with any entity in any
Rule 175 (1) Code of Integrity country during the last three years
No official of a procuring entity or a bidder or of being debarred by any other
shall act in contravention of the codes procuring entity.
which includes Rule 175 (2) The procuring entity, after giving a
(i) prohibition of reasonable opportunity of being heard,
(a) making offer, solicitation or comes to the conclusion that a bidder or
acceptance of bribe, reward prospective bidder, as the case may be,
or gift or any material benefit, has contravened the code of integrity, may
either directly or indirectly, in take appropriate measures.
exchange for an unfair Rule 176 Buy-Back Offer
advantage in the procurement When it is decided with the approval of the
process or to otherwise competent authority to replace an existing
influence the procurement old item(s) with a new and better version,
process. the department may trade the existing old
(b) any omission, or item while purchasing the new one. For
misrepresentation that may this purpose, a suitable clause is to be
mislead or attempt to mislead incorporated in the bidding document so
that the prospective and interested bidders
24
formulate their bids accordingly.
Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.

44
 Depending on the value and condition of does not have requisite expertise.
the old item to be traded, the time as well Approval of the competent authority should
as the mode of handing over the old item be obtained before engaging consultant(s).
to the successful bidder should be decided Rule 181 Preparation of scope of the required
and relevant details in this regard suitably Consultant(s): The Ministries/
incorporated in the bidding document. Departments should prepare in simple and
Further, suitable provision should also be concise language the requirement,
kept in the bidding document to enable the objectives and the scope of the
purchaser either to trade or not to trade the assignment. The eligibility and
item while purchasing the new one. prequalification criteria to be met by the
consultants should also be clearly
PROCUREMENT OF SERVICES identified at this stage.
Rule 182 Estimating reasonable expenditure:
A. CONSULTING SERVICES Ministry or Department proposing to
engage consultant(s) should estimate
Rule 177 "Consulting Service means any subject reasonable expenditure for the same by
*Imp matter of procurement (which as ascertaining the prevalent market
distinguished from 'Non- Consultancy conditions and consulting other
Consulting Services' involves primarily non-physical organisations engaged in similar activities.
Services: involves
primarily non-
project-specific, intellectual and procedural Rule 183 Identification of likely sources.
physical project- processes where outcomes/ deliverables (i) Where the estimated cost of the
specific, intellectual would vary from one consultant to Estimated cost of consulting service is up to Rupees
& procedural another), other than goods or works, consulting service twenty-five lakhs, preparation of a
processes; and except those incidental or consequential to UPTO ₹ 25L: long list of potential consultants
includes preparation of a
the service, and includes professional, may be done on the basis of
professional, long list of potential
intellectual, training and advisory services consultants formal or informal enquiries from
intellectual, training
and advisory or any other service classified or declared may be done on the other Ministries or Departments or
services as such by a procuring entity but does not basis of Organisations involved in similar
or other service include direct engagement of a retired formal or informal activities, Chambers of Commerce
classified or Government servant. enquiries from & Industry, Association of
declared as such by Note: These Services typically involve other Min./Dept/ consultancy firms etc.
a procuring entity. Org. involved in similar
providing expert or strategic advice e.g., (ii)
activities, Chambers
Where the estimated cost of the
DOES NOT include management consultants, policy of Commerce consulting services is above
goods or works; consultants, communications consultants, & Industry, Rupees twenty-five lakhs, in
direct engagement of Advisory and project related Consulting Association of addition to(i) above, an enquiry for
a retired Govt. Services which include, feasibility studies, consultancy firms seeking 'Expression of Interest'
servant. project management, engineering services, etc. from consultants should be
finance, accounting and taxation services, published on Central Public
training and development etc. Estimated cost of
Procurement Portal (CPPP) at
Rule 178 The Ministries or Departments may hire consulting service www.eprocure.gov.in and on GeM.
external professionals, consultancy firms ABOVE ₹ 25L: in An organisation having its own
or consultants (referred to as consultant addition to above- website should also publish all its
hereinafter) for a specific job, which is well 'Expression of advertised tender enquiries on the
defined in terms of content and time frame Interest' from website. Enquiry for seeking
consultants to be
for its completion. published on CPPP,
Expression of Interest should
Rule 179 This chapter contains the fundamental GeM, Org. website include in brief, the broad scope of
principles applicable to all Ministries or Expression of Interest work or service, inputs to be
Departments regarding engagement of should include broad provided by the Ministry or
consultant(s). Detailed instructions to this scope of work/ service, Department, eligibility and the pre-
effect may be issued by the concerned inputs to be provided qualification criteria to be met by
by the Min/Dept,
Ministries or Departments. However, the the consultant(s) and consultant's
eligibility and the pre-
Ministries or Departments shall ensure that qualification criteria to past experience in similar work or
they do not contravene the basic rules be met by the service. The consultants may also
contained in this chapter. consultant(s) & be asked to send their comments
Rule 180 Identification of Services required to be consultant's past on the objectives and scope of the
performed by Consultants: Engagement experience in similar work or service projected in the
work/ service.
of consultants may be resorted to in enquiry. Adequate time should be
situations requiring high quality services for allowed for getting responses from
which the concerned Ministry/ Department interested consultants.

45
Rule 184 Short listing of consultants. On the basis at the specified date, time and place.
of responses received from the interested Rule 188 Late Bids. Late bids i.e. bids received
parties as per Rule 183 above, consultants after the specified date and time of receipt
meeting the requirements should be short should not be considered.
listed for further consideration. The number Rule 189 Evaluation of Technical Bids: Technical
of short listed consultants should not be bids should be analysed and evaluated by
less than three. a Consultancy Evaluation Committee
Rule 185 Preparation of Terms of Reference (CEC) constituted by the Ministry or
(TOR). Department. The CEC shall record in detail
The TOR should include the reasons for acceptance or rejection of
(i) Precise statement of objectives. the technical proposals analysed and
(ii) Outline of the tasks to be carried evaluated by it.
out. Rule 190 Evaluation of Financial Bids of the
(iii) Schedule for completion of tasks. technically qualified bidders: The
(iv) The support or inputs to be Ministry or Department shall open the
provided by the Ministry or financial bids of only those bidders who
Department to facilitate the have been declared technically qualified by
consultancy. the Consultancy Evaluation Committee as
(v) The final outputs that will be per Rule 189 above for further analysis or
required of the Consultant. evaluation and ranking and selecting the
Rule 186 Preparation and Issue of Request for successful bidder for placement of the
Proposal (RFP). RFP is the document to consultancy contract.
be used by the Ministry/Department for Rule 191 Methods of Selection/ Evaluation of
obtaining offers from the consultants for Consultancy Proposals
the required service. The RFP should be The basis of selection of the consultant
issued to the shortlisted consultants to shall follow any of the methods given in
seek their technical and financial Rule 192 to 194 as appropriate for the
proposals. The RFP should contain: circumstances in each case.
(i) A letter of Invitation Rule 192 Quality and Cost Based Selection
(ii) Information to Consultants (QCBS): QCBS may be used for
regarding the procedure for Procurement of consultancy services,
submission of proposal. where quality of consultancy is of prime
(iii) Terms of Reference (TOR). concern.
(iv) Eligibility and pre-qualification i. In QCBS initially the quality of
criteria in case the same has not technical proposals is scored as
been ascertained through Enquiry per criteria announced in the RFP.
for Expression of Interest. Only those responsive proposals
(v) List of key position whose CV and that have achieved at least
experience would be evaluated. minimum specified qualifying score
(vi) Bid evaluation criteria and in quality of technical proposal are
selection procedure. considered further.
(vii) Standard formats for technical and (ii) After opening and scoring, the
financial proposal. Financial proposals of responsive
(viii) Proposed contract terms. technically qualified bidders, a final
(ix) Procedure proposed to be followed combined score is arrived at by
for midterm review of the progress giving predefined relative weight
of the work and review of the final ages for the score of quality of the
draft report. technical proposal and the score of
Rule 187 Receipt and opening of proposals. financial proposal.
Proposals should ordinarily be asked for (iii) The RFP shall specify the
from consultants in 'Two bid' system with minimum qualifying score for the
technical and financial bids sealed quality of technical proposal and
separately. The bidder should put these also the relative weightages to be
two sealed envelopes in a bigger envelop given to the quality and cost
duly sealed and submit the same to the (determined for each case
Ministry or Department by the specified depending on the relative
date and time at the specified place. On importance of quality vis-a-vis cost
receipt, the technical proposals should be aspects in the assignment, e.g.
opened first by the Ministry or Department 70:30, 60:40, 50:50 etc). The

46
 proposal with the highest weighted throughout in the conduct of consultancy,
combined score (quality and cost) preferably by taking a task force approach
shall be selected. and continuously monitoring the
(iv) The weightage of the technical performance of the consultant(s) so that
parameters i.e. non- financial the output of the consultancy is in line with
parameters in no case should the Ministry/Department's objectives.
exceed 80 percent. Rule 196 Public competition for Design of
Rule 193 Least Cost System (LCS). LCS is symbols/logos. Design competition
appropriate for assignments of a standard should be conducted in a transparent, fair
or routine nature (such as audits and and objective manner. Wide publicity
engineering design of non-complex works) should be given to the competition so as to
where well established methodologies, ensure that the information is accessible to
practices and standards exist. Unlike all possible participants in the competition.
QCBS, there is no weightage for Technical This should include publication on the
score in the final evaluation and the website of Ministry/Department concerned,
responsive technically qualified proposal as also the Central Public Procurement
with the lowest evaluated cost shall be Portal. If the selection has been by a jury
selected. of experts nominated for the purpose, the
Rule 194 Single Source Selection/Consultancy by composition of the jury may also be
nomination. The selection by direct notified.
negotiation/nomination, on the lines of
Single Tender mode of procurement of B. OUTSOURCING OF SERVICES
goods, is considered appropriate only
under exceptional circumstance such as: Rule 197 "Non-Consulting Service" means any
(i) tasks that represent a natural subject matter of procurement (which as
continuation of previous work distinguished from 'Consultancy Services'),
carried out by the firm; involve physical, measurable deliverables/
(ii) in case of an emergency situation, outcomes, where performance standards
situations arising after natural can be clearly identified and consistently
disasters, situations where timely applied, other than goods or works, except
completion of the assignment is of those incidental or consequential to the
utmost importance; and service, and includes maintenance, hiring
(iii) situations where execution of the of vehicle, outsourcing of building facilities
assignment may involve use of management, security, photocopier
proprietary techniques or only one service, janitor, office errand services,
consultant has requisite expertise. drilling, aerial photography, satellite
(iv) Under some special imagery, mapping etc.
circumstances, it may become Rule 198 Procurement of Non-consulting
necessary to select a particular Services.
consultant where adequate A Ministry or Department may procure
justification is available for such certain non-consulting services in the
single-source selection in the interest of economy and efficiency and it
context of the overall interest of the may prescribe detailed instructions and
Ministry or Department. Full procedures for this purpose without,
justification for single source however, contravening the following basic
selection should be recorded in the guidelines.
file and approval of the competent Rule 199 Identification of likely contractors.
authority obtained before resorting The Ministry or Department should prepare
to such single-source selection. a list of likely and potential contractors on
(v) It shall ensure fairness and equity, the basis of formal or informal enquiries
and shall have a procedure in from other Ministries or Departments and
place to ensure that the prices are Organisations involved in similar activities,
reasonable and consistent with scrutiny of 'Yellow pages', and trade
market rates for tasks of a similar journals, if available, web site etc.
nature; and the required Rule 200 Preparation of Tender enquiry.
consultancy services are not split Ministry or Department should prepare a
into smaller sized procurement. tender enquiry containing, inter alia :
Rule 195 Monitoring the Contract. The (i) The details of the work or service
Ministry/Department should be involved to be performed by the contractor;

47
 (ii) The facilities and the inputs which website. The advertisements for
will be provided to the contractor invitation of tenders should give
by the Ministry or Department; the complete web address from
(iii) Eligibility and qualification criteria where the bidding documents can
to be met by the contractor for be downloaded.
performing the required Rule 202 Late Bids. Late bids i.e. bids received
work/service; and after the specified date and time of receipt
(iv) The statutory and contractual should not be considered.
obligations to be complied with by Rule 203 Evaluation of Bids Received.
the contractor. The Ministry or Department should
Rule 201 Invitation of Bids. evaluate, segregate, rank the responsive
Estimated cost of (i) For estimated value of the non- bids and select the successful bidder for
non-consulting consulting service up to Rupees placement of the contract.
service UPTO ₹ 10 L: ten lakhs or less: The Ministry or Rule 204 Procurement of Non-consulting
Min/Dept scrutinise the
Department should scrutinise the services by nomination. Should it
preliminary list of
likely contractors as
preliminary list of likely contractors become necessary, in an exceptional
per Rule 199 & decide as identified as per Rule 199 situation to procure a non-consulting
the prima facie Eligible above, decide the prima facie service from a specifically chosen
& capable contractors Eligible and capable contractors contractor, the Competent Authority in the
& issue limited tender and issue limited tender enquiry to Ministry or Department may do so in
enquiry to them asking
them asking for their offers by a consultation with the Financial Adviser. In
for their offers by a
specified date & time
specified date and time etc. as per such cases the detailed justification, the
etc. as per standard practice. The number of circumstances leading to such
standard practice. the contractors so identified for procurement by choice and the special
The number of the issuing limited tender enquiry interest or purpose it shall serve, shall form
contractors so should be more than three. an integral part of the proposal.
identified for issuing (ii) For estimated value of the non- Rule 205 Monitoring the Contract. The Ministry or
limited tender enquiry
should be more than
consulting service above Rs.10 Department should be involved throughout
3. lakhs: The Ministry or Department in the conduct of the contract and
should issue advertisement in continuously monitor the performance of
Estimated cost of such case should be given on the contractor.
non-consulting
Central Public Procurement Rule 206 Any circumstances which are not covered
service ABOVE ₹ 10L:
Advertisement in such
Portal(CPPP)at in Rule 198 to Rule 205 for procurement of
case to be published www.eprocure.gov.in and on GeM. non-consulting services, the procuring
on CPPP, GeM, Org. An organisation having its own entity may refer Rule 135 to Rule 176
website website should also publish all its pertaining to procurement of goods and not
advertised tender enquiries on the to the procurement of consulting services.

48
 Ch.-7 - INVENTORY MANAGEMENT
Rule 207 This chapter contains the basic rules the required specifications and
applicable to all Ministries or Departments there is no damage or deficiency in
regarding inventory management. Detailed the materials. An appropriate
instructions and procedures relating to receipt shall also be given to this
inventory management may be prescribed effect by the indenting officer to the
by various Ministries or Departments division sending the materials.
broadly in conformity with the basic rules (ii) In the case of issue of materials
contained in this chapter. from stock for departmental use,
Rule 208 (1)Receipt of goods and materials from manufacture, sale, etc., the
private suppliers. Officer-in charge of the stores shall
(i) While receiving goods and see that an appropriate indent, in
materials from a supplier, the the prescribed form has been
officer—in-charge of stores should projected by the indenting officer.
refer to the relevant contract terms A written/online acknowledgement
and follow the prescribed of receipt of material issued shall
procedure for receiving the be obtained from the indenting
materials. officer or his authorised
(ii) All materials shall be counted, representative at the time of issue
measured or weighed and of materials.
subjected to visual inspection at (iii) In case of materials issued to a
the time of receipt to ensure that contractor, the cost of which is
the quantities are correct, the recoverable from the contractor, all
quality is according to the required relevant particulars, including the
specifications and there is no recovery rates and the total value
damage or deficiency in the chargeable to the contractor
materials. Technical inspection should be got acknowledged from
where required should be carried the contractor duly signed and
out at this stage by Technical dated.
Inspector or Agency approved for (iv) If the Officer-in-charge of the
the purpose. An appropriate stores is unable to comply with the
receipt, in terms of the relevant indent in full, he should make the
contract provisions may also be supply to the extent available and
given to the supplier on receiving make suitable entry to this effect in
the materials. the indentor's copy of the indent. In
(iii) Details of the material so received case alternative materials are
should thereafter be entered in the available in lieu of the indented
appropriate stock register, materials, a suitable indication to
preferably in an IT-based system. this effect may be made in the
The officer-incharge of stores document.
should certify that he has actually Rule 210 Custody of goods and materials. The
received the material and recorded officer-in-charge of stores having custody
it in the appropriate stock registers. of goods and materials, especially valuable
Rule 209 Receipt/issue of goods and materials and/or combustible articles, shall take
from internal divisions of the same appropriate steps for arranging their safe
organisation. custody, proper storage accommodation,
(i) The indenting officer requiring including arrangements for maintaining
goods and materials from internal required temperature, dust free
division(s) of the same environment etc.
organisation should project an Rule 211 Lists and Accounts.
indent in the prescribed form for (i) The Officer-in-charge of stores
this purpose. While receiving the shall maintain suitable item-wise
supply against the indent, the lists and accounts and prepare
indenting officer shall examine, accurate returns in respect of the
count, measure or weigh the goods and materials in his charge
materials as the case may be, to making it possible at any point of
ensure that the quantities are time to check the actual balances
correct, the quality is in line with with the book balances.

49
 The form of the stock accounts (ii) A certificate of verification along
mentioned above shall be with the findings shall be recorded
determined with reference to the in the stock register.
nature of the goods and materials, (iii) Discrepancies, including
the frequency of the transactions shortages, damages and
and the special requirements of unserviceable goods, if any,
the concerned identified during verification, shall
Ministries/Departments. immediately be brought to the
(ii) Separate accounts shall be kept notice of the competent authority
for for taking appropriate action in
(a) Fixed Assets such as plant, accordance with provision given in
machinery, equipment, Rule 33 to 38.
furniture, fixtures etc. in the Rule 214 Buffer Stock. Depending on the frequency
Form GFR-22. of requirement and quantity thereof as well
(b) Consumables such as office as the pattern of supply of a consumable
stationery, chemicals, material, optimum buffer stock should be
maintenance spare parts etc. determined by the competent authority.
in the Form GFR-23. Note: As the inventory carrying cost is an
(c) Library books in the Form expenditure that does not add value to the
GFR 18 material being stocked, a material
(d) Assets of historical/artistic remaining in stock for over a year shall
value held by generally be considered surplus, unless
museum/government adequate reasons to treat it otherwise
departments in the Form exist. The items so declared surplus may
GFR-24. be dealt as per the procedure laid down
Note: These forms can be under Rule 217.
supplemented with additional Rule 215 Physical verification of Library books.
details by Ministries/ (i) Complete physical verification of
Departments as required. books should be done every year
Verification of Library
Rule 212 Hiring out of Fixed Assets. When a fixed books in case of libraries having not more
asset is hired to local bodies, contractors Below 20,000 volumes: than twenty thousand volumes. For
or others, proper record should be kept of Every Year. libraries having more than twenty
20K - 50K: Atleast once
the assets and the hire and other charges thousand volumes and up to fifty
in 3 Years
as determined under rules prescribed by Above 50K: Sample thousand volumes, such
the competent authority, should be physical verification verification should be done at least
recovered regularly. Calculation of the atleast once in 3 Years. once in three years. Sample
In case unusual/
charges to be recovered from the local physical verification at intervals of
unreasonable shortages
bodies, contractors and others as above detected: Complete not more than three years should
should be based on the historical cost. verification to be done. be done in case of libraries having
Rule 213 (1) Physical verification of Fixed Assets. more than fifty thousand volumes.
Verification of Fixed The inventory for fixed assets shall In case such verification reveals
Assets: Atleast once ordinarily be maintained at site. Fixed unusual or unreasonable
in 1 Year. assets should be verified at least once in a shortages, complete verification
Outcome of verific.:
Recorded in Register.
year and the outcome of the verification shall be done.
Discrepancies: recorded in the corresponding register. (ii) Loss of five volumes per one
Promptly investigated Discrepancies, if any, shall be promptly Loss of volumes: thousand volumes of books
& brought to Account. investigated and brought to account. 5 per one thousand vol. - issued/consulted in a year may be
Reasonable, if not due to
Rule 213 (2) Verification of Consumables: dishonesty/ negligence.
taken as reasonable provided such
Verification of A physical verification of all the losses are not attributable to
Consumables: Atleast consumable goods and materials should Loss of book of value dishonesty or negligence.
once in 1 Year. above Rs. 1,000/- & rare
Discrepancies:
be undertaken at least once in a year and However, loss of a book of a value
books of any value: shall
Recorded in stock discrepancies, if any, should be recorded invariably be investigated
exceeding Rs. 1,000/- (Rupees
register for action of in the stock register for appropriate action & appropriate action taken One thousand only) and rare
competent authority
by the competent authority. books irrespective of value shall
Rule 213 (3) Procedure for verification: invariably be investigated and
(i) Verification shall always be made appropriate action taken.
in the presence of the officer, Rule 216 Transfer of charge of goods, materials
responsible for the custody of the etc. In case of transfer of Officer-in-charge
inventory being verified. of the goods, materials etc., the transferred

50
 officer shall see that the goods or material (b) public auction.
are made over correctly to his successor. (ii) For surplus or obsolete or
A statement giving all relevant details of unserviceable goods with residual
the goods, materials etc., in question shall value less than Rupees Two Lakh,
be prepared and signed with date by the the mode of disposal will be
relieving officer and the relieved officer. determined by the competent
Each of these officers will retain a copy of authority, keeping in view the
the signed statement. necessity to avoid accumulation of
Rule 217 Disposal of Goods. such goods and consequential
(i) An item may be declared surplus blockage of space and, also,
or obsolete or unserviceable if the deterioration in value of goods to
Competent authority may same is of no use to the Ministry or be disposed of. Ministries/
constitute a
committee at appropriate Department. The reasons for Departments should, as far as
level to declare item(s) declaring the item surplus or possible prepare a list of such
as surplus or obsolete obsolete or unserviceable should goods.
or unserviceable.
be recorded by the authority (iii) Certain surplus or obsolete or
competent to purchase the item. unserviceable goods such as
(ii) The competent authority may, at expired medicines, food grain,
his discretion, constitute a ammunition etc., which are
committee at appropriate level to hazardous or unfit for human
declare item(s) as surplus or consumption, should be disposed
obsolete or unserviceable. of or destroyed immediately by
(iii) The book value, guiding price and adopting suitable mode so as to
reserved price, which will be avoid any health hazard and/or
required while disposing of the environmental pollution and also
surplus goods, should also be the possibility of misuse of such
worked out. In case where it is not goods.
possible to work out the book (iv) Surplus or obsolete or
value, the original purchase price unserviceable goods, equipment
of the goods in question may be and documents, which involve
utilised. A report of stores for security concerns (e.g. currency,
disposal shall be prepared in Form negotiable instruments, receipt
GFR- 10. books, stamps, security press etc.)
(iv) In case an item becomes should be disposed of/ destroyed
unserviceable due to negligence, in an appropriate manner to
fraud or mischief on the part of a ensure compliance with rules
Government servant, responsibility relating to official secrets as well
for the same should be fixed. as financial prudence.
(v) Sale of Hazardous waste/Scrap Rule 219 Disposal through Advertised Tender.
Batteries/Electronic waste: (i) The broad steps to be adopted for
Scrap lots comprising of this purpose are as follows
hazardous waste, batteries etc. (a) Preparation of bidding
shall be sold keeping in view the documents.
extant guidelines of Ministry of (b) Invitation of tender for the
Environment & Forest. Prospective surplus goods to be sold.
bidders of such lots of hazardous (c) Opening of bids.
waste/scrap batteries/ e-waste (d) Analysis and evaluation of
should be in possession of bids received.
registration, valid on the date of e- (e) Selection of highest
Auction and on the date of responsive bidder.
delivery, as recycler/ preprocessor (f) Collection of sale value from
agency. the selected bidder.
Rule 218 Modes of Disposal. (g) Issue of sale release order to
(i) Surplus or obsolete or the selected bidder.
unserviceable goods of assessed (h) Release of the sold surplus
Above 2 Lakh value
surplus/ obsolete / residual value above Rupees Two goods to the selected bidder.
unserviceable goods: Lakh should be disposed of by : (i) Return of bid security to the
Disposed through Bidding/ (a) obtaining bids through unsuccessful bidders.
Advertised Tender or Public
Auction. advertised tender or (ii) The important aspects to be kept
Below 2 Lakh value: Mode
of disposal determined by the
competent authority.
51
 in view while disposing the goods from the successful bidder
through advertised tender are as before releasing the goods.
under:- (g) In case the selected bidder
(a) The basic principle for sale of does not show interest in
If selected bidder does not
such goods through show interest in lifting the lifting the goods, the bid
advertised tender is ensuring goods: the bid security should security should be forfeited
transparency, competition, be forfeited and other actions and other actions initiated
initiated including re-sale of the
fairness and elimination of goods and cost of the defaulter, including re-sale of the goods
discretion. Wide publicity after obtaining legal advice. in question at the risk and
should be ensured of the sale cost of the defaulter, after
plan and the goods to be sold. obtaining legal advice.
All the required terms and (iii) Late bids i.e. bids received after
conditions of sale are to be the specified date and time of
incorporated in the bidding receipt should not be considered.
document comprehensively in Rule 220 Disposal through Auction.
plain and simple language. (i) A Ministry or Department may
Applicability of taxes, as undertake auction of goods to be
relevant, should be clearly disposed off either directly or
stated in the document. through approved auctioneers.
(b) The bidding document should (ii) The basic principles to be followed
also indicate the location and here are similar to those applicable
present condition of the goods for disposal through advertised
to be sold so that the bidders tender so as to ensure
can inspect the goods before transparency, competition, fairness
bidding. and elimination of discretion. The
(c) The bidders should be asked auction plan including details of the
to furnish bid security along goods to be auctioned and their
Bid Security during disposal with their bids. The amount of location, applicable terms and
thru Advertised Tender:
Ordinarily 10% of the bid security should ordinarily conditions of the sale etc. should
assessed or reserved price of be ten per cent. of the be given wide publicity in the same
the goods. assessed or reserved price of manner as is done in case of
the goods. The exact bid advertised tender.
security amount should be (iii) While starting the auction process,
indicated in the bidding the condition and location of the
document. goods to be auctioned, applicable
(d) The bid of the highest terms and conditions of sale etc.,
acceptable responsive bidder (as already indicated earlier while
should normally be accepted. giving wide publicity for the same),
However, if the price offered should be announced again for the
by that bidder is not benefit of the assembled bidders.
acceptable, negotiation may (iv) During the auction process,
be held only with that bidder. During Auction Process: If
acceptance or rejection of a bid
In case such negotiation does a bid is accepted, earnest should be announced immediately
not provide the desired result, money (not less than 25% on the stroke of the hammer. If a
of the bid value) should
the reasonable or acceptable immediately be taken on the
bid is accepted, earnest money
price may be counter offered spot from the successful (not less than twenty-five per cent.
to the next highest responsive bidder either in cash or in of the bid value) should
the form of Deposit-at-
bidder(s). Call-Receipt (DACR), drawn
immediately be taken on the spot
(e) In case the total quantity to be in favour of the Ministry or from the successful bidder either in
In case the total quantity to be disposed off cannot be taken Department selling the cash or in the form of Deposit-at-
disposed off cannot be taken up up by the highest acceptable goods.
Call-Receipt (DACR), drawn in
by the highest acceptable bidder, the remaining quantity favour of the Ministry or
bidder: the remaining quantity may
be offered to the next higher may be offered to the next Department selling the goods. The
bidder(s) at the price offered by higher bidder(s) at the price goods should be handed over to
the highest acceptable bidder. offered by the highest the successful bidder only after
acceptable bidder. receiving the balance payment.
(f) Full payment, i.e. the residual (v) The composition of the auction
Full Payment after adjusting the
amount after adjusting the bid team will be decided by the
bid security should be obtained security should be obtained competent authority. The team
before release of goods to
successful bidder Composition of Auction Team:
Decided by the Competent
Authority. Include an officer of IF
52 Wing of the dept.
 should however include an officer in government accounts is involved.
of the Internal Finance Wing of the Powers to write off of losses are available
department under the Delegation of Financial Powers
Rule 221 Disposal at scrap value or by other Rules.
modes. If a Ministry or Department is Rule 223 (2) Losses due to depreciation: Losses
Disposal at scrap
value: With approval
unable to sell any surplus or obsolete or due to depreciation shall be analysed, and
of Competent Auth. + unserviceable item in spite of its attempts recorded under following heads, as
Finance Division. through advertised tender or auction, it applicable :-
may dispose of the same at its scrap value (i) normal fluctuation of market prices;
with the approval of the competent (ii) normal wear and tear;
authority in consultation with Finance (iii) lack of foresight in regulating
division. In case the Ministry or purchases; and
Department is unable to sell the item even (iv) negligence after purchase.
at its scrap value, it may adopt any other Rule 223 (3) Losses not due to depreciation:
mode of disposal including destruction of Losses not due to depreciation shall be
the item in an eco-friendly manner. grouped under the following heads:-
Rule 222 A sale account should be prepared for (i) losses due to theft or fraud;
goods disposed of in Form GFR 11 duly (ii) losses due to neglect;
signed by the officer who supervised the (iii) anticipated losses on account of
sale or auction. obsolescence of stores or of
Rule 223 (1) Powers to write off. All profits and purchases in excess of
In respect of losses:
losses due to revaluation, stock-taking or requirements;
Formal sanction of the other causes shall be duly recorded and (iv) losses due to damage, and
competent authority adjusted where necessary. Formal (v) losses due to extra ordinary
shall be obtained even
though no formal
sanction of the competent authority shall situations under 'Force Majeure'
correction or be obtained in respect of losses, even conditions like fire, flood, enemy
adjustment in though no formal correction or adjustment action, etc.;
government accounts
is involved.

Powers to write off

of losses: Available
under the DFPR

53
 ₹ 1L to 10L: In respect of Works
Contracts, where tender documents
*What is a Contract? include the GCC, SCC and scope of
*Art. 299(1) CoI work, the letter of acceptance will
*Legal Affair's GSR No. 585 dt 1.2.1966 result in a binding contract.
Ch.-8 - CONTRACT MANAGEMENT
Rule 224 (1) All contracts shall be made by an or Contracts for purchases
authority empowered to do so by or under valued between Rupees one
the orders of the President in terms of lakh to Rupees ten lakhs,
Article 299 (1) of the Constitution of India. where tender documents
Rule 224 (2) All the contracts and assurances of include the General
property made in the exercise of the Conditions of Contract (GCC),
executive power of the Union shall be Special Conditions of Contract
executed on behalf of the President. The (SCC) and scope of work, the
words "for and on behalf of the President letter of acceptance will result
of India" should follow the designation in a binding contract.
appended below the signature of the (c) In respect of contracts for
officer authorized in this behalf. Above ₹10L: In respect of works with estimated value of
Note 1: The various classes of contracts Works Contracts/ purchases, a Rupees ten lakhs or above or
Contract document should be
and assurances of property, which may be executed, with all necessary for purchase above Rupees
executed by different authorities, are clauses to make it a self- ten lakhs, a Contract
specified in the Notifications issued by the contained contract. document should be
Ministry of Law from time to time. executed, with all necessary
Note 2: The powers of various authorities, clauses to make it a self-
the conditions under which such powers contained contract. If
should be exercised and the general however, these are preceded
procedure prescribed with regard to by Invitation to Tender,
various classes of contracts and accompanied by GCC and
assurances of property are laid down in SCC, with full details of scope
Rule 21 of the Delegation of Financial and specifications, a simple
Powers Rules. one page contract can be
Rule 225 General principles for contract. entered into by attaching
The following general principles should be copies of the GCC and SCC,
observed while entering into contracts:— and details of scope and
(i) The terms of contract must be specifications, Offer of the
precise, definite and without any Tenderer and Letter of
ambiguities. The terms should not Acceptance.
involve an uncertain or indefinite (d) Contract document should be
liability, except in the case of a invariably executed in cases
cost plus contract or where there is of turnkey works or
a price variation clause in the agreements for maintenance
contract. of equipment, provision of
(ii) Standard forms of contracts should services etc.
be adopted wherever possible, (v) No work of any kind should be
with such modifications as are commenced without proper
considered necessary in respect of execution of an agreement as
individual contracts. The given in the foregoing provisions.
modifications should be carried out (vi) Contract document, where
only after obtaining financial and Within 21 days: Contract necessary, should be executed
legal advice. document, where necessary, within 21 days of the issue of letter
(iii) In cases where standard forms of should be executed within of acceptance. Non-fulfilment of
21 days of the issue of
contracts are not used, legal and letter of acceptance this condition of executing a
financial advice should be taken in contract by the Contractor or
drafting the clauses in the contract. Supplier would constitute sufficient
(iv) ground for annulment of the award
(a) A Ministry or Department and forfeiture of Earnest Money
may, at its discretion, make Deposit.
purchases of value up to (vii) Cost plus contracts should
Rupees two lakh and fifty ordinarily be avoided. Where such
Upto ₹ 2.5 Lakh: Ministry/
thousand by issuing purchase contracts become unavoidable, full
Department may, at its orders containing basic terms justification should be recorded
discretion, make purchases by and conditions: before entering into the contract.
issuing purchase orders
containing basic terms and
(b) In respect of Works Contracts, Where supplies or special work
conditions.

