Gfr2005

General Financial
Rules, 2005
Government of India
Ministry of Finance
Department of Expenditure

General Financial
Rules, 2005*
(* Amendments issued upto March 2010 have been added
as Annexures)

PREFACE
General Financial Rules (GFRs) are a compendium of general provisions to be
followed by all offices of Government of India while dealing with matters of a financial
nature.
2. General Financial Rules were first issued in 1947 and were in the form of executive
instructions. These were subsequently modified and issued as General Financial Rules,
1963. Over the last four decades, these GFRs had to be amplified and supplemented by
various decisions of the Government of India. Many of the rules had also become
redundant. These developments including a rapid growth of alternative service delivery
systems, developments in information technology, outsourcing of services and liberalization
of the system of procurement, accounting and disposal of goods in line with the international
practices necessitated an overall review of the General Financial Rules, 1963. A Task
Force was set up for this purpose. The report submitted by the Task Force was widely
circulated to all the Departments and Ministries and their suggestions were duly considered
for making appropriate changes.
3. General Financial Rules, 2005 have evolved as a result of the wide consultations
and extensive review. The rules have been simplified and put in a logical sequence for
easy comprehension. The appendices and forms of General Financial Rules, 1963 have
also been comprehensively reviewed but for the sake of convenience and to avoid
confusion, the existing form numbers have been retained. Provisions regulating advances
to government servants have been excluded from GFRs as these are distinct from direct
government expenditure. These provisions have been issued separately as a compendium.
4. It is expected that General Financial Rules, 2005 will provide greater flexibility to
officers in transacting government business while ensuring accountability commensurate
with responsibility at different levels of Government.
5. Finally, Department of Expenditure would like to place on record the excellent work
done by the Task Force on review of GFRs, the CGA, the Office of the C&AG, Budget
Division of Department of Economic Affairs and the Ministries and Departments which
gave valuable inputs for carrying out the exercise.
(Adarsh Kishore)
Secretary to the Government of India
New Delhi, Ministry of Finance
July 1st, 2005. Department of Expenditure

TABLE OF CONTENTS
Chapter Name of the Chapter Page No.
No.
1 Introduction 1
2 General System of Financial Management 3
I. General Principles relating to expenditure and payment of money 4
II. Defalcation and losses 7
III. Submission of records & information 8
3 Budget formulation and implementation. 9
4 Government Accounts 15
5 Works 25
6 Procurement of Goods and Services 27
I. Procurement of Goods 27
II. Procurement of Services 33
7 Inventory Management 37
8 Contract Management 41
9 Grants-in-aid and Loans 45
10 Budgeting and Accounting for Externally Aided Projects 59
11 Government Guarantees 63
12 Miscellaneous Subjects 67
I. Establishment 67
II. Refund of revenue 69
III. Debt and misc. obligations of Govt. 69
IV. Security deposits 70
V. Transfer of land and buildings 71
VI. Charitable endowments and other trusts 71
VII. Local bodies 71
VIII. Destruction of records connected with Accounts 72
IX. Contingent and Miscellaneous Expenditure. 72
APPENDICES
Appendix Subject Page No.
No.
1 Instructions for regulating the Enforcement of Responsibility for losses, etc., 73
2 Procedure for the preparation of Detailed Estimates of Receipts 74
3 Instructions for the preparation of Detailed Estimates of expenditure from the
Consolidated Fund 75
4 Procedure for compilation of Detailed Demands for Grants 81
5 Procedure for consolidation of the Estimates and Demands for Grants Deleted
6 Procedure to be followed in connection with the Demands for Supplementary Grants 83
7 The Contingency Fund of India Rules 84
8 Rules for the Supply of Articles required to be purchased for Public Services. Deleted
9 Rules regulating the Purchase of Stationery Stores for the Public Service Deleted
10 Subsidiary Instructions in regard to the terms of occupation of Government residences Deleted
11 Transfer of Land and Buildings between the Union and State Governments 87
12 Charitable Endowments and other Trusts 89
13 Destruction of Office Records connected with Accounts. 101
14 Check against provision of funds 110
15 Formula for Price Variation Clause 111
16 Rates of Guarantee Fee prevalent in July, 2004 112

(ii)
FORMS
Form Description Page No.
Serial No.
GFR 1 Model Form of Warranty Clause Deleted
GFR 2 —— Deleted
GFR 3 Statement of new Major Works under Civil Works - Central …… Deleted
GFR 4 Application for an Additional Appropriation 113
GFR 5 Revenue Receipts 114
GFR 5 - A Estimates of foreign grants 115
GFR 5 - B Estimates of Interest receipts and loan repayments 116
GFR 6 Liability Register 117
GFR 6 - A Liability Statement 119
GFR 7 Statement of proposals for pre-budget discussions 122
GFR 9 Register showing expenses by Heads of Account 123
GFR 10 Broadsheet for watching receipt of account from Disbursing Officers 124
GFR 11 Compilation Sheet 125
GFR 12 Consolidated Accounts 126
GFR 13 Broadsheet for watching Receipt of the Returns from the Heads of
Departments under a Department of the Central Government 127
GFR 14 Intimation regarding payments made by DGS&D Deleted
GFR 17 Report of Surplus, Obsolete and Unserviceable Stores for Disposal 128
GFR 18 Sale Account 129
GFR 19 Assets acquired from Grants Deleted
GFR 19 - A Form of Utilization Certificate 130
GFR 19 - B Form of Utilization Certificate 131
GFR 20 Statement of aggregate balance of loan(s) outstanding as on
31st March 20, and details of defaults 132
GFR 21 Form of Surety Bond. Deleted
GFR 22 Form of agreement for advance for purchase of Motor Vehicle etc. Deleted
GFR 22 - A —— Deleted
GFR 22 - B —— Deleted
GFR 23 Form of agreement for advance for purchase of Motor Vehicle etc. Deleted
GFR 23 - A Form of Agreement to be executed between a Department of the
Central Government, etc., and an Undertaking, etc., owned or controlled
by the Central Government or a State Government at the time of sanctioning
an advance for the purchase of a vehicle to an employee of the undertaking, etc.,
during his deputation with the Central Government (Rule 192-A) Deleted
GFR 24 Form of Mortgage Bond for Motor Vehicle / Personal Computer - Initial Advance Deleted
GFR 25 Form of Mortgage Bond for Motor Vehicle - Further Advance Deleted
GFR 25 - A Form of Mortgage Bond for Motor Vehicle purchased with sale
proceeds of an old one (Rule 205) Deleted
GFR 27 Application form for an Advance for the Purchase of a Motor Car/Motor Cycle/
Personal Computer Deleted
GFR 27 - A Application Form for an advance for the Purchase of Table Fan Deleted
GFR 28 Surety Bond Deleted

(iii)
GFR 29 Form of Agreement for adjustment of refund of advance of T.A. given to
non-official members of Committees and Commissions appointed by Government Deleted
GFR 30 Form of Cash Security Bond 134
GFR 31 Form of Security Bond (Fidelity Bond Deposited as Security) 135
GFR 32 Form of Written Undertaking to be executed by an Undertaking/Corporation
wholly owned by the Central Government at the time of sanctioning of a loan. 137
GFR 33 Certificate of transfer of charge 138
GFR 33 - A Joining Report 138
GFR 34 Fidelity Guarantee Policy 139
GFR 35 Accession Register 141
GFR 36 Notice to borrower about the due date for repayment of loan and interest thereon 142
GFR 37 Form of application for grant of flood advance Deleted
GFR 38 Register of Policy Holder 143
GFR 39 Register of Grants to be maintained by the sanctioning Authority. 144
GFR 40 Register of Fixed Assets 145
GFR 41 Stock Register of consumables such as Stationery, Chemicals, Spare parts etc. 146
GFR 42 Register of Assets of Historical / Artistic value. 147
GFR 43 Government Guarantees. 148
GFR 44 Furnishing of data regarding Guarantees to Ministry of Finance. 149
KEY New Rule number of the Rules in GFRs 1963 retained substantially
unchanged in GFRs 2005 150
ANNEXURES
AMENDMENTS
1. Amendment to Rule 198(ii)(d), 209(6)(viii) and 212(1) dated 29th March, 2006 157
2. Amendment to Appendix 12 dated 6th June, 2007 159
3. Amendment to Rule 275(4) dated 13th October, 2008 161
Form Description Page No.
Serial No.

