1

Government Accounting Rules, 1990

(Revised Edition)

Issued by the Ministry of Finance,

Department of Expenditure,
Controller General of Accounts

TABLE OF CONTENTS

Preamble.

Rule No.

CHAPTER I - INTRODUCTORY

1. Short title and Commencement

2. Definitions

3. Articles of the Constitution etc. to be kept in view in devising the form of accounts

4. Annual Accounts

5. Issue of Subsidiary Instructions

Special provision relating to Railways, Posts Telecommunication and Defence

6.
Departments

CHAPTER 2 - GENERAL OUTLINES OF THE SYSTEM OF ACCOUNTS

7. Agreement of the Central Government with the Reserve Bank

8. Account of the Central Government with the Bank

9-11. Accounts of State Governments with the Bank

12. State transactions in Central Treasuries

13. Transactions of the other Governments, including Central Government in State Treasuries

Broad outlines of the accounts-feeder network and system of accounts of the Central
14.
Government and Union Territory Administrations

Broad outlines of the accounts-feeder-network and system of accounts of State

15.
Governments and of the Union Territory Governments

16. Accounts between different Accounts Offices of the Central Government

Authorities responsible for the preparation of Annual Accounts of the Central Government,
17.
State and Union Territories Governments

18. Proforma Accounts

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19. Journal and Ledger

CHAPTER 3 - BASIC STRUCTURE OF THE FORM OF ACCOUNTS

20. Period of Accounts

21. Cash basis of Accounts

22. Currency in which accounts are kept

23. Form of Accounts—Main Divisions of Accounts

24. Sectors and sub-Sectors of Accounts

25. Allotment of Code to each Major head and range of Code numbers

26. Major, Minor and Detailed Heads

27. Classification of expenditure as "Charged" or as "Voted"

28. Classification of transactions in accounts

29. Basis of classification

Criteria for determining whether expenditure should be classified under heads of Capital
30.
Section or Revenue Section of the Consolidated Fund

31. Allocation between Capital and Revenue expenditure on a capital scheme

32. Net Gain or Loss by Exchange in respect of Government transaction in foreign currencies

Classification and accounting of transactions pertaining to more than one Major Head of
33.
Account

34. Classification aid accounting of transactions relating to Scheduled Areas

35. Classification and accounting of recoveries of overpayments

36. Accounts of Government Commercial Departments or Undertakings

37. Rectification of Misclassifications

Criteria for writes off of balances from Debt, Deposit, Suspense and Remittance Heads
38.
closed to balance and classification thereof in accounts

CHAPTER 4 - CRITERIA FOR RECOVERY OF CHARGES FOR SERVICES

RENDERED OR ARTICLES SUPPLIED BY GOVERNMENT DEPARTMENTS.

39. Introductory

40. Adjustment between Governments

41. Adjustments with Foreign Governments

42-
Inter departmental adjustments
50.
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51. General

CHAPTER 5 - RULES REGARDING CLASSIFICATION OF

RECOVERIES OF EXPENDITURE IN GOVERNMENT ACCOUNTS

52. Introductory

Classification of recoveries made from non-government parties and other Governments,

53.
including Government outside India

Classification of recoveries made by one department from another department of the

54.
same Government

Classification of recoveries of expenditure on works in progress and transactions of stock

55.
and other suspense account

56. Classification of receipts and recoveries on Capital Account

CHAPTER 6 - RULES RELATING TO CLASSIFICATION

OF LOSSES IN GOVERNMENT ACCOUNTS

57. Introductory

58. Classification of loss etc. of receipts

59. Buildings, Lands, Stores and Equipment

Classification of losses or deficiencies of cash in hand whether in treasury or in

60.
departmental charge

61. Classification of irregular or unusual payments

62. Classification of Inevitable losses

CHAPTER 7 - MISCELLANEOUS RULES

63. Incidence of certain charges and receipts between Governments

64. Treasury Accounts

65. Departmental Accounts

CHAPTER 8 - IMPORTANT GENERAL ORDERS GOVERNING CLASSIFICATION

66. Pay and Allowances (other than Travelling Allowance) of Government servants

67. Travelling Expenses

68. Contributions made by or to Government

69. Classification of transactions under "Civil Advances"

70. Classification of transactions under "Suspense"

71. Sale-proceeds of Government land and buildings

72. Municipal rates and taxes

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73. Cost of Survey of India and other scientific parties accompanying a Military Expedition

74. Interpretation

75. Repeal

APPENDICES

Articles of the Constitution and Sections of the Union Territories Act, 1963
APPENDIX I
relevant to the Form of Accounts

APPENDIX 2 Organisation of the Controller General of Accounts

Sections 10,11 and 22 of the C. &A. G's. (Duties, Powers and Conditions of
APPENDIX 3 Service) Act, 1971 and orders issued by the President in exercise of the powers
conferred by sub-section 1 of Section 10 and first Proviso to Section 11 thereof

Grant-in-aid and loans sanctioned by various Ministries/Departments of the

APPENDIX 4 Government of India to State/Union Territory Governments in connection with
Central Plan Schemes and Centrally Sponsored Plan Schemes

Principles and Rules regulating the distribution of certain charges and receipts
APPENDIX 5
between Governments

CORRECTION SLIPS
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GOVERNMENT ACCOUNTING RULES, 1990

Preamble - In exercise of the powers conferred by Article 150 of the Constitution, the
President on the advice of the Comptroller and Auditor General, hereby makes the following
basic rules relating to the form of accounts of the Union and States. This compilation
incorporates also the general principles of Government accounting laid down by the
Comptroller and Auditor General for the guidance of Government Departments, namely:-

Chapter I - INTRODUCTORY
1. Short Title and Commencement.

These rules may be called the "GOVERNMENT ACCOUNTING RULES 1990" and will come
into force with effect from 1st April, 1990.

2. Definitions

In these rules, unless the context otherwise requires,—

(a) 'Accountant General', means the Head of an Office of Accounts subordinate to the
Comptroller and Auditor General of India.

(b) 'Bank' means any branch of the State Bank of India acting as the agent of the Reserve
Bank of India in accordance with the provisions of the Reserve Bank of India Act, 1934 (2 of
1934), any branch of a subsidiary bank as defined in section 2 of the State Bank of India
(Subsidiary Banks) Act, 1959 (38 of 1959) which is authorised to transact Government
business as agent of the State Bank of India, or any branch of a bank as may be appointed by
the Reserve Bank of India as its agent under the provisions of sub-section (I) of section 45 of
the Reserve Bank of India Act, 1934 (2 of 1934);

(c) 'Chief Accounting Authority', means the Secretary of a Ministry or Department of the
Government of India in which the Departmentalised System of Accounting has been
introduced and in the case of a Union Territory with separated accounts, its Chief Secretary/
Chief Commissioner.

(d) 'Civil Accounts Officer', means an Accounts Officer subordinate to the Comptroller and
Auditor General, or a Principal Accounts Officer and or Pay and Accounts Officer functioning
under the Scheme of Departmentalisation of Central Government (Civil) Accounts or under
separated accounts set up of a Union Territories, Government or Administration as the
context may imply. The expression 'Civil Accounts Office' should also be construed
accordingly.

(e) 'Comptroller and Auditor General' means the Comptroller and Auditor General of India
appointed under article 148 of the Constitution of India.

(f) 'Controller General of Accounts' means the Controller General of Accounts in the
Ministry of Finance (Department of Expenditure), who inter alia, is responsible for prescribing
the form of accounts of the Union and States, and to frame, or revise, rules and Manuals
relating thereto on behalf of the President of India in terms of article 150 of the Constitution of
India, on the advice of the Comptroller and Auditor General of India.

(g) 'Consolidated Fund' means the Consolidated Fund of India or of a State, referred to in
clause (1) of article 266 of the Constitution, or of a Union Territory Government, referred to in
Section 47 of the Union Territories Act, 1963, or all the three, as the context may imply
(Appendix -1).
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(h) 'Contingency Fund', means the Contingency Fund of India established in pursuance of
clause (1) of article 267 of the Constitution or the Contingency Fund of a State established in
pursuance of clause (2) of article 267 of the Constitution, or the Contingency Fund of a Union
Territory Government established in pursuance of Section 48 of the Union Territories Act,
1963, or all the three, as the context may imply (Appendix-1).

(i) 'Defence Department' means that Department of the Central Government, whose
expenditure is met from the Demands for Grants relating to Defence Services.

(j) 'Government', means the Central (Union) Government or a State Government, or a

Union Territory Government, or all the three, as the context may imply.

(k) 'Public Account' means the Public Account of India or the Public Account of a State
referred to in clause 2 of Article 266 of the Constitution or both as the context may imply
(Appendix 3).

(l) Reserve Bank means any office or branch of the Banking Department, of the Reserve
Bank of India constituted under the Reserve Bank of India Act, 1934 (2 of 1934).

(m) 'State', except where it appears otherwise from the context, refers to a State included in
the First Schedule to the Constitution.

(n) 'the Constitution', means the Constitution of India.

(o) 'Treasury', includes a sub-treasury.

3. Articles of the Constitution etc. to be kept in view in devising the

form of accounts

The form of accounts of the Union, States and Union Territory Governments shall be devised
keeping in view the provisions of various articles of the Constitution and Sections of Union
Territories Act, 1963, and in particular, of those indicated and reproduced in Appendix I to
these rules.

NOTE:- According to article 150 of the Constitution, the form in which the accounts of the
Union and of the states shall be kept is to be prescribed by the President on the advice of the
Comptroller and Auditor General of India. This function is exercised by the Controller General
of Accounts, Ministry of Finance (Department of Expenditure) on behalf of the President of
India. The duties assigned to the Controller General of Accounts are contained in Appendix 2 to
these rules. The duties and powers of the Comptroller and Auditor General of India are
contained in the Comptroller and Auditor General's (Duties, Powers and Conditions of Service)
Act of 1971 (No. 56 of 1971) Sections 10, 11 and 22 of the Act (as amended from time to
time) have been reproduced in Appendix 3 to these rules. The orders issued by the President
of India in exercise of the powers conferred by the first proviso to sub-section (1) of section 10
and first proviso to section 11 of the said Act after consultation with the Comptroller and
Auditor General of India are also included in Appendix 3 to these rules.

4. Annual Accounts

Every year, from the accounts compiled by the authorities authorised to maintain the accounts
of Central Government, State Governments and Union Territory Governments, accounts
showing under the respective heads the annual receipts and disbursements for the purpose
of Union of each State and of each Union Territory having a Legislative Assembly (including
Appropriation Accounts) are to be prepared and got certified by the Comptroller and Auditor
General of India. The reports of the Comptroller and Auditor General relating to these
accounts shall be submitted to the President or the Governor of a State or the Administrator
of a Union Territory having a Legislative Assembly, as the case may be, who shall cause
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them to be laid before the Houses of Parliament, Legislatures of the States and of Union
Territories respectively.

5. Issue of Subsidiary Instructions

Subsidiary instructions that would be necessary for carrying into effect the provisions of these
rules, and in particular, instructions for opening new heads of accounts or modification of the
existing ones or instructions relating to the content and manner of maintenance of accounts, -
will be issued by the Central Government in the Ministry of Finance on the advice of the
Comptroller and Auditor General of India, in the form of executive orders, indicating wherever
necessary, the types of cases in which the advice of the Comptroller and Auditor General
could be assumed to have been obtained.

6. Special provision relating to Railways, Posts, Telecommunication

and Defence Departments

For the sake of practical convenience, the forms of accounts (including appropriation
accounts), relating to Railways, Posts, Telecommunications and Defence Department, may
be determined by the Departmental Accounting authorities within such range and covering
such aspects as may be prescribed by the Central Government in the Ministry of Finance
(Department of Expenditure—Controller General of Accounts), on the advice of the
Comptroller and Auditor General of India. The provisions of Article 150 of the Constitution will
be deemed to have been satisfied if the forms so determined are not questioned by the
Controller General of Accounts and the Comptroller and Auditor General of India.

NOTE:—With effect from 1982-83, the Ministry of Railways, Controller General of Defence
Accounts, Director General, Posts and Secretary Department of Telecommunications and
Chairman Telecommunication Commission have been delegated functions of the Central
Government under Article 150 of the Constitution in so far as such functions relate to the
opening of sub-heads and detailed heads of Accounts under various major and minor heads of
Accounts pertaining to their departments subject to the following conditions:-

(i) Powers as above shall be exercised in consultation with the accredited Audit officer namely
ADAI (Railways), Director of Audit, Defence Services or Director of Audit, Posts;

(ii) Orders so issued should be consistent with the instructions that are issued as envisaged in
Rule 5.
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Chapter 2 - GENERAL OUTLINES OF THE SYSTEM OF

ACCOUNTS
7. Agreements of the Central Government with the Reserve Bank

The Central Government has entered into an agreement with the Reserve Bank of India by
virtue of which the general banking business of the Government (in which business is
included the receipt, collection, payment and remittance of moneys on behalf of the
Government) is carried on and transacted by the Reserve Bank in accordance with and
subject to the provisions of the agreement and of the Reserve Bank of India Act, 1934, and
also in accordance with and subject to such orders as may, from time to time be given to the
Reserve Bank by the Central Government.

8. Account of the Central Government with the Bank

(1) Ministries and Departments of the Central Government shall, as a rule, operate on such
offices and branches of the Reserve Bank and or of the bank, as have been, or may be
nominated for handling the receipt and payment transactions of the particular Ministry or
Department.

(2) Each office or branch of the Reserve Bank or bank handling transactions of the
Ministries, Departments of the Central Government shall maintain separate accounts in
respect of each Ministry and Department banking with it and render an account of the
transactions to the Pay and Accounts Officer of the concerned Ministry and, or Department, at
such intervals as may be prescribed by the Government, together with all the supporting
challans, paid cheques. These transactions shall also be routed through the banking channel
prescribed by the Reserve Bank of India, to facilitate their incorporation in the books of the
Reserve Bank of India, Central Accounts Section, at Nagpur which is responsible for keeping
a complete account, of receipt and payments (including inter-Governmental adjustments and
adjustments inter se of Defence, Railways and Posts—other than Telecommunications) on
account of the Central Government.

(3) The transactions of Railways, Posts, Telecommunications and Defence Department

arising at offices and branches of the Reserve Bank and State Bank of India, acting as agent
of the Reserve Bank shall be distinguished from other Central transactions in the initial
accounts and classified separately for each Railways, each circle of Posts, each Accounts
Officer of Telecommunication, and each Controller of Defence Accounts respectively. These
transactions will be taken against the Railway Fund, Postal Account, Telecommunication
Account and Defence Account respectively, in the books of the Reserve Bank. Each office
and branch of the Reserve Bank entrusted with the work shall furnish to Accounts Officer
concerned of the Railways, Postal, Telecommunications and Defence Department, as the
case may be, daily scrolls relating to the transactions pertaining to each, together with the
requisite challans, paid cheques.

NOTE:- A statement of the closing balance of the Central Government shall be sent each
month, by the Central Accounts Section of the Reserve Bank to the Controller General of
Accounts, indicating:-

(i) Central Government Account Balance (in respect of Union Territory Administrations
dealt with by Accountants General and of all Union Territory Governments with
Legislature). {Refer Correction Slip 1}

(ii) Railway Fund Balance

(iii) Postal Account Balance

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(iv) Telecommunication Account Balance

(v) Defence Account Balance

(vi) Departmentalised Ministries' Account Balance (which also includes transactions of

Union Territories of Delhi and Andaman and Nicobar Islands whose accounts have been
separated)

(vii) Total

The Central Accounts Section of Reserve Bank shall maintain individual accounts of various
Central Government Ministries, Departments and of Union Territory Administrations having
separated accounts offices, and send a monthly statement to their Principal Accounts Offices
with such supporting details as may be prescribed by the Reserve Bank in consultation with
the Controller General of Accounts; in respect of (i) above to the concerned Accountants
General (with break up of balances/transactions relating to Central Government and relating
to relevant Union Territory Administrations) and Accounts Offices of Union Territory
Governments; and in respect of (ii), (iii), (iv), (v) above, to the Railway Board, Postal Board,
Telecommunications Board and Controller General of Defence Accounts respectively.

9. Accounts of State Governments with the bank

Each State Government has made a separate agreement with the Reserve Bank of India by
virtue of which the general banking business of that Government (in which business is
included, the receipt, collection, payment and remittance of moneys on behalf of that
Government) is carried on and transacted by the Reserve Bank, in accordance with and
subject to the provisions of the agreement and of the Reserve Bank of India Act, 1934, and in
accordance with and subject to such orders as may from time to time be given to the Reserve
Bank by the State Government. The operations of each State shall, however, be confined to
the offices and branches of the Reserve Bank of India and of the bank which have been
designated as falling within the area of that particular State. The receipt and payment of
moneys on behalf of a State outside its jurisdiction shall ordinarily be arranged through the
Accountant General of the State in which the transactions take place.

NOTE:- The Governments of Jammu and Kashmir and Sikkim have not so far entered into
agreement with the Reserve Bank of India for the conduct of their general banking business by
the Reserve Bank.

10. Each office or branch of the Reserve Bank, or the State Bank of India acting as agent
of the Reserve Bank, shall keep a separate account of cash transactions undertaken by it on
behalf of the State Government within whose area it is situated. All transactions which cannot
be debited or credited directly to the account of the Central Government with the Bank and
transactions of other State Governments shall also be taken to the account of the
Government of the State in which they occur. Statement of these transactions together with
all supporting vouchers, challans, paid cheques etc. shall be forwarded by each office and
branch of the Bank daily to the local Treasury Officer or to the Accountant General as the
case may be. The transactions shall also be reported to Central Accounts Section, Reserve
Bank of India, Nagpur.

NOTE:- With effect from 1st February, 1978 transactions on account of discharge value of,
and periodical interest on securities of State Governments, as well as receipts on account of
subscriptions against market loans floated by State Governments are taken by the officers of
the Reserve Bank of India directly against the cash balance of the State Government
concerned with the Central Accounts Section of the Reserve Bank of India, Nagpur.

11. Complete accounts of the Central Government and of each of the State Government
with the Bank shall be maintained by the Central Accounts Section of the Reserve Bank at
Nagpur which shall also act as a general clearing house for the adjustment of (i) all
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transactions between different State Governments and (ii) such transactions between the
Central and State Governments as may be specified by the Central Government. All
adjustments to be made between the accounts of different State Governments as well as all
payments which one of these Governments has to make to another shall be advised by the
Accountant General authorised in this behalf to the Central Accounts Section of the Reserve
Bank which will pass the necessary entries in the accounts of the Governments concerned,
maintained in its books. Similarly, such adjustments in the case of specified transactions
between the Central Government and the State Governments as well as transactions
between Defence, Posts, Telecommunications and Railways inter se will be advised to the
Central Accounts Section of the Reserve Bank by the Accountant General authorised in this
behalf for making monetary settlement in the accounts of the Government concerned
maintained in the books of the Bank. However, the advices to be sent by the Accountant
General to the Central Accounts Section, Reserve Bank of India, Nagpur debiting to Central
Government balances shall be supported by a certificate to the effect that "this advice
represents withdrawal of an earlier erroneous credit to the Central Government and does not
represent withdrawal of payments already made which were due to the Central Government
and that necessary details are being furnished to the Principal Accounts Officer of the Central
Government concerned." Details of transfers affected in its books against the balance of the
State Government or of the Central Government (and between accounts of Defence, Posts,
Telecommunications and Railways inter se) as the case may be, on account of adjustments
advised by Accounts Officers authorised for the purpose, shall be communicated by the
Central Accounts Section of the Bank to the originating as well as to the effected Accounts
Officers or Accounts Officer of the concerned Ministry/ Department of the Central Government
at the close of each day. At the close of the accounts of each month, a statement of closing
balance of each State Government in the books of the Bank after taking into accounts all cash
transactions in all the offices, branches and agencies of the Bank and the adjusting
transactions in its own books shall be forwarded by the Central Accounts Section to the
Accounts Officer concerned.

Similarly, a statement of the closing balance of the Central Government comprising:-

(i) Central Government Account Balance (in respect of Central transactions of Accounts
Officers and separated accounts of Union Territories only).

(ii) Railway Fund Balance.