54
 covered by such cost plus involved. It could be a
contracts have to continue over a percentage per annum or an
long duration, efforts should be overall ceiling or both. The
made to convert future contracts buyer should ensure a
on a firm price basis after allowing provision in the contract for
a reasonable period to the benefit of any reduction in the
suppliers/contractors to stabilize price in terms of the price
their production/ execution variation clause being passed
methods and processes. on to him.
Explanation: A cost plus contract (e) The clause should also
means a contract in which the stipulate a minimum
price payable for supplies or percentage of variation of the
services under the contract is contract price above which
determined on the basis of actual price variations will be
cost of production of the supplies admissible (e.g. where
or services concerned plus profit resultant increase is lower
either at a fixed rate per unit or at a than two per cent, no price
fixed percentage on the actual cost adjustment will be made in
of production favour of the supplier).
(viii) (f) Where advance or stage
(a) Price Variation Clause can be payments are made there
provided only in long-term should be a further stipulation
Where delivery period contracts, where the delivery that no price variations will be
extends beyond 18 Months:
Price Variation Clause can
period extends beyond 18 admissible on such portions of
be provided. months. In short-term the price, after the dates of
contracts firm and fixed prices such payment
should be provided for. Where (g) Where deliveries are
a price variation clause is accepted beyond the
provided, the price agreed scheduled Delivery Date
upon should specify the base subject to levy of liquidated
level viz, the month and year damages as provided in the
to which the price is linked, to Contract, the liquidated
enable variations being damages (if a percentage of
calculated with reference to the price) will be applicable on
the price levels prevailing in the price as varied by the
that month and year. operation of the Price
(b) A formula for calculation of variation clause.
the price variations that have (h) No price variation will be
taken place between the Base admissible beyond the original
level and the Scheduled Scheduled Delivery Date for
Delivery Date should be defaults on the part of the
included in this clause. The supplier.
variations are calculated by (i) Price variation may be
using indices published by allowed beyond the original
Governments or Chambers of Scheduled Delivery Date, by
Commerce periodically. An specific alteration of that date
illustrative formula has been through an amendment to the
appended to these rules at contract in cases of Force
Appendix - 11 for guidance. Majeure or defaults by
(c) The Price variation clause Government.
should also specify cut off (j) Where contracts are for
dates for material and labour, supply of equipment, goods
as these inputs taper off well etc, imported (subject to
before the scheduled Delivery customs duly and foreign
Dates. exchange fluctuations) and/or
(d) The price variation clause locally manufactured (subject
should provide for a ceiling on to excise duty and other
price variations, particularly duties and taxes), the
where escalations are percentage and element of

55
 duties and taxes included in contractor's premises. Results
the price should be of such verification should be
specifically stated, along with recorded and appropriate
the selling rate of foreign penal action taken where
exchange element taken into necessary.
account in the calculation of (xiii) [Copies of all contracts and
the price of the imported item. Value ₹ 25L & above: agreements for purchases of the
The mode of calculation of Copies of contracts/ value of Rupees Twenty-five Lakhs
agreements for purchases
variations in duties and taxes entered into by civil and above entered into by civil
and Foreign exchange rates depts of the Govt, should departments of the Government,
and the documents to be be sent to the Audit Officer should be sent to the Audit Officer
& or the Accounts officer as
produced in support of claims the case may be and or the Accounts officer as the
25
for such variations should also case may be.]
be stipulated in the Contract. (xiv)
(k) The clause should also (a) The terms of a contract,
contain the mode and terms including the scope and
of payment of the price specification once entered
variation admissible. into, should not be materially
(ix) Contracts should include provision varied.
for payment of all applicable taxes (b) Wherever material variation in
by the contractor or supplier. any of the terms or conditions
(x) "Lump sum” contracts should not in a contract becomes
be entered into except in cases of unavoidable, the financial and
absolute necessity. Where lump other effects involved should
sum contracts become be examined and recorded
unavoidable, full justification and specific approval of the
should be recorded. The authority competent to
contracting authority should ensure approve the revised financial
that conditions in the lump sum and other commitments
contract adequately safeguard and obtained, before varying the
protect the interests of the conditions.
Government. (c) All such changes should be in
(xi) Departmental issue of materials the form of an amendment to
should be avoided as far as the contract duly signed by all
possible. Where it is decided to parties to the contract.
supply materials departmentally, a (xv) Normally no extensions of the
schedule of quantities with the scheduled delivery or completion
issue rates of such material as are dates should be granted except
required to execute the contract where events constituting force
work should form an essential part majeure, as provided in the
of the contract. contract, have occurred or the
(xii) terms and conditions include such
(a) In contracts where a provision for other reasons.
government property is Extensions as provided in the
entrusted to a contractor contract may be allowed through
either for use on payment of formal amendments to the contract
hire charges or for doing duly signed by parties to the
further work on such property, contract.
specific provision for (xvi) All contracts shall contain a
safeguarding government provision for recovery of liquidated
property (including insurance damages for defaults on the part of
cover) and for recovery of hire the contractor. Only in exceptional
charges regularly, should be circumstances to be justified by
included in the contracts. procuring entity in writing, an
(b) Provision should be made in exemption from such provision can
the contract for periodical be made.
physical verification of the (xvii) A warranty clause should be
number and the physical
condition of the items at the 25
Amended vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.

56
 incorporated in every contract, the contractor/ concessionaire
requiring the supplier to, without against a Bank Guarantee (BG).
charge, repair or rectify defective The BG shall only be for the said
goods or to replace such goods 75% of the arbitral award as above
with similar goods free from defect. and not for the interest which may
Any goods repaired or replaced by become payable to the Ministry/
the supplier shall be delivered at Department should the subsequent
the buyers premises without costs court order require refund of the
to the buyer. said amount.
(xviii) All contracts for supply of goods (ii) The payment may be made into a
should reserve the right of designated Escrow Account with
Government to reject goods which the stipulation that the proceeds
do not conform to the will be used first, for payment of
specifications. lenders' dues, second, for
After lapse of 3 Years
of arising of claim: No
(xix) No claim for the payment from completion of the project and then
claim for the payment contractor shall be entertained for completion of other projects of
from contractor shall be after the lapse of three years of the same Ministry/ Department as
entertained
arising of the claim. mutually agreed/ decided. Any
Rule 226 Management of Contracts. balance remaining in the escrow
(i) Implementation of the contract account subsequent to settlement
should be strictly monitored and of lenders' dues and completion of
notices issued promptly whenever projects of the Ministry/
a breach of provisions occurs. Department may be allowed to be
(ii) Proper procedure for safe custody used by the contractor/
and monitoring of Bank concessionaire with the prior
Guarantees or other Instruments approval of the lead banker and
should be laid down. Monitoring the Ministry/ Department. If
should include a monthly review of otherwise eligible and subject to
all Bank Guarantees or other contractual provisions, retention
instruments expiring after three money and other amounts withheld
months, along with a review of the may also be released against
26
progress of supply or work. BG.]
Extensions of Bank Guarantees or
other instruments, where
warranted, should be sought
immediately.
Rule 227 Legal Advice.
Wherever disputes arise during
implementation of a contract, legal advice
should be sought before initiating action to
refer the dispute to conciliation and/or
arbitration as provided in the contract or to
file a suit where the contract does not
include an arbitration clause. The draft of
the plaint for arbitration should be got
vetted by obtaining legal and financial
advice. Documents to be filed in the matter
of resolution of dispute, if any, should be
carefully scrutinized before filing to
safeguard government interest.
Rule 227A Arbitration Awards
(i) In cases where the Ministry/
Where the Ministry/ Dept has Department has challenged an
challenged an arbitral award arbitral award and, as a result, the
and, the amount of the arbitral
award has not been paid, 75%
amount of the arbitral award has
of the arbitral award (including not been paid, 75% of the arbitral
interest up to date of the award) award (which may include interest
shall be paid by the Ministry/
Department to the contractor/
up to date of the award) shall be
concessionaire against a Bank paid by the Ministry/ Department to 26
Guarantee (BG). Inserted vide DoE OM No. F./1/9/2021-PPD dated 29.10.2021.

57
 Ch.-9 - GRANTS-IN-AID AND LOANS
I. GRANTS-IN-AID (iii) Stringent criteria should be
followed for setting up of new
Rule 228 As a general principle Grants-in-aid can be autonomous organisations and the
given to a person or a public body or an type of activities to be undertaken
GIA may sanctioned to:
*Autonomous Org. institution having a distinct legal entity. by them. The Ministry or
*Voluntary Org. / NGOs Thus Grants-in-aid including scholarships Department should examine in
*Educational and other
institutions may be sanctioned by an authority detail: (a) whether the activities
*Urban and Rural local competent to do so under the Delegation proposed to be taken up are
self-government instt.
*Co-operative societies
of Financial Powers Rules to :— necessary at all; (b) whether these
*Societies or clubs set up (a) Institutions or Organizations set up activities, if necessary, need to be
by Govt servants to as Autonomous Organisations, undertaken by setting up an
promote recreational
avenues. under a specific statute or as a autonomous organisation only or
society registered under the whether these could be performed
Societies Registration Act, 1860 or by the concerned Government
Indian Trusts Act, 1882 or other agency or any other organisation
statutes. already existing.
(b) Voluntary organizations or Non- (iv) All autonomous organisations, new
Government Organisations or already in existence should be
carrying out activities which encouraged to maximise
promote the welfare schemes and generation of internal resources
programmes of the Government and eventually attain self-
should be selected on the basis of sufficiency.
well-defined criteria regarding (v) The Ministry or Department may
financial and other resources, consider creating a Corpus Fund
credibility and type of activities for an Autonomous Body only with
undertaken. prior concurrence of Ministry of
(c) Educational and other institutions Finance if the corpus is created out
by way of scholarships or stipends of budgetary allocation. If the
to the students. corpus is created out of internal
(d) Urban and Rural local self- accruals of the body, approval of
government institutions the administrative Ministry must be
(e) Co-operative societies. obtained.
(f) Societies or clubs set up by (vi) User Charges: Governing Body of
Government servants to promote the Autonomous Body shall review
amongst themselves social, user charges/ sources of internal
cultural and sports activities as revenue generation at least once a
recreational avenues. year and inform the administrative
Rule 229 General Principles for setting up of Ministry. This exercise should
Setting up of AB: Autonomous Organisations referred to preferably be completed before the
*Approval of the Cabinet under Rule 228(a):- formulation of Union Annual
mandatory
*AB cannot set up AB (i) No new autonomous institutions Budget.
*Regional Centres/ should be created by Ministries or (vii) All Autonomous Bodies should
Offices/Sub-Stations of Departments without the approval maintain database relating to
AB can be created with
prior approval of the of the Cabinet. grants, income, expenditure,
admin. Ministry + MoF (ii) No new autonomous institution investment assets and employee
*Stringent criteria to be
followed for new AB should be created by an strength in the format prescribed
*AB should maximise Autonomous Body itself, the by the Department of Expenditure,
generation of internal
resources & attain self- appraisal/approval process for Ministry of Finance.
sufficiency creation of new autonomous (viii) Financial advice for
*Corpus Fund for AB: bodies would apply in such cases Autonomous Bodies: Every
Min/Dept may create Financial advice for
with approval of MoF if too. However, Regional AB: AB should designate autonomous organisation should
created out of Budgetary Centres/Offices/Sub-Stations of an officer at designate an officer at appropriate
allocation; Admn Min appropriate level to
approval sufficient if any autonomous body can be render financial advice. level to render financial advice
approved from internal created with prior approval of the CEO: responsible for whose concurrence should be
accruals of the AB overall financial
*Review of User
administrative ministry in management of the AB obtained for sanction and incurring
charges atleast once in consultation with Ministry of of expenditure. The financial limits
1 year. Finance. up to which such concurrence is

58
 mandatory may be drawn up by non-scientific or non-technical
each organisation. The Chief personnel etc.
Executive Officer of the (f) whether user charges
Autonomous body will be including overhead/
responsible for overall financial institutional charges /
management of the autonomous management fee in respect of
bodies. sponsored projects, wherever
(ix) Peer review of autonomous the output or benefit of
*A system of external or organisations: Ministry shall put services are utilised by others,
internal peer review of AB: in place a system of external or are levied at appropriate rates
Every 3 or 5 years depending internal peer review of (g) the scope for maximizing
on the size and nature of
activity. autonomous organisations every internal resources generation
three or five years depending on in the organization so that the
*Findings of the peer review the size and nature of activity. dependence upon
should be examined and put up
for appropriate decision to the Such a review should be the Government budgetary
Secretary by the concerned responsibility of the concerned support is minimised.
programme division of the administrative division of the (x) An organisation whose
Administrative Department.
Further releases of Grant Ministry/Department and should performance is found to be
(after 3 or 5 years) should be focus, inter alia, on; outstanding and internationally
made conditional on conduct (a) the objective for which the acclaimed as a result of the review
and decisions on the findings
of such peer review. autonomous organisation was envisaged under Para (ix) above
set up and whether these should be granted greater
*An organisation whose objectives have been or are autonomy and increased flexibility
performance is found to be
outstanding and being achieved; in matters of recruitment and
internationally acclaimed as (b) whether the activities should financial rules thereby enabling it
a result of the review should be be continued at all, either to devise and adopt staff
granted greater autonomy
and increased flexibility in because they are no longer structures, procedures and rules
matters of recruitment and relevant or have been suited to improving their
financial rules completed or if there has productivity.
been a substantial failure in (xi) Autonomous organisations as also
achievement of objectives. AB with budgetary others with a budgetary support of
(c) whether the nature of the support of more than more than Rupees five crores per
activities is such that these ₹ 5 core: should be annum, should be required to enter
required to enter in to a
need to be performed only by MoU with the Admn. in to a Memorandum of
an autonomous organisation. Min/Dept, spelling out Understanding with the
(d) whether similar functions are clearly performance Administrative Ministry or
parameters & output
also being undertaken by targets. Department, spelling out clearly
other organisations, be it in performance parameters, output
the Central Government or targets in terms of details of
State Governments or the programme of work and qualitative
Private Sector, and if so, improvement in output, along with
whether there is scope for commensurate input requirements.
merging or winding up the The output targets, given in
organisations under review. measurable units of performance,
(e) whether the total staff should form the basis of budgetary
complement, particularly at support extended to these
the support level, is kept at a organisations. The roadmap for
minimum: whether the improved performance with clear
enormous strides in milestones should form part of the
information technology and MoU.
communication facilities as (xii) Findings of the peer review should
also facilities for outsourcing be examined and put up for
of work on a contract basis, appropriate decision to the
have been taken into account Secretary by the concerned
in determining staff strength; programme division of the
and whether scientific or Administrative Department. Further
technical personnel are being releases of Grant (after three or
deployed on functions which five years, as the case may be),
could well be carried out by should be made conditional on

59
 conduct and decisions on the being given and the general and special
findings of such peer review. conditions, if any, attached to the Grant. In
Rule230 (1) Principles and Procedure for award the case of non-recurring Grants for
of Grants-in-aid. specified object, the order shall also
GIA from Govt.:
-submit an applications Any Institution or Organisation seeking specify the time limit within which the Grant
with relevant informn for Grants-in-aid from Government will be or each installment of it, is to be spent.
assessment of required to submit an application which Rule 230 (5) Central Autonomous Organisations
suitability of Orgn.
-certify that Orgn has includes all relevant information such as CAO - account for which receive Grants should account for
not obtd. similar GIA Articles of Association, bye-laws, audited capital & revenue capital and revenue expenditure
from any other Min/Dept expd. separately
statement of accounts, sources and separately. The Government of India,
of GoI/State MoF -formulated
-Min/Dept will maintain pattern of income and expenditure etc. Ministry of Finance has formulated
Standard Formats
a list of Orgn granted enabling the sanctioning authority to for presentation of standard formats for presentation of final
GIA to avoid duplication assess the suitability of the Institution or final accounts accounts, for all Central Autonomous
-No UC required for
grants on Organisation seeking Grant. The Sanctioning Organisations. All Grant sanctioning
reimbursement basis application should clearly spell out the Authority-enforce authorities should enforce the condition of
& will be treated as the the conditions of
need for seeking Grant and should be GIAs
maintaining and presenting their annual
Central Financial
Assistance (CFA) submitted in such form as may be accounts in the standard formats on all
prescribed by the sanctioning authority. Central Autonomous Organisations.
The Institution or Organisation seeking Rule 230 (6) The Grants sanctioning authorities
Grants-in-aid should also certify that it has should not only take into account the
not obtained or applied for grants for the internally generated resources while
same purpose or activity from any other regulating the award of Grants but should
Ministry or Department of the Government consider laying down targets for internal
of India or State Government. resources generation by the Grantee
Rule 230 (2) In order to obviate duplication in Institutions or Organisations every financial
Grants-in-aid, each Ministry or Department year, particularly where Grants are given
should maintain a list of institutions or on recurring basis every year.
organisations along with details of amount Rule 230 (7) Unspent Balances: When recurring
and purpose of Grants given to them. Recurring GIA: Grants-in-aid are sanctioned to the same
These details should also be made The unspent Institution or Organisation for the same
balance of the
available on the website of the previous Grant purpose, the unspent balance of the
Ministry/Department. should be taken previous Grant should be taken into
Rule 230 (3) Award of Grants should be considered into account in account in sanctioning the subsequent
sanctioning the
only on the basis of viable and specific subsequent Grant. Grant. For this purpose, the Programme
schemes drawn up in sufficient detail by Division of Ministries/Department shall take
the institution or organisation. The budget help of PFMS Portal to know the bank
for such schemes should disclose, inter balance of the recipients before making
alia, the specific quantified and qualitative each release. The instructions of
targets likely to be attained against the Department of Expenditure regarding the
outlay. In the cases of the schemes where use of PFMS Portal for Central Sector
Grants are given as part of the expenditure Schemes issued from time to time shall be
on reimbursement basis (i.e. the strictly followed by all Ministries/
expenditure has already been incurred on Departments. The principles of ‘just in time
approved project/scheme and release’, should be applied for releases in
reimbursement from the Government in the respect of all payments to the extent
form of Grant/Subsidy etc. is due) the possible. The following broad principles
same will be treated as the Central Cash balance-not shall be adhered to:
Financial Assistance (CFA) and no more than 3 (i) Cash balance at a time should
months
Utilization Certificate shall be required in requirement preferably not be more than 3
such cases of reimbursements. Release of Fund- months of requirements
Rule 230 (4) Recurring Grant is defined as one as per actual (ii) Funds should be released as per
requirements
Recurring Grant: which is released periodically to the same Sanction may actual requirements and that
released periodically to organization for the same purpose. Non- precede RoF & sanction may precede the release
the same orgnz for the recurring Grant is one time release to an valid during that of funds, though its validity may be
same purpose & output FY.
targets. organization for a special purpose (which limited to that financial year.
Non-recurring Grant: could be released in installments). Every Rule 230 (8) All interests or other earnings against
one time release to an order sanctioning a Grant shall indicate Grants in aid or advances (other than
organization for a
special purpose whether it is recurring or non-recurring and reimbursement) released to any Grantee
-Sanction Order shall specify clearly the object for which it is institution should be mandatorily remitted
indicate whether a
Grant is R/ NR

60
 Inst/Org receiving more than 50%
recurring expd. in form of GIA: should
ordinarily formulate terms and conditions
of service of their employees applicable to
similar categories of employees in Central
Government (but not higher than those).

In exceptional cases, relaxation may be

made in consultation with the Ministry of
Finance.

All interests or other

earnings against GIA/
advances (other than to the Consolidated Fund of India in- aid, should ordinarily formulate
reimbursement)- immediately after finalisation of the terms and conditions of service of
should be accounts. Such advances should not be their employees which are, by and
mandatorily remitted
to CFI allowed to be adjusted against future large, not higher than those
releases. applicable to similar categories of
Rule 230 (9) In making Grants to Non-Government employees in Central Government.
NGO/Quasi Govt. or Quasi-Government Institutions or In exceptional cases relaxation
Org- assets acquired Organisations, a condition should be laid may be made in consultation with
wholly or substantially
out of Government
down that assets acquired wholly or the Ministry of Finance.
Grants, except those substantially out of Government Grants, (ii) Grantee Institutions or
declared as obsolete except those declared as obsolete and Organisations should be
and unserviceable or
condemned, shall not
unserviceable or condemned in encouraged to take advantage of
be disposed of accordance with the procedure laid down the pension or gratuity schemes or
without prior in the General Financial Rules, shall not be Group Insurance Schemes or
approval of the
authority which
disposed of without obtaining the prior house buildings loans or vehicle
sanctioned the GIAs. approval of the authority which sanctioned loans schemes etc. available in the
the Grants-in-aid. market for employees instead of
Rule 230 (10) The sanctioning authority may undertaking liability on their own or
Condns reg. quantum prescribe conditions regarding quantum Government account.
& periodicity for and periodicity for release of Grants-in- aid Rule 230 (13) The sanctioning authority, while laying
release of GIA in
installments: in installments in consultation with the down the pattern of assistance, may
Prescribed by the Financial Adviser. However, the release of decide whether the ownership of buildings
Sanctioning the last installment of the Annual Grant constructed with Grants-in-aid may vest
Authority + Financial
Adviser must be conditional upon the Grantee with Government or the Grantee Institution
CFA: the grant will be Institutions providing reasonable evidence or Organisation. Where the ownership is
released in 1 of proper utilization of installments vested in the Government, the Grantee
installment
released earlier. In the cases where Institution or Organisation may be allowed
Central Financial Assistance (CFA) has to occupy the building as a lessee. In such
been sanctioned, the grant will be released cases suitable record of details of location,
in one installment upon the Grantee GIA may be cost, name of lessee and terms &
Institutions/ Organisation providing sanctioned to meet conditions of lease must be maintained in
the bonafide
complete evidence of achieving the expenditure
the records of the granting Ministry or
specified objectives and expenditure incurred not Department. In all cases of buildings
incurred supported by Audited Statement earlier than 2 constructed with Grants-in-aid,
years prior to the
of Expenditure. In these cases, the grantee date of issue of
responsibility of maintenance of such
institutions will not be required to submit the sanction. buildings shall be of the Grantee Institution
Utilization Certificates. or Organisation.
Rule 230 (11) In order to finalize the Budgetary Rule 230 (14) Any other special terms and
Budgetary Estimates Estimates of Grants in aid to the Grantee conditions or procedures for transaction of
of Grants: Min/Dept Institutions, the Ministry or Department business as Government may desire to be
should impress upon
Instt/ Org.desiring
should impress upon Institution or followed by the Grantee Institution or
Grants from Govt, to Organisation desiring Grants from Organisation, shall be got incorporated in
submit their Government, to submit their requirement the Articles of Association or bye-laws of
requirement
with supporting details
with supporting details by the end of the Institution or Organisation concerned
by the end of September in the year preceding the year before release of Grants-in-aid.
Sept in the year for which the Grants-in-aid is sought. The Rule 230 (15) Grants-in-aid may be sanctioned to
preceding the year
for which the
Ministry or Department should finalize their meet the bonafide expenditure incurred not
Grants-in-aid is examination of the requests with the earlier than two years prior to the date of
sought. utmost expedition and make the necessary issue of the sanction.
Result of their
requests - by April
Budget provision where it is decided to Rule 230 (16) The stipulation in regard to refund of
of the succeeding sanction Grants. The Institution or Refund of the unutilised amount of Grant-in-aid with
year. Organisation should be informed of the the unutilised interest thereon should be brought out
result of their requests by April of the amount of Grant- clearly in the letter sanctioning the Grant
in-aid with
succeeding year. interest thereon as well as in the bond so required to be
Rule 230 (12) executed.
(i) All Grantee Institutions or Rule 230 (17) (i) As a precondition to the sanction of
Organisations which receive more Grants-in-aid to the agencies where:
than fifty percent of their recurring (a) the recipient body employs
expenditure in the form of Grants- more than twenty persons on a

61
 Preconditions to regular basis and at least fifty administrative expenditure to any
sanction of GIA: per cent of its recurring private institutions other than the
-the recipient body expenditure is met from Grants- voluntary organizations should not
employs more than 20
persons on a regular basis in-aid from Central ordinarily be sanctioned. In
& atleast 50% of recurring Government; and exceptional cases such Grants can
expd met from GIA from (b) the body is a registered society be considered for sanction in
Central Govt.
-body is a registered or a co-operative institution and consultation with Internal Finance
society/ co-operative is in receipt of a general Wing.
institution & in receipt of a purpose annual Grants-in-aid of Rule 231 (2) Before a Grant is released, the
general purpose annual
GIA of ₹ 20 Lakhs & Rupees twenty lakhs and members of the Executive Committee of
Before Grant is
above from CFI above from the Consolidated released: the Grantee should be asked to Execute
-Suitable clause in GIA Fund of India; -Bonds to be Bonds in a prescribed format binding
for reservation for SCs/ executed by
STs/OBCs in posts & (c) the Grant sanctioning authority themselves jointly and severally to:-
Executive
services should ensure that a suitable Committee of (i) abide by the conditions of the
clause is invariably included in Grantee. Grants- in-aid by the target dates,
the terms and conditions under Liable jointly & if any, specified therein; and
severally to
which the Grants-in-aid are conditions of (ii) not to divert the Grants or entrust
given, to provide for reservation grants. execution of the scheme or work
for Scheduled Castes and In case of concerned to another Institution(s)
Scheduled Tribes or OBC in default/ breach or Organization(s); and
of the condns of
posts and services under such the Bond, the
(iii) abide by any other conditions
organizations or agencies. The signatories to the specified in the agreement
relative provision may be on the Bond shall governing the Grants-in-aid.
refund to the
following lines :- President of
(iv) In the event of the Grantee failing
“ … … … … … (Name of India, the whole to comply with the conditions or
Institution or Organization or a part amount committing breach of the
of the Grant with
etc.)agrees to make interest at 10%
conditions of the Bond, the
reservations for Scheduled per annum signatories to the Bond shall be
Castes and Scheduled Tribes thereon or the jointly and severally liable to refund
sum specified
or OBC in the posts or services under the Bond.
to the President of India, the whole
under its control on the lines or a part amount of the Grant with
indicated by the Government of The stamp duty interest at ten percent per annum
on Bond shall
India”. be borne by the
thereon or the sum specified under
(ii) While sanctioning Grants-in-aid Government. the Bond. The stamp duty for this
to Institutions or Organisations Bond shall be borne by the
referred to in (a) above, the Government.
Grant sanctioning authority Rule 231 (3) Execution of Bond will not apply to
should keep in view the Execution of Bond Quasi - Government Institutions, Central
progress made by such when not apply: Autonomous Organisations and Institutions
Q-G Inst., CAO, Inst.
Institutions or Organisations in whose budget whose budget is approved by the
employing Scheduled Castes approved by Govt. Government
and Scheduled Tribes or OBC Rule 232 General Principles for award of Grants-
candidates in their services. in-aid for Centrally Sponsored
Rule 231 (1) Grants-in-aid to “Voluntary Schemes. The following principles should
GIA towards Admn. Organisations” Subject to the following be kept in view by Ministries/Departments
Expd to VO: terms and conditions, Grants-in-aid of the Central Government at the time of
-to ensure certain
min. staff structure
towards administrative expenditure may be designing Centrally Sponsored Schemes
-to improve sanctioned to voluntary organizations to for implementation in State Governments
effectiveness & ensure a certain minimum staff structure or Union Territories and approving and
expand activities
and qualified personnel to improve their releasing assistance to State Governments
Conditions: effectiveness and expand their activities or Union Territories for such schemes: -
-GIA should not
exceed 25% of under the following conditions :- (i) Every Centrally Sponsored
approved admn. expd (i) The Grants-in-aid should not Scheme should have a time-bound
on pay & allowances exceed twenty-five percent of quantifiable and measurable
GIA to private approved administrative outcome targets with provisions for
institutions:
-should not ordinarily
expenditure on pay and periodic monitoring, mid-term
be sanctioned. In allowances of the personnel of the evaluation and detailed impact
exceptional cases voluntary organisation concerned; studies.
considered for
sanction in
(ii) Grants-in-aid to meet (ii) The scheme should be designed in
consultation with
Internal Finance
Wing.
62
 consultation with States and Union should be undertaken by the State
Territories. States should be Government(s) or Union Territories
delegated adequate powers to implementing the scheme,
change the details of the schemes highlighting the time and cost
to suit local conditions, subject to overruns, if any, and suggestions
reporting such changes to the for formulating and implementing
concerned Ministry or Department. future schemes. A copy of the
(iii) Where schemes are in operation review should be obtained by the
with similar objectives targeting the Ministry concerned and kept in
same population, the schemes view while formulating new
should be converged. Centrally Sponsored Schemes.
(iv) To ensure monitoring and effective Rule 233 Funding of Sponsored Projects or
control over such schemes, the Schemes.
number of schemes should be (i) Ministries or Departments of
restricted, so that the gain from the Min/Dept sponsored Government sponsor projects or
expenditure on such schemes is projects / schemes schemes to be undertaken by
undertaken by Univ., IIT,
maximized. The role of the Central Autonomous Orgn in
Universities, Indian Institute of
Ministries or Departments should national interest: Technology and other similar
be capacity building, inter-sectoral -entire expd normally Autonomous Organisations such
coordination and detailed funded by Min/ Dept as ICAR, CSIR, ICMR etc., the
monitoring. -NOT treated as GIA in results from which are expected to
the books of PIA
(v) The release of funds to State be in national interest. Normally
Governments and monitoring -ownership in the physical the entire expenditure on such
& intellectual assets
further utilisation should be created or acquired out of projects or schemes including
undertaken through PFMS. The such funds shall capital expenditure, is funded by
vest in the sponsor
Ministries or Departments should the Ministry or Department. The
establish a mechanism to ensure EXCEPTION: Scientific funds released for such projects or
Departments are allowed
that the funds earlier released to extend the provisions of
schemes in one or more
have been effectively utilised and Rule 233 (i) & (ii) to installments are not treated as
that the data and facts reported by private sector / NGOs Grants-in-aid in the books of the
who are commissioned to
the State Governments or Union execute projects implementing agency. Apart from
Territories relating to physical and or schemes. the requirement of submission of
financial performance are correct. technical and financial reports on
Before releasing further funds, it completion of the project or
should also be ensured that the scheme, a stipulation should be
State Governments or Union made in such cases that the
Territories have the capacity to ownership in the physical and
actually spend the balance from intellectual assets created or
the previous years and the acquired out of such funds shall
releases during the current year. vest in the sponsor. While the
(vi) The Ministries or Departments Project or Scheme is ongoing, the
should focus attention on the recipients should not treat such
attainment of the objectives and assets as their own assets in their
not on expenditure only. A Books of Accounts but should
mechanism for avoiding release of disclose their holding and using
large part of funds towards the end such assists in the Notes to
of the year should be devised and Accounts specifically.
incorporated in the Scheme design (ii) On completion of the Projects or
itself. Schemes and the receipt of
(vii) A concurrent monitoring and technical and financial reports, the
evaluation mechanism should be Ministries/Departments should
built into the Scheme. A periodic decide and communicate to the
review of every Centrally implementing agencies whether
Sponsored Scheme should be the assets should be returned, sold
undertaken for any required mid- or retained by them.
course correction or changes in [Note: In relaxation of the extant
the scheme design provisions of the rule, Scientific
(viii) A post-completion review of every Departments are allowed to extend
Centrally Sponsored Scheme the provisions of Rule 233 (i) & (ii)

63
 to private sector / NGOs who are been noted in the Register of
commissioned to execute projects Grants against the relevant
27
or schemes.] sanction. This will also facilitate
(iii) If the assets are to be sold, the watching of payments in
proceeds therefrom should be installments, if any, in the case of
credited to the account of the lump sum sanctions.
sponsoring Department / (iii) Information at column (xiii) of the
Organisation. If the assets are Form GFR-21 above should be
allowed to be retained by the used also for regulating the
Institution/ Organisation, the subsequent Grants.
implementing agency should Rule 235 Accounts of Grantee Institutions.
include the assets at the book Institutions or Organisations receiving
value in their own accounts. Grants should, irrespective of the amount
Rule 234 Register of Grants. A Register of Grants involved, be required to maintain
shall be maintained by the sanctioning subsidiary accounts of the Government
authority in the format given in Form GFR - grant and furnish to the Accounts Officer a
21. set of audited statement of accounts.
(i) Columns (i) to (v) of the Register in These audited statements of accounts
format at Form GFR - 21 should be should be required to be furnished after
filled in simultaneously with the utilization of the Grants-in-aid or whenever
issue of the order sanctioning each called for.
Grant. These columns should be Rule 236 (1) Audit of Accounts. The accounts of all
attested by any Gazetted Officer Grantee Institutions or Organisations shall
nominated for the purpose by the be open to inspection by the sanctioning
sanctioning authority. The serial authority and audit, both by the
number should be recorded on the Comptroller and Auditor General of India
body of the sanction at the time the under the provision of CAG(DPC) Act 1971
item is entered in the Register as and internal audit by the Principal
under: “Noted at Serial No Accounts Office of the Ministry or
…………………… in the Register Department, whenever the Institution or
of Grants”. Organisation is called upon to do so and a
(ii) Such a record will guard against provision to this effect should invariably be
the possibility of double payment. incorporated in all orders sanctioning
Columns (vi) and (vii) should be Grants-in-aid.
filled in and attested by the Rule 236 (2)
Gazetted Officer concerned as (i) The accounts of the Grantee
soon as the bill is ready. The bill s
Audit of A/c of Grantee
Institution or Organisation shall be
should then be submitted to the Inst/Org shall be by C&AG audited by the Comptroller and
Gazetted Officer nominated to act of India if Grant/ loan is Auditor General of India under
₹25L+ & 75%+ of total expd
as Drawing and Disbursing Officer Section 14 of the Comptroller and
If Grant/ loan is ₹1Cr.+: may
with the register for signing the bill be audited by C&AG of India
Auditor General of India (Duties,
and to the sanctioning authority for Powers and Conditions of Service)
giving dated initials in column (viii) Act, 1971, if the Grants or loans to
of Register. It should also be the the institution in a financial year
duty of the sanctioning authority to are not less than Rupees twenty-
verify that the conditions, if any, five lakhs and also not less than
attached to the Grant have been seventy-five percent of the total
duly accepted by the Grantee expenditure of the Institution. The
without any reservation and that no accounts may also be audited by
other bill for the same purpose has the Comptroller and Auditor
already been paid before. No bill General of India if the Grants or
should be signed unless it has loans in a financial year are not
less than Rupees one crore.
27
Where the accounts are so audited
Inserted vide DoE OM No. F.No. 8(1)/2021-E.IIA dated by the Comptroller and Auditor
03.09.2021. The Scientific Ministries/ Departments are
Department of Science and Technology, Department of Bio- General of India in a financial year,
technology, Department of Scientific and Industrial Research, he shall continue to audit the
Department of Atomic Energy, Department of Space, Ministry of accounts for a further period of two
Earth Sciences, Defence Research and Development years notwithstanding that the
Organisation.

64
 conditions outlined above are not in the order sanctioning the Grants-in-aid.
fulfilled. The Utilization Certificate in respect of
(ii) Where any Grant and /or loan is Grants referred to in Rule230 (10) should
given for any specific purpose to also disclose whether the specified,
any Institution or Organisation or quantified and qualitative targets that
authority, not being a foreign State should have been reached against the
or international Body/Organization, amount utilised, were in fact reached, and
the Comptroller and Auditor if not, the reasons therefor. They should
General is competent under contain an output based performance
Section 15 (1) of the CAG’s (DPC) assessment instead of input based
Act, 1971, to scrutinize the performance assessment. The Utilization
procedures by which the Certificate should be submitted within
sanctioning authority satisfies itself twelve months of the closure of the
as to the fulfillment of the financial year by the Institution or
conditions subject to which such Organisation concerned. Receipt of such
Grants and/or loans were given certificate shall be scrutinised by the
and shall, for this purpose, have Ministry or Department concerned. Where
right of access to the books and such certificate is not received from the
accounts of that Institute or Grantee within the prescribed time, the
Organisation or authority. Ministry or Department will be at liberty to
Rule 236 (3) In all other cases, the Institution or blacklist such Institution or Organisation
Organisation shall get its accounts audited from any future grant, subsidy or other type
from Chartered Accountants of its own of financial support from the Government.
choice. Rule 238 (2) In respect of recurring Grants, Ministry
Rule 236 (4) Where the Comptroller and Auditor or Department concerned should release
General of India is the sole auditor for a any amount sanctioned for the subsequent
local Body or Institution, auditing charges financial year only after Utilization
will be payable by the auditee Institution in Certificate on provisional basis in respect
full unless specifically waived by of Grants of preceding financial year is
Government submitted. Release of Grants-in-aid in
Rule 237 Time Schedule for submission of excess of seventy five per cent of the total
annual accounts. The dates prescribed amount sanctioned for the subsequent
for submission of the annual accounts for financial year shall be done only after
Audit leading to the issue of Audit utilisation certificate and the annual
Certificate by the Comptroller and Auditor audited statement relating to Grants-in-aid
General of India and for submission of released in the preceding year are
annual report and audited accounts to the submitted to the satisfaction of the
nodal Ministry for timely submission to the Ministry/Department concerned. Reports
Parliament are listed below:- submitted by the Internal Audit parties of
(i) Approved and authenticated the Ministry or Department and Inspection
annual accounts to be made Reports received from Indian Audit and
available by the Autonomous Body Accounts Department and the performance
to the concerned Audit Office and reports if any received for the third and
commencement of audit of annual fourth quarter in the year should also be
accounts-30th June looked into while sanctioning further
(ii) Issue of the final SAR in English Grants.
version with audit certificate to [Note: As a special measure Scientific
SAR-Separate Audit Report
Autonomous Body/ Government Departments are permitted to release
concerned-31st October subsequent Grants in aid on receipt of UCs
(iii) Submission of the Annual Report confirming utilization of 75% of the total
and Audited Accounts to the Nodal value of previous Grant(s) from a Grantee
28
for it to be laid on the Table of the Body.]
Parliament-31st December
Rule 238 (1) Utilization Certificates. In respect of 28
non-recurring Grants to an Institution or Inserted vide DoE OM No. F.No. 1(10)/E.IIA/2015 dated
31.07.2017. The Scientific Ministries/ Departments are
Organisation, a certificate of actual Department of Science and Technology, Department of Bio-
utilization of the Grants received for the technology, Department of Scientific and Industrial Research,
purpose for which it was sanctioned in Department of Atomic Energy, Department of Space, Ministry of
Form GFR 12-A, should be insisted upon Earth Sciences, Defence Research and Development
Organisation.