CHAPTER - 1
INTRODUCTION
Rule 1. Short title and commencement :
(1) These rules may be called General Financial Rules, 2005.
(2) They shall come into force at once.
Rule 2. Definitions : In these rules, unless the context otherwise requires –
(i) “Accounts Officer” means the Head of an Office of Accounts or the Head of a Pay and Accounts Office
set up under the scheme of departmentalization of accounts;
(ii) “Administrator” means Administrator of a Union Territory;
(iii) “Appropriation” means the assignment, to meet specified expenditure, of funds included in a primary
unit of appropriation;
(iv) “Audit Officer” means the Head of an Office of Audit;
(v) “Competent Authority” means, in respect of the power to be exercised under any of these rules, the
President or such other authority to which the power is delegated by or under these rules, Delegation of
Financial Power Rules, 1978 or any other general or special orders issued by the Government of India;
(vi) “Comptroller and Auditor-General” means the Comptroller and Auditor-General of India;
(vii) “Consolidated Fund” means the Consolidated Fund of India referred to in Article 266 (1) of the
Constitution;
(viii) “the Constitution” means the Constitution of India;
(ix) “Contingency Fund” means the Contingency Fund of India established under the Contingency Fund of
India Act, 1950, in terms of Article 267 (1) of the Constitution;
(x) “Controlling Officer” means an officer entrusted by a Department of the Central Government with the
responsibility of controlling the incurring of expenditure and/or the collection of revenue. The term shall
include a Head of Department and also an Administrator;
(xi) “Department of the Central Government” means a Ministry or a Department of the Central Government
as notified from time to time and includes the Planning Commission, the Department of Parliamentary
Affairs, the President’s Secretariat, the Vice-President’s Secretariat, the Cabinet Secretariat and the Prime
Minister’s Secretariat;
(xii) “Disbursing Officer” means a Head of Office and also any other Gazetted Officer so designated by a
Department of the Central Government, a Head of Department or an Administrator, to draw bills and
make payments on behalf of the Central Government. The term shall also include a Head of Department
or an Administrator where he himself discharges such function;
(xiii) “Finance Ministry” means the Finance Ministry of the Central Government;
(xiv) “Financial year” means the year beginning on the 1st of April and ending on the 31st of March following;
(xv) “Government” means the Central Government;
(xvi) “Head of a Department” in relation to an office or offices under its administrative control means (a) an
authority specified in Schedule I of the Delegation of Financial Powers Rules, 1978, and (b) any other
authority declared as such under any general or special orders of the competent authority;
(xvii) “Head of Office” means (a) a Gazetted Officer declared as such under Rule 14 of the Delegation of
Financial Powers Rules, 1978, and (b) any other authority declared as such under any general or special
orders of the competent authority;
(xviii) “Local Body” means an authority legally entitled or specially empowered by Government to administer
a local fund;
(xix) “Local Fund” means a local fund as defined in Rule 652 of the Treasury Rules;
(xx) “non-recurring expenditure” means expenditure other than recurring expenditure;
(xxi) “President” means the President of India;
(xxii) “Primary unit of appropriation” means a primary unit of appropriation referred to in Rule 8 of the
Delegation of Financial Powers Rules, 1978;
(xxiii) “Public Account” means the Public Account of India referred to in Article 266 (2) of the Constitution;
(xxiv) “Public Works” means civil works and irrigation, navigation, embankment and drainage works;

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(xxv) “reappropriation” means the transfer of funds from one primary unit of appropriation to another such
unit;
(xxvi) “recurring expenditure” means the expenditure which is incurred at periodic intervals;
(xxvii) “Reserve Bank” means the Reserve Bank of India or any office or agency of the Reserve Bank of India
and includes any Bank acting as the agent of the Reserve Bank of India in accordance with the provisions
of the Reserve Bank of India Act, 1934 (Act II of 1934);
(xxviii) “Subordinate authority” means a Department of the Central Government or any authority subordinate
to the President; and
(xxix) “Treasury Rules” means the Treasury Rules of the Central Government.
Rule 3. Interdepartmental Consultations : When the subject of a case concerns more than one department, no
order should be issued until all such departments have concurred, or, failing such concurrence, a decision has been
taken by or under the authority of the Cabinet. In this regard it is clarified that every case in which a decision, if taken
in one Department, is likely to affect the transaction of business allotted to another department, shall be deemed to be
a case the subject of which concerns more than one department.
Rule 4. Departmental Regulations of financial character : All Departmental regulations, in so far as they embody
orders or instructions of a financial character or have important financial bearing, shall be made by, or with the
approval of the Finance Ministry.
Rule 5. Removal of doubts : Where a doubt arises as to the interpretation of any of the provisions of these Rules,
the matter shall be referred to the Finance Ministry for decision.
Rule 6. Modifications :
(1) The systems and procedures established by these rules are subject to general or special instructions/
orders, which the Ministry of Finance may issue from time to time.
(2) The systems and procedures established by these rules may be modified by any other authority only with
the express approval of the Ministry of Finance.

CHAPTER - 2
GENERAL SYSTEM OF FINANCIAL MANAGEMENT
Rule 7. General Principles : All moneys received by or on behalf of the Government either as dues of Government
or for deposit, remittance or otherwise, shall be brought into Government Account without delay, in accordance with
such general or special rules as may be issued under Articles 150 and 283 (1) of the Constitution.
Rule 8.
(1)
(i) Under Article 284 of the Constitution all moneys received by or deposited with any officer employed in
connection with the affairs of the Union in his capacity as such, other than revenues or public moneys
raised or received by Government, shall be paid into the Public Account.
(ii) All moneys received by or deposited with the Supreme Court of India or with any other Court, other
than a High Court, within a Union Territory, shall also be dealt with in accordance with Clause (i) of
sub-rule (1).
(2) The Head of Account to which such moneys shall be credited and the withdrawal of moneys therefrom shall
be governed by the relevant provisions of Government Accounting Rules 1990 and the Central Government
Account (Receipts and Payments) Rules, 1983 or such other general or special orders as may be issued in
this behalf.
Rule 9. It is the duty of the Department of the Central Government concerned to ensure that the receipts and dues of
the Government are correctly and promptly assessed, collected and duly credited to the Consolidated Fund or Public
Account as the case may be.
Rule 10. The Controlling Officer shall arrange to obtain from his subordinate officers monthly accounts and returns in
suitable form claiming credit for the amounts paid into the treasury or bank as the case may be, or otherwise accounted
for, and compare them with the statements of credits furnished by the Accounts Officer to see that the amounts
reported as collected have been duly credited. For this each Accounts Officer will send an extract from his accounts
showing the amounts brought to credit in the accounts in each month to the Controlling Officer concerned.
Rule 11.
(1) Detailed rules and procedure regarding assessment, collection, allocation, remission and abandonment of
revenue and other receipts shall be laid down in the regulations of the department responsible for the
same.
(2) In departments in which officers are required to receive moneys on behalf of Government and issue receipts
therefor in Form GAR-6 the departmental regulations should provide for the maintenance of a proper
account of the receipt and issue of the receipt books, the number of receipt books to be issued at a time to
each officer and a check with the officer’s accounts of the used books when returned.
Rule 12. Amounts due to Government shall not be left outstanding without sufficient reasons. Where such amounts
appear to be irrecoverable, the orders of the competent authority shall be obtained for their adjustment.
Rule 13. Unless specially authorized by any rule or order made by competent authority, no sums shall be credited as
revenue by debit to a suspense head. The credit must follow and not precede actual realization.
Rule 14. Subject to any general or special orders issued by a Department of the Central Government, an Administrator
or a Head of a Department responsible for the collection of revenue shall keep the Finance Ministry fully informed of
the progress of collection of revenue under his control and of all important variations in such collections as compared
with the Budget Estimates.
Rule 15. Rents of buildings and lands :
(1) When the maintenance of any rentable building is entrusted to a civil department, other than the Central
Public Works Department, the Administrator or the Head of the Department concerned shall be responsible
for the due recovery of the rent thereof.
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(2) The procedure for the assessment and recovery of rent of any building hired out will be regulated generally
by the rules applicable to residences under the direct charge of the Central Public Works Department.
(3) The detailed rules and procedure, regarding the demand and recovery of rent of Government buildings and
lands, are contained in the departmental regulations of the departments in charge of those buildings.
Rule 16. Fines :
(1) Every authority having the power to impose and/ or realize a fine shall ensure that the money is realized,
duly checked and deposited into a treasury or bank as the case may be.
(2) Every authority having the power to refund fines shall ensure that the refunds are checked and no double
refunds of amounts of fines collected or refunds of fines not actually paid into a treasury or bank as the
case may be, are made.
Rule 17. Miscellaneous Demands : The Accounts Officer shall watch the realization of miscellaneous demands of
Government, not falling under the ordinary revenue administration, such as contributions from State Governments,
Local Funds, contractors and others towards establishment charges.
Rule 18. Remission of Revenue : A claim to revenue shall not be remitted or abandoned save with the sanction of
the competent authority.
Rule 19.
(1) Subject to any general or special orders issued by the Government Departments of the Central Government,
Administrators and Heads of Departments, other than those in the Department of Posts, shall submit
annually on the 1st of June to the Audit Officer and the Accounts Officer concerned, statements showing
the remissions of revenue and abandonment of claims to revenue sanctioned during the preceding year by
competent authorities in exercise of the discretionary powers vested in them otherwise than by law or rule
having the force of law, provided that individual remissions below Rupees one hundred need not be included
in the statements.
(2) For inclusion in the statements referred to in Rule 19 (1) above, remissions and abandonments should be
classified broadly with reference to the grounds on which they were sanctioned and a total figure should be
given for each class. A brief explanation of the circumstances leading to the remission should be added in
the case of each class.
Rule 20. Departments of the Central Government and Administrators may make rules defining remissions and
abandonments of revenue for the purpose of Rule 19 above.
I. GENERAL PRINCIPLES RELATING TO
EXPENDITURE AND PAYMENT OF MONEY
Rule 21. Standards of financial propriety : Every officer incurring or authorizing expenditure from public moneys
should be guided by high standards of financial propriety. Every officer should also enforce financial order and strict
economy and see that all relevant financial rules and regulations are observed, by his own office and by subordinate
disbursing officers. Among the principles on which emphasis is generally laid are the following :-
(i) Every officer is expected to exercise the same vigilance in respect of expenditure incurred from public
moneys as a person of ordinary prudence would exercise in respect of expenditure of his own money.
(ii) The expenditure should not be prima facie more than the occasion demands.
(iii) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or
indirectly to its own advantage.
(iv) Expenditure from public moneys should not be incurred for the benefit of a particular person or a section of
the people, unless -
(a) a claim for the amount could be enforced in a Court of Law, or
(b) the expenditure is in pursuance of a recognized policy or custom.
(v) The amount of allowances granted to meet expenditure of a particular type should be so regulated that the
allowances are not on the whole a source of profit to the recipients.
Rule 22. Expenditure from public funds : No authority may incur any expenditure or enter into any liability involving
expenditure or transfer of moneys for investment or deposit from Government account unless the same has been
sanctioned by a competent authority.