(iii) Postal Account Balance.

(iv) Telecommunication Account Balance.

(v) Defence Account Balance.

(vi) Departmentalised Ministries Account Balance

(vii) Total

shall be sent to the Controller General of Accounts. Besides, the Central Accounts Section of
Reserve Bank of India shall maintain individual accounts of all the Central Government
Ministries /Departments as well as accounts of Railways Fund, Posts, Telecommunications
and Defence and send a monthly statement to the Controllers of Accounts, Railway Board,
Postal Board, Telecommunications Commission and Controller General of Defence Accounts.
To keep the transactions under departmantalised system distinct from other Central
transactions, the Central Accounts Section of Reserve Bank of India shall maintain a separate
proforma account styled "Departmentalised Ministries Account".

NOTE:- The Central Accounts Section of the Reserve Bank shall maintain individual account
for each Ministry/Department of the Central Government. In respect of Accountant General
having separate Central Section of Accounts in their books and of Accountant General
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accredited with Union Territory Governments/Administrations, the Central Accounts Sections of

the Reserve Bank of India, Nagpur shall send a statement of closing balance of each such
account to the concerned Accountant General, Principal Accounts Officer of the
Ministry/Department and the Accountant General of Union Territory Government/
Administration, at the close of each month's account with such supporting details as may be
prescribed by the Reserve Bank of India, in consultation with the Controller General of
Accounts.

State Transactions in Central Treasuries

12. Cash balances held in the treasuries of the Central Government form part of the
Consolidated Fund, Contingency Fund and the Public Account of India. Such treasuries exist
in those Union Territories whose accounts have not been separated from audit and continue
to be compiled by the Comptroller and Auditor General of India. Transactions on behalf of
State Governments arising in these treasuries shall be classified in the treasury accounts
under the head ''8658 - Suspense Accounts - Suspense Accounts (Civil) - Accounts with
Accountant General and settled in cash by exchange of cheques/demand drafts as the case
may be. {Refer Correction Slip 1}

NOTE:- At present the settlement of the transactions by exchange of cheques/demand

drafts is resorted to in cases where the transactions taking place in a Union Territory
accredited to an Accountant General are adjustable against the cash balances of a State,
whose accounts are maintained by another Accountant General. These transactions are initially
taken in the Central Section of accounts under the head '8685 Suspense Accounts - Cash
Settlement Suspense Account'.

Transactions of the other Governments, including Central Government in

State Treasuries

13. Cash balances held in a State Treasury form part of the Consolidated Fund, the
Contingency Fund (if one has been established) and the Public Account of the State to which
the Treasury belongs. The treasury Rules of each State Government issued under article 283
of the Constitution, however, provide that moneys may be received and payments made on
behalf of other State Governments, by a State Treasury. Similarly, moneys may be received
and payments made by such treasuries on behalf of the Central Government in the case of
certain specified transactions. All such receipts and payments on behalf of other State
Governments and the Central Government vide (b) infra shall be taken in the first instance
against the cash balance of the State concerned. On receipt of intimation of such transactions
through the monthly treasury account or otherwise the Accountant General shall take the
following action:- {Refer Correction Slip 1}

(a) In the case of transactions pertaining to the other State Governments, the Accountant
General shall make the requisite adjustments through the Central Accounts Section of the
Reserve Bank against the balances of the other State Governments concerned.

NOTE (i): This procedure shall also be applicable to moneys received in the office of the
Accountant General on behalf of another State and book entries made in the office of the
Accountant General affecting the accounts of another State Government.

NOTE (ii): As the general banking business of the State Government of Jammu and Kashmir
is at present, not conducted by the Reserve bank of India, the settlement of transactions
between the State Government and other States the Centre / is effected in cash or by demand
drafts in accordance with the instructions contained in separate orders.

(b) In the case of such transactions of the Central Government, including Railways / Postal
/ Defence Departments at State treasuries (both banking and non-banking), these shall be
accounted for by the treasuries in the State Section of Treasury Account under the head 'PAO
Suspense - Transactions adjustable by PAO Ministry / Department of ...............' below the
Major head '8658 - Suspense Accounts' for necessary cash settlement by the State
Accountant General with the Pay and Accounts Office. {Refer Correction Slip 1}
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14. Broad outlines of the accounts - feeder-network and system of

accounts of the Central Government and Union Territory Administrations.

The broad outlines are as follows:-

(a) All receipts in India on behalf of the Central Government (other than those of Union
Territory Administrations which are having the treasury system) shall be paid into the bank.
Drawals in India on behalf of the Central Government from the bank shall be made by
cheques drawn thereon. These shall be accounted for by the bank as receipts and payments
on behalf of the concerned Ministry and/or Department of the Central Government. In support
of receipt and payment transactions at the bank, daily receipt and payment scrolls supported
respectively by challans and paid cheques shall be sent by the bank to the Accounts Officer
of the Ministry or Department concerned.

(b) At present, some miscellaneous receipt and payment transactions (viz. payment of
interest, repayment of principal on discharge of Central Government Securities and pensions
including pensions to freedom-fighters) take place at State treasuries. Such transactions shall
be accounted for by the treasuries in the State Section of Treasury accounts under the head
"PAO Suspense - Transactions adjustable by PAO Ministry/ Department of .................. '
below the major head '8658 - Suspense Accounts' for necessary cash settlement by the State
Accountant General with the concerned Pay and Accounts Office. {Refer Correction Slip 1}

Note 1: In respect of payments pertaining to Central Government Securities, Principal

Accounts Office, Department of Economic Affairs, New Delhi will bear the debits.

Note 2: In respect of Central (Civil) Pensions including High Court Judges and Freedom
Fighters, the debits will be raised against the PAO in the Central Pension Accounting Office.

(c) Officers of the Civil Ministries, Departments of the Central Government (including
drawing and disbursing officers with cheque drawing powers) who are allowed to pay their
receipts in the Consolidated Fund or the Public Account or withdraw moneys in lump for
expenditure therefrom or from the Contingency Fund, shall submit detailed 'accounts' of their
transactions to their respective Accounts Officers. Some specified Departmental Officers (e.g.
CPWD Divisions, Forest Divisions) may be required to render to the Account Officers
compiled accounts with suitable abstracts of their transactions classified under prescribed
heads of accounts.

NOTE:- The 'accounts' referred to in this clause do not relate to the accounts maintained by
Government servants in respect of expenditure incurred from permanent advance (i.e. cash imprests).

(d) From the accounts received from the bank and departmental officers, and from the
book adjustments initiated in an Accounts Office, a Classified Abstract shall be compiled by
the Pay and Accounts Officer showing the monthly receipts and payments pertaining to the
Ministry, Department or Union Territory Administration under his payment control, classified
under the relevant major, minor, sub and detailed heads. From the classified Abstract, a
Consolidated Abstract showing the progressive totals month by month under major, minor,
sub and detailed heads of accounts will be compiled.

(e) The Pay and Accounts Officer will send to his principal Accounts Office in the Ministry,
Department or Union Territory Administration a monthly compiled account showing the
receipts and payments under major, minor, sub and detailed heads of account (including
debt, deposit and remittance heads of accounts), for enabling a consolidated account of the
Ministry/Department or Union Territory Administration as a whole being prepared.

(f) In respect of Central transactions taking place at Central treasuries in Union Territories
whose accounts are at present maintained by State Accountants General, each State
Accountants General shall, [vide rule 15 (h) infra] send to the Controller General of Accounts,
 13

a monthly account showing the receipts and payments under major, minor, sub and detailed
heads of account. {Refer Correction Slip 1}

From the compiled accounts received from (a) Principal Accounts Offices of
Ministries/Departments (b) Accountants General, and (c) separated accounts organisations of
Union Territory Governments/Administrations, the Controller General of Accounts shall
prepare a Consolidated Account of the Central (Civil) transactions as a whole.

(g) The cash balance of the Central Government in the books of the Controller General of
Accounts, at the close of each month will be reconciled with the statements of closing cash
balance received from the Central Accounts Section of the Reserve Bank.

(h) Departmental Officers of Posts, Telecommunications and Railway Departments submit

accounts of their transactions to the respective Posts, Telecommunications and Railway
Accounts Officers. Posts, Telecommunications and Railway Accounts Officers render their
monthly accounts to the Postal Board, Telecommunication Board and the Railway Board
respectively, who, in turn consolidate the accounts for their respective Departments as a
whole. Consolidation of accounts of Defence Department as a whole is arranged by the
Controller General of Defence Accounts from the accounts submitted by various Controllers
of Defence Accounts functioning under him.

(i) A copy of the monthly account (Civil) shall be submitted to the Central Government in
the Ministry of Finance (Department of Economic Affairs) by the Controller General of
Accounts. Postal Board, Tele communication Board. Railway Board and Controller General of
Defence Accounts will submit the Consolidated monthly accounts of their respective
departments separately to the Central Government.

(j) Principal Accounts Offices of the Ministries/Departments, separated accounts

organisations of Union Territory Governments/Administrations and State Accountants General
keeping accounts of Union Territories [vide rule 15(i) infra) shall work out during the year the
progressive figures , of Central transactions in their books. On closing the account for March
Supplementary. a progressive account of Central transactions will be furnished by them to the
Controller General of Accounts. The Consolidated Annual Accounts of the Posts,
Telecommunications, Railways and Defence Departments, shall also be prepared and
submitted by the Postal Board, Telecommunication Board, Railway Board and the Controller
General of Defence Accounts to the Controller General of Accounts, to enable him to prepare
accounts relating to the annual receipts and disbursements for the purpose of the Central
Government. {Refer Correction Slip 1}

Note:- The Principal Director of Audit, Central, Calcutta and the Principal Accountant General
(A&E) West Bengal will continue to maintain the Central Section of Account till the switch over
of pension payment from treasury counter to Public Sector Bank is completed. {Refer
Correction Slip 1}

15. Broad outlines of the accounts - feeder-network and system of

accounts of State Governments and of the Union Territory Governments.

The broad outlines are indicated below:—

(a) All receipts in India on behalf of each State Government and on behalf of each Union
Territory shall be paid into its Treasury or the bank, and initial accounts of such receipts shall
be maintained at the treasury, keeping in view the provisions of the next clause.

(b) Receipts realised in the Public Works, Forest and any other departments which may be
authorised in this behalf shall be paid into a treasury or the bank in lump and accounted for at
the treasure merely as receipts on behalf of such departments. The detailed accounts of such
receipts shall be kept by the departmental officers concerned.
 14

(c) Payments in India on behalf of the State Governments and on behalf of the Union
Territories shall ordinarily be made either at its treasury or the bank, but some departmental
officers may be authorised to withdraw sums in lump from treasury or the bank for making
payments. In the former case, the initial 'accounts' of payments shall be kept at the treasury,
and in the latter case, such 'accounts' shall be maintained by the departmental officer
concerned.

The 'accounts' referred to in this clause do not relate to the accounts maintained by
Government servant in respect of expenditure incurred from permanent advances (i.e. cash
imprests).

Officers of the Civil Departments who pay their receipts into the Consolidated Fund or the
Public Account or withdraw moneys for expenditure therefrom or from the Contingency Fund
in lump will submit detailed accounts of their transactions to their respective Accountant
General. Some specified Departmental Officers may be required to render to the Accountant
General compiled accounts with suitable abstracts of their transactions classified under
prescribed heads of accounts.

(d) At the beginning of each month, each Accountant General will receive from the
treasuries under his Jurisdiction monthly accounts supported by the requisite schedules,
vouchers, in respect of the transactions which took place in the treasury during the previous
month. Each State or Central treasury, which renders accounts to a State Accountant General
will submit a double set of accounts, one for transactions of the State Government and the
other for transactions of the Central Government.

(e) From the accounts furnished by treasuries and Civil Departmental Officers, referred to
in clauses (b) and (c) above, Departmental Classified Abstracts will be compiled by the Civil
Account Officers showing the monthly receipts and payments pertaining to each department
for the whole account circle, classified under the relevant major, minor, sub and detailed
heads. Separate classified abstracts will be maintained for each Department, each group of
small departments or each major head or group of major heads of account not relating to any
particular department or departments according to local convenience. The transactions
adjustable against a department or against a major head not relating to any particular
department which are intimated to the Civil Accounts Officer by another Accounts Officer as
well as all book adjustments against a departmental or other major head which are initiated in
the Accounts Office itself will also be incorporated in the relevant Departmental Classified
Abstracts, so that the latter may include monthly all transactions of whatever nature
connected with the receipts and payments pertaining to each department or major head of
account. From these classified abstracts, separate Departmental Consolidated Abstracts
showing the progressive totals month by month under major, minor, sub and detailed heads
of revenue receipts and service payments will be compiled. Separate Consolidated Abstracts
will be maintained for each department or major head of account or for a group of
departments or major heads of accounts as may be found convenient.

The Departmental Classified Abstracts and the Departmental Consolidated Abstracts for
the Central transactions will be compiled separately from those for departments of the State
Government.

(f) The transactions relating to Debt, Deposit and Remittance heads appearing in the
Treasury Cash Accounts and Lists of Payments and in the Departmental and other Abstracts
will be collected for the whole circle of account under each head of account from month to
month in a Detail Book. From the figures in the Detail Book, the Consolidated Abstract of
Debt, Deposit, Remittance, Suspense transactions will be prepared showing the progressive
totals month by month under each major head in the "Public Debt", "Loans and Advances",
sectors of the Consolidated Fund and those in the Public Account. This abstract will also
show the progressive totals under such minor, sub and detailed heads as may be found
necessary. Separate Detail Books and Consolidated Abstracts will be maintained for Central
and State transactions.
 15

(g) The final stage of compilation will be the preparation of the Abstract of Major Head
Totals showing the receipts and disbursements by major heads during and to end of the
month from the Departmental Consolidated Abstracts and the Consolidated Abstracts of Debt
and Remittance transactions. From the Consolidated Abstracts for State and Centre
respectively will also be compiled the monthly and the annual accounts of the State
Governments and of Union Territory Governments with legislature and material for the annual
accounts of the Central Government and of Union Territory Administrations.

The cash balance of the State Government in the books of the Accountants General at the
close of each month will then be reconciled with the balances shown in the Cash Accounts
rendered by Treasury Officers and with the statements of closing balance received from the
Central Accounts Section of the Reserve Bank. Reconciliation of figures under the head
"8675—Deposits with Reserve Bank" in respect of transactions of the Central
Government/Union Territory Governments and Administrations arising in their books will be
effected by the Accountants General.

(h) A copy of the monthly account of each State Government, will be submitted to it by the
Accountant General concerned. A copy of the monthly account of transactions finally adjusted
in their books in respect of Union Territory Administrations, relevant portion relating to a Union
Territory Government, and of Central Government Civil pensions will be rendered by the
Accountant General to the Controller General of Accounts, vide Rule 14 (f) above.

(i) Each Accountant General will work out the progressive figures during the year of the
Central and State accounts with which he is concerned. On closing the accounts for March
(Supplementary), a progressive account of transactions and accounts relating to annual
receipts and disbursements of State/Union Territory Governments with legislature will be
furnished by him to the State Government/Union Territory Government. A progressive
account of the transactions of the Union Territory Administrations and relevant transactions of
Union Territory Governments for which budget provision is made in the composite Grants of
the Central Government and transactions under the Public Account will be sent by the
Accountants General to the Controller General of Accounts, vide rule 14 (j) above.

16. Accounts between different Accounts offices of the Central

Government

(1) Subject to any general or special orders issued by the Central Government,
transactions appearing in the books of an Accounts Officer in a Ministry /Department of the
Central Government (including Railway, Defence, Posts and Telecommunications) which are
adjustable in the books of an Accounts Officer of another Ministry/Department shall be
passed on to the latter for adjustment and settled by cheque or bank draft.

NOTE:- The undermentioned transactions between Central Civil on the one hand and Defence
Department, Posts, Telecommunications and Railway Department on the other hand, will
however, continue to be settled through the Central Accounts Section of the Reserve Bank of
India, Nagpur:-

(i) Settlement of payments against supplies arranged by the Directorate General of

Supplies and Disposals in the Department of Supply; in the Ministry of Commerce on behalf
of Railway, Defence and Posts.

(ii) Debts on account of supplies transactions arising in the books of the Chief Accounts
Officer, High Commission of India, London and Indian Embassy, Washington with the
Defence, Railways and Posts which appear, initially, in the books of the Principal Accounts
Officer, Ministry of External Affairs.

(iii) Dividend payable in lieu of tax on Railway Passenger Fares, by Railways to Central
Revenues.
 16

(iv) Loans from General Revenues to Railways and recovery of interest on loans and
advances to Railways.

(v) Settlement of Income Tax recoveries made from staff salary bills of Railways.

(2) Transactions initially taken against the balance of a State which are eventually
adjustable against the balance of another State shall be passed on to the Accountant General
of the latter State through the "Settlement Account" and the monetary settlement between the
two states in respect of such transactions effected by the Accountant General of the former
State through the Central Accounts Section of the Reserve Bank.

NOTE: Please see Note (ii) below Rule 14 (a).

(3) Central transaction initially taken against the balance of a State which are adjustable in
the books of Accounts Officers of the Ministries/Departments of the Central Government shall
be passed on by the Accountant General to the latter and settled by cheque or bank draft.
However, repayment of Central loans and payment of interest thereon by the State
Governments, excepting the Government of Jammu and Kashmir and Sikkim, are settled
through the Central Accounts Section of the Reserve Bank of India, Nagpur.

(4) Transactions of the Central and State Government handled in other countries by the
Indian Embassies/Missions shall be incorporated in the cash account rendered by them
monthly to the Controller of Accounts. Ministry of External Affairs and the latter will effect cash
settlement with the concerned Accounts Officers in India in the manner prescribed by the
Controller General of Accounts, on the advice of the Comptroller and Auditor General of India.

(5) The monthly accounts of the Central Ministries/Departments and of the State
Governments will thus include not only the receipts and disbursements arising directly in the
accounts of their Accounts Officers but also receipts and expenditure in other countries and
all credits and debits passed on to them for adjustment by other Accounts Officers in India.

17. Authorities responsible for the preparation of Annual Accounts of

the Central Government, State and Union Territories Governments.

(1) The annual accounts (including Appropriation Accounts) of the Central Government and
of each State, Union Territory Government shall be prepared in the form prescribed by the
President on the advice of the Comptroller and Auditor General of India under Article 150 of
the Constitution of India. These Accounts shall be submitted to the respective State/Union
Territory Legislature, and to Parliament on or before such dates as may be determined with
the concurrence of the Government concerned.

(2) Annual Accounts (including Appropriation Accounts) in respect of State Governments,

and Union Territory Governments with Legislature are prepared by the concerned Accountant
General and submitted to the Comptroller and Auditor General of India for approval and
transmission to the Governor of the State, Administrator of the Union Territory Government
concerned, along with his report thereon in terms of Article 151 (2) of the Constitution/Section
49 of Union Territories Act, 1963 and Section 11 of the Comptroller and Auditor General's
(Duties, Powers and Conditions of Service) Act, 1971 for being laid before the Legislature.

(3) Appropriation Accounts of Central Ministries (other than Ministry of Railways) and of
Central Civil Departments shall be prepared by the respective Ministries and Departments
under the guidance and supervision of the Controller General of Accounts, and signed by
their Chief Accounting Authority, Union Government Appropriation Accounts (Civil) required to
be submitted to Parliament, shall be prepared by the Controller General of Accounts by
condensing and consolidating the aforesaid Appropriation Accounts. Appropriation Accounts
pertaining to Departments of Posts, Telecommunications, Railways and Defence shall be
prepared and signed by the Secretaries to the Department of Posts, Department of
 17

Telecommunications, Financial Commissioner, Railway Board and Secretary (Defence

Finance) respectively.

(4) Annual accounts of the Government of India as a whole (including transactions of

Departments of Posts, Telecommunications, Defence, Railways. Union Territory
Administration and transactions under Public Account of India, Accounts of Union Territory
Governments with Legislatures showing under the respective heads the annual receipts and
disbursement for the purpose of the Union, shall be prepared by the Controller General of
Accounts.