65
 Rule 238 (3) Utilization certificates need not be [Note: Increase in monetary ceiling in
furnished in cases where the Grants-in-aid laying of Annual Reports and Audited
/ CFA are being made as reimbursement Accounts of various organisations
29
of expenditure already incurred on the receiving funds from Govt. of India] .
basis of duly audited accounts. In such Rule 239 State Government to submit Utilization
cases the sanction letters should specify Certificate for Grants-in-aid relating to
clearly that the Utilization Certificates will Scheme. When Central Grants are given
not be necessary. to State Governments for implementation
Rule 238 (4) In respect of Central Autonomous of Central Scheme, Utilization Certificate in
Organisations, the Utilization Certificate format GFR 12-C may be submitted by the
shall disclose separately the annual State Government in respect of the
expenditure incurred and the funds given Scheme. The UC should be counter-
to suppliers of stores and assets, to signed by the Administrative Secretary of
construction agencies, to staff for (House the Division regulating the
Building and Purchase of conveyance) Scheme/Finance Secretary.
which do not constitute expenditure at that Rule 240 State Government to submit Utilization
stage but have been met out of Grants and Certificate when expenditure incurred
are pending adjustments. These shall be through local bodies. When Central
treated as unutilized Grants allowed to be Grants are given to State Governments for
carried forward. While recording the Grants expenditure to be incurred by them through
in the subsequent year the amount carried local bodies or private institutions, the
forward shall be taken into account. Utilization Certificates should be furnished
Rule 238 (5) In the case of Private and Voluntary by the State Government concerned.
PVO receiving Organizations receiving recurring Grants- Rule 241 Utilisation Certificate in case of Direct
recurring GIA from ₹ in-aid from Rupees ten lakhs to less than Benefit Transfer (DBT) Scheme. In case
10L to less than ₹ 50L:
Min/Dept should include Rupees fifty lakhs, all the Ministries or of the schemes covered under Direct
in their Annual Report a Departments of Government of India Benefit Transfers (DBT), where the fund
statement showing the should include in their Annual Report a flow is directly from the Central
quantum of funds
provided & the statement showing the quantum of funds Government to the beneficiaries, the
purpose for which provided to each of those organizations intimation from the bank/National
they were utilized, for and the purpose for which they were Payments Corporation of India (Aadhaar
the information of
Parliament. utilized, for the information of Parliament. Payment Bridge) regarding deposit of the
PVO receiving The Annual Reports and accounts of funds in the beneficiaries’ bank accounts,
recurring GIA of ₹50 L Private and Voluntary Organizations generated as per procedure prescribed by
& above: Annual
Reports & A/c should receiving recurring Grants-in-aid to the the Controller General of Accounts, may
be laid on the Table of tune of Rupees fifty lakhs and above be treated as a Utilization Certificate. The
the House within 9 should be laid on the Table of the House Ministry/Department releasing the Grant
months of close of
succeeding FY within nine months of the close of the should keep proper record and accounts
succeeding financial year of the Grantee relating to such direct releases under DBT
Organisations. to the beneficiaries bank accounts.
Rule 238 (6) In the case of organizations receiving Rule 242 (1) Performance parameters.
PVO receiving non-
one-time assistance or non-recurring Performance parameters should be clearly
recurring/ one time Grants as Grants-in-aid from Rupees ten set to allow better oversight of the
GIA from ₹ 10L to ₹ 5 lakhs to Rupees five crore, all Ministries or Autonomous Body.
Cr.: Min/Dept should
include in their Annual
Departments of Government of India Rule 242 (2) Submission of Achievement-cum-
Report a statement should include in their Annual Reports, Performance Reports.
showing the quantum statements showing the quantum of funds (i) The Grantee Institutions or
of funds provided &
the purpose for which
provided to each of these organizations Organisations should be required
they were utilized, for and the purpose for which the funds were to submit performance cum
the information of utilized, for the information of Parliament. achievement reports soon after the
Parliament.
The Annual Reports and Audited Accounts end of the financial year, and in
PVO receiving non- of Private and Voluntary Organizations or any case, not later than six months
recurring/ one time societies registered under the Registration after the close of the financial year.
GIA above ₹ 5 Cr.:
Annual Reports & A/c
of Societies Act, 1860, receiving one-time (ii) In regard to non-recurring Grants
should be laid on the assistance/non-recurring Grants of Rupees such as those meant for
Table of the House Five Crore and above should also be laid celebration of anniversaries,
within 9 months of
close of succeeding
on the Table of the House, within nine conduct of special tours and
FY. months of the close of the succeeding
financial year of the grantee Organisations. 29
Inserted vide DoE OM No. F.No.8(5)/2020-E.IIA dated 09.10.2020.

66
 maintenance Grants for education, grants and Rupees fifty lakhs or
performance- cum- achievement more in the case of recurring
reports need not be obtained. grants, the Ministry or
(iii) In the case of recurring Grants, Departments of the Central
submission of achievement-cum- Government should include in their
performance reports should Annual Report a review of the
usually be insisted upon in all utilization of the Grants- in- aid
cases. However, in the case of individually, specifying in detail the
Grants-in-aid not exceeding achievements vis-à-vis the amount
Rupees twenty five lakhs, the spent, the purpose and destination
sanctioning authority may of Grants.
dispense with the submission of [Note: Increase in monetary ceiling
performance- cum- achievement in laying of Annual Reports and
reports and should, in that event, Audited Accounts of various
refer to the Utilization Certificates organisations receiving funds from
30
and other information available Govt. of India] .
with it to decide whether or not the (v) Where the accounts of the Grantee
Grants-in- aid should continue to Institutions or Organisations are
be given. audited by the CAG of India copies
(iv) (a) The Annual Reports and of the performance-cum-
Audited Statements of Accounts of achievement reports, furnished by
Autonomous Organisations the grantee Institution to the
receiving grants of Rupees Two Administrative Ministry or
crore and above are required to be sanctioning authority should be
laid on the table of the Parliament. made available to audit. In other
In such cases, the Ministries or cases copies of such reports,
Departments of Central received by the Departments of the
Government need not incorporate Central Government or the
performance-cum- achievement sanctioning authority should be
reports in the Annual Reports. made available to audit when local
(aa)In cases where these audit of such Grants-in-aid in the
Autonomous Organisations are Administrative Ministry or
getting funds less than Rupees two Department or sanctioning
crore, all the Departments of authority is conducted or when it is
Central Government should called for by the Accountant
include in their Annual Report a General.
Statement showing the quantum of Rule 243 Discretionary Grants. When an allotment
funds provided to each of these for Discretionary Grants is placed at the
organisations and the purpose for disposal of a particular authority, the
which they were utilized for the expenditure from such Grants shall be
information of the Parliament. regulated by general or special orders of
the competent authority specifying the
(b) In all other cases, if the Grants- object for which the Grants can be made
in- aid (a) exceed Rupees ten and any other condition(s) that shall apply
lakhs but less than rupees fifty to them. Such Discretionary Grants must
lakhs in the case of recurring be non-recurring and not involve any future
grants and (b) exceed Rupees commitment.
ten lakh but less than Rupees Rule 244 Other Grants. Grants, subventions, etc.,
five crore in the case of non- including Grants to States other than those
recurring grants, the Ministry or dealt with in the foregoing rules, shall be
Departments of the Central made under special orders of Government.
Government should include a Rule 245 (1) Regulation of recurring Grants-in-aid
statement in their Annual Report of for Government employees’ welfare :–
their own assessment of the a. Grants-in-aid for provision of
achievements or performance of amenities or of recreational or welfare
the Institution or Organisations. facilities to the staff of the offices of
(c)In cases where the Grants-in- the Government are regulated under
aid are for Rupees five crore or
more in the case of non-recurring 30
Inserted vide DoE OM No. F.No.8(5)/2020-E.IIA dated 09.10.2020.

67
 orders of the Ministry of Home Affairs i. Articles of sports – Outdoor
issued from time to time. The and indoor games equipment
admissibility of the Grants-in-aid for ii. Cost of uniforms, etc.,
the welfare of the employees of the supplied to teams of players.
Government should be regulated in iii. Magazines and periodicals.
the following manner :- iv. Entry fee for tournaments
(i) The Grant in aid will be admissible on v. Hiring of playgrounds
the basis of the total strength borne vi. Hiring and repair for furniture,
on the regular strength of an etc.,
organization, i.e., Ministry or vii. Purchase of furniture.
Department, etc., and its Attached viii. Conveyance expenses
and Subordinate Offices and such incurred locally.
statutory bodies whose budget forms ix. Entertainments.
part of Consolidated Fund of India, x. Prizes.
irrespective of the fact whether any xi. Film shows.
individual is a member of the staff xii. Hiring of accommodation for
club, etc., or not. However, Grant-in- Club/Association, etc.
aid in respect of Gazetted Officers will xiii. Cultural, Sports and Physical
be admissible only to that Ministry or development programme(s).
Department or Office where xiv. Inter-Ministerial meets.
membership of recreation club is open xv. Inter-Departmental meets
to such officers. (2) A maximum one time Grant of
Staff paid from contingencies, work- Rupees fifty thousand may be
charged staff etc., will not be taken sanctioned for setting up of a
into calculation for this purpose. Staff Recreation Club.
eligible for similar concession under (3) Grants-in-aid to the Ministry or
some other rule or statutory provision, Departments of the Central
e.g., industrial workers will also not be Government and their Attached and
covered by these orders. Subordinate Offices will be allocated
(ii) Amounts of Grants-in-aid. (a) The rate by the concerned Ministry or
of the Grant-in-aid will be Rupees fifty Department on receipt of formal
per head per annum. In addition to requests in the prescribed manner.
this, an additional Grant-in-aid up to For the purposes of these Grants-in-
Rupees twenty-five per head per aid, the Departments of the Central
annum to match the subscriptions Government and their attached and
collected during the previous financial Subordinate Offices will be treated
year by the existing staff clubs will be as a single unit. It will be the
admissible. In the case of staff clubs responsibility of that Ministry or
which are started during the financial Department to distribute the amount
year in which Grant-in-aid is to be further to its Attached and
given, an additional matching grants- Subordinate Offices and to their
in-aid up to Rupees twenty-five per different clubs. The accounts of
head per annum, to match the these clubs for the preceding year
subscription collected by such clubs duly audited by an Internal Auditor
up to the date on which the proposal should be obtained immediately
for the Grant is mooted, may be after the close of the financial year in
sanctioned. The total strength of the any case by the thirtieth April by the
eligible staff will be that existing on Ministry or Department before
the thirty-first March of the previous allocating funds for the next financial
financial year or that on the date on year.
which proposal for Grant is mooted in (4) Grants-in-aid for the provision of
the case of new staff clubs above amenities or recreational or welfare
rates, as revised from time to time will facilities to the staff of the Indian
apply. Audit and Accounts Department are
(iii) An illustrative list of items on which regulated by separate orders
expenditure can be incurred out of
Grants-in-aid sanctioned by II. LOANS
Government for provision of amenities
is given below: Rule 246 The rules in this Section shall be observed

68
 by all authorities competent to sanction effected by installments, which
loans of public moneys to State shall ordinarily be fixed on annual
Governments, Local Administrations of basis, and with due dates of
Union Territories, local bodies, foreign payment being specially
Government on specific recommendation prescribed.
of State Government, Government (iv) Any installment paid before its due
institutions and other Government bodies. date may be taken entirely towards
Rule 247 (1)Powers and Procedure for sanction the principal, provided it is
of loans. The powers of Departments of accompanied by payment toward
the Central Government and interest due up-to-date of actual
Administrators as well as other subordinate payment of installment; if not, the
authorities to sanction loans are given in amount of the installment shall first
the Delegation of Financial Powers Rules be adjusted towards the interest
and other general and special orders due for preceding and current
issued under that rule. periods and the balance, if any,
Rule247 (2)Nodal Division in Ministry of Finance. shall alone be applied towards the
The Budget Division, Department of principal. If, however, the payment
Economic Affairs, Ministry of Finance shall of the installment is in advance of
be the nodal division in the Ministry of the due date by fourteen days or
Finance to finalise terms and conditions of less, interest for the full period
loans by the Central Government. (half-year or full year, as the case
Rule 248 All sanctions of loans issued by a may be) shall be payable.
Department of Central Government or an (v) When the due date of repayment
Administrator of Union Territory in exercise of any installment of principal or
of their powers under the relevant interest falls on a Sunday or a
provision of Delegation of Financial public holiday, the payment made
Powers Rules shall include a certificate to on the next working day following
the effect that the same is in accordance the Sunday or the public holiday,
with the rules or principles prescribed by shall be regarded as payment on
the Ministry of Finance and that the rate of the due date and no interest shall
interest on the loan and the period of be charged for the day or days by
repayment thereof have been fixed with which the recovery is so
the approval of that Ministry. postponed.
Rule 249 (1) All sanctions to loans shall be subject Exception. If an installment of
to the Delegation of Financial Powers principal or interest is payable on
Rules and shall specify the terms and the thirty-first March of a year, and
conditions relating to them including the if that day happens to be a public
terms and conditions of their repayment holiday the recoveries shall be
and payment of interest. made on the immediately
Rule 249 (2) Borrowers shall be required to adhere preceding working day. In case,
strictly to the terms settled for the loans the due date for the repayment of
made to them. Modifications of these terms a loan or payment of interest falls
can be made subsequently only for very on a holiday observed by the
special reasons and after seeking prior Reserve Bank of India, at which
concurrence of Ministry of Finance. the effective credit of the same is
Rule 250 (1)General conditions for regulating all to take place this shall be shifted to
loans : All loans shall be regulated by the the next working day, except when
following general conditions :- the due date is thirty-first March.
(i) A specific term shall be fixed which (vi) The payment of interest and the
shall be as short as possible, repayment of principal of a loan
within which each loan has to be are always to be made with
fully repaid with interest due. The reference to the calendar date on
terms may, in very special cases, which the loan in question is paid.
extend to thirty years. However, where payment of
(ii) The term is to be calculated from installment is in advance of the
the date on which the loan is due date by fourteen days or less,
completely drawn or declared by interest for the full year or half year
competent authority to be closed. (depending on the prescribed
(iii) The repayment of loans shall be mode of recovery) shall be

69
 charged thereon. In the case of a thirty-first March of the
loan sanctioned by the Central succeeding years and not on
Government to a State the anniversaries of the
Government on or before thirty-first calendar date in April on
March of a year, which is adjusted which inter- Governmental
in the books of the Reserve Bank adjustment on account of
of India in the month of April but in such loans was carried out in
the accounts of the previous year the books of the Reserve
the installment of principal and/or Bank of India.
interest shall fall due for payment (b) Where no monetary
on the thirty- first March of the settlement is involved. In
succeeding year and not on the regard to cases where
anniversaries of the calendar date adjustment in the books of the
in April on which the inter- Accounts Offices are only
Governmental adjustment was involved and actual credit
carried out. through the Reserve Bank of
(vii) The date of drawal of a loan by a India is not necessary, the last
State Government shall be date of the month of account
determined as indicated below – in which the adjustment is
(a) When monetary settlement effected shall be taken as the
is involved-Normally the date of drawal of loan for
calendar date on which purposes of repayment and
amount of a loan is actually charging interest.
credited to the account of the (viii) In order to avoid any default in the
State Government by the payment of loan, the Principal
Reserve Bank is to be treated Accounts Officers or Pay and
as the date of its drawal. Accounts Officers who maintain
This position shall also hold in the detailed accounts of loans,
cases where adjustment in shall issue notices in Form GFR-
accounts is made in one 19 to the loanees (other than State
month but date of adjustment and Union Territory Governments)
in the books of the Reserve i.e. Public Sector Undertakings,
Bank of India falls in the statutory bodies and Government
following calendar month. The institutions etc., say, a month in
calendar date on which the advance of the due date for the
credit is actually afforded to repayment of any instalment of the
the State Government in the principal and/ or interest thereon.
books of the Reserve Bank of However, omission to give notice
India in such cases shall be does not give the loanees any
treated as the date of its claim to exemption from the
drawal. consequences of default in the
Exception. An exception to repayment of the principal and/or
this arrangement is in the interest thereon.
case of loans for which credit Rule 250 (2) Before sanctioning a loan to private
is afforded to the recipient Institutions the lending Ministry or
State Government in the Department shall examine the financial
month of April by the Reserve health and managerial ability of such
Bank of India but in the institutes.
accounts of previous year. In Rule 250 (3) (i) Before considering a loan application
such cases, a loan shall be from parties other than State Governments
deemed to have been paid on and Local Administrations of Union
the thirty-first March of the Territories, the following requirements shall
financial year in the accounts be fulfilled:-
for which the payment is (a) it shall be seen that there is
adjusted. Consequently, adequate budget provision;
payment of annual interest as (b) it shall be seen whether the
also repayment of installment grant of the loan is in
of principal in respect of such accordance with approved
loans shall fall due on the Government policy and

70
 accepted patterns of independent valuation of the security
assistance. offered shall be obtained. The applicant for
(ii)Before approving the loan, the applicant the loan must satisfy both the criteria for
shall be asked to furnish the following financial soundness and adequacy of
materials and information:- security before a loan is sanctioned.
(a) copies of profit and loss (or (iv) In the case of Institutions which receive
income and expenditure) Grants-in-aid from Government to meet a
accounts and balance sheets part of their deficits and the balance is met
for the last 3 years; by the State Government and the Trustees
(b) the main sources of income of Management, it shall be ensured–
and how the loan is proposed (a) that in computing the deficit for
to be repaid within the purpose of the Grant-in-aid, the
stipulated period; income from the scheme, if
(c) the security proposed to be any, earmarked for servicing
offered for the loan together the loan and the instalment of
with a valuation of the security repayment of the loan and
offered by an independent interest (if any) is not included;
authority and a certificate to the (b) that as far as possible, the
effect that the asset offered as scheme for which the loan is
security is not already given is self-financing and does
encumbered. not throw an additional burden
(d) Details of loan or loans taken on the general income of the
from the Central Government or institutions, e.g., in the case of
a State Government in the past, hostels for colleges that the
indicating amount, purpose, rents proposed are adequate;
rate of interest, stipulated (c) the Institution produces an
period of repayment, date of undertaking from the State
original loan and amount Government or the
outstanding against the loan(s) Management that any shortfall
on the date of the application towards repayment of the loan
and the assets, if any, given as and interest shall be made
security; good by it. In the latter case the
(e) a complete list of all other financial position of the
loans, outstanding on the date Management (Trust) shall be
of application and the assets investigated after calling for
given as security against them; information on the lines of Rule
(f) the purpose for which the loan 250. (3) (i) above.
is proposed to be utilized and (v) Ministries or Departments of the Central
the economics of the scheme. Government shall lay down a procedure for
NOTE. Where the loan is to be given to periodical review of the old loans so that
Government institution on the strength of a prompt action can be taken, if necessary,
guarantee given by the trust managing it, for enforcing regular payments.
similar information should be called for in Rule 250 (4) The detailed procedure to be followed
respect of the trust also. in connection with the Grant of loans to
(iii)On receipt of the information called for local bodies shall be regulated by the
as mentioned in (ii) above, confidential provisions of the Local Authorities Loans
enquiries shall be made from the other Act and other special Acts and by rules
Departments of the Central Government or made thereunder.
State Governments from which the party Rule 251 (1) Interest on Loans.
has taken loans, to judge the performance Interest shall be charged at the rate
in regard to the previous loans. If the prescribed by the Government for any
replies indicate that the performance was particular loan or for the class of loans
not satisfactory, the loan shall be refused. concerned.
It must be analysed that the financial Rule 251 (2) A loan shall bear interest for the day of
position of the party is sound. It shall also payment but not for the day of repayment.
be ensured that the security offered is Interest for any shorter period than a
adequate and its value is at least thirty- complete year shall be calculated as
three and one-third per cent. above the follows, unless any other method of
amount of the loan. If possible, an calculation is prescribed in any particular

71
 case or class of cases. authorized for this purpose to
Number of days X Yearly rate of interest inspect the applicant’s books, if
------------------------------------------------- necessary.
365 (366 in case of a leap year) (ii) A written undertaking in Form GFR
Rule 252 (1) Procedure to be followed for 15 shall be obtained from a wholly
recovery of loans and interest thereon Government-owned company at the
and Grant of moratorium. The time of sanctioning the loan. The
instructions issued by the Ministry of sanction shall specifically state that
Finance from time to time prescribing the such an undertaking would be
interest rates and other terms and obtained from the loanee before the
conditions of loans to State and Union drawal of the amount of loan and a
Territory Governments, Local Bodies, certificate that the undertaking has
Statutory Corporations, financial, industrial been obtained, shall be recorded by
and commercial undertakings in the Public the Drawing Officer of the office of
Sector shall be strictly followed. the sanctioning authority in the bill
Rule 252 (2) The recovery of loans shall ordinarily for drawal of the amount of loan.
be effected in annual equal installments of The sanction in respect of loans to
principal together with interest due on the other organizations, where a formal
outstanding amount of principal from time agreement is required to be
to time. The repayment and interest executed, shall also be issued in the
installments may be rounded off to the same manner.
nearest rupee subject to final adjustment at Rule 254 Undertaking to be obtained from wholly
the time of payment of last installment of - owned Government Companies.
principal and/or interest. In the case of loans to wholly-owned
Rule 252 (3) A suitable period of moratorium Government Companies, a written
towards repayment might be agreed to in undertaking to the effect that the fixed
individual cases having regard to the assets of the company shall not be
projects for which the loans are to be hypothecated without prior approval of the
utilized. However, no moratorium shall Government shall be obtained in Form
ordinarily be allowed in respect of interest GFR 32. No stamp duty need be paid on
payable on loans. these written undertakings.
Rule 253 (1) Loans to State and Union Territory Rule255 Loans to parties other than State
Governments, Local Bodies, Statutory Governments, wholly owned Government
Corporations, Public Sector Companies and Local Administration of
Undertakings, etc. Loans shall ordinarily Union Territories shall be sanctioned only
be sanctioned at the normal rates of against adequate security. The security to
interest prescribed by Government for the be taken shall ordinarily be at least thirty-
particular category of the loanee. In cases three and one-third per cent. more than the
where the normal rate is considered too amount of the loan. However, a competent
high and a concession is justified, it shall authority may accept security of less value
take the form of direct subsidy debitable to for adequate reasons to be recorded.
the grants of the sanctioning authority. In Rule 256 (1) Submission of Utilization Certificate,
such cases interest shall, however, be paid Reports, Statements, etc. In cases in
by the borrower in the first instance at the which conditions are attached to the
normal rates and subsidy shall be claimed utilization of loan, either in the shape of the
separately. specification of the particular objects on or
Rule 253 (2) Agreements and other the time within which the money must be
documentation. spent or otherwise, the authority
(i) In the case of loans to parties other competent to sanction the loan shall be
than State Governments and wholly primarily responsible for certifying to the
owned Government Companies, a Accounts Officer where necessary, the
loan agreement specifying all the fulfillment of the conditions attaching to the
terms and conditions shall be loan, unless there is any special rule or
executed. A clause shall invariably order to the contrary. The loans sanctioned
be inserted in all such agreements to the State Governments and the Local
enabling Government at any time to Administration of Union Territories shall
call for accounts of the applicant not, however, come within the purview of
relating to any accounting year with this rule.
power to depute an officer specially Rule 256 (2)

72
(i) The certificate referred to in Rule amount of the loans disbursed
256above shall be furnished as in during each year for different
Form GFR 12-B and at such purposes including the loans
intervals as maybe agreed to sanctioned by their subordinate
between the Audit Officer and/or officers. This certificate shall not
the Accounts Officer, as the case cover the loans to individuals for
may be, and the Ministry or which Utilization Certificates need
Department concerned. Before not be furnished to the Accounts
recording the certificate, the Officer. The Certificate shall
certifying officer shall take steps to indicate the year-wise and object-
satisfy himself that the conditions, wise break-up of loans disbursed
on which the loan was sanctioned, and the loans for which Utilizations
have been or are being fulfilled. Certificates are furnished. The
For this purpose, he may require utilization certificate shall also
the submission to him at suitable show the loans disbursed
intervals of such reports, separately for each sub-head of
statements, etc., which shall account to facilitate verification by
establish the utilization of loan for the Accounts Officer.
the purpose for which it was (v) The Utilization Certificates shall be
sanctioned. The loanee institution furnished within a ‘reasonable
may also be required to furnish a time’ after the loan is paid to the
certificate from its Auditors that the institutions. The Department of
conditions attaching to the loan Central Government shall
have been or are being fulfilled. prescribe, in consultation with the
The certificate shall give details of Ministry of Finance, target dates
the breaches, if any, of those for the submission of the Utilization
conditions. Certificates by the Department
(ii) A Certificate of Utilization of the concerned to the Accounts Officer.
loan shall be furnished to the The target date shall, as far as
Accounts Officer in every case of possible, be not later than eighteen
loan made for specific purposes, months from the date of sanction
even if of the any conditions is not of the loan.
specifically attached to the grant. (vi) In respect of loans, the detailed
Such certificates are not, however, accounts of which are maintained
necessary in cases where loans by Departmental Officers and
are sanctioned not for any specific where consolidated Utilization
purpose or object but take the Certificates are to be furnished to
shape of a temporary financial aid Accounts Officer, the period of 18
or where the loans have been months shall be reckoned from the
sanctioned to the Public Sector expiry of the financial year in which
Undertakings intended for the loans are disbursed. The
financing of their approved capital consolidated Utilization Certificates
outlays. The repayment of loan, in respect of such loans paid each
however, has to be watched in the year shall, therefore, be furnished
usual manner. not later than September of the
(iii) In respect of loans the detailed second succeeding financial year.
accounts of which are maintained (vii) The due dates for submission of
in the Audit Offices, the authorities the Utilization Certificates shall be
sanctioning the loan shall furnish specified in the letter of sanction
the Utilization Certificate in respect for loan. The target date as
of each individual case. specified shall be rigidly enforced
(iv) Where the detailed accounts of the and extension shall only be
loans are maintained by the allowed in very exceptional
Departmental authorities, a circumstances in consultation with
consolidated Utilization Certificate the Ministry of Finance under
shall be furnished to Audit by the intimation to the Audit Officer
Ministries/Departments and/or the Accounts Officer, as the
sanctioning the loans to Institutions case may be. No further loans
/ Organisations for the total shall be sanctioned unless the

73
 sanctioning authorities are shall invariably include provision for the
satisfied about the proper levy of penal interest on overdue
utilization of the earlier loan installments of interest or principal and
sanctioned to an Institution, etc. interest. The loan sanctions and
Rule 257 Installments of Loans. When a loan of agreements in all other cases shall
public money is taken out in installments, invariably stipulate a higher rate of interest
each installment of the loan so drawn shall and provide for lower rate of interest in the
be treated as a separate loan for purposes case of punctual payments. The penal or
of repayment of principal and payment of the higher rate of interest, as the case may
interest thereon except where the various be, shall not, except under special orders
installments drawn during a financial year of Government, be less than two and half
are, for this purpose, allowed to be per cent per annum above the normal rate
consolidated into a single loan as at the of interest prescribed by Government from
end of that particular financial year. In the time to time for the loans advanced.
latter event, simple interest at the Rule 258 (2) Any default in the payment of interest
prescribed rate on the various loan upon a loan or in the repayment of
installments from the date of drawal of principal, shall be promptly reported by the
each installment to the date of their Accounts Officer, to the authority which
consolidation shall be separately payable sanctioned the loan. The responsibility of
by the borrower. Repayment of each loan the Accounts Officer, under this rule refers
or the consolidated loan, as the case may only to the loans, the detailed accounts for
be, and the payment of interest thereon which are kept by him.
shall be arranged by the borrower annually Rule 258 (3) Procedure to be followed in case of
on or before the anniversary date of drawal defaults in repayment of interest free loans
or consolidation of the loan in such number or loans sanctioned at concessional rates
of installments as the sanctioning authority of interest:
may prescribe. The sanctioning authority (i) In the case of grant of interest free
may allow, in deserving cases a loans e.g., loans to technical
moratorium towards repayment of principal educational institutions for
but not for the payment of interest. Should construction of hostels, prompt
it appear that there is an undue delay on repayment shall be made a
the part of the debtor in taking out the last condition for the grant of interest
installment of a loan the authority free loans. The sanction letter in
sanctioning the loan may at any time such cases shall provide that in the
declare that loan closed, and order event of any default in repayment,
repayment of capital to begin. The interest at rates prescribed by
Accounts Officer shall bring to notice any Government from time to time will
delay that appears to him to require this be chargeable on the loans.
remedy and he shall take this step whether (ii) In the case of loans sanctioned at
or not there are any dates fixed for taking concessional rates of interest the
of installments. difference between the normal rate
NOTE1. These instructions are applicable and concessional rate), shall be
mutatis mutandis to loans, the repayments made conditional upon prompt
of which are made by other than annual repayments of principal and
installments. payment of interest thereon by the
NOTE 2. It must be remembered that the entity concerned.
calculation fixing the amount of equal (iii) In the cases where in addition to
periodical installments, by which a loan is interest free loans, subsidy is also
repaid with interest, presupposes punctual provided to meet running
payment of the installment and that, if any expenses the sanction letter shall
installment is not punctually repaid, the provide that in the event of any
interest amount shall need to be default in repayment, the defaulted
recalculated. dues would be recovered out of
Rule 258 (1) Defaults in Payment. The loan the subsidy payable.
sanctions in favour of State or Union Rule 258 (4) On receipt of a report of default referred
Territory Governments and the loan to in sub-rule (2) above, the authority
sanctions or undertakings or agreements concerned shall immediately take steps to
in case of wholly Government owned get the default remedied and also consider
companies or Public Sector Undertakings enforcement of penal or higher rate of

74
 interest on the overdue amounts. Where and the earliest period to which the default
the sanctioning authority is satisfied, pertains, against each State or Union
having regard to the circumstances of the Territory Government, foreign
case, that penal or higher interest need not Government, Railway or Department of
be recovered, the borrower shall ordinarily Posts funds, Central Public Sector and
be asked to pay interest, at the normal rate other Government Institutions etc. Where,
prescribed in the loan sanction, on the however, detailed accounts are not
overdue amount (of principal and/or required to be maintained by the Accounts
interest) from the due date of payment up Office, the statement shall contain
to the date of settlement of the default. The departmental authority-wise aggregate
recovery of additional interest shall not be balances of outstanding loans.
waived except in special circumstances or Rule 263 (1) Review of Annual Statements with a
where the period of defaults is very short, view to enforce repayments of the
e.g., a few days. principal and interest due.
Rule 259 Irrecoverable Loans. A competent The Administrative Ministries shall keep
authority, after prior approval of the watch over the receipt of the Annual
Ministry of Finance may remit or write off Statements in Form GFR 20 regularly from
any loans owing to their irrecoverability or the Accounts Officer and conduct a close
otherwise. review of the cases of defaults in
Rule 260 Accounts and Control. Subject to such repayment of the installments of principal
general or specific directions as may be and/or interest due, as revealed from these
given by the Comptroller and Auditor- Annual Statements and take suitable
General in this behalf, detailed accounts of measures for enforcing repayments of the
loans to Institutions and Organizations, principal and interest due. If these
etc., shall be maintained by the Accounts statements are not received in time, the
Officer who shall watch their recovery and Accounts Officer shall be reminded
see that the conditions attached to each promptly. To facilitate a proper review of
loan are fulfilled. the position of outstanding loans, the
Rule 261 The instructions contained in this Chapter Ministries may also arrange to maintain
relating to cost of audit of Grants-in-aid are centrally a list of all sanctions issued
applicable Mutatis mutandis in the case of relating to loans advanced to State
loans as well. Governments and other entities.
Rule 262 Annual Returns. Rule 263 (2) Submission of Annual Assessment
Each Principal Accounts Officer shall Report.
submit to the concerned Ministry or A copy of Annual Assessment Report on
Department of Government, a statement in status of all outstanding loans, including
Form GFR 13 showing the details of timely and accurate payment of principal
outstanding Central Loans borne on his and interest due, shall be submitted by the
books as on thirty-first March each year. Financial Advisor of the Administrative
This statement shall be submitted not later Ministry concerned to the Ministry of
than the following thirtieth September and Finance by 30th June of each financial
shall indicate the aggregate of outstanding year.
balance of loans, details of defaults, if any,
in repayment of principal and/ or interest