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Rule 23. Delegation of Financial Powers : The financial powers of the Government have been delegated to various
subordinate authorities vide Delegation of Financial Powers Rules, 1978 as amended from time to time. The financial
powers of the Government, which have not been delegated to a subordinate authority, shall vest in the Finance
Ministry.
Rule 24. Consultation with Financial Advisers : All draft memoranda for Expenditure Finance Committee or Public
Investment Bureau and Cabinet Committee for Economic Affairs or Cabinet shall be circulated by the Ministry or
Department concerned after consultation with the concerned Financial Adviser of the Ministry or Department. A
confirmation to this effect shall be included in the draft memorandum at the circulation stage.
Rule 25. Provision of funds for sanction :
(1) All sanctions to the expenditure shall indicate the details of the provisions in the relevant grant or appropriation
wherefrom such expenditure is to be met.
(2) All proposals for sanction to expenditure, shall indicate whether such expenditure can be met by valid
appropriation or re-appropriation.
(3) In cases where it become necessary to issue a sanction to expenditure before funds are communicated,
the sanction should specify that such expenditure is subject to funds being communicated in the Budget of
the year.
Rule 26. Responsibility of Controlling Officer in respect of Budget allocation: The duties and responsibilities of
a controlling officer in respect of funds placed at his disposal are to ensure :
(i) that the expenditure does not exceed the budget allocation.
(ii) that the expenditure is incurred for the purpose for which funds have been provided.
(iii) that the expenditure is incurred in public interest.
(iv) that adequate control mechanism is functioning in his department for prevention, detection of errors and
irregularities in the financial proceedings of his subordinate offices and to guard against waste and loss of
public money, and
(v) that mechanism or checks contemplated at (iv) above are effectively applied.
Rule 27.
(1) Date of effect of sanction : Subject to fulfillment of the provisions of Rule 6 of the Delegation of Financial
Powers Rules, 1978, all rules, sanctions or orders shall come into force from the date of issue unless any
other date from which they shall come into force is specified therein.
(2) Date of creation to be indicated in sanctions for temporary posts: Orders sanctioning the creation of
a temporary post should, in addition to the sanctioned duration, invariably specify the date from which it is
to be created.
Rule 28. Powers in regard to certain special matters : Except in pursuance of the general delegation made by, or
with the approval of the President, a subordinate authority shall not, without the previous consent of the Finance
Ministry, issue an order which -
(i) involves any grant of land, or assignment of revenue, or concession, grant, lease or licence of mineral or
forest rights, or rights to water power or any easement or privilege of such concessions, or
(ii) involves relinquishment of revenue in any way.
Rule 29. Procedure for communication of sanctions : All financial sanctions and orders issued by a competent
authority shall be communicated to the Audit Officer and the Accounts Officer. The procedure to be followed for
communication of financial sanctions and orders will be as under :-
(i) All financial sanctions issued by a Department of the Central Government which relate to a matter concerning
the Department proper and on the basis of which payment is to be made or authorized by the Accounts
Officer, should be addressed to him.
(ii) All other sanctions should be accorded in the form of an Order, which need not be addressed to any
authority, but a copy thereof should be endorsed to the Accounts Officer concerned.
(iii) In the case of non-recurring contingent and miscellaneous expenditure, the sanctioning authority may,
where required, accord sanction by signing or countersigning the bill or voucher, whether before or after the
money is drawn, instead of by a separate sanction.

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(iv) All financial sanctions and orders issued by a Department of the Central Government with the concurrence
of the Internal Finance Wing or Ministry of Finance, as applicable, should be communicated to theAccounts
Officer in accordance with the procedure laid down in Rule 25 of the Delegation of Financial Powers Rules,
1978, and orders issued thereunder from time to time.
(v) All financial sanctions and orders issued by a department with the concurrence of the Ministry of Home
Affairs or Comptroller and Auditor General of India or Department of Personnel should specify that the
sanction or orders are issued with the concurrence of that Department along with the number and date of
relevant communication of that Department wherein the concurrence was conveyed.
(vi) All orders conveying sanctions to expenditure of a definite amount or up to a specific limit should express
both in words and figures the amount of expenditure sanctioned.
(vii) Sanctions accorded by a Head of Department may be communicated to theAccounts Officer by an authorized
Gazetted Officer of his Office duly signed by him for the Head of Department or conveyed in the name of
the Head of the Department.
(viii) All orders conveying sanctions to the grant of additions to pay such as Special Allowance, Personal Pay,
etc., should contain a brief summary of the reasons for the grant of such additions to pay so as to enable
the Accounts Officer to see that it is correctly termed as Special Allowance, Personal Pay, etc., as the case
may be.
(ix) Orders issued by a Department of a Union Territory Government where Audit and Accounts (a) have not
been separated shall be communicated direct to the Audit authority; (b) have been separated, copies shall
be endorsed to the Audit authorities.
In case of sanctions in respect of matters, where reference was made to the Central Government under
the Rules of Business framed under Section 46 of the Government of Union TerritoryAct, 1963, the following
clause shall be added in the sanction endorsed to Audit:-
“ A reference had been made in this case to the Central Government and the above order/letter conforms
to the decision of the Central Government vide Government of India, Ministry/Department of ……..Letter
No…………dated…………..”.
(x) Copies of all General Financial Orders issued by a Department of the Central Government with the
concurrence of the Comptroller and Auditor General of India shall be supplied to the Comptroller and
Auditor General of India.
(xi) Copies of all sanctions or orders other than the following types should be endorsed to the Audit Officers:-
(a) Sanctions relating to grant to advances to Central Government employees.
(b) Sanctions relating to appointment or promotion or transfer of Gazetted and non-Gazetted Officers.
(c) All sanctions relating to creation or continuation or abolition of posts.
(d) Sanctions for handing over charge and taking over charge, etc.
(e) Sanctions relating to payment or withdrawal of General Provident Fund advances to Government
servants.
(f) Sanctions of contingent expenditure incurred under the powers of Head of Offices.
(g) Other sanctions of routine nature issued by Heads of Subordinate Officers (other than those issued by
Ministries or Departments proper and under powers of a Head of Department).
(xii) Sanctions accorded by competent authority to grants of land and alienation of land revenue, other than
those in which assignments of land revenue are treated as cash payment, shall be communicated to the
Audit and/ or theAccounts Officer, as the case may be, in a consolidated monthly return giving the necessary
details.
Rule 30. Lapse of sanctions : A sanction for any fresh charge shall, unless it is specifically renewed, lapse if no
payment in whole or in part has been made during a period of twelve months from the date of issue of such sanction.
Provided that -
(i) when the period of currency of the sanction is prescribed in the departmental regulations or is specified in
the sanction itself, it shall lapse on the expiry of such periods; or
(ii) when there is a specific provision in a sanction that the expenditure would be met from the Budget provision
of a specified financial year, it shall lapse at the close of that financial year; or
(iii) in the case of purchase of stores, a sanction shall not lapse, if tenders have been accepted (in the case of
local or direct purchase of stores) or the indent has been placed (in the case of Central Purchases) on the
Central Purchase Organization within the period of one year of the date of issue of that sanction, even if the
actual payment in whole or in part has not been made during the said period.

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Rule 31. Notwithstanding anything contained in Rule 30, a sanction in respect of an addition to a permanent
establishment, made from year to year under a general scheme by a competent authority, or in respect of an allowance
sanctioned for a post or for a class of Government servants, but not drawn by the officer(s) concerned, shall not
lapse.
Rule 32. Remission of disallowance’s by Audit and writing off of overpayment made to Government servants:
The remission of disallowance’s by Audit and writing off of overpayments made to Government servants by competent
authorities shall be in accordance with the provisions of the Delegation of Financial Powers Rules, 1978, and instructions
issued thereunder.
II. DEFALCATION AND LOSSES
Rule 33. Report of Losses :
(1) Any loss or shortage of public moneys, departmental revenue or receipts, stamps, opium, stores or other
property held by, or on behalf of, Government irrespective of the cause of loss and manner of detection,
shall be immediately reported by the subordinate authority concerned to the next higher authority as well as
to the Statutory Audit Officer and to the concerned Principal Accounts Officer, even when such loss has
been made good by the party responsible for it. However the following losses need not be reported:
(i) Cases involving losses of revenue due to -
(a) mistakes in assessments which are discovered too late to permit of a supplementary claim being
made,
(b) under assessments which are due to interpretation of the law by the local authority being overruled
by higher authority after the expiry of the time-limit prescribed under the law, and
(c) refunds allowed on the ground that the claims were time-barred:
(ii) Petty losses of value not exceeding Rupees two thousand.
(2) Cases involving serious irregularities shall be brought to the notice of Financial Adviser or Chief Accounting
Authority of the Ministry or Department concerned and the Controller-General of Accounts, Ministry of
Finance.
(3) Report of loss contemplated in sub-rule (1) & (2) shall be made at two stages-
(i) An initial report should be made as soon as a suspicion arises that a loss has taken place.
(ii) The final report should be sent to authorities indicated in sub rule (1) & (2) after investigation indicating
nature and extent of loss, errors or neglect of rules by which the loss has been caused and the prospects
of recovery.
(4) The complete report contemplated in sub-rule 3, shall reach through proper channels to the Head of the
Department, who shall finally dispose of the same under the powers delegated to him under the Delegation
of Financial Power Rules, 1978. The reports, which he cannot finally dispose of under the delegated powers,
shall be submitted to the Government.
(5) An amount lost through misappropriation, defalcation, embezzlement, etc., may be redrawn on a simple
receipt pending investigation, recovery or write-off with the approval of the authority competent to write-off
the loss in question.
(6) In cases of loss to Government on account of culpability of Government servants, the loss should be borne
by the Central Government Department or State Government concerned with the transaction. Similarly, if
any recoveries are made from the erring Government officials in cash, the receipt will be credited to the
Central Government Department or the State Government who sustained the loss.
(7) All cases involving loss of Government money arising from erroneous or irregular issue of cheques or
irregular accounting of receipts will be reported to the Controller-General of Accounts alongwith the
circumstances leading to the loss, so that he can take steps to remedy defects in rules or procedures, if
any, connected therewith.
Rule 34. Loss of Government property due to fire, theft, fraud : Departmental Officers shall, in addition to taking
action as prescribed in Rule 33, follow the provisions indicated below in cases involving material loss or destruction
of Government property as a result of fire, theft, fraud, etc. -
All losses above the value of Rupees ten thousand due to suspected fire, theft, fraud, etc., shall be invariably
reported to the Police for investigation as early as possible.
Once the matter is reported to the Police Authorities, all concerned should assist the Police in their investigation.
A formal investigation report should be obtained from the Police Authorities in all cases, which are referred to
them.