(5) The Accounts mentioned in Sub-rules (3) and (4) above, shall be prepared by the
respective authorities on dates mutually agreed upon with the Comptroller and Auditor
General of India in the form prescribed by the President on the advice of the Comptroller and
Auditor General and sent to the latter for recording his certificate. The certified annual
accounts and the Reports relating to the accounts shall be submitted by the Comptroller and
Auditor General to the President in accordance with the provisions of Section 11 of the
Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 and
clause (1) of Article 151 of the Constitution of India.

18. Proforma Accounts

The operations of some departments of Government sometimes include undertakings of a

commercial or a quasi-commercial character e.g., an industrial factory or a store. Even though
they may be maintained almost entirely for the benefit of the Department, it is still necessary
that the financial results of the undertaking should be expressed in the normal commercial
form so that the cost of the service or undertaking may be accurately known. This implies the
maintenance of suitable Capital, Manufacturing, Trading and Profit and Loss accounts and as
the Government system of account being on a purely cash basis is unsuitable for each
commercial accounts, they will usually be kept on a pro forma basis outside the general
accounts of Government. The actual transactions entering these pro forma accounts, except
those adjusted on a liability basis, will find a place primarily in the regular accounts and the
commercial accounts will be additional as well as separate. These pro forma accounts shall
be maintained by the Departmental authorities themselves in such form as may be
prescribed.

Certain pro forma accounts relating to Irrigation, Navigation, Embankment and Drainage
Projects and Government residential buildings are required to be prepared by Civil Account
Offices. Pro forma accounts are also sometimes required to be prepared for transactions
which do not relate to commercial or quasi-commercial undertakings of Government e.g.,
transactions of the Famine Relief Fund. The form in which any pro forma accounts are
prepared in Accounts Offices will be determined by the Government concerned on the advice
of the Comptroller and Auditor General of India.

19. Journal and Ledger

The accounts of Government are based, in the main, on the single entry system and the
double entry system will be applied only in regard to the maintenance of a set of technical
accounts called the Journal, Ledger and Trial Balance Sheet. The main purpose of the
Journal and Ledger is to bring out by a scientific method, the balances of accounts in regard
to which Government acts as a banker, or remitter or borrower or lender. Though such
balances are worked out in the regular Government accounts, their accuracy can be
guaranteed only by a periodical verification with balances brought out in the double entry
system. In the case of the Central Government, the various Accounts Officers shall prepare
Ledger and summary of balances in accordance with the procedure separately prescribed for
the purpose by the Controller General of Accounts. State Accountants General will maintain
separate Journal and Ledger for all transactions of the State Government, from which the
annual summary of Balances or Trial Balance Sheet is prepared by them.
 18

CHAPTER 3
BASIC STRUCTURE OF THE FORM OF ACCOUNTS
20. Period of Accounts

The annual accounts of the Central, State and Union Territory Governments shall record
transactions which take place during a financial year running from 1st April to 31st March.

NOTE:- The Government accounts of a year may be kept open for a certain period in the
following year for completion of the various accounting processes inter alia in respect of the
transactions of March, for carrying out certain inter-departmental adjustments, and for closing
the accounts of several Provident Funds and Suspense heads. Adjustments may also be made
after the close of the year for the rectification of mispostings and misclassifications coming to
notice after the 31st March. An actual cash transaction taking place after 31st March, should
not, however, be treated as pertaining to the previous financial year even though the accounts
for that year may be open for the purposes mentioned above.

21. Cash basis of Accounts

With the exception of such book adjustments as may be authorised by these rules or by any
general or special orders issued by the Central Government on the advice of the Comptroller
and Auditor General of India, the transactions in Government accounts shall represent the
actual cash receipts and disbursements during a financial year as distinguished from amounts
due to or by Government during the same period.

22. Currency in which Accounts are kept

The accounts of Government shall be maintained in Indian currency i.e. rupees. All
transactions of the Central and State Governments taking place in other countries shall be
passed on monthly by the Indian Embassies/Missions to India and brought to account finally
in the Indian books after they have been converted into rupees.

23. Form of Accounts - Main Divisions of Accounts

Government accounts shall be kept in the following three parts:-

Part I Consolidated Fund

of India (including Union Territory Administration or
of the State or Union Territory Government concerned.
Part II Contingency Fund

of India (including Union Territory Administration/Government)

Part III Public Account
or of the State concerned.

NOTE:- There being no separate Public Account in the case of Union Territory Governments,
the transactions pertaining to this account shall be booked in the Public Account of the Central
Government.

In part I, namely Consolidated Fund, of the accounts, there shall be two main divisions,
namely:—

(i) Revenue Consisting of sections for 'Receipt heads (Revenue Account)' and 'Expenditure
heads (Revenue Account)'.
 19

(ii) Capital, Public Debt, Loans consisting of sections for 'Receipt heads (Capital Account)',
'Expenditure heads (Capital Account)', and 'Public Debt', 'Loans', and 'Advances'.

The first division shall comprise the section Receipt heads (Revenue Account) dealing with
the proceeds of taxation and other receipt classed as revenue, and the Section 'Expenditure
heads (Revenue Account)' dealing with expenditure met therefrom.

The second division shall comprise the following sections:—

(a) The Section 'Receipt heads (Capital Account)' which deals with receipts of a Capital
nature which cannot be applied as a set off to Capital Expenditure.

(b) The Section 'Expenditure heads (Capital Account)' which deals with expenditure met
usually from borrowed funds with the object of increasing concrete assets of a material and
permanent character. It also includes receipts of a Capital nature intended to be applied as
set off to Capital expenditure.

(c) The Section 'Public Debt' Loans and Advances, which comprise, of loans raised and
their repayments by Government such as, Internal Debt, External Debt of the Central
Government, and loans and Advances made by Governments and their recoveries;
transactions relating to 'Appropriation to Contingency Fund' and 'Inter-State Settlement';

In Part II, namely Contingency Fund, of the accounts shall be recorded the transactions
connected with the Contingency Fund set up by the Government of India or of a State or
Union Territory Government under Article 267 of the Constitution/ Section 48 of the Union
Territories Act, 1963.

In Part III, namely Public Account, of the accounts, the transactions relating to Debt (Other
than those included in Part I), 'Deposits', 'Advances', 'Remittances' and 'Suspense' shall be
recorded. The transactions under Debt, Deposit and Advances in this part are such in respect
of which Government incurs a liability to repay the moneys received or has a claim to recover
the amounts paid, together with the repayments of the former (Debt and Deposits) and the
recoveries of the latter (Advances). The transactions relating to 'Remittances' and 'Suspense'
in this Part shall embrace all merely adjusting heads under which shall appear such
transactions as remittances of cash between treasuries and currency chests and transfer
between different accounting circles. The initial debits or credits to these heads will be cleared
eventually by corresponding receipts or payments either within the same circle of account or
in another account circle.

24. Sectors and Sub-sectors of Accounts

(a) Within each of the Divisions and sections of the Consolidated Fund referred to in rule
23, the transactions shall be grouped into Sectors such as, "General Services", "Social
Services", "Economic Services", under which specific functions or services shall be grouped.
The Sectors shall be sub-divided into Major Heads of Account, in some cases the Sectors
are, in addition, sub-divided into sub-sectors before their division into Major Heads of
Account. Each Sector in a section shall be distinguished by a letter of the Alphabet.

(b) In Part II—Contingency Fund, there shall be a single Major Head and all the
transactions met out of the Contingency Fund shall be recorded under it.

(c) In the case of Part III—Public Account, the transactions shall be grouped into sectors
and sub-sectors, which shall be further sub-divided into Major Heads of Account. The
Sectors/Sub-Sectors shall be distinguished by letters of the alphabet.
 20

25. Allotment of Code to each Major Head and range of Code Numbers

A four digit Code has been allotted to the Major Head, the first digit indicating whether the
Major Head is a Receipts Head or Revenue Expenditure Head, or Capital Expenditure Head
or Loans and Advances. Head or it pertains to Public Account, if the first digit is '0' or '1', the
Head of Account will represent Revenue Receipt; '2' or '3' will represent Revenue
Expenditure; '4' or '5' Capital Expenditure; '6' or '7' Loans and Advances Head; (4000 for
Capital Receipt) and '8' will represent Contingency Fund and Public Account—(8000 for
Contingency Fund).

Adding 2 to the first digit of the Revenue Receipt will give the Code Number allotted to
corresponding Revenue Expenditure Head; adding another 2—the Capital Expenditure Head
and another 2—the Loans and Advances Head of Accounts; e.g.

0401 represents the Receipt Head for Crop Husbandry

2401 represents the Revenue Expenditure Head for Crop Husbandry

4401 represents the Capital Outlay on Crop Husbandry

6401 represents Loans for Crop Husbandry.

Such a pattern is however, not relevant for those departments which are not operating
Capital/Loan Head of accounts e.g. Department of Supply. In a few cases, however, where
receipt/expenditure is not heavy, certain Major Heads have been combined under and single
number, the Major Heads themselves forming sub-major heads under that number.

The range of code numbers allotted under the scheme of codification is shown below:-

Part I - Consolidated Fund Major Head Code Nos.

Section I Receipt Heads (Revenue Account) 0020-1999

Expenditure Heads (Revenue Account) 2011-3999

Section II - Receipt Head (Capital Account) 4000

Expenditure Heads (Capital Account) 4046-5999

Section III Public Debt, Loans & Advances 6001-7999

Part II - Contingency Fund 8000

Part III - Public Account 8001-8995

26. Major, Minor and Detailed Heads

(a) The main unit of classification in accounts shall be the major head which shall be
divided into minor heads, each of which shall have a number of subordinate heads, generally
shown as sub-heads. The sub-heads are further divided into detailed heads. Sometimes
major heads may be divided into 'sub-major heads' before their further division into minor
heads.

The Sectors, Major heads, Minor heads, Sub-heads and Detailed heads together constitute a
five tier arrangement of the classification structure of Government Accounts.
 21

(b) Major heads of account falling within the Consolidated Fund shall generally correspond
to 'Functions' of Government, such as different services like "Crop Husbandry", 'Defence'
provided by Government, while minor heads subordinate to them shall identify the
'Programme' undertaken to achieve the objectives of the function represented by the major
head. A programme may consist of a number of schemes or activities and these shall,
generally, correspond to 'sub-heads' below the minor head represented by the programme. In
certain cases, especially in regard to non-developmental expenditure or expenditure of an
administrative nature, the sub-heads may denote the components of a programme, such as
'Organisations' or the different 'Wings of Administration'.

(c) A "detailed head'', is termed as an object classification. On the expenditure side of the
accounts particularly in respect of heads of accounts within the Consolidated Fund, detailed
heads are primarily meant for itemised control over expenditure and indicate the object or
nature of expenditure on a scheme or activity or organisation in terms of inputs such as
'Salaries', 'Office Expenses', 'Grants-in-aid', 'Loans'. 'Investments'.

(d) The detailed classification of account heads in Government Accounts and the order in
which the Major and Minor heads shall appear in all account records shall be such as are
prescribed by the Central Government from time to time on the advice of the Comptroller and
Auditor General of India. The 'List of Major and Minor Heads of Account of Union and States
contains the classification prescribed in this regard. The classification prescribed (including
the code No. assigned upto the major heads and minor heads thereunder) should be strictly
followed.

NOTE 1:- With effect from 1st January, 1982 and in the case of Jammu and Kashmir,
Maharashtra, Manipur and Sikkim from 15th January, 1982, State Governments have been
entrusted with their consent, in terms of clause (1) of article 258 of the Constitution, the
functions of the Central Government under Article 150 of the Constitution in so far as such
functions relate to the opening of sub-heads and detailed heads of accounts under the various
Major and Minor heads of Accounts in the State concerned, subject to the following conditions:

(i) Orders issued by a State Government for opening subheads and detailed heads
are consistent with the directions issued by the Central Government from time to
time.

(ii) No sums shall be paid by the Central Government to the State Government
concerned in respect of any extra costs of administration incurred by the State in
connection with the exercise of the functions so entrusted.

NOTE 2:- With effect from 1st April, 1982 the President in terms of clause (1) of Article 239
of the Constitution, has directed the Administrators of the Union Territories of Arunachal
Pradesh, Goa, Daman & Diu, Mizoram and Pondicherry, subject to his control, also to discharge
the functions of the Central Government under Article 150 of the Constitution in so far as such
functions relate to the opening of sub-heads and detailed heads of account under the various
Major and Minor heads of account within their respective territories subject to the following
conditions:—

(i) the said discharge of functions shall be subject to the forms prescribed by the
President under Article 150; and

(ii) No sums shall be paid by the Central Government to the Union Territory
concerned in respect of any extra cost of administration incurred in connection with
the said discharge of functions.

NOTE 3:—Directions issued by the Ministry of Finance (Department of Expenditure—Controller

General of Accounts) on the advice of the Comptroller and Auditor General in connection with
the exhibition of expenditure incurred by State/Union Territory Governments against grants-in-
aid and loans given to them by various Ministries/ Departments of the Government of India
under Central Plan Schemes and Centrally sponsored Plan Schemes, are reproduced in
Appendix 4.
 22

27. Classification of expenditure as "Charged" or as "Voted"

Expenditure which under the provisions of the Constitution is subject to the vote of the
Legislature shall be shown in the accounts separately from expenditure which is "Charged"
(on the Consolidated Fund of India or of a State or Union Territory Government. The
expression "Charged" or "Voted" shall be appended to the heads concerned to distinguish the
two categories of expenditure.

28. Classification of transactions in accounts

(1) Under Article 150 of the Constitution, the accounts of the Union and of the States shall
be kept in such form as the President may on the advice of the Comptroller and Auditor
General, prescribe. The word "Form" used in Article 150 has a comprehensive meaning so as
to include the prescription not only of the broad form in which the accounts are to be kept but
also the basis for selecting appropriate heads under which the transactions are to be
classified.

(2) The estimates of receipts and expenditure framed by Government or in any order of
Appropriation shall indicate provisions, ordinarily against heads opened in conformity with
these rules. Where there is divergence, the corresponding receipt or expenditure shall be
brought to account under the appropriate major head or minor head or other unit of
classification as determined by the President on the advice of the Comptroller and Auditor
General of India.

"Principles and Rules regulating adjustments between Governments of certain category of

charges and receipts, which have been accepted by all Governments are given in Appendix
5."

29. Basis of classification

As a general rule, the classification of transactions in Government accounts, shall have closer
reference to the function, programme and activity of the Government and the object of the
revenue or expenditure, rather than the department in which the revenue or expenditure
occurs. This principle is, however, subject to such exceptions as may be authorised specially
in any individual case or class of cases e.g. receipts representing 'Interest' are shown under
"0049—Interest Receipts" and expenditure on the maintenance and repairs of the non-
Residential buildings under the administrative control of the Public Works Department are
shown under the major head "2059—Public Works" irrespective of the functions to which they
relate. Important general orders governing classification of pay and allowances (including
travelling allowances) of Government servants, expenditure on civil works, contributions made
by or to Government, refunds of revenue, shall be issued by Government from time to time.

30. Criteria for determining whether expenditure should be classified

under heads of Capital Section or Revenue Section of the Consolidated
Fund.

(1) Expenditure of a capital nature to be classified in the Capital Section shall broadly be
defined as expenditure incurred with the object of either increasing concrete assets of a
material and permanent character.

NOTE:- Expenditure on a temporary asset or expenditure on Grants-in-aid to local bodies or

institutions (for the purpose of creating assets which will belong to these local bodies or
institutions) cannot ordinarily be classifiable as capital expenditure, and shall not, except in
cases specifically authorised by the President on the advice of Comptroller and Auditor General
be debited to a capital head of account.
 23

(2) Expenditure of a Capital nature shall be distinguished from Revenue expenditure both
in the Budget Estimates and in Government Accounts.

NOTE:- Capital expenditure is generally met from receipts of a capital, debt, deposit or
banking character as distinguished from ordinary revenue derived from taxes, duties, fees,
fines and similar items of current income including extra-ordinary receipts. It is open to the
Government to meet Capital expenditure from ordinary revenues provided there are sufficient
revenue resources to cover this liability.

(3) Expenditure of a Capital nature as defined above shall not be classed as Capital
expenditure in the Government accounts unless the classification has been expressly
authorised by general or special orders of Government.

31. Allocation between capital and revenue expenditure on a capital

scheme

(1) The allocation between capital and revenue expenditure on a Capital Scheme for which
separate capital and revenue accounts are to be kept shall be determined in accordance with
such general or special orders as may be prescribed by the President on the advice of the
Comptroller and Auditor General.

(2) The following are the main principles governing the allocation of expenditure on a
Capital Scheme, between Capital and Revenue accounts:

(a) Capital account should bear all charges for the first construction and equipment of a
project as well as charges for intermediate maintenance of the work while not yet opened for
service. It would also bear charges for such further additions and improvements as may be
sanctioned under rules made by competent authority.

(b) Subject to (c) below, revenue account should bear all subsequent charges for
maintenance and all working expenses. These embrace all expenditure on the working and
upkeep of the project and also on such renewals and replacements and such additions,
improvements or extensions as prescribed by Government.

(c) In the case of works of renewal and replacement which partake both of a capital and
revenue nature, the allocation of expenditure should be regulated by the broad principle that
revenue should pay or provide a fund for the adequate replacement of all wastage or
depreciation of property originally provided out of capital grants and that only the cost of
genuine improvements, whether determined by prescribed rules or formulae or under special
orders of Government, should be debited to Capital account. Where under special orders of
Government, a Depreciation or Renewals Reserve Fund is established for renewing assets of
any commercial department or undertaking, the distribution of expenditure on renewals, and
replacements between Capital account and the Fund should be so regulated as to guard
against over-capitalisation on the one hand and excessive withdrawals from the Fund on the
other.

(d) Expenditure on account of reparation of damage caused by extraordinary calamities

such as flood, fire, earthquake, enemy action, should be charged to Capital account or to
Revenue account or divided between them in such a way as may be determined by
Government according to the circumstance of each case.

(e) Capital receipts in so far as they relate to expenditure previously debited to Capital
heads, accruing during the process of construction of a project, should be utilised in reduction
of capital expenditure. Thereafter, their treatment in the accounts will depend on
circumstances, but except under a special rule or order of Government, they should not be
credited to the revenue account of the department or undertaking.
 24

32. Net Gain or Loss by Exchange in respect of Government transaction

in foreign currencies

Net gain or loss by exchange in respect of Government transactions in foreign currencies

shall be uniformly adjusted under the head "0075/2075—Miscellaneous General Services—
Gain/Loss by Exchange".

33. Classification and accounting of transactions pertaining to more

than one Major Head of Account

For the sake of convenience or for other special reasons, receipts on charges pertaining to
more than one head of account may be booked in the first instance under one of the heads
concerned, but the portion creditable or debitable to the other head or heads involved should
be transferred from the former head to the latter before the accounts of the year are closed. A
few instances are cited below:-

(1) Where the charges for the supply of water from Irrigation canals are consolidated with
the land revenue demand, the recoveries at the consolidated rates are, in the first instance,
credited to the head "0029—Land Revenue" and an approximate amount calculated as the
share due to Irrigation is transferred to the relevant Irrigation Revenue Head.

(2) Charges for collection of Corporation Tax are accounted for under the minor head
"Collection Charges—Income Tax" below the major head "2020 —Collection of Taxes on
Income and Expenditure" in the first instance, the amount debitable to the minor head
"Collection charges—Corporation Tax" being transferred later from the former minor head to
the latter.

(3) The Establishment and Tools and Plant charges of Public Works Divisions are, in the
first place, booked under a single Major Head subject to final apportionment among the
several major heads concerned.

34. Classification and accounting of transactions relating to Scheduled

Areas

Receipts and expenditure pertaining to Scheduled Areas in a State vide clause I of Article 244
of the Constitution shall be accounted for under the same major and minor heads under which
corresponding receipts and expenditure pertaining to other areas of the State are accounted
for, but the receipts and expenditure of the former kind may be shown in the accounts
separately from the later if Government so desires.

35. Classification and accounting of recoveries of overpayments

Recoveries of overpayments whether made in cash or by deduction from payment vouchers

shall always be taken as reduction of expenditure under the appropriate expenditure head
concerned irrespective of the year to which such recoveries relate.