75
 Ch.-10 - BUDGETING AND ACCOUNTING OF
EXTERNALLY AIDED PROJECTS
Rule 264 (1) Implementation of Projects or as distinct from commodity grant or other
Schemes through external aid receipt. assistance in kind received from external
The projects or schemes of the sources shall be accounted for only by the
Government of India to be implemented office of Controller of Aid Accounts and
through external aid receipt from Audit, Department of Economic Affairs.
multilateral or bilateral funding agencies Rule 267 Procedure for withdrawal. The
shall be shown in the budget proposals concerned administrative Ministries or
approved annually by the Parliament. Departments shall be required to make
Rule 264 (2) The external aid comes from bilateral provision of funds under the relevant head
and multilateral sources as follows: of account as ‘External Aided Component’
(i) Bilateral funding to finance specific in their Detailed Demands for Grants for
project(s) by the funding release of external aid amounts during the
agency(ies) under Government to year to the respective Project
Government agreement(s); and, Implementing Agencies. There are mainly
(ii) Multi-lateral funding by Multi- two procedures laid down for withdrawal of
Lateral Funding Agencies, such as funds from the loan or grant account:
the World Bank under Rule 267 (1) Reimbursement procedure. Under
agreement(s) between the the reimbursement procedure the Project
borrower (Government of India) Implementing Agency shall initially spend
and the Multilateral Funding or incur expenditure and subsequently
Agency(ies). claim the amount from the Funding Agency
Rule 264 (3) The Department of Economic Affairs, through the office of the Controller, Aid
Ministry of Finance as the nodal agency Accounts. The remittances shall be
shall execute the legal agreement for loans accounted as External Loan or Grant
or grants from external funding receipt in the Consolidated Fund of India.
Agency(ies). However, grant agreements There are two ways of dealing with the
for Technical Assistance can also be reimbursement claims as given below:
executed by the beneficiary Ministries or (i) Reimbursement through Special
Departments with the approval of Ministry Account (Revolving Fund
of Finance, Department of Economic Scheme).Under the Revolving
Affairs. Fund Scheme, the Funding
Rule 264 (4) The Office of the Controller of Aid Agency disburses the estimated
Accounts and Audit (CAAA) in the expenditure of four months for the
Department of Economic Affairs, Ministry projects as initial advance to
of Finance shall be responsible for Government of India under the
implementing the financial covenants laid respective loan or credit or grant
down in the agreement(s) executed by agreement. Office of Controller of
Department(s) of Government of India and Aid Accounts & Audit withdraws
the External Funding Agency(ies). A copy the amount specified in the
of all such agreements shall be sent to the agreement as initial deposit from
Office of Controller, Aid Accounts and the Funding Agency, by sending a
Audit, Department of Economic Affairs for simple withdrawal application in
this purpose. the prescribed format after the loan
Rule 265 Currency of external aid. is declared effective. Such initial
The external aid shall flow from the deposit designated in US Dollars is
Funding Agency in foreign currency or received by Reserve Bank of India,
Indian Rupees and shall be received by Mumbai and Rupee equivalent
the Reserve Bank of India, Mumbai which shall be passed on to Controller of
shall remit the rupee equivalent to the Aid Accounts & Audit through
account of Controller, Aid Accounts and Government Foreign Transaction
Audit, Department of Economic Affairs at (GFT) advice. However, Reserve
Reserve Bank of India, New Delhi. The Bank of India, Mumbai shall
remittances shall be accounted as external maintain a loan wise proforma
loan/Grant receipts in the Consolidated account for liquidation of advance
Fund of India. received from Funding Agency.
Rule 266 Accounting of Cash grants. Cash grants, Office of Controller of Aid Accounts

76
 and Audit, on receipt of Controller of Aid Accounts and Audit shall
reimbursement claims from Project work out the rupee equivalent of the
Implementing Agency, shall send foreign currency payment. This rupee
an advice to Reserve Bank of equivalent shall be recovered by office of
India, Mumbai advising it to debit Controller of Aid Accounts and Audit from
the Special Account with the US the Project Implementing Agencies or
Dollars equivalent of the amount of State Governments which have availed of
the eligible claim. Office of the Direct Payment Procedure.
Controller, Aid Accounts and Audit Note: In the case of Central Projects,
shall consolidate all such claims Centrally Sponsored Projects and Public
and submit to Funding Agency for Sector or Financial Institutions, the
replenishment of Special Account. concerned administrative Ministry or
This shall be accompanied by a Department shall release the fund to the
statement of debits and credits Project Implementing Agency with the
made during the period by instruction to deposit rupee equivalent of
Reserve Bank of India, Mumbai the foreign currency that have been
and supporting documents availed of under Direct Payment Procedure
received from the Project by them to the account of Controller of Aid
Implementing Agency. Accounts and Audit at Reserve Bank of
(ii) Reimbursement outside Special India, New Delhi or Branch of SBI so
Account: Under the authorised.
reimbursement procedure (where Rule 268 (1) Fund Flow for State Projects
there is no provision in the loan or financed from external aid source. The
credit agreement for the Special respective Departments of the State
Account or the balance in the Government shall provide in the Budget
Special Account is ‘Nil’) office of such expenditure proposed to be incurred
Controller of Aid Accounts and under Plan Schemes during the financial
Audit shall send the year by the Project Implementing
reimbursement claims received Agencies. These shall be in respect of
from the Project Implementing State projects to be financed from external
Agency direct to the Funding aid sources both under loan or credit and
Agency after checking the eligibility grants and eligible for disbursement from
aspect. The Funding Agency shall Funding Agency under Reimbursement or
disburse the eligible expenditure to Direct Payment Procedure.
the borrower’s account with Rule268 (2) Fund flow for State Projects under
Reserve Bank of India, Mumbai, Reimbursement Procedure. The
who shall pass on the Rupee disbursements under the “Reimbursement
equivalent to the account of the through Special Account” and
Controller of Aid Accounts and “Reimbursement outside Special Account”,
Audit at Reserve Bank of India, referred to in Rule 267(i), shall be
New Delhi by issue of Government consolidated at periodical intervals under
Foreign Transaction (GFT) advice. each loan or credit State-wise by the office
Rule 267 (2) Direct Payment Procedure. Under this of the Controller of Aid Accounts and Audit.
procedure adopted in some cases the The details of the same shall be sent to
Funding Agency, on the request of the Plan Finance Division of the Department of
Project Implementing Agency (received Expenditure in the Ministry of Finance for
through Controller of Aid Accounts and release of funds to the respective State
Audit), duly supported by relevant Governments. The Plan Finance division of
documents, shall directly pay to the Department of Expenditure in the Ministry
contractor or supplier or consultant from of Finance shall issue sanctions for actual
the loan or credit or grant account. The release of the disbursement for each State.
Funding Agency, after satisfying itself as to A copy of such sanction shall be endorsed
the eligibility of the expenditure etc. remits to the Finance Department of the
the amount directly to the account of the concerned State Government for
payees as per the payment instructions. information. The office of the Chief
The Funding Agency apprises the office of Controller of Accounts, Ministry of Finance
Controller of Aid Accounts and Audit and shall issue the Inter-Government (IG)
the Project Implementing Agency of the Advice to Reserve Bank of India, Central
particulars of the payment made. Office of Accounts Section, Nagpur, for effecting the

77
 release to the concerned State funds shall be released to Project
Governments. The account of the State Implementing Agency within six weeks by
Government maintained at Reserve Bank the administrative Ministry or Department
of India, Central Accounts Section, with reference to expenditure incurred by
Nagpur, shall be credited with the amount the Project Implementing Agency.
so released, thus, completing the cycle of Rule 270 Fund flow for Public Sector or Financial
funds from the expenditure incurred from Institutions. When the Project
the Budget of the State till receipt of funds Implementing Agency under Loan or Credit
of such expenditure from Government of Agreement is a Public Sector or Financial
India to the State. Institution or Autonomous Body and
Rule 268 (3) Fund flow for State Projects under Government of India is the Borrower, the
Direct Payment Procedure. Under Direct Administrative Ministry concerned shall
Payment Procedure the claims shall be provide in its budget funds required to be
processed as mentioned in Rule 267 (ii). passed on to the Project Implementing
Office of Controller of Aid Accounts and Agency for the expenditure incurred by the
Audit shall work out the Rupee equivalent latter under the externally aided project.
of such Direct Payment based on Reserve The Project Implementing Agency shall
Bank of India buying rate applicable for the submit claims under reimbursement or
value date on which the Direct Payment direct payment procedures to the office of
was made. Office of Controller of Aid the Controller of Aid Accounts and Audit,
Accounts and Audit shall consolidate such Department of Economic Affairs. The
disbursement in Rupees, and send a list of disbursement of the claims by the Funding
such disbursement State- wise to Plan Agency shall be similar as explained in
Finance Division of Department of Rule 267. The concerned administrative
Expenditure at periodical intervals Ministry or Department releases the
requesting them to release the amount to amount to Project Implementing Agency
the State concerned notionally and recover based on the certification of disbursement
the same for credit to Controller of Aid received from the Funding Agency as
Accounts and Audit’s account. The Plan certified by the office of the Controller of
Finance Division shall issue a separate Aid Accounts and Audit.
sanction for the amount to be released to However, where the loan is negotiated
the State concerned and for simultaneous directly by a particular Public Sector
recovery and credit back to the account of Undertaking or Financial Institution, the
the Controller of Aid Accounts and Audit. A funds from the Funding Agency shall flow
copy of such sanction shall also be direct to the borrowing entity.
endorsed to the Finance Department of the Rule 271 Repayment of loans. Office of Controller
State Government concerned. The office of of Aid Accounts and Audit shall be
the Chief Controller of Accounts, Ministry responsible for prompt repayment of
of Finance shall advise Reserve Bank of principal on the due date as per the
India, Central Accounts Section, Nagpur, agreements. The remittance of foreign
for making necessary adjustment entries in currency is arranged through designated
the accounts of the State concerned under Public Sector Commercial Banks and
intimation to the Finance Department of Reserve Bank of India. The Rupee
the State and Controller of Aid Accounts equivalent and the amount of foreign
and Audit. This completes the cycle of currency remitted shall be intimated by the
funds flow in the case of direct payment Banks to Controller of Aid Accounts and
claims. Audit. The Rupee equivalent of the foreign
Rule 269 Fund flow for Central or Central currency remitted is credited to the
sponsored Projects. Under the Central or respective Banks’ account maintained at
Central sponsored project financed from Reserve Bank of India, New Delhi, by debit
external aid, whether loan or grant, the to Controller of Aid Accounts and Audit’s
process of disbursement of such claims by account as per standing arrangement. On
the Funding Agency shall be the same as the receipt of the advice from Reserve
explained in Rule 267. The respective Bank of India, New Delhi, Controller of Aid
Ministry or Department get EAP funds Accounts and Audit shall debit the
under a separate budget head when concerned loan account in the
Demands for Grants are passed in the Consolidated Fund of India. The
Parliament and advised by the Budget repayment of loans shall be classified as
Division of the Ministry of Finance. The charged expenditure. In cases where the

78
 funds from externally aided Projects are prescribed by CGA in consultation with
further passed on as loans, the recovery of CAG.
the loan along with interest shall be the Rule 274 Aid in form of materials and equipment.
responsibility of the respective In cases where materials, equipment and
administrative Ministry or Department. other commodities, without involving any
Rule 272 Interest Payments. Interest on external cash inflow, are received as aid from
loans shall be paid on the due date as foreign countries, the Funding Agency
stipulated in the loan or credit agreements issues an advice to the concerned Ministry
against the budget provision made for this or Department giving details of materials
purpose. Interest payments shall be supplied along with the value thereof. The
accounted for as debit under the Major Ministry or Department concerned in turn
Head ‘2049-Interest Payments’ for external shall intimate the details to the office of the
loans in the Consolidated Fund of India. Controller of Aid Accounts and Audit,
The procedure for transfer of amount shall Department of Economic Affairs for making
be the same as followed in the case of the budget provision in regard to aid
repayment of loans, referred to in Rule 271 material or equipment.
above. The interest payment shall be Note: Refer to Para 4.8.1 of Civil Accounts
classified as charged expenditure. Manual and Note (1) below Major Head
Rule 273 Accounting of exchange variation. The ‘3606-Aid Materials and Equipments’ of
exchange variation in respect of foreign List of Major and Minor Heads of Account
loans that have been fully repaid shall be of Union and States for detail procedure of
adjusted written off to “8680- adjustment of value of the materials etc.
Miscellaneous Government Accounts - received
Write off in terms of Government
Accounting Rules and the procedures

79
Relevant Provisions:
*Art. 292. Borrowing by the Government of India
*Fiscal Responsibility and Budget Management Act and Rules

Ch.-11 - GOVERNMENT GUARANTEES

Rule 275 (1) Power to Give and Limits on Adviser in the same manner as a
Government Guarantees. The power of proposal for loan. While examining
the Union Government to give guarantees the proposal the following
emanates from and is subject to such limits considerations shall be kept in
as may be fixed in terms of Article 292 of view:-
the Constitution of India, the Fiscal (a) Public interest which the
Responsibility and Budget Management guarantee is expected to
Act and Rules framed there under as serve.
amended from time to time. (b) Credit worthiness of the
Rule 275 (2) In terms of the Fiscal Responsibility borrower to ensure that no
and Budget Management Act and Rules undue risk is involved.
framed thereunder, the Central (c) Terms of the borrowing shall
Government shall not give guarantees take into account the yields as
aggregating the amount prescribed therein. applicable on Government
Rule 275 (3) Powers to grant Government of India paper of similar maturity.
Guarantee, including those on external (d) The conditions prescribed in
borrowings, vests with the Budget Division, the guarantee
Department of Economic Affairs (DEA). order/agreement in order to
Rule 276 Objectives of Government Guarantees: ensure continued credit
The sovereign guarantee is normally worthiness of the borrower.
extended for the purpose of achieving the (iii) Risk associated with assumption of
following objectives: a new contingent
(i) To improve viability of projects or liability/guarantee proposal,
activities undertaken by central including the probability of future
entities with significant social and payouts should be thoroughly
economic benefits; assessed by the concerned
(ii) To enable central public sector Administrative Ministry/Department
companies to raise resources at or Credit Divisions of Department
lower interest charges or on more of Economic Affairs recommending
favourable terms; the proposal. Such assessment
(iii) To fulfill the requirement in cases should ideally be entrusted to an
where sovereign guarantee is a independent unit and should be
precondition for concessional undertaken even when it has
loans from bilateral/ multilateral already been decided by a higher
agencies to central public sector authority to provide guarantees.
companies/agencies. The assessment should reveal an
Rule 277 Guidelines for grant of Government of accurate picture of the financial
India Guarantee: The following guidelines condition of the entity to be
should be followed by the Ministries or guaranteed; risks associated with
Departments of the Government of India implementation of the project/
for recommending guarantee or counter scheme, etc. This information
guarantee.— would be useful to estimate the
(i) A proposal for guarantee by funds needed to meet associated
Government must be justified in contingent liabilities if the need
public interest such as in the case should arise, in current or future
of borrowings by central public budgets.
sector institutions for approved (iv) After examination in the concerned
development purposes or Ministry or Department or Credit
borrowings by central public sector Division of DEA, all proposals for
undertakings from Banks for extending guarantees shall be
working capital and other referred to Budget Division, DEA
purposes. for approval. No guarantees shall
(ii) The Administrative Ministry/ be given without the approval of
Department or the credit Divisions Budget Division, DEA.
of Department of Economic Affairs (v) With a view to enable the Ministry
shall examine the proposal in of Finance to examine cases of
consultation with the Financial Government of India guarantees

80
 and extension thereto, all on behalf of Government etc. Even
Ministries or Departments should if fee, representation and mortgage
furnish to that Ministry, data of are not considered necessary, the
certain operational parameters of right to verify the continued credit–
the Public Sector Undertaking or worthiness of the borrower should
Entity, as given in GFR26. In case be ensured.
the accounts of the Central Public (xiii) Guarantees may not be proposed
Sector Undertaking or Entity have for pursuing low priority objectives
been audited by the Comptroller & or programmes. Proposal for grant
Auditor General of India, the effect of guarantee as an off-budget
of the comments of the support should also be examined
Comptroller & Auditor General of comprehensively by the proposing
India on the Central Public Sector Ministry/Department against other
Undertaking’s profitability should alternative forms of support which
be brought out. Further, where may be more appropriate and cost-
BIFR targets have been assigned effective. For example, in the case
or Cabinet directions issued to the of provision of credit guarantees to
Company, the actuals vis-à-vis enterprises that continually incur
targets for the preceding three losses as a result of government's
years should be indicated. The pricing policy, budgetary subsidies
data should be furnished in the or direct government loans may be
Form GFR 26 along with the a more effective and less costly
proposal for guarantee. option.
(vi) Guarantees shall normally be (xiv) Guarantees may not be proposed
restricted to the repayment of in respect of Central Public Sector
principal and normal interest Enterprises whose strong financial
component of the loan. Other risks credentials and high credit rating
shall not form part of the would indicate inherent ability to
guarantee. directly raise the required
(vii) Government guarantees will be resources without the support of
extended to only central public government guarantee.
sector companies/ agencies. Rule 278 Borrowings from multilateral agencies
(viii) Government guarantees shall not by Central Public Sector Undertakings.
be provided to the private sector. (i) All borrowings from the multilateral
(ix) Government guarantees should agencies by Central Public Sector
normally not be extended for Undertakings would be direct
external commercial borrowings. (without Government of India’s
(x) Government guarantees may be intermediation) on the terms as
given on all soft loan components agreed mutually between the
of the bilateral/ multilateral aid. borrower and the lender and
However, guarantee shall not be approved by the Government of
normally given for the commercial India. However, where such terms
loan components of such aid. involve guarantee of Government
(xi) Government of India guarantee will of India, prior approval of the
not be given in cases of grants. Budget Division of the Ministry of
However, if the donor insists on Finance may be obtained.
ensuring performance, the same (ii) The borrowing should relate to the
may be listed as a negotiating Projects approved by the
condition for getting the grant. prescribed competent authority of
(xii) Appropriate conditions, may be the Central Government.
made by Government while giving (iii) Wherever guarantee is to be given
the guarantee e.g. period of by Government of India, the
guarantee, levy of fee to cover risk, borrower shall enter into an
representation for Government on agreement with the Government of
the Board of Management, India for the payment of guarantee
Mortgage or lien on the assets, fee on the principal amount of the
submission to Government of loan drawn and loan outstanding
periodical reports and accounts, from time to time.
right to get the accounts audited (iv) The Government of India

81
 Guarantee would only cover the guarantees will be executed and
principal amount and the normal monitored by the Administrative
interest. All other risks including Ministries concerned, who are also
the exchange rate risk would be required to report the status in this
shared between the borrower and regard on an annual basis till they
lender as per terms and conditions are invoked or are obliterated. The
prescribed in the loan agreement. following guidelines need to be
Rule 279 (1) Levy of Guarantee Fees. The rates of kept in view while issuing
fee on guarantees would be as notified by guarantees-
the Budget Division, Department of (a) The obligations of the
Economic Affairs, Ministry of Finance from borrower to service the loan
time to time. The rates of guarantee fee and the guarantee, and the
are given in Appendix - 12. Ministries or monitoring of the utilization of
Departments shall levy the prescribed fee the guaranteed loans, and
in respect of all cases. The fees are also to adherence to the terms and
be levied in respect of non-fund based conditions of the guarantee by
borrowings or credits (viz. letters of credit, the Borrower shall be ensured
Bank guarantees etc.). In case of any by the Administrative Ministry/
doubt with regard to the categorisation of Department through a back-
any particular undertaking or organization to- back agreement with the
or the nature of borrowing for the purpose borrower which may be drawn
of levy of fee, the matter may be referred up and implemented to the
to the Budget Division for clarification. The satisfaction of the
Ministries or Departments should also take Administrative Ministry
adequate steps to ensure prompt recovery concerned. For this purpose,
of the prescribed fees. necessary records to monitor
Rule 279 (2)The guarantee fee should be levied the guarantee, including
before the guarantee is given and servicing of guarantee fee
thereafter on first April every year. The rate shall be maintained by the
of guarantee fee is to be applied on the Line Ministries / Departments
amount outstanding at the beginning of the concerned.
guarantee year. (b) Administrative Ministry should
Rule 279 (3) Where the guarantee fee is not paid on ensure that there are no
the due date, fee should be charged at inconsistencies between the
double the normal rates for the period of guarantee approval given by
default. the Ministry of Finance and
Rule 279 (4)The Government may guarantee no the guarantee agreement
more than 80% of the project loan, signed by it with the borrower.
depending on the conditions imposed by The obligations enforced by
the lender. This would incentivize the the Government as guarantor
lenders to make proper analysis of the would be duly factored in.
project, credit worthiness of the (c) Deviations / modifications /
borrower(s), and build strategies for risk amendments on the main
management. In such cases, bankers/ conditions of the guarantee,
lenders may be asked to share the risk by particularly with reference to
bearing a minimum of 20% of the net loss the rate of interest on the loan
associated with any default. The to be guaranteed and
arrangement would ensure that the lenders obligations of the Government
undertake a more rigorous assessment of to be covered, should not be
the risk exposure. referred in a routine manner
Provided further that in certain exceptional to Budget Division for
circumstances, the Government of India clarification/ change. The
may guarantee 100% of the financing Administrative Ministry
where the organisation concerned is concerned shall make out a
discharging some function on behalf of the separate case, fully justifying
Government of India. the need for considering any
Rule 280 Execution of Government Guarantees. proposed modifications /
(i) Once the guarantee is approved amendments, after thorough
by Ministry of Finance, the scrutiny of the request of the

82
 borrower for the same, before monitoring or review undertaken should
placing these proposals examine whether the borrower is
before the Budget Division for discharging repayment obligations or
a final decision. interest obligations as per terms of the loan
(d) In respect of bilateral and agreement, whether the repaying capacity
multilateral credit, Standard for the loan and guarantee amount is
format of Guarantee of the imposed in any manner, and whether all
lending institutions may be covenants and conditions are being
examined with a view that the religiously followed. The Financial Advisers
same are not in contradiction of the Ministries or Departments should
with the conditions of undertake these reviews. A copy of the
sovereign guarantee review report including on timely and
prescribed in this chapter, correct payment of guarantee fees, shall
before signing by the be forwarded by the Finance Advisor to the
Administrative Ministry/ Budget Division by 30th April every year
Department. The guarantee for the previous financial year.
agreement may also not omit Rule 281 (2) The Financial Adviser of the Ministries
any conditions as brought out or Departments would be responsible for
in this Chapter. New ensuring that the annual reviews are
conditions or covenants, and carried out by the Ministries or
differences, if any, shall be Departments concerned. They shall also
referred to Budget Division of ensure that a register of guarantees in
the Department of Economic Form GFR 25 is maintained:-
Affairs (DEA) for concurrence. (i) to keep a record of guarantees;
(e) Guarantee proposals (ii) to retain information required from
approved by the Budget time to time in respect of
Division shall have to be guarantees;
executed in the same financial (iii) to keep record of the annual
year. If the guarantee/ loan reviews to see that these are
agreement is not signed in the carried out regularly;
same financial year as that of (iv) to keep record of levy and
the approval of the guarantee recovery of guarantee fee;
proposal, the guarantee (v) to send data as contained in Form
proposal shall have to be GFR 25, duly updated every year
submitted again. to the Budget Division in the
(f) The guarantee shall hold only Ministry of Finance, Department of
for the specific purpose Economic Affairs by tenth of April.
agreed to by the Budget Rule 281 (3)In respect of guarantees issued by the
Division. Ministry of Finance for external loans, the
(g) Guarantee given by respective credit divisions of Department of
Government of India shall be Economic Affairs shall conduct an annual
non - transferrable and would review in consultation with the Financial
cease to exist in case the Adviser (DEA). For this purpose the
ownership of the entity is Financial Adviser (DEA) shall ensure the
transferred from Government maintenance of the required registers, as
of India, unless the Guarantee well as ensure that the annual reviews are
is re-confirmed by the Budget carried out by the concerned credit
Division. divisions, and report forwarded to the
(ii) The Financial Advisers in Ministry/ Budget Division in Form GFR 25. In cases,
Department will perform the where the guarantees on external loans
responsibility of maintenance of are issued by the concerned administrative
records and reporting including for Ministry, that Ministry would be responsible
the Finance Accounts and the for conducting the review.
IGAS, through the office of Rule 281 (4) Classification of guarantees. For the
Controller/Chief Controller of purpose of record keeping, guarantees
Accounts. shall be classified asunder:-
Rule 281 (1)Review of Guarantees. All Ministries or (i) guarantees given to the RBI, other
Departments shall ensure that all banks and industrial and financial
guarantees are reviewed every year. The institutions for repayment of

83
 principal and payment of interest, Division. Based upon the inputs, a
cash credit facility, financing statement of Guarantees given by
seasonal agricultural operations the Central Government is
and/or providing working capital to depicted as an annexure in the
companies, corporations, Receipt Budget.
cooperative societies and banks; (ii) While furnishing the Statement of
(ii) guarantees given for repayment of guarantees to the Ministry of
share capital, payment of minimum Finance, the Administrative
annual dividend and repayment of Ministries or Departments should
bonds or loans, debentures issued ensure and certify that the
or raised by the statutory amounts shown tally with the total
corporations and central public figures in the statement to be
sector undertakings; included in the Detailed Demands
(iii) guarantees given in pursuance of for grants.
agreements entered into by the (iii) While furnishing the summary
Government of India with statements, the Ministries or
international financial institutions, Departments should also certify
foreign lending agencies, foreign that the information tallies with the
governments, contractors, material furnished to the Controller
suppliers, consultants etc., towards General of Accounts for the
repayment of principal, interest purpose of inclusion in the Finance
and/ or commitment charges on Accounts of the relevant year and
loans etc., and /or for payment is compliant with Indian
against supplies of material and Government Accounting Standard-
equipment; 1 (IGAS-1) relating to Government
(iv) counter guarantees to banks in Guarantees.
consideration of the banks having Rule283 (1) Invocation of Guarantee. A
issued letters of credit or authority Guarantee Redemption Fund (GRF) has
to foreign suppliers for supplies been established in the Public Account of
made or services rendered. India for redemption of guarantees given to
(v) guarantees given to Railways for CPSEs, Financial Institutions, etc., by the
due and punctual payment of dues Central Government whenever such
by Central Government companies guarantees are invoked. The funding to the
or corporation; Guarantee Redemption Fund is to be done
(vi) Others guarantees not covered through budgetary appropriations, as
under above five classes. considered appropriate, under the head
Rule 282 Accounting for Guarantees. In order to 'Transfer to Guarantee Redemption Fund'
ensure greater transparency in its fiscal through the Demands for Grants of the
operations in the public interest, Rule 6 of Department of Economic Affairs.
the FRBM Rules, 2004 requires Rule283 (2) The Administrative Ministries/
government to publish a disclosure Departments should inform any case of
statement on guarantees given by impending/likely invocation, well in
government, at the time of presenting the advance, to the Budget Division, along with
annual financial statement and demands the proposed corrective measures.
for grants. This statement covers, inter Rule283 (3) In the event of invocation of a
alia, details regarding the class and guarantee, the obligation may be
number of guarantees, amounts discharged by sanctioning loan to the
guaranteed, outstanding, invocations, borrowing entity equal to the amount of
guarantee fee payable and other material guarantee outstanding with the approval of
details. Budget Division, Ministry of Finance.
(i) The statement is to be compiled by However, any payment on this account will
the Administrative Ministries / finally be charged to the Guarantee
Departments and submitted to Redemption Fund maintained in the Public
Controller General of Accounts, for Accounts.
onward submission to Budget

84
 Ch.-12 - MISCELLANEOUS SUBJECTS
I. ESTABLISHMENT servant vacates a post for a short
period and no formal appointment
Rule 284 (1) Proposal for additions to or officiating arrangement is made
Establishment. in his place.
All proposals for additions to establishment (iii) Where due to administrative
shall be submitted to sanctioning authority exigencies a government servant
in accordance with the instructions is required to move to another post
contained in Rule 11 of the Delegation of relinquishing his post against local
Financial Powers Rules and other such arrangement.
instructions which may be prescribed in Rule 286 (2) In cases in which the transfer of charge
this regard. involves assumption of responsibility for
Rule 284 (2) All proposals for creation of new posts cash, stores, etc., the following instructions
or a revision in an existing establishment should be observed :-
should contain, inter alia:- (i) The Cash Book or imprest account
(i) the present cost of the should be closed on the date of
establishment in existence; transfer and a note recorded in it
(ii) cost implications of the change over the signatures of both the
proposed giving details of pay and relieved and the relieving
allowances of post(s) proposed; Government servants, showing the
(iii) expenditure in respect of claim to cash and imprest balances and the
pension or gratuity or other number of unused cheques/receipt
retirement benefits that may arise books, if any, made over and
in consequence of the proposals; received by them respectively.
(iv) details on how the expenditure is (ii) The relieving Government servant
proposed to be met including should bring to notice anything
proposed re-appropriations. irregular or objectionable in the
Rule 284 (3) Continuation of an existing post beyond conduct of business that may have
the specified duration will be with explicit come officially to his notice to the
approval of Ministry of Finance, based on incoming officer.
functional justification. (iii) In the case of any sudden casualty
Rule 284 (4) All proposals for increase in occurring or any emergent
emoluments for an existing post(s) shall be necessity arising for a Government
referred to the Ministry of Finance for servant to relinquish his charge,
approval. the next senior officer of the
Rule 285 All service matters from entry to exit, department present shall take
including leave, transfer, promotion, charge. When the person who
performance appraisal should be takes charge is not a Gazetted
maintained in a digitised format. Government servant, he must at
Rule 286 (1) Transfer of Charge. A report of once report the circumstances to
transfer of a Gazetted Government servant his nearest departmental superior
duly made in Form GFR 16 and signed and obtain orders as to the cash in
both by the relieved and relieving hand, if any.
Government servants, shall be sent on the Rule 286 (3) The additional procedure to be followed
same day to the Head of the Department by an Audit Officer or Accounts Officer,
or other Controlling Officers concerned etc., in making over charge of his functions
except in the following types of cases in in connection with the Charitable
respect of which report of transfer of Endowments and other Trust Accounts is
charge need not be signed both by the laid down in Appendix – 8.
relieving and relieved Government Rule 287 Date of Birth. Every person newly
servants simultaneously and may be sent appointed to a service or a post under
independently:- Government shall, at the time of the
(i) Where a Gazetted Government appointment, declare the date of birth by
servant assumes charge of a the Christian era with confirmatory
newly created or vacant post or documentary evidence such as a
relinquishes charge of a post Matriculation Certificate, where prescribed
which has been abolished. qualification for appointment is
(ii) Where a Gazetted government Matriculation or above. In other cases

85
 Municipal Birth Certificate or Certificate by retired Government servants appearing
from the recognised school last attended in a Court of Law for defending himself. -
shall be treated as a valid document. Retired Government servants become
Rule 288 (1) Service Book. Detailed Rules for eligible for reimbursement of Travelling
maintenance of Service Books are expenses in respect of travel(s) for
contained in SRs. Service Books appearing in court of law for defending
maintained in the establishment should be himself only when the judgement relating
verified every year by the Head of Office to his honorable acquittal is pronounced by
who, after satisfying himself that the the court. In such cases the date of
services of Government servants pronouncements of the judgement shall be
concerned are correctly recorded in each the reference point for submission and
Service Book shall record the following reimbursement of his T.A claim.
certificate “Service verified from ……(the Rule 292 Due date of Leave Travel Concession
date record from which the verification is claim. Leave Travel Concession claim of a
made) ........................................upto government servant shall fall due for
…….................(date)…………” payment on the date succeeding the date
Rule 288 (2) The service book of a government of completion of return journey. The time
servant shall be maintained in duplicate. limit for submission of the claims shall be
First copy shall be retained and maintained as under :-
by the Head of the Office and the second (i) In case advance drawn: Within
copy should be given to the government thirty days of the due date.
servant for safe custody as indicated (ii) In case advance not drawn: Within
below:- sixty days of the due date.
(i) To the existing employees - within In case of (i) above if the claim is not
six months of the date on which submitted within one month of the due
these rules become effective, if not date, the amount of advance shall be
already given. recovered but the Government employee
(ii) To new appointees - within one shall be allowed to submit the claim as
month of the date of appointment. under (ii) above. In case of failure to
Rule 288 (3) In January each year the Government submit the claim in both the cases within
servant shall handover his copy of the the prescribed time lines, the claim shall
Service Book to his office for updation. The stand forfeited.
office shall update and return it to the Rule 293 Due date of Over Time Allowance
Government Servant within thirty days of claims. A claim for overtime allowance
its receipt. shall fall due for payment on first day of the
Rule 288 (4) In case the Government servants’ copy month following the month to which the
is lost by the government servant, it shall overtime allowance relates. The claim shall
be replaced on payment of a sum of Rs. stand forfeited if not submitted within 60
500/-. days of the due date.
Rule 288 (5) All Service Books should be digitised Rule 294 Due date of a withheld increment. In the
for easy reference and to avoid problems absence of any specific order withholding
in case of loss of Service Books. an ordinary increment under FR 24 before
Rule 289 Retrospective claim due from date of the date on which it falls due for payment,
sanction. In the case of sanction accorded the period of one year should be counted
with retrospective effect the charge does from the date on which it falls due and not
not become due before it is sanctioned. In with reference to the date on which the
such cases the time-limit specified in Increment Certificate is signed by the
Rule296 (1) should be reckoned from the competent authority. Even where an
date of sanction and not from the date on increment is withheld, the time-limit should
which the sanction takes effect. be reckoned from the date on which it falls
Rule 290 Due date of T. A. claim. Travelling due after taking into account the period for
allowance claim of a government servant which it is withheld.
shall fall due for payment on the date Rule 295 (1) Arrear Claims. Any arrear claim of a
succeeding the date of completion of the Government servant which is preferred
journey. He shall submit the travelling within two years of its becoming due shall
allowance claim within sixty days of its be settled by the Drawing and Disbursing
becoming due failing which it shall stand Officer or Accounts Officer, as the case
forfeited. may be, after usual checks.
Rule 291 Reckoning the date in case of T.A. claims Rule 295 (2) For the purpose of the above

86
 provisions, the date on which the claim is unless it is specifically renewed, lapse on
presented at the office of disbursement the expiry of a period of three month. This
should be considered to be the date on will, however, not apply to withdrawals
which it is preferred. effected in installments. In such cases the
Rule 295 (3) sanction accorded for non-refundable
(i) A claim of a government servant withdrawals from Provident Fund will
which has been allowed to remain remain valid up to a particular date to be
in abeyance for a period exceeding specified by the sanctioning authority in the
two years, should be investigated sanction order itself.
by the Head of the Department
concerned. If the Head of II. REFUND OF REVENUE
Department is satisfied about the
genuineness of the claim on the Rule 300 Sanctions of refunds of revenue. All
basis of the supporting documents sanctions to refunds of revenue shall be
and there are valid reasons for the regulated by the orders of an Administrator
delay in preferring the claims, the or of the departmental authority, as the
claims should be paid by the case may be, according to the provisions
Drawing and Disbursing Officer or of the rules and orders contained in the
Accounts Officer, as the case may departmental manuals etc.
be, after usual checks. Rule 301 (1) Communication of refund sanctions
(ii) A Head of Department may to audit. The sanction to a refund of
delegate the powers, conferred on revenue may either be given on the bill
him by sub rule (i) above to the itself or quoted therein and a certified copy
subordinate authority competent to of the same attached to the bill in the latter
appoint the Government servant case.
by whom the claim is made. Rule 301 (2)Suitable note of refund to be made in
Rule 296 (1) Procedure for dealing with time- original Cash Book entry and other
barred claims. documents. Before a refund of revenue is
Even a time barred claim of a Government made, the original demand or realization,
servant, shall be entertained by the as the case may be, must be linked and a
concerned authority provided that the reference to the refund should be recorded
concerned authority is satisfied that the against the original entry in the Cash Book
claimant was prevented from submitting or other documents so as to make the
his claim within the prescribed time limit on entertainment of a double or erroneous
account of causes and circumstance claim impossible.
beyond his control. Rule 301 (3) Remission of revenue before
Rule 296 (2) A time barred claim referred to in collection is not refund. Remissions of
Rule296 (1) shall be paid with the express revenue allowed before collection are to be
sanction of the Government issued with treated as reduction of demands and not
the previous consent of the Internal as refunds.
Finance Wing of the Ministry or Rule 301 (4) Refunds not regarded as
Department concerned. expenditure for allotment. Refunds of
Rule 297 Time barred claims of persons not in revenues are not regarded as expenditure
Government service. The provisions of for purposes of grants or appropriation.
Rule 289 to Rule 296 shall apply mutatis Rule 301 (5) Competent authority in case of
mutandis to arrear claims preferred against credits wrongly classified. In cases
Government by persons not in where revenue is credited to a wrong head
Government service. of account or credited wrongly under some
Rule 298 Retrospective sanctions. Retrospective misapprehension, the authority competent
effect shall not be given by competent to order refund of revenue shall, in such
authorities to sanctions relating to revision cases, be the authority to whom the
of pay or grant of concessions to original receipts correctly pertain.
Government servants, except in very Rule 302 Compensation for accidental loss of
special circumstances with the previous property. No compensation for accidental
consent of the Ministry of Finance. loss of property shall be paid to an officer
Rule 299 Currency of sanction of Provident Fund except with the approval of the Ministry of
advance/withdrawal. A sanction to an Finance. Compensation will not ordinarily
advance or a non-refundable part be granted to an officer for any loss to his
withdrawal from Provident Fund shall, property which is caused by floods,

87
 cyclone, earthquake or any other natural Pension System (NPS).
calamity or which is due to an ordinary Rule 304 (2)Crediting of Interest. The deposit
accident, which may occur to any citizen, accounts of these funds on the
for example, loss by theft or as a result of a Government book will be credited with
railway accident or fire etc. The mere fact interest at such rates and at such intervals
that at the time of the accident, the as may be prescribed by Ministry of
Government servant is technically on duty Finance in each case.
or is living in Government quarters in which Rule 305 (1) Maintenance of a register for
he is forced to reside for the performance recovery of Postal Life Insurance
of his duties will not be considered as a Premia. All drawing officers should
sufficient ground for the grant of maintain in Form (GFR 20) record of
compensation. Postal Life Insurance policy (PLI) holders.
Rule 305 (2) The register should be kept upto date,
III. DEBT AND MISCELLANEOUS the names of the policy holders should be
OBLIGATIONS OF GOVERNMENT noted in alphabetical order according to
surnames, leaving sufficient space
Rule 303 Public Debt. The public debt raised by between two entries to enable newcomers
government by issue of securities shall be names being inserted in the right place.
managed by the Reserve Bank. The (i) A separate entry should be made in the register
Reserve Bank shall also manage securities for each policy in the case of a policy holder
created and issued under any other law or having more than one policy.
rule having the force of law, provided such (ii) On receipt of an intimation from the Director,
law or rule provides specifically for their Postal Life Insurance, Kolkata, about the issue
management by the Reserve Bank. of a policy in favour of a subscriber authorizing
Rule 304 (1)Provident Funds. The procedure the Drawing Officer to commence recovery
relating to the recovery of, subscriptions to from pay, or on receipt of a Last Pay Certificate
and withdrawals from, the Provident Funds in respect of the subscriber transferred from
established under accordance with the another office, the Drawing Officer should make
provisions of the respective Provident a note of the particulars of the policy in the
Fund Rules. Following instructions should register. The name of the office from which the
be carefully observed by the Head of the subscriber has been transferred should
Offices for correct preparation of the invariably be noted in the remarks column.
Provident Fund schedules:- Wherever a subscriber is transferred to another
(i) A complete list of subscribers to office or his policy is discharged, his name
each fund should be maintained in should be scored out from the register giving
each disbursing office in the form necessary remarks.
of the schedule. (iii) After the preparation of the monthly pay bill, the
(ii) Each new subscriber should be amount of recovery on account of PLI premium
brought on this list and any shown in the bill should be posted in the
subsequent changes resulting from monthly column in the register with proper
his transfer or in the rate of reference to the bills or the vouchers. The fact
subscription etc. clearly indicated of excess or non-recovery should be briefly
in the schedule. noted in the remarks column. Extracts should
(iii) When a subscriber dies, quits be attached to the relevant bills in support of
service or is transferred to another the recoveries. While taking extracts it should
office, full particulars should be be seen that the names of those insurants from
duly recorded in the list. whom recoveries were made in previous
(iv) In the case of transfer of a months but no recoveries have been made
subscriber to another office, the during the current month either on account of
necessary note of transfer should transfer or discharge of that policy or on
be made in the list of both the account of leave salary being not drawn or the
offices. official being on leave without pay, should be
(v) From this list the monthly schedule included in the current month's schedule and
to be appended to the pay bill necessary remarks noted against their names.
should be prepared and tallied with (iv) Similarly, the remarks 'New Policy' or
recoveries made before the Transferred from
submission of the bill for payment. ……………………………Office should be given
(vi) Similar provisions shall also be in the schedule against the names of insurant
made towards subscribers to New entered for the first time in current month.