8
Rule 35. Loss of immovable property by fire, flood, etc. : All loss of immovable property exceeding Rupees fifty
thousand, such as buildings, communications, or other works, caused by fire, flood, cyclone, earthquake or any other
natural cause, shall be reported at once by the subordinate authority concerned to Government through the usual
channel. All other losses should be immediately brought to the notice of the next higher authority.
Rule 36. Report to Audit and Accounts Officers : After a full enquiry as to the cause and the extent of the loss has
been made, the detailed report should be sent by the subordinate authority concerned to Government through the
proper channel; a copy of the report or an abstract thereof being simultaneously forwarded to the Audit or Accounts
Officer.
Rule 37. Responsibility for Losses : An officer shall be held personally responsible for any loss sustained by the
Government through fraud or negligence on his part. He will also be held personally responsible for any loss arising
from fraud or negligence of any other officer to the extent to which it may be shown that he contributed to the loss by
his own action or negligence.
The departmental proceedings for assessment of responsibility for the loss shall be conducted according to the
instructions contained in Appendix 1 and those issued by the Ministry of Personnel from time to time.
Rule 38. Prompt disposal of cases of loss : Action at each stage of detection, reporting, write off, final disposal, in
cases of losses including action against delinquents and remedial measures should be completed promptly with
special attention to action against delinquents and remedial measures, taken to strengthen the control system.
III. SUBMISSION OF RECORDS AND INFORMATION.
Rule 39. Demand for information by Audit or Accounts Officer : A subordinate authority shall afford all reasonable
facilities to theAudit Officer orAccounts Officer for the discharge of his functions, and furnish fullest possible information
required by him for the preparation of any official account or report.
Rule 40. A subordinate authority shall not withhold any information, books or other documents required by the Audit
Officer or Accounts Officer.
Rule 41. If the contents of any file are categorized as ‘Secret’ or ‘Top Secret’ the file maybe sent personally to the
Head of the Audit Office specifying this fact, who will then deal with it in accordance with the standing instructions for
handling and custody of such classified documents.

CHAPTER - 3
BUDGET FORMULATION
AND
IMPLEMENTATION
Rule 42. Financial Year : Financial year of the Government shall commence on the 1st day of April of each year and
end on the 31st day of March of the following year.
Rule 43. Presentation of Budget to Parliament :
(1) In accordance with the provisions of Article 112 (1) of the Constitution, the Finance Minister shall arrange to
lay before both the Houses of Parliament, an Annual Financial Statement also known as the ‘Budget’
showing the estimated receipts and expenditure of the Central Government in respect of a financial year,
before the commencement of that year.
(2) A separate statement of estimated receipts and expenditure relating to the Railways shall similarly be
presented to the Parliament by the Ministry of Railways in advance of the Annual Financial Statement. As
the receipts and expenditure of the Railways are the receipts and expenditure of the Government, the
figures relating to these are included in lump in the Annual Financial Statement.
(3) The provisions for preparation, formulation and submission of budget to the Parliament are contained in
Articles 112 to 116 of the Constitution of India.
(4) The Ministry of Finance, Budget Division, shall issue guidelines for preparation of budget estimates from
time to time. All the Ministries/Departments shall comply in full with these guidelines.
Rule 44. The budget shall contain the following :-
(i) Estimates of all Revenue expected to be raised during the financial year to which the budget relates.
(ii) Estimates of all Expenditure for each programme and project in that financial year.
(iii) Estimates of all interest and debt servicing charges and any repayments on loans in that financial year.
(iv) Any other information as may be prescribed.
Rule 45. Receipt Estimates : The detailed estimates of receipts will be prepared by the estimating authorities
separately for each Major Head ofAccount in the prescribed form. For each Major Head, the estimating authority will
give the break up of the Minor/Subhead wise estimate along with actuals of the past three years. Where necessary,
itemwise break up should also be furnished so as to highlight individual items of significance. Any major variation in
estimates with reference to past actuals or/and Budget Estimates will be supported by cogent reasons.
Rule 46. Expenditure estimates :
(1) The expenditure estimates shall show separately the sums required to meet the expenditure Charged on
the Consolidated Fund under Article 112 (3) of the Constitution and sums required to meet other expenditure
for which a vote of the Lok Sabha is required under Article 113(2) of the Constitution.
(2) The estimates shall also distinguish provisions for expenditure on revenue account from that for other
expenditure including expenditure on capital account, on loans by the Government and for repayment of
loans, treasury bills and ways and means advances.
(3) The detailed estimates of expenditure will be prepared by the estimating authorities for each unit of
appropriation (Sub or Detailed or Object head) under the prescribed Major and Minor Heads of Accounts
separately for Plan and Non-Plan expenditure. Estimates should include suitable provision for liabilities of
the previous years left unpaid during the relevant year.
(4) The estimates of Plan expenditure will be processed in consultation with the Planning Commission in
accordance with the instructions issued by them.
(5) The Revised Estimates of both Plan and Non-Plan expenditure and Budget Estimates for Non-Plan
expenditure after being scrutinized by the Financial Advisers and approved by the Secretary of the
Administrative Ministry or Department concerned will be forwarded to the Budget Division in the Ministry of
Finance in such manner and forms as may be prescribed by them from time to time.
9

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Rule 47. Demands for Grants :
(1) The estimates for expenditure for which vote of Lok Sabha is required shall be in the form of Demand for
Grants.
(2) Generally, one Demand for Grant is presented in respect of each Ministry or Department. However, in
respect of large Ministries or Departments, more than one Demand is presented. Each Demand normally
includes provisions required for a service, i.e. provisions on account of revenue expenditure, capital
expenditure, grants to the State and Union Territory Governments and also Loans and Advances relating to
the service.
(3) The Demand for Grants shall be presented to Parliament at two levels. The main Demand for Grants are
presented to Parliament by the Ministry of Finance, Budget Division along with theAnnual Financial Statement
while the Detailed Demands for Grants, after consideration by the “Departmentally Related Standing
Committee” (DRSC) of the Parliament, are laid on the Table of the Lok Sabha by the concerned Ministries/
Departments, a few days in advance of the discussion of the respective Ministry’s/ Departments’ Demands
in that House.
Rule 48. Form of Annual Financial Statement and Demands for Grants :
(1) The form of the Annual Financial Statement and Demands for Grants shall be laid down by the Finance
Ministry and no alteration of arrangement or classification shall be made without the approval of that Ministry.
(2) The sub-heads under which provision for expenditure will be made in the Demands for Grants orAppropriation
shall be prescribed by the Finance Ministry in consultation with the Administrative Ministry or Department.
The authorised sub-heads for expenditure in a year shall be as shown in the Detailed Demands for Grants
passed by Parliament and no change shall be made therein without the formal approval of the Finance
Ministry.
NOTE : Detailed instructions for preparation of the budget are available in Appendix 2, 3, 4, and 6.
Rule 49. Acceptance and inclusion of estimates :
(1) The estimates of receipts and expenditure of each Ministry/Department will be scrutinized in the Budget
Division of the Ministry of Finance. Finance Secretary or Secretary (Expenditure) may hold meetings with
Secretaries or Financial Advisers of Administrative Ministries or Departments to discuss the totality of the
requirements of funds for various programmes and schemes, along with receipts of the Ministries or
Departments.
(2) The estimates initially submitted by the Departments may undergo some changes as a result of scrutiny in
the Budget Division, Ministry of Finance and deliberations in the pre-budget meetings between the Finance
Secretary or Secretary (expenditure) and the Secretary or FinancialAdviser of the Department concerned.
The final estimates arrived at on the basis of scrutiny and pre-budget meetings will be accepted by the
Budget Division, Ministry of Finance and incorporated in the Budget documents.
Rule 50. Vote on Account :
(1) The Budget is normally presented to the Parliament on the last day in the month of February but the
correspondingAppropriation Bill seeking authorization of the Parliament to make expenditure in consonance
with the Budget proposal is introduced and passed much later i.e. after due deliberation and approval by
the Parliament.
(2) Pending the completion of the procedure prescribed in Article 113 of the Constitution for the passing of the
Budget, the Finance Ministry may arrange to obtain a ‘Vote on Account’ to cover expenditure for one month
or such longer period as may be necessary in accordance with the provisions ofArticle 116 of the Constitution.
Funds made available under Vote on Account are not to be utilized for expenditure on a ‘New Service’.
Rule 51. Communication and distribution of grants and appropriations : After the Appropriation Bill relating to
Budget is passed, the Ministry of Finance shall communicate Budget provisions to the Ministries/Departments which,
in turn, shall distribute the same to their subordinate formations. The distribution so made shall also be communicated
to the respective Pay and Accounts Officers who shall exercise check against the allocation to each subordinate
authority.
“CONTROL OF EXPENDITURE AGAINST BUDGET”
Rule 52. Responsibility for control of Expenditure :
(1) Departments of the Central Government shall be responsible for the control of expenditure against the