36. Accounts of Government Commercial Departments or Undertakings

Where any departments or departmental Undertakings of Government function on

commercial lines, the essential formalities of commercial accounts to the extent prescribed by
Government should be strictly observed. In such cases, separate commercial accounts of the
departments or Undertakings shall be kept outside the regular Government accounts. Gross
receipts and expenditure of commercial departments or undertakings shall be accounted for
under the appropriate major and minor heads in the same way as ordinary receipts and
expenditure of Government. The heads of accounts should, as far as possible, be common to
the Government account, and the General Ledger maintained at the department or
 25

undertaking, and should be selected with due regard to the principles of governmental and
commercial accounting so; that the monthly classified account of income and expenditure of
the department or undertakings may be prepared readily from the General Ledger.

37. Rectification of Misclassifications

The procedure to be followed in rectifying misclassifications in accounts shall be such as may

be prescribed by Govt.

38. Criteria for writes-off of balances from Debt. Deposit, Suspense

and Remittances Heads closed to balance and classification thereof in
accounts

Ordinarily, all amounts due to Government which are found to be irrecoverable shall be
written-off from the Debt head of account concerned to an expenditure head as a loss to
Government. Similarly, any balance due by Government remaining unclaimed for such time
as may be prescribed by Government shall be credited as revenue of the Government
concerned by debit to the Debt or Deposit head concerned. Amounts outstanding due to
book-keeping errors under heads which close to balance shall be written-off to "8680-
Miscellaneous Government Account-Write off from heads of account closing to balance". With
the specific approval of the Comptroller and Auditor General in all cases where the
compilation of account is his responsibility and in cases where the accounts have been
departmentalised or separated from Audit, with the specific approval of the Controller General
of Accounts; provided that the Comptroller and Auditor General and the Controller General of
Accounts may delegate the power to appropriate Accounts authorities to such extent and
subject to such conditions as may be decided by them.

Where it is not possible to establish that unreconciled balances/differences under heads of

account which close to balance are either due to book-keeping errors or involve loss/ receipts,
the balances/differences may be written-off to "8680 Miscellaneous Government Account -
Writes-off from heads of account closing to balance", with the approval of the Comptroller and
Auditor General of India after obtaining concurrence of the Government concerned in all
cases where the compilation of account is his responsibility and in cases, where the accounts
have been departmentalised or separated from Audit, of the Controller General of Accounts
after concurrence of the Chief Accounting Authority concerned is obtained.

Such unreconciled balances or differences between the ledger balances and those of as per
the relevant subsidiary registers or Broad-sheets, under any detailed/sub-detailed heads of
account relating to any Debt, Deposit, Suspense and Remittance heads in the State
Accounts, as per the list of Major & Minor Heads of Account, not exceeding Rs. 1000/- in
each case in any financial year, may be written-off by an Accountant General to the head
"8680 Miscellaneous Government Account — Write-off from heads of account closing to
balance" subject to the following conditions:—

(i) The amounts of unreconciled balances or differences are continuing for a period of over
five years, in the year in which it is proposed to be written-off.

(ii) The Accountant General has satisfied himself that a dead end has been reached in
resolving the differences and

(iii) The concurrence of the State Government has been obtained for the write-off.
 26

CHAPTER 4
Criteria for recovery of charges for services rendered or
articles supplied by Government Departments
Introductory

39. The rules in this Chapter prescribe the conditions under which a department of a
Government may make charges for services rendered or articles supplied by it and the
procedure to be observed in recording such charges in the accounts of the Government
concerned.

NOTE:- Criteria for the purpose of such adjustments in respect of the Central Government
are laid down in Part III of Chapter 16 (Rules 294 to 298) of the Central Government
Compilation of the General Financial Rules, 1963.

40. Adjustment between Governments:-

In the case of transactions between two Governments, adjustment shall always be made if
required by or under the provisions of the Constitution; and otherwise, in such manner and to
such extent as may be mutually agreed upon by the Governments concerned.

NOTE 1:- In all cases of claims for an amount not exceeding Rs. 1000 in each case, for
transactions on account of supplies made or services rendered by one Government to another,
no monetary claims will be resorted to. However, in respect of the following claims monetary
settlement should be made irrespective of the amount:—

(i) claims relating to commercial departments/undertakings of a Government which are

required to work to a financial result, for services rendered or supplies made to or by them.

NOTE 2:—For transaction above the limit of Rs. 1000 and where the supplies/services are to
be paid for irrespective of any monetary limit, the settlement will be made through cheques/
Bank drafts by the supplied Government. The procedure to be followed for making the
monetary settlements in these cases, (i) between the State Governments inter se and (ii) in
respect of supplies/service to a Central Government Department will be as indicated below:

(i) Between the State Governments inter se:

The concerned officer of the Government in receipt of the supplies or services will present a
bill at the Treasury for the cost of services or supplies alongwith the accepted invoice and a
requisition for a bank draft in favour of the officer concerned in the supplying Government and
remit the bank draft so obtained to the latter who will present it at the Treasury for
encashment and crediting to the proper head of account.

(ii) Between a State Government and Central Government Department (including Defence,
Railways, Postal and Telecommunications Departments besides Civil).

The Department of the Central Government which received supplies/services will present a
bill alongwith the accepted invoice to its own Accounts Officer concerned who will make the
payment by cheques/bank drafts drawn in favour of the officer concerned of the supplying
Government in settlement of its claims.

In the reverse case of supplies/services rendered by a Central Government Department the

cheques/Bank drafts received by it from the supplied Government will be presented by it to its
Accounts Officer for encashment and credit to the proper head of Account. In case the
departmental officer is himself in account with a branch of the bank, the cheque/draft will be
remitted by him to the bank with challan showing particulars of the Head of account for credit
to Government account.
 27

NOTE 3:- The Union Territory Governments will also follow the procedure indicated above as
may be applicable to them for settlement of their inter-Governmental transactions arising out
of services rendered or supplies made by/to them.

NOTE 4:- These instructions will not apply to payments to supplies arranged by the
Department of Supply in the Ministry of Commerce for purchases made by the State
Governments etc. through Directorate General of Supplies and Disposals in regard to the
procedure laid down in this Ministry's letter No. F. 1 (43)-B/73. dated the 31st July, 1975 will
continue to hold good.

NOTE 5:- The procedure to be followed for realisation of customs duty on goods imported by
the various Governments/Departments will be laid down separately by the Department of
Revenue and Banking (Revenue Wing). Similarly, the procedure to be followed for settlement
of claims relating to supplies made by the Medical Store Depots to various Governments/
Departments will be prescribed separately by the Department of Health in the Ministry of
Health and Family Welfare.

NOTE 6:- The Principles and procedure indicated in Notes 1 and 2 above will also be
followed for settlement of inter Departmental transactions among Defence, Railways, Postal,
Telecommunication and Central Civil Departments on account of services rendered or supplies
made by one Department to another.

41. Adjustments with Foreign Governments, outside bodies, etc.

Unless exempted by Government by general or special orders, services shall not be rendered
without being paid for to any foreign Government or non-government body or institution or to
a separate fund constituted as such. Any relief in respect of payment for services rendered or
supplies made to any outside body or fund should ordinarily be given through a grant-in-aid
rather than by remission of dues.

42. Inter-departmental adjustments

For purposes of inter-departmental payments, the departments of a Government shall be

divided into service departments and commercial departments according to the following
principles.

A. Service Departments: These are constituted for the discharge of those functions which
either (a) are inseparable from, and form part of the idea of Govt. or (b) are necessary to, and
form part of the general conduct of the business of Government. Examples of category (a)
are: the departments of Administration of Justice, Defence, Jails, Medical, Police, Public
Health, Education, Forest. Examples of category (b) are: the departments of Survey of India,
Printing and Stationery, Public Works (Building and Roads Branch), Central Purchase
Organisation under Director General of Supplies and Disposal, New Delhi.

B. Commerical Departments or Undertakings: These are constituted mainly for purposes of

rendering services or providing supplies, of certain special kinds, on payment for the services
rendered or for the articles supplied. They perform functions which are not necessarily
Government functions. They are required to work to a financial result determined through
account maintained on commercial principles.

NOTE:- Government shall specify whether a particular department or particular activities of

a department shall be regarded as commercial department or undertaking.

43. Save as expressly provided by any general or special orders, a service department
shall not make charges against another department for services or supplies which fall within
the class of duties for which the former Departments is constituted.

The following exceptions to this rule have been authorised:

 28

(a) The Forest Department shall charge any other department for vegetable, animal or
mineral products extracted from a forest area.

(b) Payment must ordinarily be made for convict labour as in the case of that supplied to
the Public Works and other departments of Government but no charge shall be made for
convict labour in the case of works undertaken by the Public Works Department which are
treated as Jail Works.

(c) The cost of additional Police Guards supplied to an Irrigation or other project while
under construction shall be debited to the project concerned.

(d) The Film Division of the Government of India shall charge any other department for the
cost of production of films and other services on such terms as may be settled in each case.

(e) The Central Industrial Security Force functioning under the Ministry of Home Affairs
shall charge any other department for the cost of force provided, on such terms as may be
settled in each case.

(f) When the Central Public Works Department executes works on behalf of other
departments of the Government of India, the cost of which is debitable to the grant (Capital
Portion) of those departments, it shall recover the establishment and tools and plant charges
leviable on such works on a percentage basis, unless there are special orders of the
Government to the contrary.

(g) When the Central Electricity Authority or the Central Water Commission including any
office or division under its control executes works on behalf of other departments of the
Government of India as an occasional arrangement, the cost of which is met from sources
other than the expenditure heads (Revenue Account) of those departments it shall recover
the establishment and tools and plant charges leviable on such works on percentage basis,
unless there are special orders of the Government to the contrary.

44. A commercial department or undertaking shall ordinarily charge and be charged for any
supplies and services made or rendered to, or by, other departments of Government.

This rule may be applied to particular units or particular activities of any department even
though the department as a whole may not be a commercial department. Such a unit or
activity shall ordinarily charge for its services or its supplies, to, and may likewise be charged
by, either the department of which it forms a part or any other departments.

NOTE 1:- Save as otherwise provided in these rules, services rendered by a service
department falling under sub-rule A (a) of rule 42 in the normal discharge of its functions shall
not be regarded as service rendered for the purpose of this rule.

NOTE 2:- The supply of residential accommodation by one department to the employees of
another shall not for the purposes of the rules in this Chapter, be held to constitute a service
rendered. In all such cases the rent charges for residential accommodation will be the rent
recoverable under the rules for the time being in force from the persons actually using such
accommodation.

NOTE 3:- The Central Water Commission and the Central Electricity Authority shall charge
commercial departments in respect of advice tendered or services rendered except in the
following eases:—

(a) Where the advice tendered is based on the data already collected by the Commission
or the Authority as part of its normal functions.

(b) Where the amount of recovery does not exceed Rs. 100/-provided that the work
involved is not of a recurring nature.
 29

45. Where one department makes payment or renders service as an agent of another
department of the same Government the principal department shall, subject to such monetary
limit as may be fixed by Government in this behalf, be debited with the expenditure incurred
on its behalf by the agent department.

NOTE 1:—The cost of land acquired by a Civil Department on behalf of the Public Works
Department shall be debitable in the accounts of the latter as part of the cost of the works for
which the land is taken up; but when land is taken up for two or more service departments
conjointly, cost shall be wholly debitable to the department for which the major portion of
expenditure was incurred unless there are special orders to the contrary.

NOTE 2:—When a special officer is employed for the acquisition of land of any department,
the expenditure on pay, allowances etc. of the Special Officer and the establishment and any
expenditure on contingencies is debitable to that department as part of the cost of land. When
the land is taken by a Civil Officer, not specially employed for the work, only special charges
incurred in connection with the acquisition of the land on establishment, contingencies etc.
shall be borne by the department for which the land is acquired.

46. Notwithstanding the provisions of rule 43 the Defence Services shall, in respect of inter-
departmental transaction charge and be charged for services rendered and supplies made to,
or by, other Departments, unless in a particular case, or class of cases, Government may
decide otherwise.

NOTE 1:- The Defence Service shall not be required to pay rent for buildings of the Central
Civil Departments other than Commercial Departments and Undertakings, occupied by the
Defence Services for non-residential purposes, nor shall rent be charged for buildings of the
Defence Services occupied for non-residential purposes by the Civil Departments of the Central
Government other than commercial Departments or undertakings falling under sub-rule 'B' of
rule 42.

NOTE 2:- The Defence Services also shall not be required to pay for the use of the
Government civil aerodromes and, or other incidental services rendered by the Civil Aviation
Department to Indian Air Force Planes, nor shall the Civil Aviation Department be charged, as
a reciprocal arrangement, for the use of the aerodromes of the Indian Air Force by the Civil
Aircrafts.

47. A branch of a service department performing duties supplementary to the main function
of the department and intended to render particular services on payment shall levy charges in
respect of the work for which it has been constituted. Examples: Jail Manufacture, Printing,
Publishing Department, Mint (Miscellaneous Services other than coinage).

48. A branch of a department constituted for the subsidiary service of that department, but
employed to render similar service to another department, shall charge that other department
e.g. workshops of a department, Dockyards.

49. A regularly organised store branch of a department shall ordinarily charge any other
department for supplies made; but petty and casual supplies of stores may, if the supplying
department consents, be made without payment.

50. Notwithstanding anything contained in the rules in this Chapter, a Government may
permit inter-departmental adjustment in any case where such an adjustment is considered
necessary in the interest of economy or of departmental control of expenditure.

51. General

Where under the rules in this Chapter payment is required to be made by one department of a
Government to another, such payment shall, if the case so requires or if otherwise deemed
necessary, include adequate charge for supervision or other indirect expenditure connected
with the service or supply for which payment is made.
 30

CHAPTER 5
Rules regarding classification of recoveries of Expenditure in
Government Accounts
52. The rules contained in this Chapter indicate the manner of
classification of 'recoveries' of expenditure in Government accounts.

The term 'recovery' is used in this chapter in a limited sense to denote repayment of or
payment by another department of the same Government or by another Government or by a
non-Government party (including public sector undertakings, autonomous bodies and private
persons and bodies to a Government Department) which initially incurred the charge and
classified it in the accounts as final expenditure by debit to revenue or capital heads of
accounts. Recoveries towards establishment charges, tools and plants, fees for procurement
or inspection of stores, or both etc. effected at percentage rates or otherwise, are some
examples.

Classification of Recoveries made from non-Government parties and

other Governments including Government outside India

53. Recoveries of expenditure for services or supplies made to non-Government parties or

other Governments (including local funds and Governments outside India) shall, in all cases
be classified as receipts of the Government rendering such services or supplies.

Exceptions - (i) When a Government undertakes a service merely as an agent of a private

body, so that the entire cost of the service is recovered from that body, the net cost to
Government being nil, the recoveries may be taken in reduction of expenditure.

NOTE:- In the case of projects, jointly executed by several Governments, where the
expenditure is to be shared by the participating Governments in agreed proportions, but the
expenditure is ab initio incurred by one Government and shares of another participating
Governments recovered subsequently, such recoveries from other Governments should be
exhibited as abatement of charges under the relevant expenditure head of account in the
books of the Government incurring the expenditure initially.

Classification of recoveries made by one department from another

department of the same Government.

54. As between different departments of the same Government, the recoveries shall be
classified as deduction from the gross expenditure except that such recoveries as are made
by a commercial department e.g. Railways, Department of Posts and Department of
Telecommunications or a departmental commercial undertaking (e.g. A.I.R.) should be
treated as receipts of that department.

Exception:—Recoveries of fees for purchase, Inspection etc., effected by the Central

Purchase Organisations of Government of India (e.g. DGS&D Army Purchase Organisations
of the Ministry of Defence) are treated as receipts of the Department concerned.

NOTE 1:—Such recoveries realised by a non-commercial department (other than the Central
Purchase Organisations of the Government of India) from another Department of the same
Government shall be shown in the relevant Demand for Grant as "below the line" recovery
under the appropriate major head of account. Recovery actually effected, irrespective of the
year to which it relates, shall be adjusted in accounts in reduction of expenditure and exhibited
in the schedule of recovery to be attached to the Appropriation Accounts of the year in which
the recovery is effected.

NOTE 2:—The term "recoveries" by a commercial department (viz. Posts, Telecommunications

and Railways) or by a Departmental commercial undertaking (e.g. A.I.R.) for the purpose of
this rule shall apply to recoveries in respect of services rendered to other departments in
 31

pursuance of the proper functions for which the department is constituted, that is to say, in
the case of Department of Posts and Department of Telecommunications, recoveries shall be
classified as receipts only when they are made in respect of Postal, Telegraphs or Telephone
services rendered to the other departments. Where, a commercial department or a
departmental commercial undertaking acts as an agent of another department for the
discharge of functions not germane to the essential purpose of the department, the recoveries
shall be taken in reduction of expenditure.

Classification of recoveries of expenditure on works in progress and

transactions of stock and other suspense account

55. The technical estimates of a work take cognizance of all anticipated receipts from sale
proceeds of materials, plant, etc. received from the old structure, while the receipts under
"stock and suspense" are by their very nature inseparable from the expenditure recorded
under the main head. The recoveries falling under these two categories shall notwithstanding
anything to the contrary provided by or under the rules in this Chapter, be treated as reduction
of gross expenditure.

Classification of receipts and recoveries on Capital Accounts.

56. Notwithstanding anything to the contrary provided by or under the rules in this Chapter,
receipts and recoveries on capital Accounts insofar as they represent recoveries of
expenditure previously debited to a Capital Major head shall be taken in reduction of
expenditure under the major head concerned except where under the rules of allocation
applicable to a particular department such receipts have to be taken to revenue.

CHAPTER 6
Rules relating to classification of losses in Government
Accounts
57. The rules in this chapter shall regulate the manner of classification and adjustment of
losses in Government accounts.

Classification of loss etc. of receipts

58.(1) If a claim be relinquished, the value of the claim shall not be recorded on the
expenditure side of accounts as a specific loss.

(2) If money due to Government has actually reached a Government servant and is then
embezzled, stolen or lost, even though it may not have reached a treasury or bank and
entered into the Consolidated Fund or the Public Account, it should be entered in the
accounts as a receipt into the Consolidated Fund or the Public Account, as the case may be,
and then shown on the expenditure side by record under a separate appropriate head of
account as a loss.

NOTE 1:—The term "Government Servant" used in sub-rule (2) of this rule includes persons,
who, though not technically borne on a regular Government establishment, are duly authorised
to receive money on behalf of Government.

NOTE 2:—Where losses of Public money are wholly or partially met by non-payment of salary
or pension and the Accounts Department authorisedly applies the unpaid amount to meet
public claim, the resultant balance of the claim alone shall be treated as a loss, the amount
due being debited to the relevant head of account as if it had been drawn and used by the
Government servant concerned in paying the Public claim.
 32

Buildings, lands, stores and equipment

59. Losses or deficiencies of such assets shall not be classified under a separate head, in
the accounts, though they should be written off from any value or commercial account that
may be maintained. If any transactions under these categories are recorded under a
Suspense head in the Government accounts, losses or deficiencies relating thereto shall be
written off the Suspense heads also.

Classification of losses or deficiencies of cash in hand, whether in

treasury or in departmental charge:

60. All losses or deficiencies of this type shall be recorded under relevant separate heads
in the accounts.

NOTE 1:- The acceptance of counterfeit coin or notes shall be regarded as a loss of cash.

N* 95 2.:- Any recovery made in the course of the year in which the losses are brought to
account shall be shown by deduction from the head under which the loss is recorded. Any
recovery made after the accounts of the year are closed shall be as an item of receipts.

Classification of Irregular or unusual payments:

61. Irregular or unusual payments shall be recorded in the accounts with general reference
to the ordinary rules of classification according to the nature of the expenditure; for example
an overpayment of salary shall be debited to the head "Salaries". Similarly, an excess
payment for bricks manufactured shall be debited to the work for which the bricks are used. It
is only when special heads exist in the accounts for recording such charges as
compensations for damages, irrecoverable temporary loans written off and the like, that
unusual or extraordinary payments shall be separately classified.

Classification of Inevitable Losses

62. Where losses are an inevitable feature of the working of a particular department, the
major head of account under which the expenditure of that department is classified shall
contain separate descriptive heads under which such losses shall be recorded.