88
 Reasons for short or excess recovery should be risk involved;
noted briefly in the remarks column. In short, (ii) such exemption is granted only in
schedule of Postal Life Insurance recoveries to the case of a permanent
be attached to the bills, would be a record not Government servant; and
only of those from whom the recovery has (iii) the period of officiating
actually been affected but also of those from arrangement does not exceed four
whom recovery was being affected previously months.
but has not been affected. Rule 307 Notwithstanding anything contained in
Rule 306, security need not be furnished in
IV. SECURITY DEPOSITS cases of –
(a) Government servants who are
Rule 306 (1) Furnishing of security by entrusted with the custody of
Government servants handling cash. stores, which in the opinion of the
Subject to any general or special competent authority are not
instructions prescribed by Government in considerable.
this behalf, every Government servant, (b) Government servants, who are
who actually handles cash or stores shall entrusted with the custody of office
be required to furnish security, for such furniture, stationery and other
amount and in such form as Central articles required for office
Government or an Administrator may management, if the Head of Office
prescribe according to circumstances and is satisfied about the safeguards
local conditions in each case, and to against loss through pilferage.
execute a security bond setting forth the (c) Librarian and Library Staff.
conditions under which Government will (d) Drivers of Government vehicles.
hold the security and may ultimately refund Rule 308 Retention of Security. A security deposit
or appropriate it. taken from Government servant shall be
Rule 306 (2) The amount of security to be obtained retained for at least six months from the
from a Government servant shall be date he vacates his post, but a security
determined on the basis of actual cash bond shall be retained permanently or until
handled which shall not include account it is certain there is no further necessity for
payee cheques and drafts. keeping it.
Rule 306 (3) Security should be furnished in the form
of a Fidelity Bond in GFR 17, the security V. TRANSFER OF LAND AND BUILDINGS
bond should be executed in Form GFR 14.
The Administration shall see that the Rule 309 Save as otherwise provided in any law,
government servant pays the premia rule or order relating to the transfer of
necessary to keep the Bond alive, for Government land, no land belonging to the
which the government servant shall submit Government or any of its bodies, including
premium receipt in time. If the government autonomous bodies, PSUs, etc. shall be
servant fails to submit the premium receipt sold without previous sanction of the
he shall not be allowed to perform the Government.
duties of his post and he shall be dealt with Rule 310 (1)Transfer of Land. Transfer of land from
in accordance with the terms of his a Union Territory to a Central Government
appointment. Department (i.e. Ministry or Department of
Rule 306 (4) A Government servant who is officiating the Union Government including Defence,
against the post of another cash or store Railways, and Posts and Telegraphs) or
handling Government servant shall be vice versa shall be on 'no profit no loss'
required to furnish the full amount of the basis.
security prescribed for the post. The Rule 310 (2) Transfer of land from one Department
Ministry or Department of Central of the Government (as defined in Rule
Government, Administrators and the 309) to another shall be on 'no profit no
Comptroller and Auditor General in respect loss' basis.
of persons serving in Indian Audit and ‘No profit no loss’ as indicated at rules
Accounts Department may, however, 310(1) and 310(2) above does not
exempt a Government servant officiating in necessarily mean transfer being effected
such a short-term vacancy from furnishing with ‘zero cost’. Transfer can be on the
security if the circumstances warrant such basis of mutually agreeable terms and
exemption provided that - conditions or in exchange for equal value
(i) they are satisfied that there is no land or payment of value of land or cost of

89
 acquisition. adjusted from any non-statutory grant
Rule 310 (3) Transfer of buildings and sanctioned for payment to it.
superstructures on land shall be treated Rule 314 Taxes etc. collected by Government on
similar to transfer of land. Transfer of behalf of Local Bodies. Proceeds of
buildings and superstructures on land vide taxes, fines or other revenues levied or
above shall be at the present day cost collected by Government for or on behalf
minus depreciation of these structure(s) of local bodies shall not be appropriated
standing on the land. Valuation for this direct to a local fund without passing them
purpose shall be obtained from the Central through the Consolidated Fund unless
Public Works Department at the time of expressly authorised by law.
transfer. Rule 315 Payments to Local Bodies. Subject to
Rule 310 (4) The allotment of land to, and recovery provision of relevant act and rules,
of cost of buildings from the Public Sector payments to local bodies in respect of
Undertakings shall be at 'market value' as revenue and other moneys raised or
defined in paragraph - 2 of Appendix - 7. received by Government on their behalf
Rule 310 (5) The transfer of land and building will be made in such manner and on such
between the Union and State date, as may be authorized by general or
Governments shall be regulated by the special orders of Government.
provisions of Articles 294, 295, 298 Rule 316 Audit of Account of Local Bodies.
and299 of the Constitution and subsidiary Subject to the provisions of any law made
instructions issued by the Union under Article 149 of the Constitution, the
Government which are reproduced as accounts of local bodies, other non-
Appendix - 7. Government bodies, or institutions will be
audited by the Indian Audit and Accounts
VI. CHARITABLE ENDOWMENTS AND Department under such terms and
OTHER TRUSTS conditions as may be agreed upon
between the Government and the
Rule 311 Detailed instructions relating to Charitable Comptroller and Auditor General of India.
Endowments and other Trusts are Rule 317 Audit Fees. Audit fees on the basis of
embodied in Appendix -8. daily rates prescribed by Government in
consultation with the Comptroller and
VII. LOCAL BODIES Auditor General of India from time to time
shall be charged by the Indian Audit and
Rule 312 (1)Financial arrangements between Accounts Department for the audit of local
Central Government and Local Bodies. and other non-Government funds,
Unless any one of the following excluding funds for the audit of which the
arrangements is authorized by specific rates of fees recoverable are prescribed by
orders of Government, a local body will be law or by rules having the force of law.
required to pay, in advance, the estimated Provided that nothing contained in this rule
amount of charges to be incurred or cost of shall be held to override any special
services to be rendered, by Government instructions of Government exempting any
on account of the fund:- particular local body or institution wholly or
(i) payments made by Government are partially from the payment of audit fees.
debited to the balances of the Rule 318 In the case of Government Companies, the
deposits of the local fund with recovery of the cost of Supplementary
government; or Audit conducted under Section 143(6) of
(ii) payments are made as advances Companies Act, 2013 as amended from
from public funds in the first instance time to time, should be waived in those
pending recovery from the local cases where the audit is done by the
funds. Comptroller and Auditor General through
Rule 312 (2) Notwithstanding the provision his own departmental staff but should be
contained in Rule 312 (1) in case of enforced in cases where the Comptroller
emergency such as epidemics pre- and Auditor General employs professional
payment will not be insisted upon from auditors for the Supplementary Audit.
local bodies for supply of medicines from Rule 319 Financial transactions between
Medical Stores Depots of the Ministry of Government and local bodies shall be
Health. rounded off to the nearest Rupee.
Rule313 Any amount or loan not paid on due date
to Government by a local body, may be VIII. MAINTENANCE OF RECORDS

90
 purpose.
Rule320 (1) Destruction of Records. Subject to (iv) The Head of the Office shall be
any general or special rules or orders responsible for timely recovery or
applicable to particular departments as adjustment of the advance.
prescribed in their departmental manuals, Rule 323 (2) The adjustment bill, along with balance
no Government record connected with if any, shall be submitted by the
accounts shall be destroyed except in government servant within fifteen days of
accordance with the provisions of the drawal of advance, failing which the
Appendix -9. advance or balance shall be recovered
Rule 320 (2) All the records prescribed for retention from his next salary(ies).
in Appendix - 9, if maintained in electronic Rule 324 The Ministry or Department may sanction
form should mandatorily have a back up the grant of an advance to a Government
and adhere strictly to the retention period Pleader in connection with law suits, to
and the prescribed formats. The which Government is a party, up to the
responsibility for verification and maximum limit of Rupees twenty-five
certification on a monthly/annual basis as thousand at a time. The amount so
prescribed under relevant rules should also advanced should be adjusted at the time of
be ensured. settlement of Counsel’s fee bills.

IX. CONTINGENT & MISCELLANEOUS

EXPENDITURE

Rule 321 Rules relating to contingent expenditure

are available at Rule 13 of the Delegation
of the Financial Powers Rules and Rules
96 to 98 of the Government of India
(Receipts and Payments) Rules, 1983.
Rule 322 Permanent Advance or Imprest.
Permanent advance or Imprest for meeting
day to day contingent and emergent
expenditure may be granted to a
government servant by the Head of the
Department in consultation with Internal
Finance Wing, keeping the amount of
advance to the minimum required for
smooth functioning. Procedures for
maintenance of permanent advance or
Imprest are available in para 10.12 of the
Civil Accounts Manual.
Rule 323 (1) Advances for Contingent and
Miscellaneous purpose. The Head of the
Office may sanction advances to a
Government Servant for purchase of
goods or services or any other special
purpose needed for the management of
the office, subject to the following
conditions:-
(i) The amount of expenditure being
higher than the Permanent
Advance available, cannot be met
out of it.
(ii) The purchase or other purpose
cannot be managed under the
normal procedures, envisaging
post- procurement payment
system.
(iii) The amount of advance should not
be more than the power delegated
to the Head of the Office for the

91
 APPENDIX– 1
[See Rule 37 ]

INSTRUCTIONS FOR REGULATING THE ENFORCEMENT

OF RESPONSIBILITY FOR LOSSES, ETC.

1. The cardinal principle governing the assessment of responsibility is that, every Government officer should
exercise the same vigilance in respect of expenditure from public fund generally as a person of ordinary prudence
would exercise in respect of the expenditure and the custody of his own money. While, the competent authority
may, in special cases, condone an officer's honest errors of judgement involving financial loss if the officer can
show that he has acted in good faith and done his best up to the limits of his ability and experience, personal
liability shall be strictly enforced against all officers who are dishonest, careless or negligent in the duties
entrusted to them.
2. In cases where loss is due to delinquencies of subordinate officials and where it appears that this has been
facilitated by laxity of supervision on the part of a superior officer, the latter shall also be called strictly to account
and his personal liability in the matter carefully assessed.
3. (a)The question of enforcing pecuniary liability shall always be considered as well as the question of other forms
of disciplinary action. In deciding the degree of an officer's pecuniary liability, it will be necessary to look not only
to the circumstances of the case but also to the financial circumstances of the officer, since it should be
recognized that the penalty should not be such as to impair his future efficiency.
(b)In particular if the loss has occurred through fraud, every endeavour should be made to recover the whole
amount lost from the guilty persons and if laxity of supervision has facilitated the fraud, the supervising officer at
fault may properly be penalized either directly by requiring him to make good in money a sufficient proportion of
the loss or indirectly by reduction or stoppage of his increments of pay.
(c)It should always be considered whether the depreciated value of the Government property or equipment lost,
damaged or destroyed by the carelessness of individuals entrusted with their care should be recovered from the
delinquent official. The depreciated value of the stores may be calculated by applying the 20% of depreciation in
the case of vehicles, including cycles, and 15% in the case of calculating machines, on the reduced balance
every year. The amount to be recovered may be limited to the Government servant's capacity to pay.
4. When a pensionable Government servant is concerned in any irregularity or loss, the authority investigating the
case shall bear in mind the provisions contained in Central Civil Services (Pension) Rules 1972 as amended from
time to time and immediately inform the Audit Officer and/or the Accounts Officer, as the case may be,
responsible for reporting on his title to Pension or Death-Cum-Retirement Gratuity, and the authority competent to
sanction Pension or Death-Cum-Retirement Gratuity and it will be the duty of the latter to make a note of the
information and see that the Gratuity or Death-Cum-Retirement Gratuity is not paid before a conclusion is arrived
at as regards the Government servant's culpability and final orders are issued thereon.
5. The fact that Government servants who were guilty of frauds or irregularities have been demobilized or have
retired and have thus escaped punishment, should not be made a justification for absolving those who are also
guilty but who still remain in service.
6. It is of the greatest importance to avoid delay in the investigation of any loss due to fraud, negligence, financial
irregularity, etc. Should the administrative authority require the assistance of the Audit Officer and/or the
Accounts Officer, as the case may be, in pursuing the investigation, he may call on that officer for all vouchers
and other documents that may be relevant to the investigation; and if the investigation is complex and he needs
the assistance of an expert Audit Officer/ Accounts Officer to unravel it, he should apply forthwith for that
assistance to Government which will then negotiate with Audit Officer and/or the Accounts Officer concerned for
the services of an investigating staff. Thereafter, the administrative authority and the Audit /Accounts authority
shall be personally responsible within their respective spheres, for the expeditious conduct of the enquiry. In any
case in which it appears that recourse to judicial proceedings is likely, the Special Police Establishment or the
State Police should be associated with the investigation.
7. Depending upon the results of the inquiry, departmental proceedings and/or prosecution shall be instituted at the
earliest moment against the delinquent officials concerned and conducted with strict adherence to the Central
Civil Services (Classification, Control and Appeal) Rules, 1957, and other instructions prescribed in this regard by
Government.

92
 APPENDIX– 2
[See Rule 52 ]

PROCEDURE FOR PREPARATION OF

DETAILED ESTIMATES OF RECEIPTS

1. Revenue receipts. - These comprise (i) Central taxes, duties and cesses administered by the Central Board of
Direct Taxes and the Central Board of Excise and Customs; (ii) local taxes and duties and other receipts in
relation to the Union Territories without Legislature; (iii) interest receipts of loans and advances by the Central
Government as also interest charged to commercial departments, etc., (iv) notional receipts from adjustments
based on principles of accounting like grant assistance from foreign Governments or International institutions;
and (v) all other revenue receipts including dividends on equity investments of the Central Government, cesses
collected by the Ministries and Departments, etc.
2. Capital Receipts. These comprise (i) Internal debt (market loan, treasury bills, etc.); (ii) External debt; (iii)
Repayment of loans and advances made by the Central Government; (iv) Disinvestment Receipts (v) Other
Liabilities.
3. (1)Estimates of receipts of Central Taxes and Duties and External Aid receipts are prepared within the Ministry of
Finance by the Central Board of Direct Taxes, the Central Board of Excise and Customs and the Controller of Aid
Accounts and Audit. Estimates of internal debt (market loans) receipts are framed by the Budget Division.
(2)Estimates of revenue receipts of the Union Territory Administrations will be furnished to the Ministry of Finance
by the concerned Audit Officer / Accounts Officer wherever departmentalization of accounts has not taken place
and by the Controller of Accounts of the Union Territory Administrations where departmentalization of accounts
has been introduced.
(3)Estimates of receipts in all other cases will be prepared by Controller of Accounts of each Department after
obtaining necessary data by the 30th November from the various organizations / field units and such scrutiny as
may be necessary in the light of policy decisions and other post Budget developments.
4. Estimates will be furnished to the Ministry of Finance in prescribed forms (GFR 2, 2-A and 2-B) by the prescribed
date, each year for the ensuing Budget.
5. (1)In preparing the Revised Estimates, while previous year's actuals and current year's trends will be material
factors to review the original Budget Estimates, special attention should be devoted to making as realistic an
estimate as possible of receipts which are likely to materialize during the rest of the financial year.
5. (2)In framing the Budget Estimates for the ensuing year, the estimating authorities should exercise utmost care.
While all receipts which can be foreseen in the light of latest trends, decisions and developments must be
provided for, care should be taken to ensure that undue optimism does not influence these estimates. Similarly,
where the receipts have a seasonal character, due note should be taken thereof in preparing the estimates.
5. (3) Receipts by way of recoveries from Central Government Ministries / Departments, are to be excluded in
preparing Receipt Estimates. Other recoveries (from the State and Union Territory Governments, foreign
Governments, companies and statutory bodies, individuals, etc.) will, however, be included in the Receipt
Estimates.
5. (4) Estimates of receipts by way of interest on loans and advances will be based on the terms of the loans
sanctioned, as entered in the Loan Registers, including defaults, if any. The estimates should be realistic; that is
to say, that the estimates should reflect not merely what is due but what is likely to be realized during the year
together with the reasons for non-recovery of the difference between receipts due and assumed in the estimates.
In the case of Public Sector Units, interest receipts expected from their internal resources should be distinguished
from notional recoveries offset by corresponding expenditure provisions in the form of subsidies and loans.
Similarly, where repayments due are refinanced by further loans or by conversion of past loans into equity, the
details should be furnished.
5.(5) In reporting estimates of receipts by way of foreign grant assistance in cash or in kind, care should be taken to
classify foreign grant receipts in cash under the Major Head '1605 External Grant Assistance' and those in the
form of commodities under the Major Head '1606 Aid Materials and Equipment'. In the case of commodities
grants, identical provision will be made in expenditure estimates under the Major head '3606 Aid Materials and
Equipment's' (both as debits to represent the notional payment therefor and as credits - recoveries in reductions
of expenditure - to reflect the counter-balancing entries), as well as under the final functional Head of Account
showing the final destination and use of the aid materials and equipment.(Refer to Form GFR 2A)
NOTE. For utilization of cash grants, provision in expenditure estimates under the final functional Heads of
Account will be necessary.
5. (6)In reporting the estimates, the estimating authorities should confine their estimates to those items of receipts
93
which are to be accounted for finally in their own accounts and ultimately in the accounts of the Ministry/
Department to which they are subordinate. All other receipts/recoveries entering the accounts of another Ministry/
Department should be communicated to the concerned Ministry/Department for consolidation in their estimates
(e.g., receipts of CGHS contributions and rent recoveries in respect of Government accommodation).

94
 APPENDIX– 3
[ See Rule 52]

INSTRUCTIONS FOR PREPARATION OF DETAILED

ESTIMATES OF EXPENDITURE FROM THE CONSOLIDATED FUND

1. For purpose of Budget Estimates, expenditure from the Consolidated Fund –with the merger of Plan and Non-
Plan from Budget 2017-18 will comprise of expenditure on revenue account and on capital account including
loans and advances, and shown in the separate categories as applicable, comprising of I. Central Expenditure: (i)
Secretariat Expenditure; (ii) Central Sector Schemes and (iii) Other Central Expenditure and II. Transfers: (i)
Centrally Sponsored Schemes (ii) Finance Commission Transfers and (iii) Other Transfers.

A. GENERAL GUIDELINES FOR PREPARING EXPENDITURE ESTIMATES

2. To facilitate appropriate scrutiny and consolidation of Expenditure Estimates for reporting to the Ministry of
Finance, the Financial Adviser in each Ministry / Department will obtain detailed estimates and other supporting
data from each of the estimating authorities under the control of the Ministry / Department, in appropriate forms,
sufficiently in advance.
3. The framing of the Revised Estimates for the current year should always precede estimation for the ensuing year.
The Revised Estimates should be framed with great care to include only those items which are likely to
materialize for payment during the current year, in the light of (i) actuals so far recorded during the current year,
compared with the actuals for corresponding period of the last and previous years, (ii) seasonal character or
otherwise of the nature of expenditure, (iii) sanctions for expenditure and orders of appropriation or re-
appropriation already issued or contemplated and (iv) any other relevant factor, decision or development.
The Budget Estimate for the ensuing year should likewise be prepared on the basis of what is expected to be
paid, under proper sanction, during the ensuring year, including arrears of previous years, if any. Due attention to
considerations of economy must be paid and while all inescapable and foreseeable expenditures should be
provided for, care should be taken that the estimate is not influenced by undue optimism.
4. No lump sum provision will be made in the Budget except where urgent measures are to be provided for meeting
emergent situations or for meeting preliminary expenses on a project/scheme which has been accepted in
principle for being taken up in the financial year. In latter cases Budget provision will be limited to the
requirements of preliminary expenses and for such initial outlay, as, for example, on collection of material,
recruitment of skeleton staff, etc.
Provision for a 'token' demand should not be made in the Budget Estimates for the purpose of seeking approval
in principle for big schemes without the full financial implications being worked out and got approved by the
appropriate authorities. In accordance with instructions contained in Paragraph (viii) of Appendix (5), a 'token'
demand can be made during the course of a year for a project / scheme when the details thereof are ready and
funds are also available for undertaking it but it cannot be started without Parliament's approval, it being in the
nature of a 'New Service/New Instrument of Services'.
5. All estimates should be prepared on gross basis and 'voted' and 'charged' portions must be shown separately;
even expenditure met partly or fully from receipts taken in reduction of such expenditure or those
counterbalanced by receipts credited as revenue to the Consolidated Fund, must be reported in such estimates
on gross basis. Care should also be taken to ensure that all notional receipts reported in 'Receipt Estimates'
(such as interest receipts fully or partly subsidized, loan repayment receipts partly or fully refinanced through
further loans or conversions into equity, receipts of foreign grant assistance in the form of commodities or
material, etc.) are properly matched by adequate provisions in expenditure estimates.
6. The estimates of expenditure should include all items which are fully accounted for in the accounts of the
Ministry/Departments to which the estimating authority is subordinate; they shall also cover expenditure, if any, in
Union Territories without Legislature, whether provided for in the demands of the said Ministry / Department or in
the 'Area' demand of the concerned Union Territory. Estimates of 'Works Expenditure', if any, against the
provisions in the demands of the Ministry of Urban Development, as well as expenditure on pensions (including
commutation payments, gratuity payments, pension contributions, etc.) interest payments, loans and advances to
Government servants, etc., which are provided for in the centralized Grants/Appropriations controlled by the
Ministry of Finance should be furnished to the Ministry of Urban Development and the Ministry of Finance.
7. The estimate of establishment charges should be framed taking into account the trends over preceding three

95
 years and other relevant factors like changes in rates of pay, allowances, number of posts and their filling and the
economy instructions issued by the Ministry of Finance from time to time.
8. Expenditure estimates will be prepared with full accounts classification, i.e., Major/Sub-Major Head, Minor Head,
Sub-Head, Detailed Head and Object Head of Account. The correctness of accounts classification must be
ensured by the Principal Chief Controller / Chief Controller/ Controller of Accounts in each case. Doubts, if any,
may be clarified beforehand in consultation with the Ministry of Finance, Budget Division and Controller General
of Accounts. The relevant Grant number and title of Appropriation should also be mentioned to facilitate
identification of the provision in Budget Estimates for the current year.
9. Unless otherwise indicated by the Ministry of Finance, estimates (both Revised Estimates for the current year
and Budget Estimates for the ensuing year) should reach the Ministry of Finance, Department of Economic
Affairs, Budget Division, by the date prescribed by the Ministry of Finance, each year, in triplicate in Form GFR 4,
a separate form being used for each Major Head of Account.
10. To facilitate appreciation and scrutiny of the estimates, any major variations between the Budget and Revised
Estimates for the current year and also between the Revised Estimates for the current year and Budget
Estimates for the ensuing year should be explained cogently. In particular, all provisions for subsidy, capital
investment or loan to a Public Sector Undertaking, must be explained by indicating their purpose and the extent
to which they are intended to cover losses, working capital needs, debt or interest liabilities of the undertaking.
11. Wherever the proposed estimates attract the limitations of 'New Service/New Instrument of Service', the fact must
be specifically highlighted. The guidelines to be followed in this regard are indicated in Annexure - I to this
Appendix. For all 'new' schemes, other than purely 'works' projects, the estimates proposed should be supported
by details set out in Annexure - II to this Appendix. In the case of provisions of 'Grants-in-aid' to non- Government
entities, the full purpose thereof and the nature of the grants, whether recurring or non-recurring, should also be
indicated.
12. All provisions for transfer of Government assets to Public Sector Undertaking and other non-Government entities
must also be highlighted, indicating whether the transfer is by way of grants or by way of equity investment or
loan. Similarly, in the case of nationalization or take-over of any private sector assets, the related provisions in
estimates must be supported by full details, such as the effective date of take-over, the agreed compensation
amount and the manner of its payment, etc. In cases of takeover, where the assets are simultaneously
transferred to a Public Sector Undertaking, it must be ensured that the estimates provide for (i) payment of
compensation for the take-over, (ii) for transfer of assets to the Public Sector Undertaking, by means of recovery
of compensation payment to be taken in reduction of expenditure, and (iii) provisions for equity or loanto the
Public Sector Undertaking.

B. SCHEME RELATED EXPENDITURE ESTIMATES

13. The Budget Division through the yearly Budget Circular will prescribe the form and the manner in which
proposals are required to be submitted to them for determining the scheme allocations,(both Central Sector
Schemes and Centrally Sponsored Schemes) for the ensuing year. The Financial Adviser in each Ministry /
Department of the Central Government will accordingly call for requisite data from the estimating authorities,
public sector and other enterprises under the control of the Ministry / Department, etc. The approved allocations
for Central Sector and Centrally Sponsored Schemes will be communicated by the Ministry of Finance to the
Central Ministries / Department. Ministries/ Departments will finalize the Statement of Budget Estimates,
indicating the total outlay approved for each scheme / organization and the extent to which it is to be met from
extra-budget resources and from provisions in the Demands for Grants.
14. Subject to such directions as may be issued by the Ministry of Finance from time to time, the Revised Estimates
for the current year and Budget Estimates of the ensuing year, in respect of Scheme provisions, are to be sent to
the Ministry of Finance in Form GFR 7. For furnishing these estimates, instructions for preparation and
submission of Other than scheme Expenditure Estimates will apply to the extent relevant; in addition, the
following points should also be borne in mind :-
(i) Such part of the approved budgetary support for Scheme outlay as relates to 'works expenditure' and has
been accepted by the Ministry of Urban Development for inclusion in their Demands for Grants should be
excluded by the other Ministries / Departments in reporting the estimates to the Ministry of Finance in Form
GFR 4.
(ii) In the case of, provisions for equity investments and loans to public sector and other enterprises, as well as
those for grants-in-aid, specific schemes, for which the outlay is provided and the extent for each of them is
also to be indicated clearly.
(iii) Provisions for Scheme expenditure on Central Sector Schemes and Centrally Sponsored Schemes,
including such expenditures in Union Territories, are to be included in the relevant demand of the
Administrative Ministry/ Department and not in 'Area' Demand of the concerned Union Territory.

96
 ANNEXURE – I TO APPENDIX-3
(Refer: Ministry of Finance, Budget Division's OM No. F.1(23)-B(AC)/2005 dated 25.05.2006
[ See Paragraph 11 of Appendix – 3/Rule 63 ]

FINANCIAL LIMITS TO BE OBSERVED DETERMINING CASES

RELATING TO “NEW SERVICE”/NEW INSTRUMENT OF SERVICE

Nature of Transaction
Limits upto which expenditure can Limits beyond which prior
be met by re-appropriation of approval of Parliament is
savings in a Grant subject to report required for expenditure from
to Parliament the Consolidated Fund
1 2 3
I. CAPITAL EXPENDITURE
A. Departmental Undertakings
(i) Setting up a new --- All cases
undertaking, or taking up
a new activity by an
existing undertaking.
(ii) Additional Investment in Above Rs.2.50 crore but not Above Rs. 5 crore
an existing undertaking exceeding Rs. 5 crore.

B. Public Sector Companies/Corporations

(i) Setting up of a new --- All cases
Company or splitting up
of an existing Company,
or amalgamation of two
or more Companies,
or taking up a new
activity by an existing
Company
(ii) Additional investment in/
loans to an existing
company
a) Where there is no Above Rs.50 lakhs but Above Rs. 1 crore
Budget Provision not exceeding Rs.1crore
b) Where BudgetProvision
exists for investment
and/or loans
Paid up capital of
theCompany
(i) UptoRs. 50 crore 20% of appropriation Above 20% of appropriation
already voted or already voted or
Rs.10 crore, Rs.10 crore,
whichever is less whichever is less.
(ii) Above Rs.50 crore 20% of appropriation Above 20% of appropriation
already voted or already voted or
Rs.20 crore, Rs.20 crore,
whichever is less whichever is less.

97
C. All bodies or authorities within the administrative control/management of Central
Government or substantially financed by the Central Government.
Loans Upto 10% of the appropriation More than 10% over the
already voted or Rs. 10 crore, appropriation already voted by
whichever is less Parliament or Rs.10 crore.
whichever is less
Note: Where a lumpsum provision is made for providing 'Loans' under a particular scheme, the details of
substantial apportionment (10% of lumpsum or Rs. 1 crore, whichever is higher) should be reported to
Parliament. In the case of lumpsum provision of loans to States, the State-wise distribution should be
reported to Parliament.
Nature of transaction Limits upto which expenditure can be Limits beyond which prior
met by re-appropriation of savings in approval of Parliament is
a Grant subject to report to required for expenditure from
Parliament the Consolidated Fund
D. Expenditure on new Above Rs.50 lakhs but not Above Rs.2.5 crore or above
Works (Land, Buildings exceeding Rs. 2.5 crore or not 10% of the appropriation
and/or Machinery) exceeding 10% of the appropriation already voted.
already voted,
whichever is less.
II REVENUEEXPENDITURE
E. Grants-in-aid to any --- All cases
body or authority
Note: Where a lumpsum provision is made for providing grants-in-aid under a particular scheme, the
details of substantial apportionment (10% of lumpsum or Rs. 1 crore, whichever is higher) should be
reported to Parliament. In the case of lumpsum provision of grants to States, the State-wise distribution
should be reported to Parliament.
F. Subsidies
(i) New Cases – All cases
(ii) Enhancement or Upto 10% of the appropriation More than 10 % of the
provision in the already approved by the Parliament appropriation already voted by
existing appropriation or Rs.10 crore, whichever is less. Parliament or Rs.10 crore,
whichever is less.
Payments against cess Limits as applicable to grants-in-aid All cases
collections to statutory or public institutions will
apply
New Commissions or – Above Rs.20 lakhs (total
Committees of Enquiry expenditure)

G. Write off of Above Rs 50,000 but not exceeding Above Rs.1 lakh (individual
Government loans Rs. 1 Lakh (individual cases) cases)

H. Other cases of Each case to be considered on merits.

Government
expenditure

I. Posts The aforesaid limits, including The aforesaid limits, including

Railways those relating to Works expenditure, those relating to Works
Defence will also apply to these Departments expenditure, will also apply to
subject to considerations of security these Departments subject to
in the case of Defence considerations of security in the
case of Defence Services
Estimates.