11
sanctioned grants and appropriations placed at their disposal. The control shall be exercised through the
Heads of Departments and other Controlling Officers, if any, and Disbursing Officers subordinate to them.
(2) A Grant or Appropriation can be utilised only to cover the charges (including liabilities, if any, of the past
year) which are to be paid during the financial year of the Grant or Appropriation and adjusted in the
account of the year. No charges against a Grant or Appropriation can be authorized after the expiry of the
financial year.
(3) No expenditure shall be incurred which may have the effect of exceeding the total grant or appropriation
authorized by Parliament by law for a financial year, except after obtaining a supplementary grant or
appropriation or an advance from the Contingency Fund. Since voted and charged portions as also the
revenue and capital sections of a Grant/Appropriation are distinct and reappropriation inter se is not
permissible, an excess in any one portion or section is treated as an excess in the Grant/Appropriation.
(4) To have effective control over expenditure by the Departments, Controlling and Disbursing Officers
subordinate to them shall follow the procedure given below :-
(i) For drawal of money the Drawing and Disbursing Officer shall :-
(a) Prepare and present bills for “charged” and “voted” expenditure separately.
(b) Enter on each bill the complete accounts classifications from major head down to the object head
of account. When a single bill includes charges falling under two or more object heads, the charges
shall be distributed accurately over the respective heads.
(c) Enter on each bill the progressive total of expenditure up-to-date under the primary unit of
appropriation to which the bill relates, including the amount of the bill on which the entry is made.
(ii) (a) All Disbursing Officers shall maintain a separate expenditure register in Form GFR 9, for allocation
under each minor or sub-head of account with which they are concerned.
(b) On the third day of each month, a copy of the entries made in this register during the preceding
month shall be sent by the officer maintaining it, to the Head of the Department or other designated
Controlling Officer. This statement shall also include adjustment of an inward claim, etc.,
communicated by Pay and Accounts Officer directly to the DDO (and not to his Grant Controlling
Officer). If there are no entries in the register in any month, a ‘nil’ statement shall be sent.
(iii) (a) The Controlling Officer will maintain a broadsheet in Form GFR 10 to monitor the receipt of the
return prescribed in the foregoing sub-clause;
(b) On receipt of the returns from Disbursing Officers, the Controlling Officer shall examine them and
satisfy himself :-
(aa) that the accounts classification has been properly given;
(bb) that progressive expenditure has been properly noted and the available balances worked
out correctly;
(cc) that expenditure up-to-date is within the grant or appropriation; and
(dd) that the returns have been signed by Disbursing Officers
Where the Controlling Officer finds defects in any of these respects, he shall take steps to rectify the
defect.
(iv) When all the returns from the Disbursing Officers for a particular month have been received and found
to be in order, the Controlling Officer shall compile a statement in Form GFR 11, in which he will
incorporate -
(a) the totals of the figures supplied by Disbursing Officers;
(b) the totals taken from his own registers in Form GFR 9;
(c) the totals of such adjustments under the various detailed heads as communicated to him by the
Accounts Officer on account of transfer entries and expenditure debited to the grant as a result of
settlement of inward account claims and not reckoned by his DDOs.
(v) If any adjustment communicated by the Accounts Officer affects the appropriation at the disposal of a
subordinate Disbursing Officer, the fact that the adjustment has been made shall be communicated by
the Controlling Officer to the Disbursing Officer concerned.
(vi) On receipt of all the necessary returns, the Head of the Department shall prepare a consolidated
account in Form GFR 12, showing the complete expenditure from the grant or appropriation at his
disposal upto the end of the preceding month.
(5) The Head of the Department and theAccounts Officer shall be jointly responsible for the monthly reconciliation
of the figures given in the accounts maintained by the Head of the Department with those appearing in the
Accounts Officer’s books. The procedure for reconciliation shall be as follows :-

12
I. DDOs shall maintain a Bill Register in Form TR 28-A, and note all bills presented for payment to the
PAO in the register. As soon as cheques for the bills presented for payment are received, these will be
noted in the appropriate column of the Bill Register and the DDOs will ensure that the amounts of
cheques tally with the net amount of the bills presented. In case any retrenchment is made by the PAO,
a note of such retrenchments should be kept against the bill in the remarks column in TR 28-A.
II. The PAOs shall furnish to each of the DDOs including Cheque –drawing DDOs, an extract from the
expenditure control register or from the Compilation Sheet every month indicating the expenditure
relating to grants controlled by him classified under the various major-minor detailed head of accounts.
The statements for May to March should also contain Progressive Figures.
III. On receipt of these extracts from the PAOs, the DDOs should tally the figures received, excluding book
adjustments, with the expenditure worked out for the month in the GFR 9 register. Discrepancies, if
any, between the two sets of figures should be promptly investigated by the DDO in consultation with
the PAO. He will also note in the GFR 9 register particulars of book adjustments advised by the PAO
through the monthly statement.Thereafter, the DDO should furnish to the PAO a certificate of agreement
of the figures as per his books with those indicated by the PAOs by the last day of the month following
the month of accounts.
IV. The PrincipalAccounts Officer (or PAO wherever payments, relating to a grant are handled wholly by a
PAO) of each Ministry, should send a monthly statement showing the expenditure vis-à-vis the Budget
provision under the various heads of accounts, in the prescribed pro forma, to the Heads of Departments
responsible for overall control of expenditure against grant of the Ministry as a whole. The figures so
communicated by the Principal Accounts Officer (or the PAO concerned) should be compared by the
Heads of Departments with those consolidated in Form GFR 12 and differences, if any, should be
taken up by the Heads of Departments with the Principal Accounts Officers (or the PAO concerned) for
reconciliation. The Head of the Department should furnish a quarterly certificate to the PrincipalAccounts
Officer certifying the correctness of the figures for the quarter by the 15th of the second following
month after the end of quarters April-June, July-September, October-December and January-March.
(6) The Departments of the Central Government should obtain from their Heads of Departments and other
offices under them the departmental figures of expenditure in Form GFR 12 by the 15th of the month
following the month to which the returns relate. The figures relating to Plan and Non-Plan expenditure
should be separately shown in these returns. The information so obtained should be posted in register(s)
kept for watching the flow of expenditure against the sanctioned grant or appropriation. Progressive totals
of expenditure should be worked out for the purpose. If the departmental figures obtained in Form GFR 12
and posted in the register(s), require correction in a subsequent month, Heads of Departments or other
offices should make such corrections by making plus or minus entries in the progressive totals. In case the
Accounts Office figures which subsequently become available are found to be higher than departmental
figures, the former should be assumed to be the correct figures, as appropriation accounts are prepared on
the basis of the figures booked in the accounts.
(7) The Departments of Central Government should also obtain from the Heads of Departments and other
authorities under them, statements showing the details of the physical progress of the schemes for which
they are responsible. This statement should show the name of the scheme, the Budget provision for each
scheme, the progressive expenditure on each scheme, the progress of the scheme in physical terms and
the detailed reasons for any shortfalls or excess, both against physical and financial targets.
(8) A Broadsheet in Form GFR 13 should be maintained by the Departments of Central Government or each
Head of Department and other authorities directly under them, to watch the prompt receipt of the various
returns mentioned above from month to month and to take necessary measures for rectifying any defaults
noticed.
Rule 53. Maintenance of Liability Register for effecting proper control over expenditure : In order to maintain
proper control over expenditure, a Controlling Officer should obtain from the spending authorities liability statements
in Form GFR 6-A every month, starting from the month of October in each financial year. The Controlling Officer
should also maintain a Liability Register in Form GFR 6.
Rule 54. Personal attention of the Head of Department /Controlling Officer required to estimate savings or
excesses : A Head of Department or Controlling Officer should be in a position to estimate the likelihood of savings
or excesses every month and to regularize them in accordance with the instructions laid down in Rule 56.
Rule 55. Control of expenditure against grant/appropriation and ultimate responsibility of the authority
administering it : The Accounts Officer should report to the Head of the Department concerned immediately on the