CHAPTER 7
Miscellaneous Rules
Incidence of certain charges and receipts between Governments

63. The incidence of pay, leave salaries, pension etc. charges of Government servants as
well as of certain other charges and receipts between different Governments are normally
governed by arrangements made by mutual agreements between different Governments and
they shall form the basis of accounting of the relevant transactions. Since any modifications in
such agreements could involve consequential changes in the accounting arrangements, no
agreements, between two Governments governing incidence of charges and receipts shall be
executed or modified without the concurrence of the Central Government. Detailed
instructions for the allocation and accountal of such transactions shall be issued by the
Central Government from time to time.

Treasury Accounts

64. The manner in which the initial and subsidiary accounts shall be kept by the treasuries
and the accounts returns to be rendered by them to the Accounts Offices shall be such as
may be prescribed by the President from time to time on the advice of the Comptroller and
 33

Auditor General of India. The forms of initial and subsidiary accounts prescribed in this behalf
shall be regarded as standard or model forms which may be modified by Government
according to local requirements in consultation with the Accounts Officer concerned. Similarly,
as regards accounts returns, the Accounts Officer concerned may introduce such changes in
detail as he may deem necessary. In respect of such modification of standard or model forms
to suit the local requirements of Governments or of changes in the accounts returns to be
rendered by the Treasuries, the Accountant General will consult the Comptroller and Auditor
General of India, wherever necessary.

Departmental Accounts

65. The manner in which the initial and subsidiary accounts shall be kept by departments
like, Public Works, Forests, etc. and the forms in which the compiled accounts of these
departments shall be rendered to the Accounts Offices shall be such as may be prescribed by
the President from time to time on the advice of the Comptroller and Auditor General of India.
The forms of initial and subsidiary accounts prescribed in this behalf shall be regarded as
standard or model forms which may be modified by State Governments according to local
requirements in consultation with the Accountant General and by the Central Ministries/
Departments in consultation with their Principal Accounts Offices. Changes in detail, of
accounts returns, as may be deemed necessary, may be introduced:-

(a) by the Accountant General concerned on the advice of the Comptroller and Auditor
General of India, in respect of returns due to be submitted to them.

(b) in consultation with the Controller General of accounts by Chief Controller of Accounts/
Controller of Accounts/ Dy. Controller of Accounts of Ministries/ Departments of Central
Government.

CHAPTER 8
Important General Orders Governing Classification
Pay & Allowances (Other than Travelling Allowances) of Government
Servants

66. (1) Following the provisions of Rule 28 of the Government Accounting Rules relating to
Form of Accounts of Union and State Govts. the pay and allowances of a Government
servant should be classified in accounts as part of scheme, activity or organisation (sub-head)
under a programme (minor head) below a function (Major Head) to which the services of the
Government servant closely relate. Where, however, the duties of a Government servant
extend to several activities, programmes, functions etc. and it is not possible to classify ab
initio his pay and allowances under the appropriate sub-heads, the charges may be classified
as part of the scheme or activity or organisation to which the major portion of the work of the
Government servant relates.

(2) The transit pay and allowances of a Government servant proceeding to join an office
whether on first appointment, or on transfer from one department to another either
permanently or as a temporary measure, or proceeding on deputation to another Deptt. /Govt.
or reverting therefrom should in absence of special orders to the contrary, be borne by the
Deptt./Govt. to which the Govt. Servant is proceeding.

NOTE 1 :—The transit pay and allowances both ways of a government servant transferred on
foreign service will be borne by the foreign employer.

NOTE 2 :—The transit pay & allowances both in respect of the forward and return journeys of
Government servant transferred to or from Missions and Offices abroad will be borne by the
Ministry which plans the transfer of the official. However, the transit pay and allowances of the
officers belonging to Indian Foreign Service (A) and Indian Foreign Service (B) in respect of
 34

their return journeys from abroad shall be debited to the Budget grant of the Ministry of
External Affairs or the Ministry of Commerce and Industry where the official reports for duty.

Travelling Expenses

67. The travelling expenses of a Government servant should on whatever duty he may be
employed be debited under the same major/minor/subhead as his pay. However, in the
following cases the travelling expenses of a Government servant may be debited to a
major/minor etc. head different from that to which his pay is debited :

(i) in cases where a Government servant is required to travel on duty connected with an
outside body or fund;

(ii) When Government considers it necessary to show separately the cost of a special service
in connection with which the tour is undertaken, and

(iii) in cases covered by general or special orders of the Government authorising a deviation
from the general rule.

Contributions made by or to Government

68.(1) Contributions made by the Central or the State Government to district boards,
Municipalities, etc. or vice versa should be debited as expenditure or shown as receipts (as
the case may be) under the head of account most closely connected with the object for which
the contributions are made. Thus, a grant for the construction of a school should be debited to
"2202—General Education", grant for construction of a drainage system to "2205—Water
Supply and Sanitation" and a grant for the construction of a road to "3054—Roads and
Bridges" and grant given for general purposes, such as grant to make good a deficit or a
compensation for revenue resumed, shall be classified under "3604—Compensation and
Assignments to Local Bodies and Panchayati Raj Institutions".

NOTE 1 :—If the financial assistance given by the Central or State Government to a local body
does not take the form of a grant of cash, but of expenditure in the Public Works Department
equivalent to the whole or part of the cost of a work constructed by that department on behalf
of the local body concerned, the contribution thus made should be debited as expenditure
under the detailed head 'Contributions' below the relevant minor/major head corresponding to
the programme/function closely connected with the object of the assistance.

NOTE 2 :—Contribution paid by a local body or private party with the express object of
meeting the whole or a part of the cost of construction by the Public Works Department of a
specific work which is eventually to be the property of Government should be credited as
revenue receipt of the Government relevant to the function/Programme closely connected with
the object for which the contribution is made.

(2) Article 282 of the Constitution provides that the Union or a State may make any grants
for any public purpose, not withstanding that the purpose is not one with respect to which
Parliament or the Legislature of the State, as the case may be, may make laws. The word
'Grant' used here should be taken to mean not merely 'Grant-in-aid' but also other direct
expenditure.

Classification of transactions under "Civil Advances"

69.(1) Moneys advanced for miscellaneous purposes under special authority and
recoverable in cash and sums overpaid in vouchers other than those for service payments
should be adjusted under the head "8550-Civil Advances". This head should cover items
which are from their inception, debts due to Government recoverable either in cash or by
deduction from other claims of the party concerned. (In this connection footnotes under the
major head may be referred to). Payment made on account of government expenditure
 35

should not be held under "Civil Advances" on the ground that further proceedings in audit etc.
are necessary for their final admission. Pay and Allowances in respect of an assignable
period, paid before they are due shall be debited to same head to which they are debitable
had they been paid after they were due.

Classification of advances of Pay and Travelling Allowance on

transfer

(2) Advances of Pay and Travelling Allowances should be debited to the final head of
account and not to 'Civil Advances'. Such advances should be finally adjusted as a revenue
expenditure in the books of the Government which makes the advances irrespective of the
fact whether the officer is proceeding to or reverting back from another Government.

Settlement of such advances by way of net payment/net recovery through adjustment bills will
be accounted for in the books of the Government where the adjustment bills are preferred.

(3) In case of transfer of a government servant from one Department/Government to

another, the debits representing advances of pay and transfer travelling allowance should be
finally adjusted as revenue expenditure in the books of the Department/Government which
makes the advance irrespective of the fact whether the Officer is proceeding to or reverting
back from another Department/Government. Settlement of such advances by way of net
payment/net recovery through adjustment bills will be accounted for in the books of the
Deptt./Govt. where the adjustment bills are preferred.

Advances for Law suits

(4) Advance for law suits should be debited to the functional expenditure head concerned.
Refunds of amounts remaining unspent out of these advances should be dealt with as cash
recoveries.

Classification of transactions under 'Suspense'

70. Items of receipts and payments which cannot at once be taken to a final head of receipt
or charge owing to lack of information as to their nature or for any other reasons, may be held
temporarily under the major head "8658-Suspense Account" in the sector "L. Suspense and
Miscellaneous" of the Accounts, (Footnotes under the major head in the list of major/minor
heads of account may be referred to for further guidance). A service receipt of which full
particulars are not given must not be taken to the head "Suspense Account" but should be
credited to the minor head "Other Receipt" under the revenue major head to which it appears
to belong pending eventual transfer to the credit of the correct head on receipt of detailed
particulars.

NOTE:- No sums should ordinarily be credited to Government by debit to a suspense head

credit must follow and not precede actual realisation.

Sale-proceeds of Government land and Buildings

71. The classification of the sale-proceeds of Government land and buildings should be
regulated in accordance with the schedules given below:
 36

Schedule I

Sale proceeds of land etc. Heads to which creditable

1 2

*(i) When the cost of the land was originally The Capital or Revenue account of the
debited to, or remains at the debit of the Capital project, as the case may be, according
Account of any Project or Undertaking for which to the allocation rules applicable to the
regular Capital and Revenue Accounts are kept or department concerned.
was originally met from the revenue account of
such Project or Undertaking.

(ii) When the cost was originally debited to a The Capital expenditure head originally
capital expenditure head outside the Revenue debited.
Accounts, even though no regular Capital and
Revenue Accounts are kept for the work covered
by the Capital expenditure.

(iii) When the cost was originally debited, within The receipt head relating to the
the Revenue Section of the accounts, to any department concerned or, in the case of
service or revenue department for which no capital department not having a corresponding
and Revenue Accounts are kept. receipt head '0075 Miscellaneous
General Services-Sale of land and
Property'.

(iv) When cost was not so debited.

(a) The right of the Government in agricultural land '0401-Crop. Husbandry Other Receipts.
not covered by clause (b),

(b) Nazul lands in Uttar Pradesh, Punjab and '0075- Miscellaneous General
Madhya Pradesh or elsewhere and lands in Services—sale of land and property'.
Punjab equipped at the cost of State revenues for
re-sale for building purposes;

(c) In all other cases;—

(i) If sold in the Public Works Department. The functional receipt major head
concerned or the head '0059-Public
Works'.

(ii) If sold in the Defence The major heads "0076-Defence

Services-Army". "0077—Defence
Services—Navy", and "0078-Defence
Services-Air Force" as the case may be.

(iii) if sold by civil agency. The functional receipt—major head

concerned or '0075-Miscellaneous
General Services'.

• In the case of land acquired by Government on payment for Companies, Railways, or of

Government land made over to such Railways by other Government Departments or
Railways, where the cost was originally debited to '3001-Indian Railways etc. Subsidised
Companies—Land' the sale proceeds are creditable to '1001-Indian Railways etc-sale of Land
Subsidised Companies (3)' on the receipt side.
 37

Schedule II

Sale proceeds of buildings (including the actual Heads to which creditable.

area occupied by or auxiliary to a building).

1 2

(i) When the cost of the building was originally The capital or Revenue Account of the
debited, to, or remains at the debit of the capital Project as the case may be, according to
account of a Project or Undertaking for which the allocation rules applicable to the
regular Capital and Revenue Accounts are kept department concerned.
or was originally met from the revenue account
of such project or undertaking.

(ii) When the cost of the building was originally The capital expenditure head original
debited to a Capital expenditure head outside debited
the Revenue account, even though no regular
Capital and Revenue accounts are kept for the
work covered by the capital expenditure.

(iii) When the sale affects Irrigation, Navigation, "0701-Major and Medium Irrigation 02—
Embankment and Drainage works for which Major Irrigation (Non- Commercial) — Sale
capital accounts are not kept. of Water for Irrigation purposes — or
Navigation Receipts" or '0702—Minor
Irrigation-Flood Control - Drainage Project'
as the case may be.

(iv) When the sale of buildings, the cost of which "The receipt head relating to the function
was originally debited, within the revenue to which the cost of the building was
Section of the accounts, to any service or initially debited or in cases where there is
revenue department for which no Capital and no corresponding receipt head to the head
Revenue Accounts are kept. "0075-Misc. General Services—Sale of
land and Property".

(v) In all other cases :—

(i) if sold in the Public Works Department, The functional receipt major head
concerned or the head "0059-Public
Works".

(ii) If sold in the Defence Department, The major heads "0076-Defence Services-
Army","0077-Defence Services-Navy" or
"0078-Defence Sevices-Air Force" as the
case may be.

The functional receipt 'major head

(iii) if sold by civil agency. concerned or 0075-Misc. General
Services'.

Municipal rates and taxes

72. Municipal rates and taxes on Government Buildings should be adjusted as follows :

(i) As a general rule, municipal rates and taxes on a non-residential building utilised for
functional purposes, such as for schools, colleges or hospitals, if paid by the relevant
departments dealing with those functions, should be adjusted in accounts as part of the sub-
heads, minor heads concerned relating to the function, under the detailed head "Rent, Rates
and Taxes". Where, however, the whole or a part of the tax is paid by the Public Works
 38

Department in administrative control of the building, the payments may be debited to the
maintenance estimates of the buildings concerned, viz. "2059-Public Works-Maintenance and
Repairs".

(ii) Taxes on non-residential buildings occupied by Departments other than the Defence
Department, if paid by a department nominated by Government in this behalf and not passed
on to the occupying department, should be debited to "2070-Other Administrative Services-
Other Expenditure".

(iii) Taxes on residential buildings, if payable by Government should be debited to the

maintenance estimates of the buildings under the head "2216—Housing—Government
Residential Buildings—Maintenance and Repairs" or "2059-Public Works", in case the
Government has decided to debit maintenance expenditure to the latter head.

NOTE:—In cases where the whole or any portion of the taxes which by local rule or by custom
are ordinarily leviable from the tenant, is paid by a department of the Government such
payments are treated as part of the contingent expenditure of the department.

(iv) Taxes both on residential or non-residential buildings owned or occupied by the

Defence Department should be debited to the Defence Service Estimates.

Cost of Survey of India and other Scientific parties accompanying a

Military Expedition

73. The cost of Survey of India and other scientific parties which may accompany a military
expedition should be adjusted as follows:-

(i) All extra expenditure connected with Survey of India unit which would not have been
incurred but for field operation should be borne by the Defence Estimates, provided the
Survey of India unit accompanies the expedition at the request of the Defence Department.

(ii) The cost of the pay, allowances and contingencies of other scientific parties should be
borne by the respective Civil Departments concerned, while the expenditure incurred on
special transport arrangements made by the Defence Services should be debited to the
Defence Estimates. These directions do not, however, apply to the classification of the cost of
units of the Survey of India or of other scientific parties mobilized for service with the Army on
general mobilization. The whole cost of these units except (in the case of the Survey of India)
that of the initial supply of all technical equipments, material and stores, should be debited to
the Defence Estimates under special rules.

74. Interpretation

Where any doubt arises as to the interpretation of any of these rules, the matter shall be
referred to Ministry of Finance, Department of Expenditure, Controller General of Accounts for
its decision, on the advice of the Comptroller and Auditor General.

75. Repeal

With the issue of these rules, the provisions of Accounts Code Vol. I & Form of
Accounts of the Union and States (Basic) Rules are hereby repealed.
 39

APPENDIX I
(See Rule 3)

Articles of the Constitution and sections of the Union Territories Act,

1963 relevant to the form of Accounts.

(a) In regard to Consolidated Fund, Public Account and Contingency Fund of India and of
the States; and in regard to Consolidated and Contingency Funds of Union Territory
Governments, the relevant articles/Sections are reproduced below:-

Article 266. (1) Subject to the provisions of article 267 and to the provisions of this Chapter
(i.e. Chapter I of Part XII of the Constitution) with respect to the assignment of the whole or
part of the net proceeds of certain taxes and duties to States, all revenues received by the
Government of India, all loans raised by that Government by the issue of treasury bills, loans
or ways and means advances and all moneys received by the Government in repayment of
loans shall form one consolidated fund to be entitled "the Consolidated Fund of India", and all
revenues received by the Government of a State, all loans raised by that Government by the
issue of treasury bills, loans or ways and means advances and all moneys received by that
Government in repayment of loans shall form one consolidated fund to be entitled "the
Consolidated Fund of the State".

(2) All other public moneys received by or on behalf of the Government of India or the
Government of a State shall be credited to the public account of India or the public account of
the State, as the case may be.

(3) No moneys out of the Consolidated Fund of India or the Consolidated Fund of a State
shall be appropriated except in accordance with law and for the purposes and in the manner
provided in this Constitution.

Article 267. (1) "Parliament may by law establish a Contingency Fund in the nature of an
imprest to be entitled "the Contingency Fund of India" into which shall be paid from time to
time such sums as may be determined by such law, and the said Fund shall be placed at the
disposal of the President to enable advances to be made by him out of such Fund for the
purposes of meeting unforeseen expenditure pending authorisation of such expenditure by
Parliament by law under article 115 or article 116.

(2) The Legislature of a State may by law establish a Contingency Fund in the nature of an
imprest to be entitled "the Contingency Fund of the State" into which shall be paid from time
to time such sums as may be determined by such law, and the said Fund shall be placed at
the disposal of the Governor of the State to enable advances to be made by him out of such
Fund for the purposes of meeting unforeseen expenditure pending authorisation of such
expenditure by the Legislature of the State by law under article 205 or article 206'.

Section 47.(1) 'As from such date as the Central Government may, by notification in the
Official Gazette, appoint in this behalf, all revenues received in a Union Territory by the
Government of India or the Administrator of the Union Territory in relation to any matter with
respect to which the Legislative Assembly of the Union Territory has power to make laws, and
all grants made and all loans advanced to the Union Territory from the Consolidated Fund of
India and all moneys received by the Union Territory in repayment of loans shall form one
Consolidated Fund to be entitled "the Consolidated Fund of the Union Territory".

(2) No moneys out of the Consolidated Fund of a Union Territory shall be appropriated
except in accordance with, and for the purposes and in the manner provided in this Act'.
 40

Section 48. (I) "There shall be established a Contingency Fond in the nature of an imprest to
be entitled "the Contingency Fund of the Union Territory" into which shall be paid from and
out of the Consolidated Fund of the Union Territory such sums as may, from time to time, be
determined by law made by the Legislative Assembly of the Union Territory; and the said
Fund shall be held by the Administrator to enable advances to be made by him out of such
Fund.

(2) No advances shall be made out of the Contingency Fund of the Union Territory except
for the purposes of meeting unforeseen expenditure pending authorisation of such
expenditure by the Legislative Assembly of the Union Territory under appropriations made by
law'.

(b) In regard to custody etc. of Consolidated Fund, Contingency Fund and moneys credited
to the Public Account the relevant provisions of Articles/Sections are:-

Article 283. (1) "The custody of the Consolidated Fund of India and the Contingency Fund
of India, the payment of moneys into such Funds, the withdrawal of moneys therefrom, the
custody of public money other than those credited to such Funds received by or on behalf of
the Government of India, their payment into the public account of India and the withdrawal of
moneys from such account and all other matters connected with or ancillary to matters
aforesaid shall be regulated by law made by Parliament, and until provision in that behalf is so
made, shall be regulated by rules made by the President.

(2) The custody of the Consolidated Fund of a State and the Contingency Fund of a Slate,
the payment of moneys into such Funds, the withdrawal of moneys therefrom, the custody of
public moneys other than those credited to such Funds received by or on behalf of the
Government of the State, their payment into the public account of the State and the
withdrawal of moneys from such account and all other matters connected with or ancillary to
matters aforesaid shall be regulated by law made by the Legislature of the State, and, until
provision in that behalf is so made, shall be regulated by rules made by the Governor of the
State'.

Section 47. (3) The custody of the Consolidated Fund of a Union Territory, the payment of
moneys into such Fund, the withdrawal of moneys therefrom and all other matters connected
with or ancillary to those matters shall be regulated by rules made by the Administrator with
the approval of the President'.

Section 48. (3) "The Administrator may make rules regulating all matters connected with or
ancillary to the custody of, the payment of moneys into, and the withdrawal of moneys from,
the Contingency Fund of the Union Territory'.

(c) In regard to Annual Financial Statement the relevant provisions of Articles/Sections are
:-

Article 112. (1) The President shall in respect of every financial year cause to be laid before
both the Houses of Parliament a statement of the estimated receipts and expenditure of the
Government of India for that year, in this Part referred to as the "annual financial statement".