98
Note 1: For investment in Ordnance Factories, the limit of Rs.5 crore mentioned in item A (ii) will be
applicable with reference to investment in all the factories as a whole.
Note 2: Civil Works, which do not form part of any project of the departmental undertakings (Ordnance
Factories) should be treated as ordinary Defence works. As such, prior approval of Parliament
will be necessary if the cost of individual works exceeds Rs.2.5 crore and in cases where the
individual works cost Rs.50 lakhs or more but not exceeding Rs.2.5 crore, a report to Parliament
will be required. A list of such works should, however, be supplied to Director of Audit, Defence
Services.

99
 ANNEXURE - II TO APPENDIX - 3
[ See Paragraph 11 of Appendix - 3/Rule 63 ]

MEMORANDUM FOR PROPOSALS INVOLVING

EXPENDITURE ON NEW SERVICE OR NEW INSTRUMENT OF SERVICE
Government of India
Ministry of.......................................
Department of.................................
New Delhi, the................................

MEMORANDUM
1. Statement of proposal :
(a) Title of the proposal / scheme.
(b) Description of the proposal / scheme and its objects.
(c) Justification for the proposal / scheme and what alternatives have been considered.
(d) Description of the manner in which the proposal / scheme is proposed to be implemented including mention
of agency through which the scheme will be executed.
(e) Schedule of programme and target date of completion.
2. Financial implications of the proposal:
(a) Nature of the scheme (Central Sector Scheme or Centrally Sponsored – or Others.)
(b) Total outlay (recurring and non-recurring separately), its broad details and its year-wise phasing.
(c) (i) Budget allocation, in a scheme; and
(ii) Budget provision in the current financial year;
if no Budget provision exists, how is the expenditure proposed to be met?
(d) Foreign exchange component of the outlay and how it is proposed to be met.
(e) Component of grant, loan and subsidy, if any, in the total outlay involved and their proposed terms.
(f) Number of posts, their pay scales and the basis adopted for staffing (Statement attached).
(g) Broad details of construction works, their justification and basis of estimates (Statement attached).
(h) Requirement of stores and equipment together with justification and cost (Statement attached).
(i) Achievement / return expected and other economic implications, if any.
3. (a) Comments, if any, of the NITI Aayog (for Schemes only).
(b) Comments, if any, of other Ministries / Departments which may have been consulted.
4. Supplementary information, if any.
5. Points on which decision / sanctions are required.

Secretary to the Government of India.

Ministry of........................................
Department of..................................

100
 APPENDIX – 4
[See Note below Rule 52]

PROCEDURE FOR COMPILATION OF

DETAILED DEMANDS FOR GRANTS

1. The Demand for Grants are presented to Parliament at two levels. The Main Demands for Grants are presented
to Parliament by the Ministry of Finance along with the Annual Financial Statement while the Detailed Demands
for Grants are laid on the Table of the Lok Sabha by the concerned Ministries a few days in advance of the
discussion of the respective Ministries Demands in that House.
Both the Main Demands for Grants as also the Detailed Demands for Grants comprise three parts each, viz.-
Part - I shows the Service for which the Demand (or Appropriation) is intended and the estimates of the gross
amount, separately for Voted and Charged Expenditure, under Revenue and Capital (including Loan) sections
required in the ensuing year in respect of that Service.
Part - II shows break up of the estimates separately. In the Main Demands for Grants, the break up is exhibited
up to the level of Major Heads of Account which correspond to functions of the Government.
In the Detailed Demands for Grants the break up in respect of activities/schemes/organization up to the object
head level is given.
The Detailed Demands for Grants also exhibit actuals of the previous year in Part - II.
Both in the Main Demands for Grants as well as in the Detailed Demands for Grants, the details of recoveries
taken in reduction of expenditure provided for in the Demand or Appropriation are also depicted.
2. All Detailed Demands for Grants of a Ministry / Department are consolidated in a single volume and presented to
Lok Sabha by the concerned Ministry / Department. The Detailed Demands show ‘actual expenditure’ as per
accounts in the previous year, Budget and Revised Estimates for the current years and Budget Estimates for the
ensuing year.
(i) The process of compilation should start in July / August with the preparation of a manuscript skeleton.
Manuscript skeletons of Detailed Demands for the ensuing year should be prepared by using the printed
Detailed Demands for the current year by making necessary alterations therein. New sub-heads sanctioned
by the Ministry of Finance, if any, and those expected to be required should also be added in the manuscript
at appropriate places. The manuscript should then be sent to the designated press for a proof. Where
necessary, a second proof may be obtained. The printed skeletons should be available with the Ministries/
Departments preferably by the 15th October each year.
(ii) Two copies of the Demand skeleton may then be sent to the Principal Accounts Officer, as the case may be,
for filling the ‘Actuals’ column for the previous year and to return one copy duly filled in.
(iii) In the master copy of the Demand, the Ministry / Department will then post (1) the figures of actuals as
reported by the Principal Accounts Officer / Accountant-General; (2) Revised Estimates for the current year
and the Budget Estimates for the ensuing year from the office copy of the SBEs /Demands for Grants sent to
Ministry of Finance. While posting these entries, care should be taken to ensure that –
(a) “Charged” items are shown in italics and are not mixed up with “Voted” provisions;
(b) posting is done accurately against the proper item / head of account including “recoveries”, if any,
taken as reduction of expenditure;
(c) new items are inserted at the proper place under the relevant minor head;
(d) totals of sub-heads, minor heads, major heads, etc., are correctly worked out and posted; that totals of
Revenue section and Capital section as well as the grand totals are correct and show “Charged” and
“Voted” figures distinctly; and
(e) new sub-head (opened through Supplementary Demands) or otherwise or any change in the
numbering and nomenclature sanctioned by the Budget Division since the proof of the skeleton should
also be incorporated in the Master Copy.
NOTE :–A sub-head should appear in the Demand only when there is provision thereunder, either in the
current year(Budget or Revised) or the ensuing year. Wherever only actuals of the previous year pertaining to
a sub-head are to be exhibited, this should be done by inserting suitable footnote on the relevant page.
(iv) The process of compilation and printing of the Demands should be undertaken in stages.
3. The first proof of individual Demands may be obtained after posting actuals of previous year and other than
Scheme estimates (by 15th December). The second proof may be similarly obtained (by 15th January) after
”Scheme” Revised estimates are posted in the first proof. As soon as “Scheme” provisions for the ensuing year are

101
 finalized and communicated by the Ministry of Finance, they should be posted in the second proof. Before
obtaining the third proof, the following material may also be added.
(A) Main Demands for Grants :
(i) Notes on the Demands for Grants highlighting the following :-
(a) The objectives of the concerned Ministry / Department, how the programmes undertaken or
contemplated contribute towards attainment of such objectives and the agencies entrusted with the
execution of such programmes;
(b) Details of important provisions included in Demands for Grants with particular emphasis on Scheme
provisions and new items of expenditure;
(c) Cogent reasons for significant variations between the Budget Estimates and Revised Estimates for
the current year and between the Revised Estimates, for the current year and the Budget Estimates
for the ensuing year;
(d) Provisions for subsidy in lieu of interest on loans by the Government or token provisions for
concessional rate of interest along with number of likely cases involved and financial implications, if
determinable; and
(e) Complete details of the estimated cost of a project together with its economics and financial
implications (whenever these estimates are revised and the cost of escalation exceeds 20 per cent of
the sanctioned cost or Rs. 3 crores, whichever is more, full reasons therefor and the effect thereof on
the economics of the projects should also be included in the Notes on Demands).
(ii) A statement giving details of provisions in the Budget which attract limitations of “New Service”/”New
Instrument of Service”.
(B) Detailed Demands for Grants :
The Detailed Demands for Grants will be accompanied by the following schedules/ statements:-
(i) Schedule showing the estimated strength of establishment and provision therefor.
(ii) Statement showing project-wise provision for expenditure on externally aided projects in the Central Schemes.
(iii) Schedule showing provision for payment of grants in aid to non-Government bodies.
(iv) Statement showing details of individual works and projects costing Rs. 5 crore or above.
(v) Statement showing revised cost estimates of projects of public sector enterprises and departmental
undertakings.
(vi) Statement showing transfer or gift of Government properties of value exceeding Rs. 5 lakhs to non-
Government bodies.
(vii) Statement showing contributions to International bodies. This statement will include only items of contribution,
membership fees to international bodies, which constitute revenue expenditure. Subscriptions to international
bodies, which represent investments and are accounted for in the Capital section, are to be excluded from it.
(viii)Statement showing guarantees given by the Central Government and outstanding as on 31st March of the
preceding year.
(ix) Statement showing grants-in-aid exceeding Rs. 5 lakhs (recurring ) or Rs. 10 lakhs (non-recurring) actually
sanctioned to private institutions/organizations/ individuals.
4. In addition the Detailed Demands for Grants will also include where necessary, “Notes on Important Projects and
Schemes”, e.g., where the Ministry / Department do not bring out performance Budgets.
5. The third proof on receipt from the press should be thoroughly checked for accuracy of all estimates and other
data, as these must necessarily conform with the main Demands for Grants. Therefore for obtaining page proof,
all pages should be serially numbered and table of contents prepared. The page proof received from the Press
should be fully scrutinized.
6. A sample printed copy of the Demands should be scrutinized on receipt from Press and where necessary an
errata may be prepared, got printed and pasted by the Press in individual copies of the Printed Demands.
7. The Demands of smaller Departments like Lok Sabha, Rajya Sabha, Department of Parliamentary Affairs, Staff,
Household and Allowances of the President, Secretariat of the Vice-President and Union Public Service
Commission which are clubbed in a single volume are to be prepared and presented by the Ministry of Finance.

102
 APPENDIX – 5
[Rule 66]

PROCEDURE TO BE FOLLOWED IN CONNECTION

WITH THE DEMANDS FOR SUPPLEMENTARY GRANTS

An excess over the sanctioned Grant or Appropriation may arise owing to either –
(a) an unforeseen emergency; or
(b) under-estimated or insufficient allowance for factors leading to the growth of expenditure. In the case of an
excess of either type the Head of the Department or the Controlling Officer concerned should proceed as follows
:-
(i) He should, in the first place, examine the allotments given to other Disbursing Officers under the same
detailed head within the unit of appropriation, and transfer to the Disbursing Officer who requires an additional
allotment such sum as can be permanently or temporarily spared. Since appropriation audit is ordinarily
conducted against total allotments for a unit, re-appropriation in the technical sense of the word is not involved
in such cases. The process amounts only to redistribution which the Controlling Officer can ordinarily effect
without reference to any other authority.
(ii) Should he find such redistribution impossible he should examine the allotments against other detailed heads
inside the primary units of appropriation, with the object of discovering probable savings and effecting a
transfer. Where such redistribution is feasible, he should if he has been vested with the necessary powers,
carry it out. Otherwise, he should obtain the sanction of the competent authority.
(iii)If the provision of funds from within the primary units proves to be impossible, an examination of the whole
grant should be undertaken to see whether there are likely to be savings under any of the other units of grant
or appropriation which can be utilized to meet it. If so, he should proceed as indicated in Clause (ii) above.
(iv)If such savings are not available, it should be seen whether special economies can be effected under other
primary units of appropriation. If funds cannot be provided by either of these methods, it will have to be
considered whether the excess should be met by postponement of expenditure or whether an application for
supplementary grant or appropriation should be made.
(v) The Supplementary Demand for Grants shall be presented to the Parliament in a number of batches as
decided by the Ministry of Finance, Department of Economic Affairs. The first batch shall normally consist of
requirements of the following nature :-
(a) Cases where advances from Contingency Fund of India have been granted, which are required to be
recouped to the Fund.
(b) Payment against a court decree, which cannot be postponed; and
(c) Cases of additional requirement of funds for making immediate payments, which can be met by re-
appropriation of savings in the Grant but attract the limitation of New Service / New Instrument of
Service.
(vi)All applications for supplementary grants or appropriations should be submitted by the Department of the
Central Government administratively concerned to the Ministry of Finance on such dates and in such forms /
batches as may be prescribed by the latter from time to time.
(vii)On receipt of an application for a supplementary grant, the Ministry of Finance will review the position of the
grant of appropriation as a whole with reference to the known actuals of the year to date and the actuals and
estimates for previous years. If after this examination, the Ministry of Finance comes to the conclusion that it
should be possible for the Administrative Department to meet the expenditure from within the sanctioned grant
either from normal savings or by special economies or in the last resort by judicious postponement of other
expenditure or in the last resort by judicious postponement of other expenditure, the Administrative
Department will be so informed and no supplementary demand will be presented to Parliament. If, on the
other hand, the Ministry of Finance considers that a supplementary grant will be necessary, a demand will be
placed before Parliament.
(viii) If during the course of the year it is found necessary to incur expenditure on a ‘New Service’ not provided for in
the annual budget the Administrative Department shall explain to the Ministry of Finance why the expenditure
was not provided for in the original budget and why it cannot be postponed for consideration in connection with
the next budget. The Ministry of Finance, if satisfied on these points, will consider whether it would not be
reasonable to ask the department concerned to curtail its other expenditure so as to keep the total within the
grant. Ordinarily, no “new service” or item will be accepted by the Ministry of Finance, unless the department

103
 concerned can guarantee that the extra expenditure will be met from normal savings or by special economies
within the grant. Cases which involve additional grant will normally be accepted by the Ministry of Finance only if
they relate to matters of real imperative necessity or to the earning or safeguarding of revenue. The demand for a
supplementary grant of appropriation or a token vote in respect of a “new service” will be presented to Parliament
as soon as practicable after the need arises.

NOTE. –The expression ‘New Service’ wherever used in this Appendix includes – ‘New Instrument of Service’.

104
 APPENDIX – 6
[Rule 67. (4)]

THE CONTIGENCY FUND OF INDIA RULES

SRO 1358. - In exercise of the powers conferred by Section 4 of the Contingency Fund of India Act, 1950 (XLIX of
1950), the Central Government hereby makes the following rules:-

CONTINGENCY FUND OF INDIA RULES

1. These rules may be called the Contingency Fund of India Rules.

2. The Contingency Fund of India shall be held on behalf of the President by the Secretary to the Government of
India, Ministry of Finance, Department of Economic Affairs.
3. An amount equivalent to forty per cent of the Fund corpus shall be placed at the disposal of the Secretary,
Ministry of Finance, Department of Expenditure for the purpose of meeting unforeseen expenditure, and beyond
this limit, all further Contingency Fund releases shall be made with the approval of Secretary to the Government
of India, Department of Economic Affairs, after the approval of Secretary to the Government of India, Department
of Expenditure.
4. Subject to the provisions of Rule 5 below, all applications for advances from the Fund shall be made to the
Secretary to the Government of India, Ministry of Finance, Department of Expenditure. The applications shall give
-
(i) brief particulars of the additional expenditure involved,
(ii) the circumstances in which provision could not be included in the budget,
(iii) why its postponement is not possible,
(iv) the amount required to be advanced from the Fund with full cost of the proposal for the year or part of the
year, as the case may be, and
(v) the grant or appropriation under which supplementary provision will eventually have to be obtained.
5. Applications for advances required shall be made to the Secretary to the Government of India, Department of
Expenditure and applications for advances of new loans shall be made to the Secretary to the Government of
India, Department of Economic Affairs, in the manner provided for in Rule 4.
6. Advances from the Fund shall be made for the purpose of meeting unforeseen expenditure including expenditure
on a new service not contemplated in the annual financial statement.
7. A copy of the order sanctioning the advance, which shall specify the amount, the grant or appropriation to which it
relates and give brief particulars by sub-heads and units of appropriation of the expenditure for meeting which it is
made, shall be forwarded by the Ministry of Finance to the Audit and Accounts Officers concerned.
8. (1) All expenditure so financed shall be regularized through the Supplementary Estimates presented to
Parliament unless such advance has been resumed to the Contingency Fund in accordance with the
provisions of sub-rule (2).
NOTE 1. -While presenting to Parliament Estimates for expenditure financed from the Contingency Fund, a
note to the following effect shall be appended to such Estimates :-
‘A sum of Rs………………………… has been advanced from the Contingency Fund in
………………………and an equivalent amount is required to enable repayment to be made to that Fund.’
NOTE 2. -If the expenditure on a new service not contemplated in the Annual Financial Statement can be met,
‘wholly or partly’ from savings available within the authorized appropriation, the note appended to the
Estimates submitted shall be in the following form :-
‘The expenditure is on a new service. A sum of Rs…………………… has been advanced from
Contingency Fund in……………….. and an equivalent amount is required to enable repayment to be
made to that Fund.’ The amount, viz., Rs…………………….. can be found by re-appropriation.
‘A part of that amount, viz., Rs…………………………..of savings within the grant and a token vote only is now
required, viz., Rs…………………………. only.
a vote is required for the balance
(2) As soon as Parliament has authorized additional expenditure by means of a Supplementary Appropriation Act,
the advance or advances made from the Contingency Fund, whether for meeting the expenditure incurred
before the Supplementary Estimates were presented to the Parliament or after they were so presented, shall
105
 be resumed to the Fund to the full extent of the appropriation made in Act.
8. A. If in any case, after the order sanctioning an advance from the Contingency Fund has been issued in accordance
with Rule 7 and before action is taken in accordance with Rule 8, it is found that the advance sanctioned will
remain wholly or partly unutilized, an application shall be made to the sanctioning authority for cancelling or
modifying the sanction, as the case may be.
8. B. All advances sanctioned from the Contingency Fund to meet expenditure in excess of the provision for the
service included in an Appropriation (Vote on Accounts) Act shall be resumed to the Contingency Fund as soon
as the Appropriation Act in respect of the expenditure on the service for the whole year, including the excess met
from the advances from the Contingency Fund has been passed.
8. C. If during an Election year, two Budgets are presented to the Parliament, all advances, sanctioned from the
Contingency Fund of India during the period between the presentation of first and second Budgets or during the
period between the presentation of the second Budget and the passing of the connected Appropriation Act to
meet expenditure on a service not included in an Appropriation (Vote on Account) Act and the advances
outstanding at the end of the preceding financial year being advances the estimates for which are included in the
second Budget, shall be resumed to the Contingency Fund as soon as the Appropriation Act in respect of the
expenditure on the service for the whole year has been passed.
NOTE.-A suitable explanation regarding the advance and the recoupment thereof shall be incorporated in the
“Notes on Demands for Grants”. Wherever required, such a case will be included in the statement of ‘New
Service’ / ‘New Instrument of Service’ appended at the end of the demands.
9. A copy of the order resuming the advance, which shall give a reference to the number and date of the order in
which the original advance was made and to the Supplementary Appropriation Act referred to in Rule 8, shall be
forwarded by the Ministry of Finance and the Financial Officers concerned, in addition, to the Audit and Accounts
Officers concerned. In addition, the Ministry of Finance shall forward copies of such orders to the Accountant
General, Central Revenues, and the Director of Railways Audit if pertaining to the Railways.
10. An account of the transactions of the Fund shall be maintained by the Ministry of Finance in Form ‘A’ annexed to
these rules.
11. Actual expenditure incurred against advances from the Contingency Fund shall be recorded in the account
relating to the Contingency Fund in the same details as it would have been shown if it had been paid out of the
Consolidated Fund.

106
 ANNEXURE FORM‘A’
[See Paragraph 10 of Appendix-6]

CONTINGENCY FUND OF INDIA

Amount of the Fund Rs. .......................................................

SI. Date of Number and Number Number Amount Supplementary Amount of Balance Initials of Remarks
No. transaction name of and and date of Appropriation advance after each Officer-in-
Grant of date of the of the advance act providing resumed transaction charge
appropriation application order resumed for the
for making Additional
advance the Expenditure
advance
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

NOTE1.-The balance should be struck after each transaction.

NOTE2.-The amount of the advances should be entered in Black ink when made and in red ink when resumed.

107
 APPENDIX - 7
[See Rule 310 (4) and 310 (5) ]

TRANSFER OF LAND AND BUILDINGS BETWEEN

THE UNION AND STATE GOVERNMENTS

1. These rules apply to the transfer of land and buildings between the Union and the State Governments and also to
the surrender to the State Governments of land belonging to Railways.
The general position under Article 294 of the Constitution is that as from the commencement of the Constitution -
(a) all property and assets which immediately before such commencement were vested in His Majesty for the
purposes of the Government of the Dominion of India and all property and assets which immediately before such
commencement were vested in His Majesty for the purpose of the Government of each Governor’s Province,
shall vest respectively in the Union and the corresponding State; and all rights, liabilities and obligations of the
Government of the Dominion of India and of the Government of each Governor’s Province, whether arising out of
any contract or otherwise, shall be the rights, liabilities and obligations respectively of the Government of India
and the Government of each corresponding State subject to any adjustment made or to be made by reason of
the creation before the commencement of the construction of the Dominion of Pakistan or of the Province, of
West Bengal, West Punjab and East Punjab.
Article 294, as is evident, relates to succession to property, assets, rights, liabilities and obligations in certain
cases only; Article 295 of the Constitution which relate to succession to property, assets, rights, liabilities and
obligations in other cases, provides that -
(i) As from the commencement of the Constitution:
(a) all property and assets which immediately before such commencement were vested in any Indian State
corresponding to a State specified in Part -B of the First Schedule shall vest in the Union if specified in
Part - B of the First Schedule shall vest in the Union if the purpose for which such property and assets
were held immediately before such commencement will thereafter be purposes of the Union relating to
any of the matters enumerated in the Union List; and
(b) all rights, liabilities and obligations of the Government of any Indian State corresponding to a State
specified in Part -B of the First Schedule, whether arising out of any contract or otherwise, shall be the
rights, liabilities and obligations of the Union Government, if the purposes for which such rights were
acquired or liabilities or obligations were incurred before such commencement will thereafter be purposes
of the Union Government relating to any of the matters enumerated in the Union List:
subject to any agreement entered into in that behalf by the Union Government with the Government of
that State.
(ii) Subject as aforesaid, the Government of each State specified in Part ‘B’ of the First Schedule shall, as from
the commencement of the Constitution, be the successor of the Government of the corresponding Indian
State as regards all property and assets and all rights, liabilities and obligations, whether arising out of any
contract or otherwise, other than those referred to in Clause (1).
All property and assets, which include land and buildings, and which vest in the State Government under
Articles 294 and 295 of the Constitution or otherwise shall be at the disposal of the respective State
Governments, who will be at liberty to dispose them of by sale, mortgage, etc., and the proceeds thereof shall
be credited to the revenues of the respective State Governments.
From the commencement of the Constitution, the transfer of land between the Union and the State
Government shall be regulated by mutual agreement except when they are acquired under some Act. The
Union Government have laid down the following principles to be observed in regard to certain points :-
(i)(a) When land belonging to a private party has to be acquired on behalf of the Union Government
acquisition shall be at the expense of that Government.
(b) In cases where the Union Government require any land, which is in occupation of the State
Government, to be transferred to them, the amount payable by the Union Government will ordinarily
be the market value of the land and buildings, if any, thereon.
(c) The amount payable will include the capitalized value of land revenue assessable on the land when
the transfer causes actual loss of land revenue to the State Government.
(d) Solatium of 15 per cent payable under the Land Acquisition Act will not apply to such transfers.
(ii)Land surplus to the requirements of the Union Government :- When the Union Government no longer
required land in their possession, the Government of the State in which it is situated will be given the option of
assuming possession of the whole or any portion thereof subject to the following conditions :-

108
 (a) the Union government themselves shall be the judges of whether they require to retain any particular land
or not;
(b) if the State Government desire to assume possession of the land, the option to do so shall be exercised
within six months of the date on which the Union Government signify their intention of surrendering the
land;
(c) the amount payable for the land will in all cases be its market value at the date of transfer;
(d) when the State Government desire to assume possession of only a portion of the land surrendered, they
shall be entitled to do so only if the value of the land as a whole is not materially reduced by the division;
and
(e) if the State Government do not desire to assume possession of any land on the foregoing terms, the
Union Government will be free to dispose it of to a third party. Before, however, so disposing of the land,
the Union Government will consult the State Government as to the levy of ground rent or assessment and
the conditions, if any, subject to which it should be sold and they will, as far as possible, dispose of the
land subject to the conditions which the State Government may desire to impose. The Union Government
are not, however, bound to obtain the concurrence of the State Government in all cases, and in cases of
disagreement the Union Government shall be the sole judge of the terms and conditions to be imposed.
(iii) Determination of Disputes as to Titles. - Disputes as to title between the Union Government and a State
Government shall be determined by the Supreme Court.
2. Market value defined. -Market value when applied to land may be defined as the price which the land would
fetch if sold in the open market subject to the ground rent or assessment shown against it in the revenue
registers, or, if no ground rent or assessment shown against it in the revenue registers, subject to a ground
rent or assessment levied at the rate at which ground rent or assessment is actually being levied on similar
lands in the neighbourhood excluding all cases in which such similar lands in the neighbourhood are held free
of ground rent or assessment at favourable or unfavourable rates of ground or assessment. This is the market
value which has to be credited or debited, as the case may be, in the case of all transactions between the
State Governments and the Union Government or between the Union Government and State Governments or
the Railways.

109
 APPENDIX - 8
[ See Rule 286. (3) and Rule311]

CHARITABLE ENDOWMENTS AND OTHER TRUSTS

I. CHARITABLE ENDOWMENTS

1. The duties of the Treasurer of Charitable Endowments for India are prescribed in the Charitable Endowments
Act, 1890 (Act VI of 1890), and the rules framed thereunder, which are printed as an Annexure hereto.
2. Under sub-section (1) of Section 3 of the Charitable Endowments Act, the Deputy Secretary/Director (Budget) in
the Ministry of Finance, Department of Economic Affairs, nominated for the purpose, has been appointed ex
officio to be the Treasurer of Charitable Endowments for India with effect from the 1st April, 1954. All the property
of Charitable Endowments, the objects of which extend beyond a single State or which are objects to which the
executive authority of the Central Government extend, vest in him.
The Treasurer of Charitable Endowments for India is authorized to employ the agency of the Treasurer of
Charitable Endowments of a State, with the consent of the State Governments, for discharging any of the
functions assigned to him under the rules referred to in Paragraph 1 above.
3. When a copy of a vesting order is received by the Treasurer of Charitable Endowments for India, he should at
once place himself in communication with the persons who appear from the order to be the holders of the
documents of title relating to the property or of the securities mentioned in the order, and request them to forward
the Title Deeds, or securities in a registered cover and to insure the cover for Rs. 100. These do not require to be
endorsed, as the vesting order operates to transfer the securities to the Treasurer.
4. At every change of Office of the Deputy Secretary/Director (Budget) in the Ministry of Finance, Department of
Economic Affairs nominated for the purpose, a formal transfer of charge of the Treasurer of Charitable
Endowments for India should also take place and as separate charge report, supported by a statement of the
total of the balances of the Funds vested in the Treasurer, duly signed by the relieved and the relieving
Treasurers should be sent to Government.
A list of receipts granted by the Reserve Bank in acknowledgement of the securities forwarded to it for safe
custody as also of the securities kept in the custody of the Treasurer should also be prepared and signed by the
relieved and the relieving Treasurers, and sent to Government along with the charge report.
NOTE. -Whenever there is a change in the Office of a Treasurer of Charitable Endowments of a State who has
been acting as an agent of the treasurer of Charitable Endowments for India, a charge report prepared in the
manner indicated in this paragraph should be furnished to the latter.

II. MISCELLANEOUS TRUST ACCOUNTS

5. If, under any general or special orders of Government, an Audit Officer / Accounts Officer or any other
Government officer is required to act in his official capacity as a Trustee or Depository of any public or quasi-
public fund, which does come within the scope of the accounts of Government, or of any Charitable Endowment
and is not a Government security held in trust under the rules in Chapter IX of the Government Securities
Manual, such an officer should endeavour to have the trust vested, if possible, in the Treasurer of Charitable
Endowments for India; but, if that course is not possible, he should open an account with the State Bank of India,
or with any other approved Bank, for the deposit of moneys received by him on account of Trust. Full and clear
record of all transactions relating to the trust fund should be kept in the books of accounts in his personal custody
in a form complying with the terms and conditions of the Trust. The securities, if any, deposited with him should
be dealt with in accordance with the instructions contained in Chapter IX of the Government Securities Manual.
6. The books of accounts should be supported by a short statement descriptive of the nature and obligation of the
Trust, with reference to the documents bearing upon it, so that any other Government officer on receiving charge
may know by reference to it exactly what his obligations are in the matter.
NOTE. -The receipt and disposal of interest should be recorded in these accounts which are meant for the
principal of the Trusts only.
7. The accounts should be balanced and closed every 31st day of March. They should also be balanced and closed
when the Government officer acting as the Trustee makes over charge of his office to a successor or substitute,
a balance sheet being appended to the charge report and signed both by the officer receiving and the officer
giving over charge.
8. The accounts will be subject to such audit check as may be prescribed by Government.

110
 ANNEXURE
[ See Paragraph 1 of Appendix -8 ]

In exercise of the powers conferred by Section 13 of the

Charitable Endowments Act, 1890 (VI of 1890), and in supersession of the late Home Department
Notification No. 1569 - Judicial, dated the 24th October, 1890, the Central Government is pleased
to make the following rules and forms :-

THE CHARITABLE ENDOWMENTS (CENTRAL) RULES, 1942

1. Short Title. -
(1) These rules may be called the Charitable Endowments (Central) Rules, 1942.
(2) They apply to charitable endowments the objects of which extend beyond a single State or are objects, to
which the executive authority of the Central Government extends.
2. Interpretation.- In these rules -
(a) “the Act” means the Charitable Endowments Act, 1890;
(b) “Treasurer” means the Treasurer of Charitable Endowments for India for the time being, appointed under sub-
section (1) of Section 3 of the Act, and includes such other officer as the Treasurer may appoint to discharge
any of the functions assigned to him under these rules;
(c) “Form” means a form appended to these rules.
3. Previous publication of vesting orders and schemes.-On cases in which private persons apply for a vesting
order or a scheme or modification of a scheme, and in all cases in which it is proposed to depart in any respect
from the ascertained wishes or presumable intentions of the founder of an endowment, there shall ordinarily, and
unless the Central Government otherwise directs, be precious publication of the proposed vesting order or scheme
or modification.
4. Mode of previous publication.
(1) Unless the Central Government is of opinion that a proposed vesting order or proposed scheme or
modification of a scheme may be made or settled without previous publication, it shall publish a draft of the
proposed order, scheme or modification or a sufficient abstract thereof, for the information of persons likely to
be affected thereby.
(2) The publication shall be made in the Official Gazette and in such other manner as the Central Government
may direct.
(3) A notice specifying a date on or after which the proposed order, scheme or modification will be taken into
consideration by the Central Government should be published with the draft or abstract.
(4) The Central Government shall consider any objection or suggestion which it may receive from any person
with respect to the proposed order, scheme or modification thereof before the date specified in the notice
under sub-rule (3).
5. Costs. The cost of the previous publication under Rule 4 of any proposed order, scheme or modification of a
scheme, and any other costs incurred or which may be incurred in the making of the orders or in the settlement of
a scheme or modification of a scheme, shall be paid by the applicant for the order, scheme or modification, as the
case may be, and, if the Central Government so directs may be paid by him out of any money in his possession
pertaining to the trust to which his application relates.
6. Securities which may vest in the Treasurer.-No securities for money except the securities mentioned in Clauses
(a), (b), (bb), (c) and (d) of Section 20 of the Indian Trusts Act, 1882 (II of 1882), shall be vested in the Treasurer.
7. Accounts of trusts consisting of immovable property.-In the case of property vested in the Treasurer other than
securities for money, the person acting in the administration of the trust and having, under sub-section (3) of
Section 8 of the Act, the possession, management and control of the property and the application of the income
thereof, shall in books to be kept by him, regularly enter or cause to be entered full and true accounts of all moneys
received and paid respectively on account of the trust, and shall, on the demand of the Central Government,
submit annually to such public servant as the Central Government may appoint in this behalf, in such form and at
such time as the Central Government may prescribe, an abstract of those accounts and such returns as to other
matters relating to the administration of the trust as the Central Government may from time to time see fit to
require.
8. Fees.
(1) The following are prescribed as the fees to be paid to the Central Government in respect of any property
vested under the Act in the Treasurer :-

111
 (i) In the case of property other than securities for money, the actual charge incurred by the Treasurer in the
discharge of his functions in respect of the property.
(ii) In the case of securities for money, at the rate of one Paisa for every rupee of interest collected.
The fee shall be charged on interest by rounding off the amount to the nearest rupee, fractions of a rupee
below fifty Paisa or more being reckoned as one rupee.
(2) The Treasurer may deduct any fees payable to the Central Government under this rule on account of any
endowment from any money in his hands on account of such endowment. If he holds no such moneys the
amount shall be claimed form the administrators of the endowment.
9. Vesting orders how filed. - All copies of vesting orders received by the Treasurer shall be filed together and shall
be numbered in consecutive order of their receipt; when a sufficient number have been received they shall be
bound in volumes. A note shall be made on each vesting order of any entries in the registers prescribed under
these rules relating to the property vesting in the Treasurer under the order.
10. Registers of securities. - On the receipt of any securities for money, or on their purchase by himself, the
Treasurer shall record their receipt in a register in Form 1. He shall also keep a separate account for each
endowment in Form 2, in which he shall record all receipts including any amount sent for investment, and all
disbursements. In the cash account in Part - II of Form 2 the Treasurer shall record only his own transactions
(such as the payment of the money to the administrator), and not the transactions of the administrators of the
endowment fund.
11. Stock Disposal Register. - The Treasurer shall enter all securities returned or sold by him in a register in Form 3.
Returns shall also be entered in Form 2, where the amount returned will be deducted from the capital of the
endowment concerned.
12. Custody of Securities. - On the issue of a vesting order under Section 4 of the Act in respect of any securities for
money, the person authorized under Section 6 of the Act to make the application for such vesting order shall, as
soon as practicable, forward to the Treasurer the said securities. The Treasurer shall, after recording the receipt
of the said securities in the registers kept under Rule10, take steps, as soon as practicable, to have them
converted into stock and keep the stock certificate in his custody. After conversion, entries shall be made in the
Treasurer’s Stock Register in Form 7. A consolidated register showing the securities (e.g., Promissory Notes and
the Stock Certificates) in the custody of the Treasurer shall also be maintained in Form 8.
13. Accounting of Interest. - The Treasurer, on receipt of any interest securities, shall pass it through his General
Trust Interest Account under a special Sub-Head “Interests on Charitable Endowments under Act VI of 1890”.
The interest will then be distributed to the various ledger accounts in the register in Form 2, in which the gross
amounts shall be shown, any deductions for fees, etc., being shown as a charge, and the payment of the balance
to the administrators being shown as a disbursement. The Treasurer shall maintain personal, ledger account in
the Reserve Bank and shall make payment to the administrators by cheques. The entries in the ledger of interest
received shall be taken out and agreed annually with the total amount of the interest drawn.
14. Balance Sheet. -The registers in Form 1 shall show all securities vested in the Treasurer as such. In order to
prove the balance actually held by the Treasurer in his own hands, a balance sheet in Form 4 shall be made out
actually and agreed with the actual securities in the Treasurer’s possession. Such agreement shall be certified on
the balance sheet.
15. Publication of accounts. -A list of all properties vested in the Treasurer and an abstract of the accounts of the
interest and the annual agreement of balance shall be published in the Official Gazette on the 15th June of each
year.
16. Register of property other than securities.-The Treasurer shall enter in a register in Form 5 any property other
than securities which becomes vested in him, and shall record in the same register against the original entry a
note of any property of which he is divested.
17. Form of publication of list and abstract.-The list of properties vested in the Treasurer to be published annually
under Rule 15 shall be in Form 6. Part - I will relate to properties other than securities; Part - III will relate to
securities and will also contain the abstract of accounts required by the Act to be published. The Treasurer shall
demand and receive acknowledgements of the correctness of the balances when so published, from the
administrators of endowment funds or from any one or more of their body who may have been authorized by the
administrators to give such acknowledgements and such acknowledgements shall be furnished within 3 months
from the date of publication of accounts in the Official Gazette.
18. Audit.-Arrangements for annual audit of the Treasurer’s accounts shall be made by the Comptroller and Auditor
General.