13
first appearance of any disproportionate expenditure, particularly in respect of recurring items of expenditure under
any grant or appropriation or a primary unit of appropriation thereof. However, the authority administering a grant/
appropriation is ultimately responsible for the control of expenditure against the grant/appropriation and not theAccounts
Officer.
Rule 56. Surrender of savings :
(1) Departments of the Central Government shall surrender to the Finance Ministry, by the dates prescribed by
that Ministry before the close of the financial year, all the anticipated savings noticed in the Grants or
Appropriations controlled by them. The Finance Ministry shall communicate the acceptance of such
surrenders as are accepted by them to the Accounts Officer, before the close of the year. The funds
provided during the financial year and not utilized before the close of that financial year shall stand lapsed
at the close of the financial year.
(2) The savings as well as provisions that cannot be profitably utilised should be surrendered to Government
immediately they are foreseen without waiting till the end of the year. No savings should be held in reserve
for possible future excesses.
(3) Rush of expenditure, particularly in the closing months of the Financial year, shall be regarded as a breach
of financial propriety and shall be avoided.
Rule 57. Expenditure on New Service : No expenditure shall be incurred during a financial year on a “New Service”
not contemplated in the Annual Budget for the year except after obtaining a supplementary grant or appropriation or
an advance from the Contingency Fund during that year. The guidelines to determine cases of “New Service”/”New
Instrument of Service” are contained in Annexure-1 to Appendix -3.
Rule 58. Additional Allotment for excess expenditure :
(1) A subordinate authority incurring the expenditure will be responsible for seeing that the allotment placed at
its disposal is not exceeded. Where any excess over the allotment is apprehended, the subordinate authority
should obtain additional allotment before incurring the excess expenditure. For this purpose, the authorities
incurring expenditure should maintain a ‘Liability Register’ in Form GFR 6.
(2) A Disbursing Officer may not, on his own authority, authorize any payment in excess of the funds placed at
his disposal. If the Disbursing Officer is called upon to honour a claim, which is certain to produce an
excess over the allotment or appropriation at his disposal, he should take the orders of the administrative
authority to which he is subordinate before authorizing payment of the claim in question. The administrative
authority will then arrange to provide funds either by reappropriation or by obtaining a Supplementary Grant
or Appropriation or an advance from the Contingency Fund.
Rule 59. Reappropriation of Funds :
(1) Subject to the provisions of Rule 10 of the Delegation of Financial Powers Rules, 1978, and also subject to
such other general or specific restrictions as may be imposed by the Finance Ministry in this behalf,
reappropriation of funds from one primary unit of appropriation to another such unit within a grant or
appropriation, may be sanctioned by a competent authority at any time before the close of the financial year
to which such grant or appropriation relates.
(2) Reappropriation of funds shall be made only when it is known or anticipated that the appropriation for the
unit from which funds are to be transferred will not be utilized in full or that savings can be effected in the
appropriation for the said unit.
(3) Funds shall not be reappropriated from a unit with the intention of restoring the diverted appropriation to
that unit when savings become available under other units later in the year.
(4) An application for reappropriation of funds should ordinarily be supported by a statement in Form GFR 4 or
any other special form authorized by departmental regulations showing how the excess is proposed to be
met. In all orders, sanctioning reappropriation, the reasons for saving and excess of Rupees 1 lakh or over
and the primary units (secondary units, wherever necessary), affected should be invariably stated. The
authority sanctioning the reappropriation should endorse a copy of the order to the Accounts Officer.
Rule 60. Supplementary Grants : If savings are not available within the Grant to which the payment is required to be
debited, or if the expenditure is on “New Service” or “New Instrument of Service” not provided in the budget, necessary
Supplementary Grant or Appropriation in accordance with Article 115 (1) of the Constitution should be obtained before
payment is authorized.

14
Rule 61.
(1) Advance from Contingency Fund : When a need arises to incur unforeseen expenditure in excess of the
sanctioned grant or appropriation or on a new service not provided in Budget and there is not sufficient time
for the voting of the Supplementary Demand and the passing of the connected appropriation bill before
close of the financial year, an advance from the Contingency Fund set up under Article 267 (1) of the
Constitution shall be obtained before incurring the expenditure.
(2) An advance from the Contingency Fund shall also be obtained to meet expenditure in excess of the
provisions for the service included in an Appropriation (Vote on Account) Act.
(3) The application for an advance from the Contingency Fund should indicate inter alia the particulars of the
additional expenditure involved and the sanction to the advance has also to indicate the sub-head and the
primary unit of the Grant to which the expenditure appropriately relates. In case, however, any difficulty is
felt, the matter should be referred to the Finance Ministry for clarification.
(4) The procedure for obtaining an advance from the Contingency Fund and recoupment of the Fund shall be
as laid down in the Contingency Fund of India Rules, 1952, as amended from time to time. For ready
reference, rules have been placed at Appendix - 7 to this volume.
Rule 62. Inevitable Payments :
(i) Subject to the provisions of Article 114 (3) of the Constitution, money indisputably payable by Government
shall not ordinarily be left unpaid.
(ii) Suitable provision for anticipated liabilities should invariably be made in Demands for Grants to be placed
before Parliament.
Rule 63. For easy reference an extract relating to procedures followed in the Accounts Office for check against
provision of funds as a part of pre-check of bills has been placed at Appendix 14.
Rule 64. Duties and Responsibilities of the Chief AccountingAuthority :- The Secretary of a Ministry/Department
who is the Chief Accounting Authority of the Ministry/Department shall
(i) be responsible and accountable for financial management of his Ministry or Department.
(ii) ensure that the public funds appropriated to the Ministry or Department are used for the purpose for which
they were meant.
(iii) be responsible for the effective, efficient, economical and transparent use of the resources of the Ministry
or Department in achieving the stated project objectives of that Ministry or Department, whilst complying
with performance standards.
(iv) appear before the Committee on Public Accounts and any other Parliamentary Committee for examination.
(v) review and monitor regularly the performance of the programmes and projects assigned to his Ministry to
determine whether stated objectives are achieved.
(vi) be responsible for preparation of expenditure and other statements relating to his Ministry or Department
as required by regulations, guidelines or directives issued by Ministry of Finance.
(vii) shall ensure that his Ministry or Department maintains full and proper records of financial transactions and
adopts systems and procedures that will at all times afford internal controls.
(viii) shall ensure that his Ministry or Department follows the Government procurement procedure for execution
of works, as well as for procurement of services and supplies, and implements it in a fair, equitable,
transparent, competitive and cost-effective manner;
(ix) shall take effective and appropriate steps to ensure his Ministry or Department : -
(a) collects all moneys due to the Government and
(b) avoids unauthorized, irregular and wasteful expenditure.