(2) The estimates of expenditure embodied in the annual financial statement shall show
separately-

(a) the sums required to meet expenditure described by this Constitution as expenditure
charged upon the Consolidated Fund of India; and

(b) the sums required to meet other expenditure proposed to be made from the
Consolidated Fund of India, and shall distinguish expenditure on revenue account from other
expenditure.
 41

(3) The following expenditure shall be expenditure charged on the Consolidated Fund of
India:-

(a) the emoluments and allowances of the President and other expenditure relating to his
office;

(b) the salaries and allowances of the Chairman and the Deputy Chairman of the Council of
States and the Speaker and the Deputy Speaker of the House of the People;

(c) debt charges for which the Government of India is liable including interest, sinking fund
charges and redemption charges, and other expenditure relating to the raising of loans and
the service and redemption of debt;

(d) (i) the salaries, allowances and pensions payable to or in respect of Judges of the
Supreme Court;

(ii) the pensions payable to or in respect of Judges of the Federal Court;

(iii) the pensions payable to or in respect of Judges of any High Court which exercises
jurisdiction in relation to any area included in the territory of India or which at any time before
the commencement of this Constitution exercised jurisdiction in relation to any area included
in a Governor's Province of the Dominion of India;

(e) the salary, allowances and pension payable to or in respect of the Comptroller and
Auditor General of India;

(f) any sums required to satisfy any judgement, decree or award of any court or arbitral
tribunal;

(g) any other expenditure declared by this Constitution or by Parliament by law to be so

charged.

Article 202. (1) "The Governor shall in respect of every financial year cause to be laid
before the House or Houses of the Legislature of the State a statement of the estimated
receipts and expenditure of the State for that year, in this Part referred to as the "annual
financial statement, shall show separately:-

(2) The estimates of expenditure embodied in the annual financial statement shall show
separately-

(a) the sums required to meet expenditure described by this Constitution as expenditure
charged upon the Consolidated Fund of the State; and

(b) the sums required to meet other expenditure proposed to be made from the
Consolidated Fund of the State;

and shall distinguish expenditure on revenue account from other expenditure.

(3) The following expenditure shall be expenditure charged on the Consolidated Fund of
each State-

(a) the emoluments and allowances of the Governor and other expenditure relating to his
office;
 42

(b) the salaries and allowances of the Speaker and the Deputy Speaker of the Legislative
Assembly and, in the case of a State having a Legislative Council, also of the Chairman and
the Deputy Chairman of the Legislative Council;

(c) debt charges for which the State is liable including interest, sinking fund charges and
redemption charges, and other expenditure relating to the raising of loans and the service and
redemption of debt;

(d) expenditure in respect of the salaries and allowances of Judges of any High Court;

(e) any sums required to satisfy any judgement, decree or award of any court or arbitral
tribunal;

(f) any other expenditure declared by this Constitution, or by the Legislature of the State by
law, to be so charged'.

Section 27. (1) "The Administrator of each Union Territory shall in respect of every
financial year cause to be laid before the Legislative Assembly of the Union Territory, with the
previous approval of the President, a statement of the estimated receipts and expenditure of
the Union Territory for that year, in this Part referred to as the "annual financial statement".

(2) The estimates of expenditure embodied in the annual financial statement shall show
separately—

(a) the sums required to meet expenditure described by this Act as expenditure charged
upon the Consolidated Funds of the Union Territory, and

(b) the sums required to meet other expenditure proposed to be made from the
Consolidated Fund of the Union Territory;

and shall distinguish expenditure on revenue account from other expenditure.

(3) The following expenditure shall be expenditure charged on the Consolidated Fund of
each Union Territory:-

(a) the emoluments and allowances of the Administrator and other expenditure relating to
his office as determined by the President by general or special order;

(b) the charges payable in respect of loans advanced to the Union Territory from the
Consolidated Fund of India including interest, sinking fund charges and redemption charges,
and other expenditure connected therewith:

(c) the salaries and allowances of the Speaker and the Deputy Speaker of the Legislative
Assembly;

(d) expenditure in respect of the salaries and allowances of a Judicial Commissioner;

(e) any sums required to satisfy any judgement, decree or award of any court or arbitral
tribunal;

(f) expenditure incurred by the Administrator in the discharge of his responsibility;

(g) any other expenditure declared by the Constitution or by law made by Parliament or by
the Legislative Assembly of the Union Territory to be so charged'.
 43

(d) In regard to Appropriation bills the relevant provisions of Articles/Sections are:-

Article 114. (1) 'As soon as may be after the grants under article 113 have been made by
the House of the People, there shall be introduced a Bill to provide for the appropriation out of
the Consolidated Fund of India of all moneys required to meet-

(a) the grants so made by the House of the People; and

(b) the expenditure charged on the Consolidated Fund of India but not exceeding in any
case the amount shown in the Statement previously laid before Parliament.

(2) No amendment shall be proposed to any such Bill in either House of Parliament which
will have the effect of varying the amount or altering the destination of any grant so made or
varying the amount of any expenditure charged on the Consolidated Fund of India, and the
decision of the person presiding as to whether ; in amendment is inadmissible under this
clause shall be final.

(3) Subject to the provisions of articles 115 and 116, no money shall be withdrawn forn the
Consolidated Fund of India except under appropriation made by law passed in accordance
with the provisions of this article'.

Article 204. (1) 'As soon as may be after the grants under article 203 have been made by
the Assembly, there shall be introduced a Bill to provide for the appropriation out of the
Consolidated Fund of the State of all moneys required to meet-

(a) the grants so made by the Assembly; and

(b) the expenditure charged on the Consolidated Fund of the State but not exceeding in
any case the amount shown in the statement previously laid before the House or Houses.

(2) No amendment shall be proposed to any such bill in the Houses or either House of the
Legislature of the State which will have the effect of varying the amount or altering the
destination of any grant so made or of varying the amount of any expenditure charged on the
Consolidated Fund of the State, and the decision of the person presiding as to whether an
amendment is inadmissible under this clause shall be final.

(3) Subject to the provisions of articles 205 and 206, no money shall be withdrawn from the
Consolidated Fund of the State except under appropriation made by law passed in
accordance with the provisions of this article'.

Section 29, (1) 'As soon as may be after the grants under Section 28 have been made by
the Assembly, there shall be introduced a Bill to provide for the appropriation out of the
Consolidated Fund of the Union Territory of all moneys required to meet-

(a) the grants so made by the Assembly, and

(b) the expenditure charged on the Consolidated Fund of the Union Territory but not
exceeding in any case the amount shown in the statement previously laid before the
Assembly.

(2) No amendment shall be proposed to any such Bill in the Legislative Assembly which will
have the effect of varying the amount or altering the destination of any grant so made or of
varying the amount of any expenditure charged on the Consolidated Fund of the Union
Territory and the decision of the person presiding as to whether an amendment is
inadmissible under this sub-section shall be final.
 44

(3) Subject to the other provisions of this Act, no money shall be withdrawn from the
Consolidated Fund of the Union Territory except under appropriation made by law passed in
accordance with the provisions of this section'.

(e) In regard to supplementary, additional or excess grants the relevant provisions of

Articles/Sections are:—

Article 115. (1) 'The President shall-

(a) if the amount authorised by any law made in accordance with the provisions of article
114 to be expended for a particular service for the current financial year is found to be
insufficient for the purposes of that year or when a need has arisen during the current
financial year for supplementary or additional expenditure upon some new service not
contemplated in the annual financial statement for that year, or

(b) if any money has been spent on any service during a financial year in excess of the
amount granted for that service and for that year,

cause to be laid before both the Houses of Parliament another statement showing the
estimated amount of that expenditure or cause to be presented to the House of the People a
demand for such excess, as the case may be.

(2) The provisions of articles 112, 113 and 114 shall have effect in relation to any such
statement and expenditure or demand and also to any law to be made authorising the
appropriation of moneys out of the Consolidated Fund of India to meet such expenditure or
the grant in respect of such demand as they have effect in relation to the annual financial
statement and the expenditure mentioned therein or to a demand for a grant and the law to be
made for the authorisation of appropriation of moneys out of the Consolidated Fund of India to
meet such expenditure or grant'.

Article 205, (1) The Governor shall—

(a) if the amount authorised by any law made in accordance with the provisions of article
204 to be expended for a particular service for the current financial year is found to be
insufficient for the purposes of that year or when a need has arisen during the current
financial year for supplementary or additional expenditure upon some new service not
contemplated in the annual financial statement for that year, or

(b) if any money has been spent on any service during a financial year in excess of the
amount granted for that service and for that year

cause to be laid before the House or the Houses of the Legislature of the State another
statement showing the estimated amount of that expenditure or cause to be presented to the
Legislative Assembly of the State a demand for such excess, as the case may be.

(2) The provisions of articles 202, 203 and 204 shall have effect in relation to any such
statement and expenditure or demand and also to any law to be made authorising the
appropriation of moneys out of the Consolidated Fund of the State to meet such expenditure
or the grant in respect of such demand as they have effect in relation to the annual financial
statement and the expenditure mentioned therein or to a demand for a grant and the law to be
made for the authorisation of appropriation of moneys out of the Consolidated Fund of the
State to meet such expenditure or grant'.
 45

Section 30. (1) 'The Administrator shall—

(a) if the amount authorised by any law made in accordance with the provisions of section
29 to be expended for a particular service for the current financial year is found to be
insufficient for the purposes of that year or when a need has arisen during the current
financial year for supplementary or additional expenditure upon some new service not
contemplated in the annual financial statement for that year, or

(b) if any money has been spent on any service during a financial year in excess of the
amount granted for that service and for that year,

cause to be laid before the Legislative Assembly of the Union Territory, with the previous
approval of the President, another statement showing the estimated amount of that
expenditure or cause to be presented to the Legislative Assembly of the Union Territory with
such previous approval a demand for such excess, as the case may be.

(2) The provisions of sections 27, 28 and 29 shall have effect in relation to any such
statement and expenditure or demand and also to any law to be made authorising the
appropriation of moneys out of the Consolidated Fund of the Union Territory to meet such
expenditure or the grant in respect of such demand as they have effect in relation to the
annual financial statement and the expenditure mentioned therein or to a demand for a grant
and the law to be made for the authorisation of appropriation of money out of the
Consolidated Fund of the Union Territory to meet such expenditure or grant'.

(f) In regard to votes on account, votes of credit and exceptional grants the relevant
provisions of Articles/Sections are:-

Article 116. (1) 'Notwithstanding anything in the foregoing provisions of this Chapter, the
House of the People shall have power-

(a) to make any grant in advance in respect of the estimated expenditure for a part of any
financial year pending the completion of the procedure prescribed in article 113 for the voting
of such grant had the passing of the law in accordance with the provisions of article 114 in
relation to that expenditure;

(b) to make a grant for meeting an unexpected demand upon the resources of India when
on account of the magnitude or the indefinite character of the service the demand cannot be
stated with the details ordinarily given in an annual financial statement;

(c) to make an exceptional grant which forms no part of the current service of any financial
year;

and Parliament shall have power to authorise by law the withdrawal of moneys from the
Consolidated Fund of India for the purposes for which the said grants are made.

(2) The provisions of articles 113 and 114 shall have effect in relation to the making of any
grant under clause (1) and to any law to be made under that clause as they have effect in
relation to the making grant with regard to any expenditure mentioned in the annual financial
statement and the law to be made for the authorisation of appropriation of moneys out of the
Consolidated Fund of India to meet such expenditure'.

Article 206. (1) 'Notwithstanding anything in the foregoing provisions of this Chapter, the
Legislative Assembly of a State shall have power-

(a) to make any grant in advance in respect of the estimated expenditure for a part of any
financial year pending the completion of the procedure prescribed in article 203 for the voting
 46

of such grant and the passing of the law in according with the provisions of article 204 in
relation to that expenditure;

(b) to make a grant for meeting an unexpected demand upon the resources of the State
when on account of the magnitude or the indefinite character of the service the demand
cannot be stated with the details ordinarily given in an annual financial statement;

(c) to make an exceptional grant which forms no part of the current service of any financial
year;

and the Legislature of the State shall have power to authorise by law the withdrawal of
moneys from the Consolidated Fund of the State for the purposes for which the said grants
are made.

(2) The provisions of articles 203 and 204 shall have effect in relation to the making of any
grant under clause (1) and to any law to be made under that clause as they have effect in
relation to the making of a grant with regard to any expenditure mentioned in the annual
financial statement and the law to be made for the authorisation of appropriation of moneys
out of the Consolidated Fund of the State to meet such expenditure'.

Section 31. (1) 'Notwithstanding anything in the foregoing provisions of this part, the
Legislative Assembly of a Union Territory shall have power to make any grant in advance in
respect of the estimated expenditure for a part of any financial year pending the completion of
the procedure prescribed in section 28 for the voting of such grant and the passing of the law
in accordance with the provisions of section 29 in relation to that expenditure and the
Legislative Assembly shall have power to authorise by law the withdrawal of moneys from the
Consolidated Fund of the Union Territory for the purposes for which the said grant is made.

(2) The provisions of sections 28 and 29 shall have effect in relation to the making of any
grant under sub-section (1) or to any law to be made under that sub-section as they have
effect in relation to the making of a grant with regard to any expenditure mentioned in the
annual financial statement and the law to be made for the authorisation of appropriation of
moneys out of the Consolidated Fund of the Union Territory to meet such expenditure'.
 47

APPENDIX 2
(See Note under rule 3)

Organisation of the Controller General of Accounts

1. An organisation functioning under the Controller General of Accounts has been created
in the Department of Expenditure of the Ministry of Finance. A copy of the Presidential
Notification dated the 27th September, 1980 in regard to the function of the C.G.A. as
incorporated in the (Allocation of Business) Rules, 1961 is appended as Annexure 'A'. The
C.G.A. will have the responsibility for establishing and maintaining a technically sound
accounting system in the Departmentalised Accounts Offices. He will, on behalf of the
Ministries and Departments, liaise with the Budget Division and the Comptroller and Auditor
General of India in accounting matters. He will provide necessary directions in accounting
matters to the Ministries/ Departments and will issue general instructions about the system
and form of accounts and procedures for accounting of receipts and payments. In order to
maintain the requisite technical standard of accounting in the Departmentalised Accounts
Offices, he will have powers to inspect the offices, and will be expected with his staff, to
ensure that accounts are maintained accurately, comprehensively, and in a correct manner.
He will also be required to ensure that data and information are supplied in time to the
concerned Ministries. Cadre management in respect of Group 'A' and Group 'B' officers of
these offices will vest in him. He will have a coordinating and innovating role in the
introduction of Management Accounting system in the various Ministries/ Departments.

2. In the discharge of these function, he will also have special responsibility for:—

(i) Coordination with the Ministries in the administration and interpretation of Rules
regarding Group 'C' and Group 'D' staff of the Central Civil Accounts Service;

(ii) Holding of Departmental examination (analogous to S.A.S. examinations etc., held by

the Comptroller and Auditor General of India) to maintain the requisite standard of technical
expertise for accounting work in the Ministries and Departments;

(iii) Revising Treasury Rules, Account Codes and provisions of General Financial Rules in
so far as they relate to the form , and system of accounts etc., consequent upon the
departmentalisation of Accounts and the use of the services of the public sector banks in
place of treasuries, for collecting receipts and making payments.

3. Consolidation of monthly Civil Accounts of the Union Government from the monthly
accounts submitted to him by various Ministries and Departments has also been entrusted to
him with effect from 1st April, 1977. Further, the responsibility for preparation of annual
accounts including Summary Civil Appropriation Accounts showing under the respective
heads, the annual receipts and disbursements for the purpose of the Union Government has
been entrusted to him, relieving the Comptroller and Auditor General of India of the
responsibility in consultation with him under Section 11 of Comptroller and Auditor General's
(Duties, Powers and Conditions of Service) Act, 1971, vide Ministry of Finance order No. 1
(12)-B (AC) /78 dated the 20th June. 1978.
 48

ANNEXURE 'A'
NOTIFICATION NO. CD-896/80

Dated 27th September, 1980.

Issued from Rashtrapati Bhavan, New Delhi

2. (c) Under the heading MINISTRY OF FINANCE (VITTA MANTRALAYA), under the
subheading B—DEPARTMENT OF EXPENDITURE (VYAYA VIBHAG):-

(a) entry 5 shall be omitted;

(b) for entry 7A, the following entry shall be substituted namely:-

"7A. Organisation of the Controller General of Accounts dealing with

(i) General principles of Government accounting relating to Union or State Governments

and form of accounts, and to frame or revise rules and manuals relating thereto;

(ii) Reconciliation of cash balances of Union Government with Reserve Bank in general
and, in particular, of Reserve Bank Deposits pertaining to Civil Ministries or Departments;

(iii) Overseeing the maintenance of adequate standards of accounting by Central Civil

Accounts Offices;

(iv) Consolidation of monthly accounts, preparation of review of trends of revenue

realisation and significant features of expenditure etc. and preparation of annual accounts
(including Summary Civil Appropriation Accounts) showing under the respective heads, the
annual receipts and disbursements for the purpose of the Union Government;

(v) Administration of Central Treasury Rules;

(vi) Co-ordination and assistance in the introduction of management accounting system in

Civil Ministries or Departments;

(vii) Cadre Management of Group 'A' (Indian Civil Accounts Service) and Group 'B' Officers
of the Central Accounts Offices; and

(viii) Organising of training and examination for the Central Civil Accounts Staff belonging
to Group 'C' and 'D'.
 49

APPENDIX 3
(See Note under rule 3)

Sections 10, 11 and 22 of the C&AG's (Duties, Powers and Conditions of Service) Act,
1971, and orders issued by the President in exercise of the powers conferred by sub-section
1 of section 10 and first proviso to section 11 thereof

Section 10.—Comptroller and Auditor General to compile accounts of

Union and States.

(1) The Comptroller and Auditor General shall be responsible-

(a) for compiling the accounts of the Union and of each State from the initial and subsidiary
accounts rendered to the audit and accounts offices under his control by treasuries, offices or
departments responsible for the keeping of such accounts; and

(b) for keeping such accounts in relation to any of the matters specified in clause (a) as
may be necessary;

Provided that the President may, after consultation with the Comptroller and Auditor General,
by order, relieve him from the responsibility for compiling-

(i) the said accounts of the Union (either at once or gradually by the issue of several
orders); or

(ii) the accounts of any particular services or departments of the Union;

Provided further that the Governor of a State with the previous approval of the President and
after consultation with Comptroller and Auditor General, by order, relieve him from the
responsibility for compiling-

(i) the said accounts of the State (either at once or gradually by the issue of several
orders); or

(ii) the accounts of any particular services or departments of the State;

Provided also that the President may, after consultation with the Comptroller and Auditor
General, by order, relieve him from the responsibility for keeping the accounts of any
particular class or character.

(2) Where, under any arrangement, a person other than the Comptroller and Auditor
General has, before the commencement of this Act, been responsible-

(i) for compiling the accounts of any particular service or department of the Union or of a
State, or

(ii) for keeping the accounts of any particular class or character, such arrangement shall,
notwithstanding anything contained in subsection (1), continue to be in force unless, after
consultation with the Comptroller and Auditor General, it is revoked in the case referred to in
clause (i), by an order of the President or the Governor of the State, as the case may be, and
in the case referred to in clause (ii) by an order of the President.
 50

Section 11—Comptroller and Auditor General to prepare and submit

accounts to the President, Governors of State and Administrators of
Union Territories having Legislative Assemblies

The Comptroller and Auditor General shall, from the accounts compiled by him or by the
Government or any other person responsible in that behalf prepare in each year accounts
(including, in the case of accounts compiled by him, appropriation accounts) showing under
the respective heads the annual receipts and disbursements for the purpose of the Union, of
each State and of each Union territory having a Legislative Assembly, and shall submit those
accounts to the President or the Governor of a State or Administrators of the Union Territory
having a Legislative Assembly, as the case may be, on or before such dates, as he may, with
the concurrence of the Government concerned, determine:

Provided that the President may, after consultation with the Comptroller and Auditor General,
by order, relieve him from the responsibility for the preparation and submission of the
accounts relating to annual receipts and disbursements for the purpose of the Union or of a
Union Territory having a Legislative Assembly:

Provided further that the Governor of a State may, with the previous approval of the President
and after consultation with the Comptroller and Auditor General, by order relieve him from the
responsibility for the preparation and submission of the accounts relating to annual receipts
and disbursements for the purpose of the State.