112
 FORM 1

REGISTER OF SECURITIES HELD UNDER ACT VI OF 1890

Particulars of Securities received

From No. and Nature of Distingui- Nominal Total
SI. Date of Number or whom date of Securities, e.g. shing value of nominal Ledger Remarks
No. Receipt brief received forwarding Government number of each value of Folio
description of letter securities each security each
Charitable 3 ½ per cent security separate
Endowments Loan of 1865, endowment
Guaranteed
Railway
Debentures,
etc.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

113
 FORM 2

LEDGER ACCOUNT OF SECURITIES HELD UNDER ACT VI OF 1890.

1. Name of Endowment…………
2. Particulars of vesting order…………
3. When vested in Treasurer…………
4. Name of Administrators…………
5. To whom interest is to be sent…………

PART - I - Account of Capital

SI.ParticularsNo.(e.g Details Value of each security Amount Date to Initials

. ofsecurities( (separatecolumnforeachkind) of which of
Form received distingui- 3½ half interest Treasurer
GuaranteedR
1 or shingnumb yearly has or interest
per cent ailwayDeben-
returned) er,etc.) been paidAssistant-
Loan of tures
1865 on receipt in- Charge

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

NOTE.- The balance of the value columns must be worked out on every day on which there is a new entry.

114
 FORM 2

PART-II-CASH ACCOUNT

RECEIPTS EXPENDITURE

Date Particulars Amount Date Particulars Amount

NOTE. To be closed annually to balance. The transactions will not be numerous. A few pages of the ledger (rule
only for the Cash Account) may be left for each account, so that the account may be carried on for
several years without opening a fresh Ledger Account.

115
 FORM 3

STOCK DISPOSAL REGISTER

SI. Date of Name of the No. of entries in Amounts How GO’s Official
No. entry Fund or Trust Stock Register disposed of disposed of initials Designation of
Officer

116
 FORM 4

BALANCE SHEET OF SECURITIES HELD UNDER ACT VI OF 1890

3 ½ per cent Loan (A pair of columns for each Total

Particulars of 1865 different kind of security
No. Value held) No. Value
Opening Balance (from last year)
...........Securities received..................
...........Stock Certificates received .....
....................

GRAND TOTAL

Deduct -
Sent to the PDO Reserve Bank of
India for conversion into stock...........
BALANCE
Deduct -
Returned or sold...............................
BALANCE
Add -
Sent for conversion out of which stock
certificates have not been received
..............................
CLOSING BALANCE

Certified that the above closing balance has been compared with the Securities in Treasurer’s possession and
has been found to be agree both as to number and value.

117
 FORM 5

REGISTER OF PROPERTIES OTHER THAN SECURITIES

HELD UNDER ACT VI OF 1890

Particulars of vesting order Property held

SI. Name of Administrators of
No. No. Date endowment property Description Value Annual
income if
known
1 2 3 4 5 6 7 8

Title Deeds held

Description Initials of Treasurer or
Date of Where Date of To whom Authority for Assistant-in-Charge Remarks
receipt deposited return returned return

9 10 11 12 13 14 15 16

118
 FORM 6
LIST AND ABSTRACT ACCOUNT OF
PROPERTIES HELD UNDER ACT VI OF 1890

PART - I - LIST OF PROPERTIES, OTHER THAN SECURITIES

SI. Particulars of vesting Name of Administrators of Property held

No. order endowment property Remarks
No. Date Descri- Value Annual
ption income
if known
1 2 3 4 5 6 7 8 9

LISTOFABSTRACTPARTACCOUNT-II-OFSECURITIES

Case Name of Persons Particular Total Cash Receipts Cash Balance Remarks
No. endow- in whose s of of expenditure in cash
ment behalf Securities Securities Interest Other Total Payments*
held or Cash cash
dividend Receipts* Receipt
realised s
1 2 3 4 5 6 7 8 9 10 11

* Enter details in these columns

119
 FORM 7

TREASURER’S STOCK REGISTER OF

per cent loan of

No. of Serial No. Date of To what fund To whom Amount of Amount of (Pair of Remarks
Case in entry or trust the interest is investment half-yearly columns for
Form No. investment to be interest noting interest
belongs remitted payment order

1 2 3 4 5 6 7 8 9
Rs. P. Rs. P. Rs. P.

120
 FORM 8

REGISTER OF CLEAN GOVERNMENT PROMISSORY NOTES AND

STOCK CERTIFICATES HELD BY THE TREASURER
OF CHARITABLE ENDOWMENTS FOR INDIA

Particulars A pair of
SI. Date of In conversion Receipts Disposals columns for
No. entry of noting interest Remarks
for half-year
No. Amounts No. Amounts
ending
1 2 3 4 5 6 7 8 9

121
 APPENDIX - 9
[ See Rule320]

DESTRUCTION OF OFFICE RECORDS CONNECTED

WITH ACCOUNTS

The destruction of records (including correspondence) connected with accounts shall be governed by the
following Rules and such other subsidiary rules consistent therewith as may be prescribed by Government in this
behalf with the concurrence of the Comptroller and Auditor-General.
1. The following shall on no account be destroyed :-
(i) Records connected with expenditure, which is within the period of limitation fixed by law.
(ii) Records connected with expenditure on projects, schemes or works not completed, although beyond the
period of limitation.
(iii) Records connected with claims to service and personal matters affecting persons in the service except
as indicated in the Annexure to this Appendix.
(iv) Orders and sanctions of a permanent character, until revised.
(v) Records in respect of which an audit objection is outstanding.

2. The following shall be preserved for not less than the period specified against them :-
Description of records

Sl. No. Main-Head Sub-Head Retention Period Remarks

(1) (2) (3) (4) (5)

1. Payments (I)Expenditure Sanctions not 2 years, or one year after

and covered by Paragraph 1above completion of audit, whichever
recoveries. (including sanctions is later. Subject to:
Relating to grants-in-aid) (a)Original nomination
being placed in Vol. II
(ii)Cash Books maintained by 10years. of the Service Book of
the Drawing and Disbursing Group ‘D’ Government
Officers under Central servants;
Government Account and
(Receipts and (b)Nomination in
Payments) Rules,1983. original or an
(iii)Contingent expenditure. 3 years, or one year after authenticated copy
completion of audit, thereof being placed
Whichever is later. in Vol. II of the Service
Book/Personal File in
(iv)Arrear claims (including 3 years, or 1 year after
case of other
sanction for investigation, completion of audit,
Government servants.
Where necessary). Whichever is later.
Subject to an
Papers relating to: authenticated copy of
(v)GPF Membership. 1year. the sanction being
(vi)GPF Nomination. 1year-afterfinal placed on the
Settlement of GPF Account. personal file.
(vii)Adjustment of missing credits 1year.
in GPF Accounts.

122
 Description of records

Sl. No. Main-Head Sub-Head Retention Period Remarks

(1) (2) (3) (4) (5)
(viii) Final withdrawal from 1 year.
GPF, e.g., for house
building, higher technical
education of children, etc.
(ix) GPF annual 1 year.
statements.
(x)T.A./Transfer T.A. 3 years, or one year after
claims completion of audit,
whichever is later.
2. Budget 3 years. The retention period
Estimates / here related to the
Revised Budget / Revised
Estimates. Estimates as
3. Service compiled by the
Books of: 3 years after issue of final Budget / Accounts
(a) Officials pension/ gratuity payment Section for the
entitled to order. Department as a
retirement / whole.
terminal
benefits.

(b) Other 3 years after they have

employees. ceased to be in service.
4. Leave of:
Account
(a) Officials 3 years after issue of final
entitled to pension/
retirement / gratuity payment order.
terminal
benefits.
(b) Other 3 years after they have
employees. ceased to be in service.
5. Service (a) Nomination relating to 1 year - after settlement of Subject to the
records family pension in and DCR benefits. nomination in
gratuity. original or
(b) Civil List Gradation/ anauthenticated
Seniority list- 3 years. copythereof (where
(i) in the case of original kept with the
Departments preparing . audit)as the may be
bringing out the being placed in Vol.
compilation. IIof the Service
Book/ Personal File.
(ii) In the case of other 1 year after issue of
Departments (i.e., those relevant compilation.
supplying information for
such compilation)

123
 Description of records

Sl. No. Main-Head Sub-Head Retention Period Remarks

(1) (2) (3) (4) (5)
(c)Alteration in the date of 3years. Subject to suitable entry
birth. being made in
the appropriate service
record and an
authenticated copy of the
order being kept in
Vol. II of Service
Book/Personal file
(d)Admission of previous 3years;or1yearafter – do –
Service not supported by Completion of
Authenticated service audit, whichever is later
record, e.g., through Subject to a suitable record
collateral evidence. being kept somewhere,
(e)Verification of service. 5years. e.g., in the Service Book or
History Sheet.
6. Expenditure (a)In respect of lower To be weeded out at the
statements. formations. end of financial year.
(b)In respect of To be weeded out after the
Department itself. Appropriation Accounts for
the year have been finalized
(c)Register of monthly To be weeded out
expenditure(Form GFR9) the Appropriation
Accounts for the year have
Been finalized.
7. Surety Bonds 3yearsafter the Bond
executed in Ceases to enforceable.
be favour of a
temporary or a
retiring Govern-
ment servant.
8. (a) Pay Bill . 35 years
register
(b) Office copies 35 years
of Establishment
pay bills and
related schedules
(in respect of
period for which
pay bill register is
not maintained).
(c) Schedules to 3 years, or one year after
the Establishment the completion of audit,
pay bills for the whichever is later
period for which
pay bill register is
maintained.
(d) Acquaintance 3 years, or one year after
Roll. the completion of audit,
whichever is later.

124
 Description of records

Sl. No. Main-Head Sub-Head Retention Period Remarks

(1) (2) (3) (4) (5)
9. Muster Rolls. Such period as may be
prescribed in this behalf in
the departmental regulations
subject to a minimum of three
financial years of payment
excluding the financial year of
payment
10. Bill Register 5 years.
Maintained in 5 years
FormTR-28-A
11. Paid cheques The counter foils of
Returned by the paid cheques
Bank to the Audit/ should be preserved
Accounts Office. for the same period as
prescribed for
preservation of paid
cheques, viz., 5 years.
However, in cases
where the counter foils
are required to be
preserved in
connection with
settlement of some
5 years after the contract/ enquiry, etc., these
12. Files, papers and agreement is fulfilled or should not be
Documents terminated. In cases where destroyed unless
Relating to audit objections have been otherwise advised by
contracts, raised, however, the relevant the authorities
agreements, etc. files and documents shall not, conducting the enquiry.
under any circumstances, be The other
instructions contained
allowed to be destroyed till
in this Appendix will
such time as the objections
continue to be
have been cleared to the
applicable in this case
satisfaction of the audit
before the counterfoils
authorities or have been which are more than
reviewed by the Public five years old are
Accounts Committee. actually destroyed.
3 years after the expiry of the
13. Sub-vouchers financial year in which the
expenditure was incurred,
Relating to the subject to completion of
Secret Service administrative audit and issue
Expenditure. of audit certificate by the
nominated Controlling Officer.

125
INSTRUCTIONS
1. The retention period specified in Column (4), in the case of a file, is to be reckoned form the year in which the file
is closed (i.e., action thereon has been completed) and not necessarily from the year in which it is recorded.
2. In the case of records other than files, e.g., registers, the prescribed retention period will be counted from the
year in which it has ceased to be current.
3. In exceptional cases, a record may be retained for a period longer than that specified in the schedule, if it has
certain special features or such a course is warranted by the peculiar needs of the department. In no case,
however, will a record be retained for a period shorter than that prescribed in the schedule.
4. If a record is required in connection with the disposal of another record, the former will not be weeded out until
after all the issues raised in the latter have been finally decided, even though the retention period marked on the
former may have expired in the meantime. In fact, the retention periods initially marked on such records should
be consciously reviewed and, where necessary, revised suitably.

NOTES.-
(1) Before any pay bills/pay registers are destroyed, the service of the Government servants concerned should be
verified under Rule257in accordance(1) with .
(2) The periods of preservation of account records in Public Works Offices are prescribed separately by
Government.
(3) Where a minimum period after which any record may be destroyed has been prescribed, the Head of a
Department or any other authority empowered by him to do so, may order in writing the destruction of such
record in their own and subordinate offices on the expiry of that period counting from the last day of the latest
financial year covered by the record.
(4) Heads of Departments shall be competent to sanction the destruction of such other records in their own and
subordinate offices as may be considered useless, but a list of such records as property appertain to the
accounts audited by the Indian Audit and Accounts Departments shall be forwarded to the Audit Officer and or
the Accounts Officers, as the case may be, for his concurrence in their destruction before the destruction is
ordered by the Head of Department.
(5) Full details shall be maintained permanently, in each office, of all records destroyed from time to time.

126
 ANNEXURETOAPPENDIX–9

Destruction of records referred to in Para. 1(iii)of this Appendix

Description of records
Sl. Main-Head Sub-Head Retention Period Remarks
No.
(1) (2) (3) (4) (5)
1. Creation & (I) Continuance / revival of 1 year Subject to particulars
Classification of posts. of sanction being noted in
posts. Establishment/ Sanction
Register.
(ii) Conversion of 10 years – do –
temporary posts.
(iii) Creation of posts. 10 years – do –
(iv) Revision of scales of Permanent in the case of – do –
pay. Departments issuing
orders and
Departments concerned;
other Departments
need keep only the
standing orders, weeding
out superseded ones as
and when
they become obsolete.
(v) Upgrading of posts. 10 years – do –

2. Review for Establishment / Permanent. Where, for any reason the

determining Sanction Register. register is
suitability of re-written, the old volume
employees for will be kept for 3 years.
continuance in
service.
3 years Subject to:
3. Arbitration and (a) the file not being
litigation cases. closed until the award/
judgment become final in
all respects by limitation
or final decision in appeal/
revision; and

(b) cases involving

important issues or
containing material of a
high precedent /
reference value being
retained for an
appropriately longer
period either initially or at
the time of review.

127
 Description of records
Sl. Main-Head Sub-Head Retention Period Remarks
No.
(1) (2) (3) (4) (5)
4. Notices under 1year If such a notice is
Section 80 of followed up by a civil suit,
Civil Procedure it would become
Code. arbitration/ litigation case
and would, therefore,
need to be retained for 3
years.

5. Recruitment. Condonation of break in 5years Subject to a suitable

service. entry being made in the
appropriate service
record and an
authenticated copy of
the order being kept in
Vol. II of Service Book
Personal File.

6. Advance.
housebuilding

(i) Car Advance Rules

(ii) Conveyance
Advance Rules.
(iii) Cycle Advance Rules
(iv) Festival Advance Permanent in the case
Rules of Departments issuing
(v) GPF Advance Rules the rules, orders and
instructions; other
(vi) House Building
Departments need keep
Advance Rules
only the standing rules,
(vii) Motor Cycle/ etc., weeding out the
Scooter Advance superseded ones as
Rules and when they become
(viii) Pay Advance Rules obsolete.
(ix) T. A. Advance Rules
(x) Travel Concession
Rules
(xi) Other Advance Rules
(xii) Grant of car
Advance
(xiii)Grant of Subject to :
conveyance (i) suitable entries being
allowance 1year made in pay bill register;
and (ii) in case of motor
car/motor cycle / scooter
and house building
advances.

128
 Description Of records
Sl. Main-Head Sub-Head Retention Period Remarks
No.
(1) (2) (3) (4) (5)
(a)copies of sanction
xiv Grant of cycle
advance 1 year Being placed on
xv Grant of festival Personal files; and
advance (b)mortgage deeds and
xvi Grant of GPF Other agreements
advance Executed being kept
xvii Grant of motor Separately in safe
cycle/scooter Custody for the period
advance They are valid.
xviii Grant of pay
advance 1 year
xix Grant of T. A.
advance
xx Grant of LTC
advance
xxi Grant of other
advance

7. Surety Bonds 3yearsafter the Bond

executed in favor Ceases to be
of a temporary enforceable.
or a retiring
Government
servant.

8. Pension / (i) Rules and Orders Permanent in the case of

retirement. (general aspects.) Departments issuing the
rules, orders and
(ii) In respect of Groups instructions; other
Departments need keep only
‘A’, ‘B’ and ‘C’ the standing rules and
Government servants. orders weeding out the
superseded ones as and
(a) Pre-verification of
when they become obsolete.
pension cases. 3years
(b) Invalid pension
Tilloneyearafterthelastb
(c) Family pension eneficiaryofthefamilypen
(d) Other pensions sionceasestobeentitledtor
eceive or 5 years
whichever is later.
(e) Gratuity 5years
15years
(f) Commutation of
pension after the Bond
ceases to be enforceable.

129
Note – The principle to be adopted in respect of files having financial implications and hence liable to be called by
audit for inspection is that such files should be retained for a period of five years after they have been recorded. If, at
any time during the period of five years, an audit objection having reference to the transaction dealt with in that file
arises, is received, the file will not be destroyed until after the audit objection has been settled to the satisfaction of the
audit. Also, if local audit does not take place within the period of five years, the Head of the Office should ascertain
from the audit authorities whether they have any objection to the files relating to the earlier years, due for weeding out
by the application of the five year formula, being destroyed or retained for a further period for scrutiny by the audit
party and, if so, for what period.
While records may be reviewed and weeded out at periodical intervals in the light of the retention periods prescribed
to avoid their build-up, the attempt should be to make a continuous and conscious effort throughout the year to weed
out unnecessary records. In other words, the working rules should be “weed as you go”.

INSTRUCTIONS:
1. The retention period specified in Column (4) in the case of a file, is to be reckoned from the year in which the
file is closed (i.e., action thereon has been completed) and not necessarily from the year in which it is
recorded.
2. In the case of records other than files, e.g., registers, the prescribed retention period will be counted from the
year in which it has ceased to be current.
3. In exceptional cases, a record may be retained for a period longer than that specified in the Schedule, if it has
certain special features or such a course is warranted by the peculiar needs of the Department. In no case,
however, will a record be retained for a period shorter than that prescribed in the schedule.
4. If a record is required in connection with the disposal of another record, the former will not be weeded out until
after all the issues raised on the latter have been finally decided, even though the retention period marked on
the former may have expired in the meantime. In fact, the retention periods initially marked on such records
should be consciously “reviewed and where necessary revised suitably”.

130
 APPENDIX - 10
[See Rule 61 and Rule 69]

“CHECK AGAINST PROVISION OF FUNDS”

The pre-check to be applied to all payments by the departmentalized Accounts Officers includes a check against
provision of funds also. It is an important part of the functions of the Accounts Office to see that no payment is made in
excess of the budget allotment. In order to exercise an effective check in this behalf, a separate register (DDO- wise
Bill Passing-cum-Expenditure Control Register –Form CAM –9) should be maintained in the Accounts Officer for each
Drawing Officer and by sub-heads and units of appropriation so as to ensure at the time of passing each bill that the
amount of the bill under check is covered by Budget allotment. If the amount of any bill leads to excess over the
Budget allotment or is not covered by an advance from the Contingency Fund, the Accounts Officer should decline
payment under advice to the authority controlling the grant so that the latter could arrange for additional funds. An
Appropriation Audit Register (Form CAM – 62) shall be maintained.

NOTE. – In cases where payment of a bill/claim would lead to excess over the provision under any unit of
appropriation the payment may be made by the Pay and Accounts Office only on receipt of an assurance in writing
from the Ministry/Head of Department controlling the grant that the expenditure involved is not on a New Service, or
New Instrument of Service; that necessary funds to accommodate the expenditure will be provided for in time by issue
of re- appropriation order, etc., that a note to the effect has been kept for further action, and that the grant as a whole
(i.e., separately under Revenue and Capital Sections) is not likely to be exceeded. This applies in respect of any new
item of expenditure, provision for which does not exist in the Budget (as distinct from expenditure on “New Service” or
“New Instrument Service” not provided in the Budget) as well as in cases where the existing provisions is not sufficient
to cover the payments. In case of an urgent requirement of expenditure attracting the provisions of New
Service/New Instruments of Service and thereby supplementary demands through theapproval of Parliament,
the same should be referred to Ministry of Finance. The excess expenditure in such cases can be allowed by
the concerned Financial Advisers only on the specific approval of Secretary (Expenditure) that the necessary
funds will be made available through the next batch of supplementary demands for grant.
If such a contingency in regard to inevitable payment of a bill should arise towards the close of financial year and the
grant as a whole is likely to get exceeded thereby, order of the FA on behalf of the Chief Accounting Authority would
have to be sought.
In case the additional funds required are to be made available merely by reallocation (and not by re- appropriation) of
savings, if any, under the same sub-head of appropriation, the related claim will be passed for payment only after
additional funds therefor are allocated in writing by the Controlling Officer.

131
 APPENDIX - 11
[ See Rule 225 (viii) (b) ]

FORMULA FOR PRICE VARIATION CLAUSE

The formula for Price Variation should ordinarily include a fixed element, a material element and a labour element.
The figures representing the material element and the labour element should reflect the corresponding proportion of
input costs, while the fixed element may range from 10 to 25%. That portion of the price represented by the fixed
element will not be subject to variation. The portions of the price represented by the material element and labour
element alone will attract Price variation. The formula for Price variation will thus be :

P1 = P0 F+a M1 +b L1 - P0
M0 L0

Where P1 is the adjustment amount payable to the supplier (a minus figure will indicate a reduction in the Contract
Price)
P0 is the Contract Price at the base level.
F is the Fixed element not subject to Price variation.
a is the assigned percentage to the material element in the Contract price.
b is the assigned percentage to the labour element in the Contract Price.
L0 and L1 are the wage indices at the base month and year and at the month and year of calculation respectively. M0
and M1 are the material indices at the base month and year and at the month and year of calculation respectively.
If more than one major item of material is involved, the material element can be broken up into two or three
components such as Mx, My &Mz. Where price variation clause has to be provided for services (with insignificant
inputs of materials) as for example in getting Technical assistance normally paid in the form of per diem rates, the
price variation formula should have only two elements viz. a high fixed element and a labour element. The fixed
element can in such cases be 50% or more, depending on the mark-up by the supplier of the Periderm rate vis-à-vis
the wage rates.

132
 APPENDIX - 12
[See Rule 279 (1).]

RATES OF GUARANTEE FEE

Guarantee fees based on credit score and tenor for Domestic as well as external borrowings

Less than or equal to 5 years More than 5 years

Category A 0.5 0.6
Category B 0.7 0.9

Suggested Framework for Risk assessment of Guarantee proposals

Ministries/Departments are required to undertake risk assessment of the proposals received from
CPSUs before sending them to Ministry of Finance. Following ratios may be calculated for assessing the risk:

i) Debt Service Coverage Ratio: It indicates the ability of a company to use its operating income to repay
all its debt obligations, including repayment of principal and interest on both short-term and long-term debt.

Earnings before Interest, Tax, Depreciation & Amortization (EBITDA)

Interest + Principal

Category A Category B
More than or equal to 1.25 Less than 1.25

ii) Current Ratio (CR): It depicts the ability to meet short-term liabilities from selling short-term assets, and
calculated as under:

Current assets
Current liabilities

Category A Category B
More than or equal to 1.5 Less than 1.5

iii) Debt to Equity Ratio (D/E): It depicts the ability to pay off debt in future and calculated as under:

Total liabilities
Shareholders’ equity

Category A Category B
Less than or equal to 1 More than 1

Overall Risk Rating Less than or equal to 1.5 More than 1.5
Category A Category B

133
Example: The above framework has been illustrated as under:

DSCR* D/E* CR* Calculation= Overall risk

Average of rating
(Ratings
Assigned)
Company 1 1.75 0.25 2.10 = 1 (1+1+1)/3) Category A
Company 2 1.20 1.20 1.50 = 1.67(2+2+1)/3) Category B
Company 3 0.90 1.80 0.80 = 2 (2+2+2)/3) Category B

Note: Overall Risk Rating shall be calculated by taking simple mean of all the ratios by assigning 1 and 2 values
to ‘A or ‘B’ category.

*Three years’ average ratio may be considered for calculating the overall risk rating.

****

134
 FORM GFR 1
[ Rule 65 (4) ) ]

APPLICATION FOR AN ADDITIONAL APPROPRIATION,

YEAR……………………………… FOR DEPARTMENT

Budget Head Original Expenditure Additional Expenditure during the past three
Major and Appropriation appropriation
Amount Necessary
Minor Heads as years applied for
up for
of Account modified 20 20 20 20
and Primary by competent to the remaining
unit of authority month month
Appropriation

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

No…………………………………., dated…………………………… 20.

Explanation of insufficiency of grant, recommendations and proposals for re-appropriation by -
(1) Disbursing Officer :
(2) Controlling Officer :
(3) Head of Department :
(4) Secretary to Government in Administrative Department. No…………………………………. , dated
……………………………… 20.

Order of sanction with details

Additional appropriation of Rs………………………………………………… of source of appropriation Sanctioned.
The amount will be met by re-appropriation form ……………………………………………………….............……

Signature ……………………………………………….
Designation …………………………………………….

135
 GFR2
FORM GFR 2
[ See Paragraph 4 of Appendix - 2 ]

REVENUE RECEIPTS

Ministry / Department / Union Territory :

Major Head :
(In thousands of Rupees)
First Month Last Month
ACCOUNTS Total
Third Eight Seven Five Four
Last year

Second
Last year

Last year

Current Budget
Year Revised

Ensuing Budget
Year

Accounts 7 months Accounts Current year Ensuing

Minor Heads Year
Last year Current year Third Second Last Budget Revised Budget
Last Year Last Year Year Estimate Estimate Estimate

Explanation for increase / decrease (Minor Headwise)

Signature …………………......................................
Designation ………………...............................……
Date ………………………...............................……

136
 FORM GFR 2-A
[ See Paragraph 4 of Appendix - 2 ]

ESTIMATES OF FOREIGN GRANTS CONCERNING

THE MINISTRY / DEPARTMENT …….........................................
(In thousands of Rupees)
Date of aid Receipt Amounts to be provided in
Name of the agreement Particulars of Total Major Current Current Ensuring Manner of
grant or assistance to assistance Head Year BE Year RE Year BE utilization
country/ body be received expected of aid*

1 2 3 4 5 6 7 8 9

Signature …………………………….
Designation ………………………….
Date .………………………………….

* A brief note may be added indicating the project on which aid is to be utilized. In the case of material and
equipment, the relevant grant and expenditure Heads of Account under which (i) utilization of material by Central
Government Departments / Projects, (ii) transfer of material to States, Union Territories and other Bodies will be
adjusted and also whether the utilization on transfer will be on Central Sector Scheme or Centrally Sponsored
Schemes should also be indicated. In cases where the aid material is proposed to be sold the Receipt Major
Head under which the proceeds will be credited should be indicated.

NOTE : Cash grants and assistance in the form of material and equipment should be indicated separately in
Columns 3 to 8.

137
 FORM GFR 2 - B
[ See Paragraph 4 of Appendix - 2 ]

ESTIMATES OF INTEREST RECEIPTS AND LOAN REPAYMENTS

Ministry / Department ………….................…………………….

(In thousands of Rupees)

Interest Receipts Loan Repayments

BE RE BE BE RE BE
Current Current Ensuing Current Current Current
Year Year Year Year Year Year

1. State Governments*.
2. Union Territory Governments*.
3. Interest on Capital Outlay in
departmental commercial
undertakings.
4. Foreign Governments*.
5. Industrial/Commercial/Financial
undertakings
(undertaking-wise details to be given)
:
(a) Public Sector Undertakings.
(b) Private Sector Undertakings.
6. Statutory Bodies (Port Trusts,
Municipalities, KVIC, Tea/Coffee
Boards, etc.)
7. Railways / P&T Reserve Funds.
8. Other parties (Co-operatives,
Educational Institutions, displaced
persons and other individual loanees
except Governments servants)*
9. Government servants.

Total

* Estimates for each State / Union Territory / Foreign Government /Statutory Body or Institution should be
separately appended to the Annexure.
No........................................................................................
Ministry / Department ………......………………..........…..…
Date the ………....……………………………….........……....

Forwarded in duplicate to the Ministry of Finance, Budget Division.

Signature ….……………...…………............…...........….…..
Designation………………………………....……...........….…

138
 FORM GFR 3
[ See Rule 58 and Rule 64(1)) ]
Office of …………………………
Grant No ………………………

LIABILITY REGISTER FOR THE YEAR ……………

SI. Designation Month Serial Nature No. & date Agency Estimated Permissible Total
No. of Disbursing of number in of of indent or on which Cost excess over Liability
Officer Report Liability Liability connected indent is the (Cols. 8+9)
Statement letter placed estimated
cost, in any
1 2 3 4 5 6 7 8 9 10

139
 Probable month and year Record of Payment Balance commitments
in which the expenditure [Col. 10 minus Col. 14(b)]
will be accounted for in Initials
the departmental of the (a) (b) (a) (b)* Initials of
expenditure statement Branch Month Amount Amount Year(s) in the Remarks
Officer and which it is Branch
Month Amount of year likely to be Officer
and expenditure discharged
year to be incurred
11 12 13 14 15 16 17 18 19

NOTE :- Cols. 2, 3 and 4 will be operated upon only in the Register of Liabilities maintained by the Controlling
Officers in respect of the case reported by their Disbursing Officers.

* If the balance of commitment is to be discharged during more than one financial year, the year-wise break-up
of the amount should be indicated.

140
 FORM GFR 3-A
[See Rule58]
Office of …………………………
Grant No ………………………

LIABILITY STATEMENT FOR THE MONTH OF …………………………..

Part - I - Statement of Liabilities incurred during the month of report

SI. Nature of No. and Agency on Estimated Permissible Total Probable month in
No. liability date which cost excess over liability which the expenditure Remarks
of indent indent is the (Col. 5 + will be accounted for
or placed or estimated Col. 6) in the departmental
connected demand is cost, if any expenditure statement
letter made Month Expenditur
e likely to
be incurred
1 2 3 4 5 6 7 8 9 10

141
 Part - II - Payments made against Liabilities and Liabilities
cancelled or finally paid off

Record of payment Balance commitment Remarks

Month in Serial
(a) (b) (a) (b)*
which No.
Liability was Month Amount Amount Year(s) in which
reported and year the balance of
Commitments
is likely to be
discharged.
1 2 3 4 5 6 7

NOTE 1-In Col. 2, the number to be entered will be the serial number of the liability in the Liability Statement in
which it was first reported.
NOTE 2 - In the Remarks column, the following information should also be given :-
(i) If payment against a liability is likely to be made, not in the month originally indicated, but in
some other month, the latter should be indicated. If change in the month of payment is the only
information to be given in respect of a liability, the Columns to be used will be 1, 2 and 5.
(ii) Similarly, if the whole or part of a liability has been cancelled or otherwise extinguished, the fact
may be mentioned and brief reasons given.

* If the balance of commitments is to be discharged during more than one financial year, the year -wise break- up
of the amount should be indicated.

142
 Part - III - Progressive amount of outstanding

Month in Serial Balance commitments

which No. (a) (b)*
liability was Amount Year(s) in which the balance of
reported commitments is likely to be discharged
1 2 3 4

Total

NOTE. 1 - This is a list of liabilities which are pending, that is, those which have not been paid off or
otherwise extinguished or cancelled.
NOTE. 2 - In Column 2, the number to be entered will be the serial number of the liability in the Liability
Statement in which it was first reported.

* If the balance of commitments is to be discharged during more than one financial year, the year -wise break-
up of the amount should be indicated.

142
 FORM GFR 4
[ See Paragraph 9 of Appendix - 3 ]

STATEMENT OF PROPOSALS FOR PRE-BUDGET DISCUSSION

Demand No.
STATEMENT OF BUDGET ESTIMATES (in crores of Rupees)
Sl. Description as Actuals Actuals B.E. Actuals upto R.E. B.E
No. shown in the For the last two current September of current current year
Exp.Bud.Vol.2 Preceding years year current year year
(SBE)

1 2 3 4 5 6 7 8

APPENDIX I Expenditure SBE

(See Paragraph3.5)

Ministry/ Department Demand No.

(Rs.in crore)

Actuals BE RE BE

For the last two (current year) (current year) (next year)
Preceding years

Revenue Capital Revenue Capital Revenue Capital Revenue Capital

A CENTRE'S EXPENDITURE
I. Establishment Expenditure
II. Central Sector Schemes
III. Other Central Expenditure

B. TRANSFERS TO STATES
IV. Centrally Sponsored Schemes
V. Finance Commission Transfers
VI. Other Transfers to States

143
 FORM GFR 4
[ See Paragraph 3.5 ]
OBJECT HEAD WISE SUMMARY EXPENDITURE

PART C-OBJECT HEADWISE SUMMARY

Demand No.
(Rs.in crore)
Object Object Actual BE Actual RE BE
Head Head 2015-16 Expenditure
Code Name till
September
Revenue Capital Revenue Capital Revenue Capital

144
 FORM GFR 5
[ See Rule 57 (4) (ii) and Rule 57 (5) (iii)]

REGISTER SHOWING EXPENSES BY HEADS OF ACCOUNT

Office of ................................................. Head of Account....................................

Major Head.................................................
Minor Head................................................
Sub-Head ...................................................
Month
Year (Unit of Appropriation)

Allotment Sub-Head of Grants Deduction, if Net amount

any of
SI. No. Voucher No./Token No. & Date/Serial the bill
No. in Bill Register*
1.
2.
3.
4.

Add adjustment communicated by PAO

Total for the month

Total from 1st April Balance of the

appropriation

NOTE 1. If an allotment is changed, necessary correction in the register should be made in red ink.
NOTE 2. Allotment of expenditure under ‘Charged’ portion should be indicated distinctly.
rd
NOTE 3.- This account should be dispatched on the 3 of the following month.

* Serial No. in Bill Register to be entered only in respect of bills passed by Cheque Drawing
DDOs under their cheque-drawing powers.

Signature.....................................................
Designation.................................................
Date............................................................

145
 FORM GFR 6
[ See Rule 57 (4) (iv) ]

BROADSHEET FOR WATCHING RECEIPT OF

ACCOUNT FROM DISBURSING OFFICERS

Office of ...................................................................
Major Head.............................................................
Minor Head .............................................................
Sub-Head ................................................................