CHAPTER - 4
GOVERNMENT ACCOUNTS
Rule 65. Preparation and presentation of Accounts : Accounts of the Union Government shall be prepared every
year showing the receipts and disbursements for the year, surplus or deficit generated during the year and changes
in Government liabilities and assets. The accounts so prepared shall be certified by the Comptroller and Auditor
General of India. The report of the Comptroller and Auditor-General of India relating to these accounts shall be
submitted to the President of India, who shall cause them to be laid before each House of Parliament.
Rule 66. Form of Accounts : By virtue of the provisions of Article 150 of the Constitution, the Accounts of the Union
Government shall be kept in such form as the President may, on the advice of the Comptroller and Auditor General of
India, prescribe.
The Controller General of Accounts in the Ministry of Finance (Department of Expenditure) 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.
Rule 67. Principles of Accounting : The main principles according to which the accounts of the Government of India
shall be maintained are contained in Government Accounting Rules, 1990; Accounting Rules for Treasuries; and
Account Code Volume-III. Detailed rules and instructions relating to the forms of the initial and subsidiary accounts to
be kept and rendered by officers of the Department of Posts and other technical departments are laid down in the
respective Accounts Manuals or in the departmental regulations relating to the department concerned.
Rule 68. Cash based Accounting : Government accounts shall be prepared on cash basis. With the exception of
such book adjustments as may be authorised by Government Accounting Rules, 1990 or by any general or special
order 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.
Rule 69. Period of Accounts : The annual accounts of the Central Government shall record transactions which take
place during a financial year running from the 1st April to the 31st March thereof.
Rule 70. Currency in which Accounts are kept : The accounts of Government shall be maintained in Indian rupees.
All foreign currency transactions and foreign aid shall be brought into account after conversion into Indian rupees.
Rule 71. Main Divisions and structure of Accounts : The accounts of Government shall be kept in three parts,
namely Consolidated Fund (Part-I), Contingency Fund (Part-II) and Public Account (Part-III).
Part-I - Consolidated Fund is divided into two Divisions, namely, ‘Revenue’ and ‘Capital’ divisions. The Revenue
Division comprises of the sections ‘Receipt Heads (Revenue Account)’ dealing with the proceeds of taxation and
other receipts classified as revenue and the section ‘Expenditure Heads (RevenueAccount)’ dealing with the expenditure
met therefrom. The Capital Division comprises of three sections, viz., ‘Receipt Heads (CapitalAccount)’, ‘Expenditure
Heads (CapitalAccount)’ and ‘Public Debt, Loans andAdvances, etc.’. These sections are in turn divided into sectors
such as ‘General Services’, ‘Social and Community Services’, ‘Economic Services’, etc., under which specific functions
or services are grouped corresponding to the sectors of Plan classification and which are represented by Major
Heads (comprising Sub-Major Heads wherever necessary).
In Part-II - Contingency Fund, are recorded transactions connected with the Contingency Fund set up by the
Government of India under Article 267 of the Constitution or Section 48 of Government of Union TerritoriesAct, 1963.
There shall be a single Major Head to record the transactions thereunder, which will be followed by Minor, Sub and/or
Detailed Heads.
In Part-III - Public Account, transactions relating to debt (other than those included in Part-I), reserve funds,
deposits, advances, suspense, remittances and cash balances shall be recorded.
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Rule 72. Classification of transactions in Government Accounts : As a general rule, classification of transactions
in Government Accounts, shall have closer reference to functions, programmes and activities of the Government and
the object of revenue or expenditure, rather than the department in which the revenue or expenditure occurs.
Major Heads (comprising Sub-Major Heads wherever necessary) are divided into Minor Heads. Minor Heads
may have a number of subordinate heads, generally known as Sub Heads. The Sub Heads are further divided into
Detailed Heads followed by Object Heads.
The Major Heads of account, falling within the sectors for expenditure heads, generally correspond to functions
of Government, while the Minor Heads identify the programmes undertaken to achieve the objectives of the functions
represented by the Major Head. The Sub Head represents schemes, the Detailed Head denotes sub scheme and
Object Head represent the primary unit of appropriation showing the economic nature of expenditure such as salaries
and wages, office expenses, travel expenses, professional services, grants-in-aid, etc. The above six tiers are
represented by a unique 15 digit numeric code.
Rule 73. Authority to open a new Head of Account : The List of Major and Minor Heads of Accounts of Union and
States is maintained by the Ministry of Finance (Department of Expenditure – Controller General of Accounts) which
is authorised to open a new head of account on the advice of the Comptroller and Auditor General of India under the
powers flowing from Article 150 of the Constitution. It contains General Directions for opening Heads ofAccounts and
a complete list of the Sectors, Major, Sub-Major and Minor Heads of Accounts (and also some Sub/Detailed Heads
under some of them authorised to be so opened).
Ministries/Departments may open Sub-Heads and Detailed Heads as required by them in consultation with the
Budget Division of the Ministry of Finance. Their Principal Accounts Offices may open Sub/Detailed Heads required
under the Minor Heads falling within the Public Account of India subject to the above stipulations.
The Object Heads have been prescribed under Government of India’s Orders below Rule 8 of Delegation of
Financial Power Rules. The power to amend or modify these object heads and to open new Object Heads rest with
Department of Expenditure of Ministry of Finance on the advice of the Comptroller and Auditor General of India.
Rule 74. Conformity of budget heads with rules of classification : Budget Heads exhibited in estimates of
receipts and expenditure framed by the Government or in any appropriation order shall conform to the prescribed
rules of classification.
Rule 75. Responsibility of Departmental officers : Every officer responsible for the collection of Government dues
or expenditure of Government money shall see that proper accounts of the receipts and expenditure, as the case may
be, are maintained in such form as may have been prescribed for the financial transactions of Government with which
he is concerned and tender accurately and promptly all such accounts and returns relating to them as may be
required by Government, Controlling Officer or Accounts Officer, as the case may be.
Rule 76. Classification should be recorded in all the bills and challans by Drawing Officers : Suitable classification
shall be recorded by Drawing Officers on all bills drawn by them. Similarly, classification on challans crediting
Government money into the Bank shall be indicated or recorded by Departmental Officers responsible for the collection
of Government dues, etc. In cases of doubt regarding the Head under which a transaction should be accounted,
however, the matter shall be referred to the Principal Accounts Officer of the Ministry/Department concerned for
clarification of the Ministry of Finance and the Controller General of Accounts, wherever necessary.
Rule 77. Charged or Voted Expenditure : The expenditure covered under Article 112 (3) of the Constitution of India
is charged on the Consolidated Fund of India and is not subject to vote by the legislature. All other expenditure met
out of the Consolidated Fund of India is treated as Voted expenditure. Charged or Voted Expenditure shall be shown
separately in the accounts as well as in the Budget documents.
Rule 78. Plan or Non plan Expenditure : Plan expenditure representing expenditure on Plan outlays approved for
each scheme or organisation by the Planning Commission and indicating the extent to which such outlays are met out
of budgetary provisions shall be shown distinctly from the other (Non-Plan) expenditure in the accounts as well as in
the Budget documents.
Rule 79. Capital or Revenue Expenditure : Significant expenditure incurred with the object of acquiring tangible
assets of a permanent nature (for use in the organisation and not for sale in the ordinary course of business) or
enhancing the utility of existing assets, shall broadly be defined as Capital expenditure. Subsequent charges on

17
maintenance, repair, upkeep and working expenses, which are required to maintain the assets in a running order as
also all other expenses incurred for the day to day running of the organisation, including establishment and administrative
expenses shall be classified as Revenue expenditure. Capital and Revenue expenditure shall be shown separately in
the Accounts.
Rule 80. Banking Arrangements : The Reserve Bank of India (RBI) shall be the banker to the Government. It shall
maintain cash balance of the Government and provide banking facilities to the Ministries and subordinate or attached
offices either directly through its own offices or through its agent banks. For this purpose, RBI shall, in consultation
with the Controller General of Accounts, nominate a bank to function as Accredited Bank of a Ministry or Department.
Pay & Accounts offices and Cheque Drawing and Disbursing Officer shall have assignment accounts with the identified
branches of the Accredited Bank of the ministry. All payments shall be made through these identified bank branches.
These branches shall also collect departmental and other receipts. Tax revenues of the Government shall be collected
by the RBI through its own offices or through the nominated branches of its agent banks.
Note: Detailed procedure to be followed for remittance of Government receipts into Government cash balance and
reimbursement of payments made on behalf of Government by the banks are laid down in the Memoranda of Instructions
issued by the Reserve Bank of India.
ANNUALACCOUNTS
Rule 81. Appropriation Accounts : Appropriation Accounts of Central Ministries (other than Ministry of Railways)
and of Central Civil Departments (excluding Department of Posts and Defence Services) shall be prepared by the
Principal Accounts Officers of the respective Ministries and Departments (under the guidance and supervision of the
Controller General of Accounts) and signed by their respective Chief Accounting Authorities i.e., the Secretaries in the
concerned Ministries or Departments. Union Government Appropriation Accounts (Civil) required to be submitted to
Parliament, shall be prepared annually by the Controller General ofAccounts by consolidating the aforesaidAppropriation
Accounts.
Appropriation Accounts pertaining to Departments of Posts and Defence Services shall be prepared and signed
by the Secretaries to the Government of India in the Department of Posts and Ministry of Defence respectively and
that of Ministry of Railways by the Chairman, Railway Board.
Rule 82. Finance Accounts : Annual accounts of the Government of India (including transactions of Department of
Posts and Ministries of Defence and Railways and transactions under Public Account of India of Union Territory
Governments), showing under the respective Heads the annual receipts and disbursements for the purpose of the
Union, called Finance Accounts, shall be prepared by the Controller-General of Accounts.
Rule 83. Presentation of Annual accounts : The Appropriation and Finance accounts mentioned above, shall be
prepared by the respective authorities on the dates mutually agreed upon with the Comptroller andAuditor-General of
India, in the forms prescribed by the President on the advice of the Comptroller and Auditor-General of India 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 of India 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.
PROFORMAACOUNTS
Rule 84. Subsidiary Accounts of Government Departments undertaking commercial activities : Where the
operations of certain government departments working on a commercial or quasi-commercial basis e.g., an industrial
factory or a store cannot be suitably brought within the cash based Government accounting system, the Head of the
units shall be required to maintain such subsidiary proforma accounts in commercial form as may be agreed between
Government and Comptroller and Auditor-General. This includes the maintenance of suitable Manufacturing, Trading,
Profit & Loss Accounts and Balance Sheet.
Rule 85. Methods and principles on which subsidiary accounts in commercial form are to be kept : The
methods and principles in accordance with which subsidiary and proforma accounts in commercial form are to be
kept shall be regulated by orders and instructions issued by Government in each case.
Note 1. Proforma accounts of regular Government Workshops and Factories shall be kept in accordance with the
detailed rules and procedure prescribed in the departmental regulations. Proforma accounts relating to Public Works
shall be prepared by the Accounts Officers in accordance with the instructions contained in Account Code for
Accountants General.