Section 22— Power to make rules

(1) The Central Government may, after consultation with the Comptroller and Auditor
General, by notification in the Official Gazette, make rules for carrying out the provisions of
this Act in so far as they relate to the maintenance of accounts.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules
may provide for all or any of the following matters, namely:-

(a) the manner in which initial and subsidiary accounts shall be kept by the treasuries,
offices and departments rendering accounts to audit and accounts offices;

(b) the manner in which the accounts of the Union or of a State or of any particular service
or department or of any particular class or character, in respect of which the Comptroller and
Auditor General has been relieved from the responsibility of compiling or keeping the
accounts, shall be compiled or kept;

(c) the manner in which the accounts of stores and stock shall be kept in any office or
department of the Union or of a State, as the case may be;

(d) any other matter which is required to be, or may be, prescribed by rules.

(3) Every rule made under this section shall be laid, as soon as may be after it is made,
before each House of Parliament, while it is in session, for a total period of thirty days which
may be comprised in one session or in two or more successive sessions, and if, before the
expiry of the session immediately following the session or the successive sessions aforesaid
both Houses agree in making any modification in the rule or both Houses agree that the rule
should not be made, the rule shall thereafter have effect only in such modified form or be of
no effect, as the case may be; so, however, that any such modification or annulment shall be
without prejudice to the validity of anything previously done under that rule.
 51

Orders issued by the PRESIDENT of India in exercise of the powers

conferred by the first proviso to sub-section (1) of Section 10 and first
proviso to section 11 of the C.A.G.'s (Duties, Powers and Conditions of
Service) Act, 1971.

I. Copy of Order No. F. l (15)-B (A/cs) /76 dated 6th March, 1976 Issued by
the Government of India, Ministry of Finance (Department of Economic
Affairs).

In exercise of the powers conferred by the first proviso to subsection (1) of section 10 of the
Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 (56
of 1971), the President, after consultation with the Comptroller and Auditor General, hereby
relieves the Comptroller and Auditor General from the responsibility for compiling the
accounts of the Ministry of Industry , and Civil Supplies, the Ministry of Tourism and Civil
Aviation and the Ministry of Communications, other than the Directorate of Posts and
Telegraphs.

2. This Order shall come into force on the 1st day of April, 1976.

II. Copy of Order No. 1 (15)-B (A/cs) /76 dated 6th March, 1976 issued
by the Government of India, Ministry of Finance (Department of
Economic Affairs).

In exercise of the powers conferred by the first proviso to subsection (1) of Section 10 of the
Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 (56
of 1971), the President, after consultation with the Comptroller and Auditor General, hereby
relieves the Comptroller and Auditor General from the responsibility for compiling the
accounts of the Postal Wing and Civil Engineering Wing of the Department of Posts and
Telegraphs of the Ministry of Communications.

2. This Order shall come into force on the 1st day of April, 1976.

III. Copy of Order No. l (15)-B (A/cs) /76 dated 3-6-1976 issued by the
Government of India, Ministry of Finance (Department of Economic
Affairs).

In exercise of the powers conferred by the first proviso to subsection (1) of Section 10 of the
Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 (56
of 2971), the President, after consultation with the Comptroller and Auditor General, hereby
relieves the Comptroller and Auditor General from the responsibility for compiling the
accounts of—

(a) The Ministry of Agriculture and Irrigation,

(b) The Ministry of Chemicals and Fertilizers,

(c) The Ministry of Commerce,

(d) The Ministry of Energy,

(e) The Ministry of Petroleum,

(f) The Ministry of Shipping and Transport,

 52

(g) The Ministry of Steel and Mines,

(h) The Ministry of Supply and Rehabilitation, and

(i) The Ministry of Works and Housing.

2. This Order shall come into force on the 1st day of July, 1976.

IV. Copy of Order No. F. l (15)-B (A/cs) /76 dt. 26-8-1976 issued by the
Government of India Ministry of Finance (Department of Economic
Affairs).

In exercise of the powers conferred by the first proviso to subsection (1) of section 10 of the
Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 (56
of 1971), the President, after consultation with the Comptroller and Auditor General, hereby
relieves the Comptroller and Auditor General of India from the responsibility for compiling the
accounts of-

1. President's Secretariat.

2. Vice-President's Secretariat.

3. Prime Minister's Secretariat.

4. Cabinet Secretariat, including Department of Personnel and Administrative Reforms and

Department of Cabinet Affairs.

5. Department of Parliamentary Affairs.

6. Department of Atomic Energy.

7. Department of Electronics.

8. Department of Science and Technology.

9. Department of Space.

10. Ministry of Education, Social Welfare and Culture.

11. Ministry of Law, Justice and Company Affairs.

12. Ministry of Health and Family Planning.

13. Ministry of Labour.

14. Ministry of Information and Broadcasting.

15. Ministry of External Affairs.

16. Ministry of Defence.

17. Ministry of Planning including Planning Commission.

18. Union Public Service Commission.

 53

19. Election Commission of India.

20. Supreme Court of India.

21. Central Vigilance Commission.

2. This Order shall come into force on the 1st day of October, 1976.

V. Copy of Order No. P. l (15)-B (A/cs) 76 dt. 8-9-1976 issued by the

Government of India, Ministry of Finance (Department of Economic
Affairs).

In exercise of the powers conferred by the first proviso to subsection (1) of section 10 of the
Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 (56
of 1971), the President, after consultation with the Comptroller and Auditor General, hereby
relieves the Comptroller and Auditor General from the responsibility for compiling the account
of—

(a) the Ministry of Finance, except those relating to

(i) pensions; and

(ii) the Indian Audit and Accounts Department;

(b) the Ministry of Home Affairs, except those relating to

(i) such of the Union Territories whose accounts are; on the date of the issue of this Order,
being compiled by the Comptroller and Auditor General; and

(ii) pensions to freedom fighters and pensions in lieu of resumed Jagirs, lands etc.; and

(c) the Department of Revenue and Banking except those relating to taxes, duties and other
receipts and deposits realised under any law for the time being in force and administered by
the Department of Revenue and Banking including the Central Board of Direct Taxes and the
Central Board of Excise and Customs.

2. This Order shall come into force on the 1st day of October, 1976.

VI. Copy of Order No. F. l (15)-B (A/cs) /76 dated 15th March, 1977
issued by the Government of India, Ministry of Finance (Department of
Economic Affairs).

In exercise of the powers conferred by the first proviso to subsection (1) of section 10 of the
Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 (56
of 1971), and in partial modification of the order of the Government of India in the Ministry of
Finance (Department of Economic Affairs) No. F. l (15)-B (A/cs) /76 dated the 8th September,
1976, the President, after consultation with the Comptroller and Auditor General, hereby
relieves the Comptroller and Auditor General from the responsibility of compiling the accounts
relating to taxes, duties and other receipts and deposits realised or refunded under any law
for the time being in force and administered by the Department of Revenue and Banking
including the Central Board of Direct Taxes and the Central Board of Excise and Customs.

2. This Order shall come into force on the 1st day of April, 1977.
 54

VII. Copy of Order No. F. l (15)-B (A/cs) /76 dated 22-3-77 issued by the
Government of India, Ministry of Finance (Department of Economic
Affairs).

In exercise of the powers conferred by the first proviso to subjection (1) of section 10 of the
Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 (56
of 1971), and in partial modification of the Order of the Government of India in the Ministry of
Finance (Department of Economic Affairs) No. F. l (15)-B (A/cs) /76 dated the 8th September,
1976 and in continuation of the Order of the Government of India in the Ministry of Finance
(Department of Economic Affiars) No. F. l (15)-B (A/cs) /76 dated 15th March, 1977, the
President, after consultation with the Comptroller and Auditor General, hereby relieves the
Comptroller and Auditor General from the responsibility for compiling—

(i) the accounts of the Union Territory of Delhi, and

(ii) the accounts in respect of Central Government pensions, pensions to freedom fighters and
pensions in lieu of resumed Jagirs, Lands, etc. payable or recoverable in the said Union
Territory.

2. This Order shall come into force on the 1st day of April, 1977.

VIII. Copy of Order No. l (12)-B (A/cs) /78 dated 20th June, 1978 issued
by the Government of India, Ministry of Finance (Department of
Economic Affairs).

In exercise of the powers conferred by the first proviso to section 11 of the Comptroller and
Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 (56 of 1971) the
President, after consultation with the Comptroller and Auditor General hereby relieves the
Comptroller and Auditor General from the responsibility for the preparation in each year of the
accounts showing under the respective heads the annual receipts and disbursements for the
purpose of the Union.

This Order shall be applicable to the accounts relating to the year 1977-78 onwards.

IX. Copy of Order No. F. l (3)-B (A/cs) /80 dated the 13th March, 1980
issued by the Government of India, Ministry of Finance (Department of
Economic Affairs).

In exercise of the powers conferred by the first proviso to subsection (1) of section 10 of the
Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971 (56
of 1971) and in continuation of the order of the Government of India in the Ministry of Finance
(Department of Economic Affairs) F. 1 (15)-B (A/cs) /76 dated the 22nd March 1977, the
President after consultation with Comptroller and Auditor General, hereby relieves the
Comptroller and Auditor General from the responsibility for compiling-

(i) the accounts of the Union Territory of the Andaman and Nicobar Islands; and

(ii) the accounts in respect of Central Government pensions, pensions to freedom fighters and
pensions in lieu of resumed Jagirs, Lands etc. payable or recoverable in the said Union
Territory.

2. This order shall come into force on 1st day of June, 1980.
 55

APPENDIX 4
[See Note 3 below Rule 26(d)]

Subject: Grants-in-aid and loans sanctioned by various Ministries/

Departments of the Government of India to State/Union Territory
Governments in connection with Central Plan Schemes and Centrally
sponsored Plan Schemes.

Grants-in-aid and loans are given by various Ministries/Departments of the Government of

India to State Governments/Union Territory Governments under Central Plan Schemes and
also Centrally sponsored Plan Schemes. Many of the Central Plan Schemes/Centrally
sponsored Plan Schemes are common to a number of States/Union Territories. In order to
achieve uniformity in the accountal of such central grants/ loans in the books of all recipient
State/Union Territory Governments, the following procedure shall be adopted:

2. Provisions for the release of grants-in-aid and loans to State/Union Territory

Governments under Central Plan Schemes and Centrally-sponsored Plan Schemes are made
in the Union Budget comprising (i) major/sub-major heads "3601/3602-Grants-in-aid to
State/Union Territory Governments" alongwith 'grants for Central Plan Schemes' or 'grants for
Centrally Sponsored Plan Schemes' and under "7601/7602 Loans and Advances to
State/Union Territory Governments" alongwith "Loans for Central Plan Schemes' or 'Loans for
Centrally Sponsored Plan Schemes' and (ii) minor heads thereunder with nomenclature
designed in terms of paras 3.9 and 6.5 of 'General Directions' contained in the List of Major
and Minor Heads of Account of Central and States. According to these paragraphs, the first
portion of the nomenclature of the minor head is to indicate the function as per sub-major
head (or where a sub-major head does not give any indication of the function e.g. General,
the major head concerned is to be indicated in bracket; or in the absence of a sub-major
head, function as per major head itself) on the revenue expenditure side and second portion
is to indicate the programme minor head.

3. Approval for the plan outlay under various schemes and also sanctions issued by the
Central Ministries/Departments releasing grants-in-aid and/or loans, will indicate the budget
head/head of the account upto minor head designed as above and also sub-detailed heads to
which the expenditure is debitable in central books. The nomenclature of the minor head
mentioned in the sanctions etc. would automatically provide necessary clue in regard to the
major/sub-major and minor heads under which corresponding provisions should be budgeted
for and expenditure accounted for in State/Union Territory Government books, and the
sub/detailed heads mentioned in such sanctions would provide clue to similar heads to be
opened in State/Union Territory Government books.

4. Some illustrations of the manner in which budget head/account head should be devised
in books of the recipient Government with reference to budget/account head in the central
books and mentioned in the sanction etc. releasing the grant/loan by the Central Government
Ministries/Departments, are given in the Annexure for facility of understanding the modus
operandi of the above procedure.

5. There may be some schemes/programmes in which constitution of a fund in the public

account may also be involved. If the relevant sanction of the Ministry releasing fund relating to
such a scheme does not indicate the head (s) of account to be operated upon in the public
account portion etc. of the State/Union Territory Government, the Controller General of
Accounts, Ministry of Finance (Department of Expenditure) may be approached for the
purpose of indicating necessary major/minor head of account in the interest of uniformity of
classification.
 56

Head in Central Govt. Budget/Sanction letter Corresponding heads in State Govt. books from which
expenditure is to be incurred
Sl. Major Sub-major Minor head Purpose Sub-head Major head Sub-major Minor head Sub-head
No. Head head head
1 2 3 4 5 6 7 8 9 10
1. 7601- 03-Loans Housing- Grants-in aid Construction of 2216- General Assistance to Grants for
Loans & for Central General - to Housing residential Housing Housing Construction of
Advances Plan Assistance to Boards, Buildings. Boards, affiliated
to State Schemes. Housing Corporations. Corporation, Colleges.
Govt. Boards, etc.
Corporations,
etc.
2. Do. Do. Capital outlay Meant for Do. 4216- Capital 03-Rural Subsidised (Place/ name to
on other direct Outlay on Housing Housing be given)
Housing investment Housing Schemes. Scheme for
Schemes - by the State Plantation
Subsidised, Govt. workers.
Housing
Scheme for
Plantation
workers.
3. 7601- 03-Loans Loans for Meant for Loans to ------ 6216-Loans Loans to Loans to ------
Loans & for Central Housing- relending by (Name of the for Housing. Housing (Name of the
Advances Plan Loans to State Govt. board to be Boards. Housing board
to State Schemes. Housing to Housing indicated) to be indicated.)
Govt. Boards, Society.
Corporations,
etc.
4 Do. Do. University & For release Construction of 2202- University Assistance to Grants for
Other Higher of grant-in Hostels of General & Other Non-Govt. construction of
Education- aid to non- affiliated - Education. Higher Colleges & affiliated
Assistance Govt. Colleges. Education. institutes Colleges.
To Non-Govt. Colleges as
Colleges. Revenue
Expenditure
by State
Govt.
5. Do. Do. Capital Investment Construction of 4202-Capital Nil University & Buildings
Outlay on hostels of Outlay 1 on Higher Equipments.
Education affiliated Education, Education.
Sports Art Colleges. Sports and
and Culture Culture.
University &
Higher
Education.
6. 7601- 03-Loans Loans for For relending Loans for 6202-Loans Nil University & Loans for
Loans & for Central Education by State Construction of for Education, Higher Construction of
Advances Plan Sports, Art Govt. to Non- hostels of Sports Art& Education. hostels of
to State Schemes. and Culture Govt. affiliated Culture. affiliated
Govts. University & Colleges. Colleges. Colleges- Name
Higher of the loan
Education. College.
7. Do. Do. Cooperation- Grants in aid Grants for 2425-Co- Assistance to Grants for
Assistances 0 by State Credit Co- operation. Credit Co- Credit
Credit Govts. to operative operatives. cooperative
Cooperatives. Credit coop. Institutions in Institutions in
underdeveloped underdeveloped
States. States.
8. 7601- 03- Loans Loans for For relending Loans to Credit 6425-Loans Loans to Loans for Credit
Loans & for Central Cooperation- Cooperatives for Co- Credit Co-operative
Advances Plan Credit Co- Institutions in operatives, Cooperatives- Institutions for
to State Scheme operatives. underdeveloped under
Govts, States. developed
States.
9. Do. Do. Capital Investment in Investment in -- 4425-Capital Investment in Investment in
Outlay and Credit Co- ----- outlay on Co- Credit Co- ————
Cooperation operatives by operation operatives.
in Credit Co- States.
operatives.
10. Do. 04-Loans Villages & Grant-in-aid Management 2851-Village Nil Management/
for Small to meet Operation & & Small Operation &
Centrally Industries working maintenance. Industries. Maintenance.
Sponsored (Separate expenses of
Plan minor head Departmental
 57

Schemes. for each Commercial

departmental Undertakings
Commercial relating to
Under-taking) S.S.I.
11. 7601- 04-Loans Capital Capital Integrated 4851-Capital Small Scale Integrated
Loans & for Outlay on Expenditure Training Outlay on Industries. Training
Advances Centrally Village & by State Centres. Village & Centres.
to State Sponsored Small Govt. Small
Govts. Plan Industries Industries.
Schemes. Small Scale
Industries.
12. Do Do. Loans for Relending of Loans to Public 6851-Loan. Small Scale Loans to Public
Village & Loans. Sector & other for Village & Industries. Sector & Other
Small Undertakings. Small Undertakings.
Industries Industries.
Small Scale
Industries.
13. Do. 03-Loans Dairy Grants by Assistance to 2404-Dairy Dairy Assistance for
for Central Development- State Govt. State Govt. for Development. Development ne Dairy.
Plan Dairy for dairy new Dairy. Projects.
Schemes. Development development
Projects. in the State.
14. 7601- 03-Loans Capital Investment Assistance to 4404 Capital Dairy Investment in
Loans & for Central Outlay on State Govt. for Outlay on Development State run new
Advances Plan Dairy new Dairy. Dairy Projects. Dairy.
to State Schemes. Development. Development.
Govt.
15. Do. Do. Loans for For Do. 6404-Loans Do. Loans to new
Dairy relending. for Dairy Dairies.
Development- Development.
Dairy
Development
Projects.
 58

APPENDIX 5
(See Rule 28)

Principles and Rules regulating the distribution of certain charges and receipts between
Governments.

A—INTRODUCTORY

B.—PAY, ALLOWANCES, PENSIONS, ETC.

(i) Incidence of Pay and Allowances, other than Leave Salaries.

(ii) Incidence of Leave Salaries.

(iii) Incidence of Pensions.

C—OTHER CHARGES

(iv) Incidence of expenditure involved in Audit and keeping Accounts.

(v) Incidence of the cost of Police functions on Railways including the cost of protecting
Railway Bridges.

(vi) Principles relating to recovery of the cost of (1) Forest surveys carried out by the Survey
of India, and (2) Forest maps prepared by that Department.

D— RECEIPTS

(vii) Incidence of Leave Salary and Pension Contributions recovered in respect of

Government Servants lent on Foreign Service.

A.—INTRODUCTORY

The rules, regulating the incidence of pay, leave, and pension etc. charges of Government
servants as well as of certain other charges and receipts between Governments which are set
out in this Appendix are based on arrangements agreed between the different Governments
and are therefore binding on all the Governments.

B.—PAY, ALLOWANCES, PENSIONS, ETC.

I. Incidence of Pay and Allowances, other then Leave Salaries.

1. The transit pay and allowances of a government servant transferred from one
government/department to another either permanently or as a temporary measure or
proceeding on deputation to another department/ government or reverting therefrom should in
absence of special orders to the contrary, be borne by the Department/Government to which
the government servant is proceeding. {Refer Correction Slip 2}

Note.—The transit pay and allowances including travelling allowance, both ways of a
government servant transferred on foreign service will be borne by the foreign employer."
 59

2. When a military Officer holding a civil post on consolidated pay which is less than his
military pay is allowed to draw the difference between them, he draws it from the
department—Central or State— from which he receives his consolidated pay.

3. The following rule govern the incidence of the cost of troops lent to civil departments of
the Central Government and to State Government. The words 'Military' and Troops' are used
to include Indian Navy and Air-Force as well as Army.

(1) When troops are required on duties of a 'Military' nature (e.g.) Ceremonial purpose and
provision of escort on guards of honour in circumstances not covered by instruction No. 755
of the Regulations for the Army in India (1962 Edition) and flag marches when they fall into
the category of cases involving duties of military nature and when they are not connected with
the maintenance of law and order, the extra cost, if any of supplying the services required
(e.g. in the way of transport, equipment etc.) will be met by a contribution from the State or
the Civil Department concerned of the Central Government, to the Defence Services
Estimates.