Serial Names of Disbursing District Date of receipt of account

No. Officers
March April May

NOTE 1.Districts are to be arranged according to alphabetical order.

NOTE 2.Dates of receipts should be noted in monthly columns. Reminder should be sent if notreceived by the
7thof the month.

146
 FORM GFR 7
[ See Rule 57 (4) (vi) ]

COMPILATION SHEET

Major Head....................................................
Minor Head....................................................
Sub-Head.......................................................

Month Serial No. of the Disbursing Officers Total for Remarks

each officer

Total expenditure ..............................

Add Adjustment communicated by
Accounts Officer and not reckoned by
DDOs ..............................................
......................................................
Grand Total.......................................

Add Total up to previous month...........

…………………................................
Progressive Total up-to-date ...............
........................................................

147
 FORM GFR 8
[ See Rule 57 (4) (viii), (5) (iv) & (6)]

CONSOLIDATED ACCOUNTS

Name of Office........................................................ Grant No.................................................................

Appropriation..........................................................
Financial Year...........................................................

Units of Grants Grants Proportionate Grant Actual

appropriation sanctioned distributed from April to date Expenditure April
(Part -III of Demands
for Grants)
1 2 3 4 5
(i) Salaries Charged Voted Charged Voted Charged Voted Charged Voted
(ii) Total of all units
of appropriation

Units of Actual Expenditure

appropriation May Progressive June Progressive
(Part -III of Demands expenditure expenditure
for Grants) upto end of May
6 7 8 9
(i) Salaries Charged Voted Charged Voted Charged Voted Charged Voted
(ii) Total of all units
of appropriation

NOTE 1. Subsequent charges, if any, under Column 2 are to be made in red ink.
NOTE 2. Figures under Column 4 may be entered in pencil for facility of updating from month to month.
NOTE 3.Wherever variations between actual expenditure and proportion grant are large, suitable explanations
should be given in a “Remarks” column.

148
 FORM GFR 9
[ See Rule 57 (8) ]

BROADSHEET FOR WATCHING RECEIPT OF THE RETURNS FROM THE HEADS OF

DEPARTMENTS UNDER A DEPARTMENT OF THE CENTRAL GOVERNMENT

SI. Grant Date of receipt of returns

No. No.
April May June July August Sep. Oct. Nov. Dec. Jan. Feb. March

NOTE 1.Dates of receipt should be noted in monthly columns. Reminders should be sent if returns are not
received by the prescribed date.

NOTE 2.Returns relating to the Secretariat proper should also be maintained in the above form.

149
 FORM GFR 10
[ See Rule 217 (iii) ]

REPORT OF SURPLUS, OBSOLETE AND

UNSERVICEABLE STORES FOR DISPOSAL

Item No. Particulars of Quantity/ Book Value/ Condition and Mode of disposal Remarks
stores Weight Original year of purchase (sale, public
purchase price auction or
otherwise)

1 2 3 4 5 6 7

Signature...........................................................
Designation.......................................................
Date..................................................................

150
 FORM GFR 11
[ See Rule 222]

SALE ACCOUNT

Item Particulars Quantity/ Name Highest Highest Earnest Date on Whether the Auctioneer’s
No. of Weight And bid bid money Which the Articles were Commission
Stores Full accepted rejected realized complete actually and
address on Amount is Handed over acknowled-
Of The spot realized On the spot. Gement
purchaser and If not, the For
credited Actual date Its
into Of handing Payment
treasury Over of the
Articles with
quantities
1 2 3 4 5 6 7 8 9 10

Signature...........................................................
Designation.......................................................
Date..................................................................

151
 GFR 12 – A
[(See Rule 238 (1)]

FORM OF UTILIZATION CERTIFICATE

FOR AUTONOMOUS BODIES OR THE GRANTEE ORGANIZATION

UTILIZATION CERTIFICATE FOR THE YEAR………….. in respect

of recurring/non-recurring
GRANTS-IN-AID/SALARIES/CREATION OF CAPITAL ASSETS

1.Name of the Scheme......................................................................................

2. Whether recurring or non-recurring grants.......................................................
3. Grants position at the beginning of the Financial year
(i) Cash in Hand/Bank
(ii) Unadjusted advances
(iii) Total
4. Details of grants received, expenditure incurred and closing balances: (Actuals)
Unspent Interest Interest Grant received during the Total Expenditure Closing
Balances of Earned deposited year Available incurred Balances
Grants received thereon back to the funds (5-6)
years [figure as Govern- (1+2-
at Sl. No. ment 3+4)
3 (iii)]

1 2 3 4 5 6 7
Sanction Date Amount
No. (ii) (iii)
(i)

Component wise utilization of grants:

Grant-in-aid– Grant-in-aid– Salary Grant-in-aid–creation of capital Total

General assets

Details of grants position at the end of the year

(i) Cash in Hand/Bank
(ii) Unadjusted Advances
(iii) Total

152
Certified that I have satisfied myself that the conditions on which grants were sanctioned have been duly
fulfilled/are being fulfilled and that I have exercised following checks to see that the money has been actually
utilized for the purpose for which it was sanctioned:
(i) The main accounts and other subsidiary accounts and registers (including assets registers) are maintained
as prescribed in the relevant Act/Rules/Standing instructions (mention the Act/Rules) and have been duly
audited by designated auditors. The figures depicted above tally with the audited figures mentioned in
financial statements/accounts.
(ii) There exist internal controls for safeguarding public funds/assets, watching outcomes and achievements of
physical targets against the financial inputs, ensuring quality in asset creation etc. & the periodic evaluation
of internal controls is exercised to ensure their effectiveness.
(iii) To the best of our knowledge and belief, no transactions have been entered that are in violation of relevant
Act/Rules/standing instructions and scheme guidelines.
(iv) The responsibilities among the key functionaries for execution of the scheme have been assigned in clear
terms and are not general in nature.
(v) The benefits were extended to the intended beneficiaries and only such areas/districts were covered where
the scheme was intended to operate.
(vi) The expenditure on various components of the scheme was in the proportions authorized as per the scheme
guidelines and terms and conditions of the grants-in-aid.
(vii) It has been ensured that the physical and financial performance under…………….(name of the scheme has
been according to the requirements, as prescribed in the guidelines issued by Govt. of India and the
performance/targets achieved statement for the year to which the utilization of the fund resulted in
outcomes given at Annexure – I duly enclosed.
(viii) The utilization of the fund resulted in outcomes given at Annexure – II duly enclosed (to be formulated by
the Ministry/Department concerned as per their requirements/specifications.)
(ix) Details of various schemes executed by the agency through grants-in-aid received from the same Ministry
or from other Ministries is enclosed at Annexure –II (to be formulated by the Ministry/Department concerned
as per their requirements/specifications).

Date:
Place:

Signature Signature

Name.......................................................... Name.......................................................

Chief Finance Officer Head of the Organisation

(Head of the Finance)

(Strike out inapplicable terms)

153
 GFR 12 – B
[ See Rule 256 (2) ]

FORM OF UTILIZATION CERTIFICATE

(1) Certified that out of the Loan of Rs. …….........…....……. SANCTIONED under…………………………………...
dated…………………….…..,in favour of ………….....………….during the year……………………......an amount of
Rs…………………………...has been utilized for the purpose for which it was sanctioned, and that the balance of
Rs. ………...................remaining unutilized at the end of the year…………………….has been surrendered to the
Government (vide No. ……….………., dated…………………..) / will be adjusted towards the loan payable during
the next financial year.

(2) Certified that I have satisfied myself that the conditions on which the loan was sanctioned have been duly
fulfilled/are being fulfilled and that I have exercised the following checks to see that the money was actually
spent for the purpose for which the loan was made.

Kinds of checks exercised

1.

2.

3.

4.

Signature…….….…………………….
Designation ………………………….
Date …………………………………..

154
 GFR 12 – C
[(See Rule 239)]

FORM OF UTILIZATION CERTIFICATE (FOR STATE GOVERNMENTS)

(Where expenditure incurred by Govt. bodies only)

Sl. Amount
No. Letter Certified that out of
No. and date Rs……………………………………………...........Of
grantssanctionedduringtheyear.................................infavourof
..........................................................undertheMinistry/Department
Letter No. given in the margin and Rs…………………………..on
Account of unspent balance of the previous year, a sum of
Rs…………………………….has been utilized for the propose
of
............................................for which it was sanctioned and that
The balance of Rs…………………………..remaining unutilized
At the end of the year has been surrendered to
Government (vide No.
Total ...........................dated.......................)/will be adjusted
towards the grants pa yable during the next
year........................................

2. Certified that I have satisfied myself that the conditions on which the grants-in-aid was sanctioned have
been duly fulfilled/ are being fulfilled and that I have exercised the following checks to see that the
money was actually utilized for the propose for which it was sanctioned.

Kinds of checks exercised

1.
2.
3.
4.
5.

Signature………………………………………
Designation…..………………………………..
Date……………………………………………

PS: The UC shall disclose separately the actual expenditure incurred and loans and advances given to suppliers
of stores and assets, to construction agencies and like in accordance with scheme guidelines and in
furtherance to the scheme objectives, which do not constitute expenditure at the stage. These shall be
treated as utilized grants but allowed to be carried forward.

155
 FORM GFR 13
[ See Rule 262]

STATEMENT OF AGGREGATE BALANCE OF LOAN(S) OUTSTANDING AS

ON 31ST MARCH, 20… AND DETAILS OF DEFAULTS

PAO / Pr. AO Ministry of ………………………………………Major Head………………………

Sub-Major Details of defaults Amount of default

Head Earliest
SI. Minor Head Name of the Aggregate Original letter Amount of Principal Interest date to
No. of Account borrower outstanding No(s). and loan(s) which the
balance of Date(s) sanctioned default
loan(s) sanctioning the Rs. Rs. Rs. pertains
loan(s)
1 2 3 4 5 6 7 8 9

NOTE. - Statements may be prepared on separate sheets for each Major Head, with Minor Head-wise break-up.
Parties having aggregate outstanding balances of less than Rs. 5 lakhs each and which are not defaulters may
be grouped together with a common descriptive head such as “Regional Engineering Colleges”, etc., if possible
or “parties with small outstanding balance” under Column 3.

156
 FORM GFR 14
[ See Rule306 (3) ]

FORM OF SECURITY BOND (FIDELITY BOND DEPOSITED AS SECURITY)

KNOW ALL MEN BY these presents that I, A.B……………………… of……………………........and held and firmly
bound unto the President of India, his successors and assigns (hereinafter referred to as “Government”) in the
sum of Rs………………(Rupees………….) to be paid to the Government for which payment, well and truly to be
made, I bind myself, my heirs, executors, administrators, and legal representatives by these presents. Singed
and dated this ……………………… day of……………….20
2. WHEREAS the above bounden A.B.........................................was on the day of...........................................
20…………………… appointed to and now holds the office of ……………in the office of…………………… AND
WHEREAS the said A.B………… by virtue of holding such office is bound to collect………………………… (here
describe the nature of Cashier’s/ Storekeeper’s/Sub-storekeeper’s/Sub-ordinate’s duties) …………………………
and to keep and render true and faithful accounts of his dealings with all property and money which may come
into his hands or possession under his control such accounts to be kept in the form and manner that may, from
time to time, be prescribed by duly constituted authority, and also to prepare and submit such returns, accounts
and other documents as may from time to time be required of him.
3.AND WHEREAS the said A.B…………………...has, in pursuance of Rule 270 of the General Financial Rules,
1963, delivered to and deposited with ……………… a Fidelity Bond issued by……………………Company for the
sum of Rs………………… (Rupees………………….) as Security for the due and faithful performance by the said
A.B……………………of the duties of his said office and of any other office requiring security to which he may be
appointed at any time and of other duties which may be required of him while holding any office as aforesaid
and for the purpose of securing and indemnifying the Government against all loss, injury, damage, costs, or
expenses which the Government may, in any way, suffer, sustain or pay by reason of misconduct, neglect,
oversight or any other act of omission of the said A.B……………………………or of any person or persons acting
under him or for whom he may be responsible.
4. AND WHEREAS the said A.B……………………………………..has entered into the above Bond in the sum of
……………………… conditioned for the due performance by him the said A.B……………………...of the duties of
the said office and of other duties appertaining thereto or which may lawfully be required of him and to indemnify
the Government against loss from or by reason of the acts or defaults of the said A.B………………………………
and of all and every person and persons aforesaid.
5.NOW THE CONDITION of the above written Bond is such that of the said A.B……………………has whilst he
has held the said office of………………………...as aforesaid always duly performed and fulfilled the duties of his
said office and if he shall, whilst he shall hold the said office or any other office requiring security to which he
may be appointed, or in which he may act, always duly perform and fulfil all and every duties thereof
respectively and other duties which may from time to time be required of him while holding any such office as
aforesaid, and shall duly pay into the Government Treasury at ………………………… all such money and
securities for money as are payable or deliverable to Government and shall come into his possession or control
by reason of the said office and shall duly account for and deliver up all moneys, papers and other property
which shall come into his possession or control by reason of the said office and if the said A.B………….his
heirs, executors, administrators or legal representatives shall pay or cause to be paid unto the Government the
amount of any loss and /or defalcation in the accounts of the said …………………………………………………….
within 24 hours after the amount of such loss and /or defalcation shall have been demanded from the said
A.B…………… by the………………………………such demand to be in writing and left at the office or last known
place of residence of the said A.B…………………………and shall also at all times indemnify and save, and keep
harmless the Government from all and every loss, injury, damage, actions, suits, proceedings, costs, charges
and expenses which has been or shall or may at any time or times hereafter during the service or employment
of the said A.B……………………… in such office as aforesaid, or any such offices aforesaid, be sustained,
incurred, suffered brought, sued or commenced or paid by the Government by reason of any act,

157
embezzlement, defalcation, mismanagement, neglect, failure, misconduct, default, disobedience, omission, or
insolvency of the said A.B…………………………….or of any person or persons acting under him or for whom he
may be responsible, then the above written Bond shall be void and of no effect, otherwise the same shall be and
remain in full force.
6.PROVIDED ALWAYS and it is hereby declared and agreed by and between the parties hereto that the said
Fidelity Bond No…………….delivered and deposited as aforesaid shall be and remain at the disposal of the said
officer for the time being or the Government as and for part and additional security over and above the above
written Bond to the Government, for the indemnity and other purposes aforesaid with full power to the
Government or an officer duly authorized in that behalf to obtain and receive payment of the sum or sums of
money recoverable or to be received, upon or by virtue of the said Fidelity Bond or a sufficient portion thereof
and all benefits and advantages thereof and to apply the same in and towards the indemnity as aforesaid of the
Government.
7.AND it is hereby further agreed and declared by and between the parties hereto that the said
A.B……………………….shall keep the said Fidelity Bond issued by the said company in full force by payment of
The premia and as when they fall due and by otherwise conforming to the rules of the said company relating
thereto.
8.PROVIDED ALWAYS that cancellation or lapse at any time of the said Fidelity Bond shall not be deemed to
affect or prejudice the right of the Government to take proceedings upon or under this said Bond against the
said……………………… in case any breach of the condition of this Bond shall be discovered after the
cancellation or lapse of the said Fidelity Bond but the responsibility of the A.B…………………….shall at all times
continue and but the Government shall be fully indemnified against all such loss or damage as aforesaid at any
time.
9. PROVIDED FURTHER that nothing herein contained nor in the Fidelity Bond so deposited shall be deemed to
limit the liability of the said A.B…………………..in respect of matters aforesaid to the forfeiture of the said sum of
Rupees………………… or part or parts thereof and that if the said sum be found insufficient to indemnify the
Government in full for any loss or damage sustained by them in respect of matters aforesaid or any of them the
said A.B……………………………………………shall pay to Government on demand such further sum as shall be
deemed by…………………… to be necessary in addition to the said Fidelity Bond of Rs……………………………
to cover such loss or damage as aforesaid and that the Government shall be entitled to recover such further
sum payable as aforesaid in any manner open to them.
10. The stamp duty, if any, on this Bond shall be borne by the Government.

Signature

1. Signed and delivered by the above named A.B…………….. in the presence of …………………..
2. Signed for and on behalf of the President of India by ……………… the……………….being the person directed
or authorized by him in that behalf in the presence of ……………………

158
 FORM GFR 15
[ See Rule 253 (2) (ii) ]

FORM OF WRITTEN UNDERTAKING TO BE EXECUTED BY AN UNDERTAKING /

CORPORATION WHOLLY OWNED BY THE CENTRAL GOVERNMENT
AT THE TIME OF SANCTIONING OF A LOAN
Memorandum of written undertaking given on the ……………… day of…………………………...two thousand and
……………………… by a company incorporated under the Indian Companies Act, 1913 /the Companies Act,
1956,/ the Companies Act, 2013,having its registered office………………………….a body corporate incorporated
under the same name and style and by under ……………… (Act No…………… of……………) having its office at
……………………a society registered under the Societies Registration Act (21 of 1860) having its office
at………………(hereinafter called ‘the Company / Corporation’ which expression shall include its successors and
assigns) to the President of India (hereinafter called ‘the President’ which expression shall include his
successors and assigns).
WHEREAS the said Company / Corporation, etc., applied to the President for a loan of Rs…………………………
(Rupees………………………) only. AND WHEREAS the President has agreed to lend an amount of Rs…………
(Rupees………………………… only) to the said Company / Corporation, etc., on the terms and conditions
prescribed in the Government of India, Ministry of ……………………… (Department of…………………….. ……..)
Letter / Office Memorandum No……………………, dated…………………. (annexed).
Now IT IS HEREBY AGREED by the said Company / Corporation, etc., that, in consideration of the sum of
Rs……………… (Rupees………………… only) lent by the President to the Company / Corporation etc., the
Company / Corporation, etc., hereby agree in accordance with the said terms and conditions –
(i)To repay the loan in…………………………..annual equal instalments the first instalment repayable from the
…………………… anniversary of the date of drawal;
(ii)To pay interest at the rate or ………….……% per annum on the principal payable on each anniversary; and
(iii)In case of default in the payment of the instalment of the loan in accordance with (i) above and / or interest in
accordance with (ii) above, pay interest at penal rate of……………………………...% per annum on such overdue
payments.
IT IS HEREBY FURTHER AGREED AND DECLARED that the said Company / Corporation, etc., shall not,
without the written consent of the President, encumber or alienate, create, any mortgage lien or charge by way
of hypothecation, pledge otherwise, or create other encumbrances of any kind whatsoever any part of its land or
buildings or other structure, and / or plant, machinery or any other fixed assets owned by them.
AND IT IS HEREBY AGREED that the said principal amount lent by the President as aforesaid shall be used by
the Company / Corporation, etc., only for the purpose or purposes for which the aforesaid amount was
sanctioned and for no other purpose whatsoever.
IN WITNESS WHEREOF these presents have been executed by the said Company / Corporation the day and
year first above written.
THE PRESIDENT of India has agreed to bear the stamp duty, if any, chargeable on this document. Signed for
and on behalf of…………….Company / Corporation, etc., by

Shri…………………………………….(Name and Designation) in the presence of

1………………………………………..Seal of the Company / Corporation

2. ……….………………………………

159
 FORM GFR 16
[ see Rule 286 (1) ]

CERTIFICATE OF TRANSFER OF CHARGE

Certified that I /we have in the forenoon / afternoon of this day respectively made over and received charge of
the Office………………………… in pursuance of Order No…………………......dated ………..……………....……...

Received Officer ………………………… Relieving Officer …………………………

Signature ………………………………… Signature …………………………………
(Name in Block Letters) (Name in Block Letters)
Designation……………………………… Designation…………………………………
Station …………………………………… Station ………………………………………
Date ……………………………………… Date …………………………………………

(For use in Audit Office / PAO only)

Noted in A/R at page …………………………
SO/AAO/AO/PAO
Noted in A/R at page……………………………
SO/AAO/AO/PAO
Forwarded …………………………………………………………………………………

NOTE :- Separate certificate (as per Form appended) also to be used where transfer / assumption of charge
involves responsibilities for Cash, Stores etc.

160
 FORM GFR 16 (APPENDIX)
[ See Rule 286(1) ]

CERTIFICATE OF TRANSFER OF CHARGE IN RESPECT OF TRANSFER /

ASSUMPTION OF RESPONSIBILITIES FOR CASH, STORES, ETC.

Certified that I/we have in the forenoon / afternoon of this day……………[date to be indicated] respectively made
over and assumed charge and responsibility of the following :-
Cash Rs…………………………………
Permanent advance Rs…………………
Others……………………………………

Relieved Officer…………………………..
Reliving Officer……………………………

161
 FORM GFR 16A
“Ministry / Department of ………………………….

JOINING REPORT

I hereby report myself for duty this day…………………………….forenoon / afternoon after availing of leave from
…………........…… to …………….....……… sanctioned vide Ministry / Department of………………………..Order
No……………, dated ………….……………

Signature ……………………………
(Name in Block Letters)

Designation………………………….

162
 FORM GFR 17
[ See Rule 306 (3) ]

GENERAL INSURANCE CORPORATION OF INDIA AND ITS SUBSIDIARIES

FIDELITY GUARANTEE POLICY

POLICY No.

IN CONSIDERATION OF the first premium shown in the First Schedule and subject to the terms and conditions
contained herein or endorsed herein which are to be deemed conditions precedent to any liability on the part of
the Life Insurance Corporation of India (hereinafter called “Corporation”) so far as they relate to anything to be
done or complied with by the Employer, the Corporation agrees and binds itself to make good and reimburse to
the Employer all such direct pecuniary loss not exceeding the amount of guarantee, as the Employer shall
sustain by any act or acts of dishonesty, default or negligence committed by the employed / any of the employed
(a) during the currency of this insurance and (b) during the uninterrupted continuance of employment of such
employed and (c) in connection with his occupation and duties AND DISCOVERED during the currency of this
insurance or within a reasonable time thereafter or within twelve months after determination of such employment
whichever event shall first happen.
The proposal for this insurance made by or on behalf of the Employer together with any correspondence relative
thereto shall be incorporated herein and be the basis of this contract and of every renewal.

THE FIRST SCHEDULE

Name
The Employer Business THE PRESIDENT OF INDIA
The Employed : Address through
The amount of Guarantee Rs.
Occupation and duties:
The first premium Rs.
The renewal date The ………day of ……… in each year.

The currency of this insurance: The period or periods from the date written against the respective names of the
Employed to the then next renewal date and any year thereafter in respect to which the Corporation shall agree
to accept and Employer or Employed shall pay the annual premium specified in the Second Schedule hereto.

THE SECOND SCHEDULE

Period of Name Occupation Amount of Annual Actual

Risk and duties Guarantee Premium Premium
Rs. Rs. P. Rs. P.

In witness whereof this Bond has been signed at …………......…… this day of ……………………20.........
For1 …………………………........…
Prepared by …………………………
Examined by…………………………
N.B.-For your own protection it is incumbent upon you to read your policy and its conditions to ascertain that it is
made out in accordance with your intentions.
1 The name of the Company to be inserted in ink at the time of execution of this form.

163
CONDITIONS
In this policy the expression shall bear the respective meanings attached to them in the First Schedule hereto
1. The Corporation shall not be liable to make any payment hereunder if the nature of the business of the
Employer of the duties or conditions of service shall be changed or the remuneration or any of the Employed
reduced without the sanction of the Corporation or if the precautions and checks for securing accuracy of
accounts shall not be duly observed.
2. Notice in writing shall be given to the Corporation’s office as soon as possible after any act or acts of
dishonesty, default or negligence on the part of any of the employed or of reasonable cause of suspicion
thereof or any improper conduct shall have come to the knowledge of the Employer or of any representatives
of the employer to whom is entrusted the duty of superintendence over any of the Employed and no amount
shall be payable under this policy in respect of that Employed by reason of any act committed after such
knowledge shall have come to the Employer or his said representatives. Within three months after such
notice the Employer shall deliver to the Corporation full details of his claim and shall furnish proof of the
correctness of such claim. All books of accounts of the Employer or any Accountant’s report thereon shall be
open to the inspection of the Corporation and the Employer shall give all information and assistance to
enable the Corporation to sue for and obtain reimbursement by any one of the Employed or by his estate of
any moneys which the Corporation shall have paid or become liable to pay under this Policy. Provided
always that the Corporation shall not be entitled to the disclosure of any record or information in respect of
which the Employer is entitled to claim privilege in a Court of Law under Sections 123 and 124 of the Indian
Evidence Act.
3. Any moneys of any one of the Employed in respect of whom a claim is made in the hands of the Employer
and any money which but for any act of fraud or dishonesty committed by such one of Employed would have
been due to that Employed from the Employer shall be deducted from the amount otherwise payable under
the Policy. Provided that the Employee is entitled under the law to make such deduction. Provided further
that in cases in which the loss to the Employer is in excess of the maximum amount payable under the
policy, the moneys aforesaid will be applied in the first place to make good the amount of such excess and
the balance, if any, shall be deducted as herein provided. The Employer and the Corporation shall share any
other recovery (excluding insurance and reinsurance and any counter security taken by Corporation) made
by either on account of any loss in the proportions that the amount of the loss borne by each bears to the
total amount of the loss.
4. Notwithstanding anything herein contained to the contrary it is also agreed that the Corporation guarantees to
the Employer that the Employed shall honestly and faithfully account to the Employer for all moneys or
valuables or property which they shall receive or be entrusted with on account of the Employer either in their
personal or individual capacity or as member of group working conjointly with other members and that the
Corporation will make good and reimburse to the Employer such loss not exceeding the amount of guarantee
as the Employer may sustain by any act or acts of default or dishonesty or negligence of the Employed in the
capacity and employment aforesaid and that when individual liability cannot be brought home to the
Employed the amount to be made good shall be that which falls to the share of the Employed calculating
from the total number of men forming such group, i.e., the total loss divided by the total number of men
employed on the particular work.
5. The Corporation also agrees that during the period in which the guarantee shall be in force the particulars
contained in the Second Schedule shall be with the consent of Employer and on previous notice to and on
payment to the Corporation of any additional proportionate premium that may become payable in
consequence of any change in the employed by reason of promotion or otherwise be varied as
circumstances may require and such additional persona as may be taken into the employment of the
employer referred to in the Schedule hereof during such period shall with such consent aforesaid and on
previous notice to and on payment to the Corporation of a further proportionate premium at the rate for the
time being applicable be

164
 added to and included in the said Schedule and the expression Employed used throughout this policy shall
as from the respective date on which the names shall be included in the said schedule be deemed to include
all persons whether previously named in the said Schedule or subsequently added thereto as aforesaid.

6. If any question or difference shall arise between the parties hereto or their respective representatives
touching these presents or the construction hereof or as to the rights, duties or obligations of any persons
hereunder or as to any other matter in anywise arising out of or connected with the subject-matter of these
presents, the same shall be referred to a single Arbitrator to be named by the Government of India. The
Arbitrator so named shall be an officer of Government and shall have all the powers conferred on Arbitrators
under the Indian Arbitration Act. The costs of the reference and award shall be in the discretion of the
Arbitrator. The making of an award in such reference shall be a condition precedent to any liability of the
Corporation or any right of action against the Corporation in respect of such difference. If the Corporation
shall disclaim liability for any claim hereunder and such claim shall not within twelve calendar months from
the date of such disclaimer have been referred to arbitration under the provision herein contained then the
claim shall for all purpose be deemed to have been abandoned and shall not thereafter be recoverable
hereunder.
7. The expression "Government of India" for the purpose of Clause 6 above shall mean the Secretary to the
Government of India in the Administrative Ministry/ Head of Department under which the employed is
working.

165
 FORM GFR 18
[ See Rule 211. (ii) (c) ]

ACCESSION REGISTER

Date Acces Author Title Vol. Place Year Pages Sourc Class Book Cost Bill With Re-
sion and of e No. No. No. drawn marks
Num- Publi- Publi- and date
ber sher cation date
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15)

166
 FORM GFR 19
[ See Rule250. (1) (viii) ]

NOTICE TO BORROWER ABOUT THE DUE DATE

FOR REPAYMENT OF LOAN AND INTEREST THEREON

No………………………
Office of the Controller of Accounts, Ministry / Department of ………….......…… New Delhi, dated the…….......….

To ……………………………
…………………………...…..

Subject :-Repayment of loan and payment of interest thereon.

Dear Sir,
According to the terms of the loan of Rs………………………….sanctioned to you, vide the Ministry / Department
………………………… Letter No……………………, dated………………………… the annual repayment
instalment and / or interest thereon, detailed below, will become due on…………………………
(i) Repayment ……………………… Rs…………………(in words and figures)
(ii) Interest …………………………… Rs………………..(in words and figures)
2.Please arrange the payment by the due date. It should be noted that the amount of interest has been
calculated on the assumption that payment will be arranged promptly; otherwise it will be revised upwards in
accordance with the terms of the loan.
3.The amounts due should be tendered, on or before the due date at the………………………...(New Delhi Head
Office / Main Office of the Public Sector Bank (PSB) accredited to the Ministry / Department in cash or by
cheque or draft drawn on any Scheduled Bank / New Delhi, in favour of the aforesaid PSB Branch. The
payment should be accompanied by a memorandum or challan, in duplicate, giving the following details :-
(i) Name of the Ministry / Department………………………………
(ii) Name of the Borrower …………………………………………
(iii) No. and date of loan sanction letter with the loan amount sanctioned ………………………….
(iv) Amount due for payment, separately for interest and payment…………………………
(v) Due date of payment……………………………
(vi) The head of the account indicated below, to which the amounts will be adjusted in Government accounts,
should be included in the challan:

(i) Instalment of Principal. Head of Account

(ii) Interest.

4. Separate cheque / draft and challans should be submitted for payment of principal and interest.
5. For outstation loanees, payment of dues together with memorandum / challans is to be arranged through their
Bank to the aforesaid PSB Branch in New Delhi by the due date.

Yours faithfully

Accounts Officer

167
 FORM GFR 20
[See Rule 305 (1) ]

REGISTER OF POLICY HOLDER

SI No
1

Policy. No
2

Name of Policy holder

3

Designation
4

Monthly Premium rate

5

April
6

May
7
8

June

July
9
10

August
11 12

September
Amount actually recovered

October
13

November
14

December
15

January
16

February
17

March
18

Remarks

168
 FORM GFR 21
[ See Rule 234 ]

REGISTER OF GRANTS TO BE MAINTAINED BY THE SANCTIONING AUTHORITY

(i) Serial Number.

(ii) Number and date of sanction letter.
(iii) Purpose of grant.
(iv) Conditions, if any, attached to the grant.
(v) Amount sanctioned.
(vi) Amount of the Bill.
(vii) Whether conditions attached to the grant have been accepted by the grantee without reservation.
(viii) Dated initials of the sanctioning authority.
(ix) Date by which statements of accounts along with utilization certificate, etc., are required to be furnished
by the grantee.
(x) Date by which utilization certificate is required to be furnished by sanctioning authority to the Accounts
Officer, as the case may be.
(xi) Date by which the statements of accounts, etc., are actually received. (In case there has been delay in
the receipt of these statements, the reasons therefor as well as efforts made by the sanctioning
authority to expedite submission of such statements may be clearly indicated).
(xii) Date of submission of utilization certificate to PAO (in case there has been delay in submission of
utilization certificate, the reasons therefor may be clearly indicated).
(xiii)Unspent balance, if any, also indicating whether the unspent balance has been surrendered by the
grantee Institution / Organisation.

169
 FORM GFR - 22
[ See Rule211 (ii) (a) ]

REGISTER OF FIXED ASSETS

Name and description of the Fixed Assets..........................................

Date Particulars Particulars of supplier Cost of Location of the Remarks

of Asset the Asset Asset
Name and Bill No.
address and date
1 2 3 4 5 6 7

NOTE : The items of similar nature but having significant distinctive features (e.g. study table, office table,
computer table, etc.) should be accounted for separately in stock.

170
 FORM GFR 23
[ See Rule211 (ii) (b) ]

STOCK REGISTER OF CONSUMABLES SUCH AS STATIONERY,

CHEMICALS, SPARE PARTS ETC.

Name of Article............................................ Unit of Accounts .........................................

Date Particulars Suppliers Receipt Issue Issue Balance Unit

Invoice No. Voucher Price
and Date No.
1 2 3 4 5 6 7 8

NOTE : User’s indent in original shall be treated as issue voucher. Issue voucher number shall be in consecutive
order, financial year wise and it should be noted on each indent.

171
 FORM GFR 24
[ See Rule211 (ii) (d) ]

REGISTER OF ASSETS OF HISTORICAL / ARTISTIC VALUE

Name of Asset.......................................

Date of Source of Cost price, Particulars which Particulars of Location Remarks

acquisition acquisition if any make it an asset of the custodian of the
historic /artistic value of the asset asset

NOTE 1 : The custodian shall take appropriate measures for preservation of the assets.
NOTE 2 : The present value of the asset should be ascertained by obtaining appropriate valuation from an
expert agency and the same is indicated in Column 3, every five years.

172
 FORM GFR 25
[ See Rule 281. (2) & (3) ]

GOVERNMENT GUARANTEES

Name of Ministry /
Department [ Rs. In crore ]
SI. Beneficiary Loan Authority Period of Purpose Class Sector Details Details Amount
No. [Name of Holder / for validity of Loan of of of Loan
the PSU etc Entity Guarantee [ MOF ID No., Reschedul Securities
in whose giving [MoF & date through e pledged
favour Loan approval which the
guarantee No. & Date] guarantee was
is given] last extended]

1 2 3 4 5 6 7 8 9 10 11

Extent of Additions Deletions Invoked Outstanding Rate of Guarantee Fee/ Other

Guarantee Principal, Guarantee Commission conditions
Dis- Not interest etc at Fee/ Receiv- Recei- &
Principal

Interest

the end of Commi- compli-

Total

charged dis- able ved

charged the period ssion ance

12 13 14 15 16 17 18 19 20 21 22 23

NOTES - 1 : For the purpose of Column - 8 the sectors are as under :-

(i) Power (ii) Cooperative (iii) Irrigation (iv) Roads & Transport (v) Urban Development & Housing (vi) Other
Infrastructure(vii) Any other. 2 : For the purpose of Column - 7 the classification is indicated in Rule 281 (4).

173
 FORM GFR 26
[ See Rule277(v). ]

FURNISHING OF DATA REGARDING GUARANTEES TO

MINISTRY OF FINANCE

Name of the Ministry/Department :

Name of Public Sector Undertaking / entity :

Year Turnover Profit Sundry Current If audited by In case of

After tax Debtors Ratio CAG, profit after targets set
tax, taking into by BIFR the
account the same for
comments of Turnover and
CAG Profit.

X-2

X-1

X*

Where ‘X’ is the immediate preceding financial year.

2. In case of proposal seeking extension of guarantee it may specifically be indicated whether the guarantee fee
for the preceding financial year has been paid or not. The amount paid and date of payment should be indicated.
In case of default in payment it may be indicated whether default fee in terms of Rule 279 (3) has been levied

174
175