Note.—The cases in which flag marches come within the scope of this rule will be decided by
the Central Government.

(2) (1) The types of duties that Armed Forces may be called upon to perform in aid of Civil
Authorities are as follows:-

(a) Maintenance of law and order.

(b) Maintenance of essential Services.

(c) Assistance during natural and other calamities such as earthquakes, floods, fire and
famine.

(d) Assistance required in the execution of development projects.

(e) Any other types of assistance which may be needed by the Civil authorities and which the
Armed Forces are in a position to render.

(2) For maintenance of law and order vide (a) in rule 2 (1) above, all expenditure will be borne
by the Central Government but the State Government may contribute towards the cost, if they
wish to do so.

(3) For maintenance of essential services, for assistance during natural calamities and
assistance in the execution of development projects, vide (b) to (d) in rule 2 (1) above, no
recoveries will be made from the State Government/Union Territory Administration on account
of:-

(a) Normal pay and allowances and rations for service personnel of the Unit which may be
made available from within the Order of Battle. However, in cases where additional units are
maintained by retaining the Units due for disbandment or by raising new Units specifically to
meet the requirements of state Governments/Union Territories, the entire cost of these units
will be charged.

(b) All other expenditure like the cost of payment for consumable stores including pay and
allowances will be charged.

(c) For non-consumable stores and equipment:-

 60

(i) Depreciation assessed on the replacement cost on account of wear and tear. For Aircraft,
depreciation will be calculated on the original cost.

(ii) Cost of repairs and maintenance.

(iii) Cost of replacement of equipment rendered unserviceable. assessed on its condition

before use. In the case of aircraft, normal strike off wastage element will be charged.

(d) Incidental expenditure, e.g. cost of move of Units, Personnel and equipment to and from
the site of work and extra allowances, rations, clothing and amenities will be charged where
provided.

(e) Hospitalisation and treatment of the service personnel injured whilst employed in
rendering aid will be charged.

(f) Pensionary liability in respect of any troops while employed in aid of civil authorities will be
that of Government of India. Damages to crops or compensation payable to civilians would be
the responsibility of the State Government.

(g) Assistance rendered by Armed Force for extinguishing fire will be governed by the
principles laid down in the Ministry of Defence letter No. F. 256/51/D (15) dated 18th April, '55
as amplified letter dated 18th May, 1959.

(h) Non-consumable stores and equipment issued in the circumstances detailed in para 2 (3)
above, the depreciation rate will be calculated by dividing the Price Vocabulary rates plus
25% by the life of the item in use. Additional packing and Transportation charges, cost of
repairs and maintenance charges, cost of stores issued for repair will be paid by Civil
authorities.

(i) Cost of replacing items of personal kit/clothing rendered unserviceable or lost accidentally
due to no fault of an individual while employed in aid during natural calamities will be met by
the State Government if classified by the Survey Board on termination of aid.

(j) In the case of Indents for equipment on loan for a period of over six months, the issue will
be only on payment and not on loan.

(k) No departmental charges will be levied over and above the cost of replacement of
Equipment and stores rendered unserviceable during rendition of aid during flood, relief
operations and other natural calamities.

(l) Recoveries of hire charges in respect of stores other than ordnance stores will be made as
follows:—

(i) Tools & Plant Engineering Stores

Hire charges will be based on para 943 of M E S Regulations. For items not covered by
above para, the charges will be fixed in consultation with the Ministry of Defence (Finance.)

(ii) MT Vehicles

Recovery will be made at normal rates in accordance with Army Instruction No. 928 of 1945
as amended from time to time. In the case of items not covered by this, the hire charges will
be fixed in consultation with the Ministry of Defence (Finance).

(4) For any other type of Assistance, vide item (e) in rule 2 (1) above
 61

(a) The complete cost of Armed Forces including ordinary pay and allowances, cost of
transport of equipment including loss, repair etc. and extra-ordinary charges in the shape of
special pay or transportation of stores will be recovered.

(b) The recoveries in respect of stores equipment or vehicles issued in connection with aid to
civil authorities will include hire charges for stores, equipment or vehicles assessed as per
normal rules and expenditure incurred on transportation handling etc. charges.

(c) The depreciation charges in case of ordnance stores will be calculated on the basis of
Price Vocabulary rates plus 50% divided by life of the items in use, expressed in months.

(d) The recoveries of hire charges in respect of stores other than ordnance stores will be
made on the lines laid down in rule 2 (3) (1) above.

(e) In the case of assistance rendered by Indian Navy to civil Ministries etc. or the loan on hire
of Naval Yard Craft, equipment, tools etc. the depreciation charges will be calculated as
under:—

(i) In terms of para 1 (b) of the Ministry of Defence letter No. Dy/0201/IHQ/SO-II/3152/D (N-
I) dated 21-11-1959 and 3620/D (N-I) dated 17th September '77 as amended from time to
time for loan on hire of Naval Yard Craft, equipment tools etc; and

(ii) for assistance rendered by Indian Navy Ship, in terms of Ministry of Defence letter No.
AC/3977/8 (2) NHQ/1951/ DO III/DLN. II dated 26th December 80 as amended from time to
time.

(f) In the event of difference of opinion as to the actual method of calculating the charges
payable by State Government, the decision of the Government of India will be final.

4. Indian commissioned officers of the Armed Forces in civil employment count their
service as qualifying for the outfit allowances under item (d) of:

A.I (I) 16/S/48

A.F.I (1) 6/S/48

RIN (1) 4/5/48

provided that:

(a) their pay and allowances are governed by the new pay code and

(b) they are required to wear uniform while in civil employ.

The entire cost of the outfit allowance is debitable to the estimates of the Ministry
(Central/Civil) /State Government under whom the officer is employed at the time the
allowance becomes due for payment.

5. When soldiers are sent under Military escort from one station to another to stand trial on
a criminal charge, they will travel like any other party of soldiers on duty, under a warrant
furnished by the Military authorities, the charge being met from the Defence Services
Estimates. When a soldier is conducted by a Police escort, the charge will be Civil; the
warrant issued in such cases should include the accused as he is a soldier proceeding to a
certain place under the orders of his military superior and therefore on duty.
 62

6. Civilian Government servants, who belong to the Army in India Reserve of Officers,
when called up for training receive the following emoluments:-

(i) When proceeding to carry out their training direct from their civil appointments the pay and
allowances which they would have drawn in their civil appointments but for the training;

(ii) When proceeding to carry out their training while on leave in India, Burma, Ceylone, Great
Britain or Northern Ireland, the civil leave pay and allowances which they would have drawn
but for the training;

(iii) when proceeding to carry out their training on the expiry of leave out of India taken from
their civil appointments but before rejoining their civil appointments for duty, joining time civil
pay from the date of disembarkation in India to the date preceding that on which their training
commenced and full civil leave pay and allowances which they would have drawn in
journeying to the place of their civil appointment; and

(iv) military pay and allowances for the period of actual training.

The emoluments drawn under (i) to (iii) are debitable to the Civil-Central or State Estimates
and that under (iv) to the Defence Services Estimates.

If it is necessary to provide a substitute in the place of such an officer undergoing training the
additional cost will be a charge on Civil Estimates.

NOTE.- This rule is also applicable in regard to the allocation of the civil pay of a
Government Servant, who is a member of the Indian Naval Volunteers Reserve or the India
Naval Reserve, when called up for training.

7. Reservists of the Indian Army employed under the Central or State Governments will,
when called up for periodical military training receive military pay and allowances. They will
also receive the excess if any of their civil pay over military pay. Provided that this concession
is specifically sanctioned by Department of the Government of India or the head of the
attached or subordinate office concerned or by the 'State Governments in whose employ the
reservists are serving in their civil capacity. Except where the civil pay of the reservists is met
from the Defence Services Estimates the extra expenditure involved will not constitute a
charge against the Defence Services Estimates.

7-A. Civil, Central or State Government servants who are members of the various Army,
Navy, and Air Force Reserves (excluding the reserve of the officers) will when called up for
periodical training receive pay and allowances as under:—

(a) during the transit period they will be entitled to their civil rates of pay and allowances to be
met from the Budget to which such expenditure is normally debitable.

(b) for the period of training (excluding period of transit) if the pay and allowances (including
concessions in kind e.g. free ration etc.) admissible as a reservist are less than the pay and
allowances admissible in the civil post the difference will be paid and debited to the Budget
head to which the individual's civil pay is normally debitable.

8. Travelling allowances of Telegraph signallers accompanying Governors and other high

officials on tour is debited to the Department concerned although their pay for the period is
debited to the Telegraph Department.

9. Subject to any separate agreements that have been or may be arrived at between the
various Governments, the pay and allowances including travelling allowances of a
Government servant summoned to give evidence in his official capacity in a criminal Court or
in a Civil Court in a case in which Government is a party or during the period of his absence,
 63

are debited to the Government under which he is employed. Actual expenses under the rules
of the court, if admissible, are, however, payable by the court, and debited to court
contingencies.

II. Incidence of Leave Salaries

The following rules govern the incidence of leave salaries of Government Servants who have
served under two or more Governments:-

The liability for leave salary will be borne in full by the Department from which the
Government servant proceeds on leave, whether it be his parent Department or a borrowing
Department with whom he is on deputation.

III. Incidence of Pensions

Except in regard to the apportionment of liabilities of pensions of Government servants who

retired after serving the undivided India between India and Pakistan, the following rules
regulate the adjustment of pensionary charges of Government servants who have served one
or more than one Government.

The liability for pension including gratuity will be borne in full by the Central/State Government
to which the Government servant permanently belongs at the time of retirement.

C.—OTHER CHARGES

IV. Incidence of expenditure involved in Audit and Keeping Accounts

The following rules govern the incidence of expenditure in Audit and Accounts:—

(i) Under Article 149 of the Constitution and the Provisions of Section 13 of the C&AG's (DPC)
Act, 1971, the Comptroller and Auditor General is responsible for the audit of all expenditure
from the revenues of the Union and of the States, and of certain accounts specified in the Act.
In conducting such audit the Comptroller and Auditor General performs a statutory function
entrusted to him and the cost of this function is a charge of the Central Government.

(ii) Besides the audit of expenditure from the revenue of the Union and of the States and of
certain accounts, as mentioned in rule (i), the Comptroller and Auditor General may be
entrusted with the audit of the accounts of "any other authority or body" by or under any law
made by Parliament under the provisions of Article 149 of the Constitution. The cost of such
audit is recoverable from the authority or body whose accounts are audited.

NOTE 1—The expression, "any other authority or body' does not include private commercial
and quasi-commercial under taking (other than Government Companies as defined in Section
617 of the Companies Act 1956) in which Governments in India may be participating.

NOTE 2—In the case of Government Companies the recovery of the cost of supplementary
audit conducted under Section, 619 (3) (b) of the Companies Act 1956 shall be waived in
these cases where the audit is done by the Comptroller and Auditor General through his own
departmental staff; but shall be enforced in cases where the Comptroller and Auditor General
employs professional auditors for the second audit.

(iii) If a State Government requests the Comptroller and Auditor General to arrange for a more
detailed or a local audit of expenditure, transactions or accounts which relate to or form part
of the accounts of the State, the criterion for deciding the incidence of the expenditure
involved in such audit is whether or not the Comptroller and Auditor General agrees to do the
work as part of his legitimate statutory functions.
 64

If he does, the cost of the audit should be treated as a charge of the Central Government,
since what is involved is an extension of audit for which the Comptroller and Auditor General
is statutorily responsible. The fact that such audit is undertaken in a single State is not a
decisive consideration in the apportionment of cost as the extent of audit to be conducted in
any case is determined by the Comptroller and Auditor General.

(iv) The Comptroller and Auditor General is not responsible ab initio for the audit of any
accounts mentioned in Section 13 (b) of the C.&A.G's (DPC) Act 1971 but, when he
undertakes the audit of any such accounts he becomes statutorily responsible for the work. In
this case also, the cost of audit is a charge of the Central Government.

(v) The Comptroller and Auditor General is not statutorily responsible for the audit of the
accounts of local authorities (other than those in relation to the accounts of which specified
duties have been entrusted to him by or under any law made by Parliament) whose accounts
do not constitute part of the accounts of the Union or of any State and of the accounts of
private commercial and quasi-commercial undertakings (other than Government companies
as defined in Section 617 of the Companies Act, 1956) in which Governments in India may be
participating. Such Audit can be undertaken by the Comptroller and Auditor General only on a
"consent" basis and on such terms and conditions as regards recovery of costs, etc., as be
settled between him and the Government concerned.

NOTE- The recovery of cost of audit of the accounts of local bodies/institutions that are
wholly or largely financed from grants-in-aid or loans by Government shall be regulated as
follows:—

(i) Where the Comptroller and Auditor General is the sole auditor for a local body/institution,
whether under any law made by Parliament under Article 149 of the Constitution or on
consent basis under Section 20 (1) of CAG's (DPCs) Act, 1971 charges will be payable in full
unless specifically waived by Government.

(ii) Where the local body/institution has its own auditors and audit by the Comptroller and
Auditor General is conducted in addition with a view to safeguard Government interests and
to ensure that the grants or loans by Government have been utilised for the purpose for which
they are given, the Comptroller and Auditor General will be acting in discharge of the C&AG's
DPC Act 1971, is a charge of the Central ment cost.

(iii) Expenditure involved in keeping the accounts of a State in so far as the responsibility for
keeping such accounts remains with the Comptroller and Auditor General under Section 10
(1), [2nd Proviso to Sec. 10 (1) and 1st Proviso to 10 (1)] of the C&AG's (DPC) Act 1971, is a
charge of the Central Government. The cost of keeping such accounts of a State as are
covered by the initial and Subsidiary Accounts Rules issued under Section 10 (1), 2nd
Provisio to Sec. 10 (1) and 1st Proviso to 10 (1) of the C&AG's DPC Act 1971 is a charge of
the State concerned. Similarly, if in any State the Comptroller and Auditor General is relieved
of the responsibility for the keeping of the accounts of any particular service or department of
a State Government in pursuance of Sec. 10 (1), 2nd Proviso to Sec. 10 (1) and 1st Proviso
to 10 (1) of the C&AG's DPC Act 1971, the cost of keeping such accounts will be a liability of
the Government of the State.

(vii) The maintenance of the internal accounts of a Department of a State is part of the
ordinary duties of a State Government and is therefore a responsibility of the State
concerned. Thus, if the Comptroller and Auditor General is asked to scrutinise or advise on
the modification of an existing system of internal accounts kept in a department of a State,
such work can be undertaken by him on a 'consent' basis and on specified terms and
conditions as in rule (v) above.
 65

V. Incidence of the cost of Police Functions on Railways including the

cost of Protecting Railway Bridges.

1. With effect from 1-4-79, the cost of GRP, (without distinction of 'Crime' and 'Order Police)
will be shared between the State Government and Railways on 50: 50 basis, provided that the
strength of GRP is determined with the approval of the Railways.

2. For the purpose of calculating Railway's share of cost of GRP the following will be
included:—

(i) Pay and all types of allowances in respect of GRP staff including office and supervisory
staff upto the level of Superintendent of Police.

(ii) Office expenses and contingencies.

(iii) Cost of Pensionary charges.

(iv) Cost of rent of buildings occupied by GRP staff.

In addition to above, charges on account of medical reimbursement and medical allowances

payable to staff, may also be considered in internal check for payment. However, charges on
account of pay and allowances of medical staff viz. Doctors, Nurses etc. are not to be shared.

3. The following rules regulate the incidence of the cost of protecting Railway Bridges:—

(a) Protection of Railway bridges under normal condition is the responsibility of the concerned
State Governments and the expenditure incurred thereon will be borne by them.

(b) In the event of replacement of Police guard by military or other Armed Forces of the
Union:—

(i) When the services of the Military or other armed forces of the Union are placed at the
disposal of the Railways at the request to the Railway Administration, the expenditure of the
guards will fall upon the Railway.

(ii) If the substitution is made on general ground of Government Policy and service is taken
over by Defence Services, or other Public Service Department as part of the regular duties,
the charges will be debited to Defence services or the Public department concerned, as the
case may be.

VI. Principles relating to recovery of the cost of (1) Forest Surveys

carried out by the Survey of India and (2) Forest maps prepared by that
Department.

Principles relating to recovery of the cost of (1) Forest Surveys carried out by the Survey of
India and (2) Forest maps prepared by that department are given in Chapter IX of the Survey
of India Handbook of Topography.
 66

D. RECEIPTS

VII. Incidence of Leave Salary and Pension Contributions recovered in

respect of Government servants lent on Foreign Service.

Contributions towards leave salary and pension recovered on behalf of a Government servant
in foreign service are creditable to the Government (Central or State) under which he was
permanently employed at the time of his transfer to foreign service.

2. No contributions towards leave salary and pensions shall be recoverable/payable among

the departments of the Central Government including Railways, P&T and Defence
Department and departments of the Union Territories with or without legislature in respect of
Government servants lent to or borrowed by these departments.

(This arrangement takes effect from 1st January 1978).

Correction Slips
Correction Slip No.: 1
Dated: 04-08-1993

1) Note (i) below Rule 8(3) - Page 7

Delete the words 'Central transactions and' appearing between the words 'of' and 'Union
Territory' in line 1 and line 2 of this Rule.

2) Third sentence in Rule 12 Page 11 may be modified as below:

"Transactions on behalf of State Governments arising in these treasuries shall be classified in

the treasury accounts under the head '8658 - Suspense Accounts - Suspense Accounts
(Civil) - Accounts with Accountant General ............' and settled in cash by exchange of
cheques/demand drafts, as the case may be."

3)(i) Rule 13 - Page 12-13

Delete the words 'other than transactions of Central (Civil) Pensions' appearing the line 11
and 12.

(ii) Substitute the sub-rule (b) and (c) with the following:-

(b) In the case of such transactions of the Central Government, including Railways / Postal
/ Defence Departments at State treasuries (both banking and non-banking), these shall be
accounted for by the treasuries in the State Section of Treasury Account under the head 'PAO
Suspense - Transactions adjustable by PAO Ministry / Department of ...............' below the
Major head '8658 - Suspense Accounts' for necessary cash settlement by the State
Accountant General with the Pay and Accounts Office.
 67

4)(i) Rule 14 - Page 13-17

Substitute the sub-rule (b) with the following:-

(b) At present, some miscellaneous receipt and payment transactions (viz. payment of
interest, repayment of principal on discharge of Central Government Securities and pensions
including pensions to freedom-fighters) take place at State treasuries. Such transactions shall
be accounted for by the treasuries in the State Section of Treasury accounts under the head
"PAO Suspense - Transactions adjustable by PAO Ministry/ Department of .................. '
below the major head '8658 - Suspense Accounts' for necessary cash settlement by the State
Accountant General with the concerned Pay and Accounts Office.

Note 1: In respect of payments pertaining to Central Government Securities, Principal

Accounts Office, Department of Economic Affairs, New Delhi will bear the debits.

Note 2: In respect of Central (Civil) Pensions including High Court Judges and Freedom
Fighters, the debits will be raised against the PAO in the Central Pension Accounting Office.

(ii) Sub-Rule (f) - Page 15

(a) Delete the words 'at State treasuries as' appearing between the words 'place' and 'at'
appearing in line 1 and 2.

(b) Put a full stop (.) after the word 'account' appearing in line 9 and delete the remaining
words viz. 'in respect of transaction appearing in the Central Section of his accounts.

(iii) Sub-Rule (j) - Page 16

Add the words 'keeping accounts of Union Territories' after the words 'Accountants General'
appearing in Line 4.

5) Insert the following Note at the end of Rule 14 (Page 17):-

'Note:- The Principal Director of Audit, Central, Calcutta and the Principal Accountant
General (A&E) West Bengal will continue to maintain the Central Section of Account till the
switch over of pension payment from treasury counter to Public Sector Bank is completed.''

Authority : T-14012/1/93-Codes

Correction Slip No.: 2

Dated: 2-8-1999

Appendix 5 - Page 97

Delete the words "including travelling allowance" appearing in para1 of Part-B to Appendix5.

(This takes effect from 1-4-99)

(Authority: T-14012/1/98-Codes)