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Note 2. The Heads of Account (which should, as far as possible, be common to the Government accounts and the
General Ledger maintained by a Commercial Undertaking) shall 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
undertaking may be prepared readily from the General Ledger maintained by it.
Rule 86. Adequate regulations to be framed to ensure cost deduced is accurate and true : Where commercial
accounts are maintained for the purpose of assessment of the cost of an article or service, the Head of the unit shall
ensure that adequate regulations are framed with the approval of Government in order to ensure that the cost deduced
from the accounts is accurate and true.
Rule 87. Maintenance and submission of subsidiary accounts and statements by department units : The
Head of the unit shall arrange to obtain the orders of Government regarding the nature and form of subsidiary
accounts and statements, if any. Such accounts and statements shall be submitted to the Accounts Officer on such
date as may be required by him. The same shall be appended to the Appropriation Accounts of each year.
PERSONAL DEPOSIT ACCOUNT
Rule 88. Personal Deposit Account : Personal Deposit Account is a device intended to facilitate the Designated
Officer thereof to credit receipts into and effect withdrawals directly from the account, subject to an overall check
being exercised by the bank in which the account is authorised to be opened. The Designated Officer shall ensure
(with the help of a personal ledger account to be maintained by the bank for the purpose) that no withdrawal will result
in a minus balance therein. Only Government officers acting in their official or any other capacity shall be the Designated
Officer thereof.
Rule 89. Authority to open Personal Deposit Account :
(1) The Personal Deposit Account shall be authorised to be opened by a special order by the concerned
Ministry or Department in consultation with the Controller General of Accounts. Such special order or
permission shall be issued or granted by the Ministry or Department concerned after it is satisfied that the
initial accounts of the moneys to be held in a personal deposit account and disbursed, shall be arranged to
be maintained properly and shall be subject to audit. Every personal deposit account so authorised to be
opened, shall form part of the Government Account and be located in the Public Account thereof. The
provisions relating to “Personal Deposit Account” are contained in para 16.7 of Civil Accounts Manual and
Rule 191 to 194 of Central Government Account (Receipts and Payments) Rules.
(2) Personal Deposit accounts shall generally be authorised to be opened in the following types of cases:
(a) in favour of a Designated Officer appointed for the purpose of administering monies tendered by or on
behalf of wards and attached estates under Government management. It shall also be ensured that
proper arrangements are made for the maintenance and audit of connected initial accounts;
(b) in relation to Civil and Criminal Courts’ deposits, in favour of the Chief Judicial authority concerned;
(c) where, under certain regulatory activities of the Government, receipts are realised and credited to a
Fund or Account under the provisions of an Act to be utilised towards expenditure thereunder and no
outgo from the Consolidated Fund is involved.
(d) where a personal deposit account is required to be created by a law or rules having the force of law and
certain liabilities devolve on the Government out of the special enactments;
(e) officers commanding units and others concerned in the administration of public funds in the Defence
Departments can be authorised to open personal deposit accounts for such funds.
CAPITAL AND REVENUE ACCOUNTS
Rule 90. Capital Expenditure : Significant expenditure incurred with the object of acquiring tangible assets of a
permanent nature (for use in the organisation and not for sale in the ordinary course of business) or enhancing the
utility of existing assets, shall broadly be defined as Capital expenditure. Subsequent, charges on maintenance,
repair, upkeep and working expenses, which are required to maintain the assets in a running order as also all other
expenses incurred for the day to day running of the organisation, including establishment and administrative expenses,
shall be classified as Revenue expenditure. Capital and Revenue expenditure shall be shown separately in the
Accounts.
Expenditure on a temporary asset or on grants-in-aid cannot ordinarily be considered as a capital expenditure
and shall not, except in cases specifically authorised by the President on the advice of the Comptroller and Auditor-
General of India, be debited to a Capital Head.

19
Capital expenditure is generally met from receipts of capital nature, as distinguished from ordinary revenues
derived from taxes, duties, fees, fines and similar items of current income including extraordinary receipts. It is open
to the Government to meet capital expenditure from ordinary revenues, provided there are sufficient revenue resources
to cover this liability.
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.
Expenditure of a Capital nature shall be distinguished from Revenue expenditure both in the Budget estimates
and in Government Accounts.
Rule 91. Principles for allocation of expenditure between Capital and Revenue : The following are the main
principles governing the allocation of expenditure between Revenue and Capital:-
(a) Capital shall 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 shall also bear charges for such
further additions and improvements, which enhance the useful life of the asset, as may be sanctioned
under rules made by competent authority.
(b) Subject to Clause (c) below, revenue shall bear subsequent charges for maintenance and all working
expenses. These embrace all expenditure on the working and upkeep of the project and also on renewals
and replacements and additions, improvements or extensions that are revenue in nature as per rules made
by Government.
(c) In the case of works of renewal and replacement, which partake expenditure both of a capital and revenue
nature, the allocation of expenditure shall 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. Only the cost of genuine improvements, which enhance the useful life of the asset
whether determined by prescribed rules or formulae, or under special orders of Government, may be
debited to Capital. 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 and the Fund shall be so regulated as to
guard against overcapitalisation 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, etc., shall be charged to Capital, or to Revenue, or divided between them,
depending upon whether such expenditure results in creation/acquisition of new assets or whether it is only
for restoring the condition of the existing assets, as may be determined by Government according to the
circumstance of each case.
Rule 92. Allocation between capital and revenue expenditure : The allocation between capital and revenue
expenditure on a Capital Scheme for which separate Capital and RevenueAccounts are to be kept, shall be determined
in accordance with such general or special orders as may be prescribed by the Government after consultation with
the Comptroller and Auditor-General
Rule 93. Capital receipts during construction mainly to be utilised in reduction of capital expenditure : Capital
receipts in so far they relate to expenditure previously debited to Capital accruing during the process of construction
of a project, shall be utilised in reduction of capital expenditure. Thereafter their treatment in the accounts will depend
on circumstances, but except under special rule or order of Government, they shall not be credited to the revenue
account of the department or undertaking.
Rule 94. Receipts and recoveries representing recoveries of expenditure previously debited to Capital Major
Head : Receipts and recoveries on Capital Account in so far 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.
Rule 95. Capital cost of non-productive work to be met from ordinary revenues : As a general rule, capital cost
of works which are non productive in nature is met from ordinary revenues. Borrowed moneys and other resources
outside the RevenueAccount shall not ordinarily be spent for non productive purposes unless the following conditions
are fulfilled:-
(a) The objects for which the money is wanted are so urgent and vital that the expenditure can neither be
avoided, postponed or distributed over a series of years; and
(b) The amount is too large to be met from current revenues.

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Rule 96. Conversion of outstanding loans into equity investments or grants-in-aid : Government takes from
time to time, suitable measures to strengthen/restructure the Capital base of public sector enterprises so that these
enterprises can improve their performance and productivity. As a part of the package scheme, financial relief in the
form of conversion of outstanding loans into equity investments or grants-in-aid are also agreed to.
Where loans outstanding against Public Sector Undertakings are proposed to be converted into equity investments
in or as grants-in-aid to the Public Sector Undertakings, the approval of the Parliament to such proposals, shall be
obtained by including a token provision in the relevant Demands for Grants or Supplementary Demands for Grants as
may be found expedient. The details of such conversion of loans may be explained in the relevant Budget/Supplementary
Demand documents. After obtaining the approval of the Parliament, the balances under loans and the progressive
expenditure of the Capital Heads ofAccounts shall be corrected pro forma through “Prior Period AdjustmentAccount”
in the relevant Finance Accounts of the Union Government without affecting the current transactions of the year,
under the Loan/Capital Major Heads concerned.
INTEREST ON CAPITAL
Rule 97. Interest rate : Except in special cases regulated by special orders of Government, interest at such rates as
may be specified from time to time shall be charged in the accounts of all Commercial departments or units for which
separate capital and revenue accounts are maintained within the Government accounts.
Rule 98. Charging of interest on capital outlay met out of specific loans raised by Government :
(1) For capital outlay met out of specific loans raised by Government, the interest shall be charged at such rate
as may be prescribed by Government, having regard to the rate of interest actually paid on such loans and
the incidental charges incurred in raising and managing them.
By specific loans are meant loans that are raised in the open market for one specific purpose which is
clearly specified in the prospectus and in regard to which definite information is given at the time of raising
of the loans.
(2) For capital outlay provided otherwise, interest shall be charged at the average rate of interest to be determined
each year by the Department of Economic Affairs, Ministry of Finance.
(3) In the case of Capital Outlay of the Railways, dividend is payable to the general revenues on the capital-at-
charge at the rate prescribed in the Railway Convention Resolution from time to time.
Rule 99. Method of calculation of interest : The interest shall be calculated on the direct capital outlay at the end of
the previous year plus half the outlay of the year itself, irrespective of whether such outlay has been met from current
revenues or from other sources.
Rule 100. How interest charged to capital is to be written back : When under any special orders of Government,
charges for interest during the process of construction of a project are temporarily met from capital, the writing back
of capitalised interest shall form the first charge on any capital receipts or surplus revenue derived from the project
when opened for working.
ADJUSTMENTS WITH OTHER GOVERNMENTS’ DEPARTMENTS, ETC.
Rule 101. Adjustments with State Governments : Subject to the relevant provision of the Constitution or of law
made by Parliament or any orders issued thereunder, adjustments in respect of financial transactions with State
Governments shall, unless otherwise provided for, be made in such manner, and to such extent as may be mutually
agreed upon between the Central Government and the State Government concerned. However, adjustments with
State Government in respect of the matters mentioned below shall be regulated by the rules contained in Appendix-
5 to the Government Accounting Rules, 1990. The rules are based on reciprocal arrangements made with the State
Governments and are, therefore, binding on all of them:-
(i) Pay and Allowances, other than Leave Salaries.
(ii) Leave Salaries.
(iii) Pensions.
(iv) Expenditure involved in Audit and Keeping Accounts.
(v) Cost of Police functions on Railways including the cost of protecting Railway Bridges.
(vi) Cost of (a) Forest Surveys carried out by the Survey of India, and (b) Forest maps prepared by that
Department.

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(vii) Leave Salary and Pension Contributions recovered in respect of Government servants lent on Foreign
Service.
Rule 102. Reaudit : As a convention, a period of three years has been accepted by the Central and State Governments
for the reaudit of past transactions involving errors in classification.
Rule 103. When adjustment necessary : Adjustment shall always be made unless otherwise agreed upon-
(a) If a commercial department or undertaking or a regularly organised store department or store section of a
department is concerned, or
(b) If under the operation of any rule or order, an adjustment would have been made if the particular transaction
with State Government were a transaction between two departments of the Central Government.
Rule 104. Petty and isolated claims for services rendered not to be preferred: The Central Government (which
includes Union Territories) and the State Governments have agreed under reciprocal arrangements not to prefer petty
and isolated claims for an amount not exceeding Rupees two thousand five hundred against one another.
Rule 105. Criteria in determining whether a particular claim is covered by the reciprocal arrangement : The
significant criterion in determining whether a particular claim is covered by the reciprocal arrangement mentioned
above, will be that the claim shall be both petty and of an occasional character and shall cover services rendered and
not supplies made unless the latter forms part of service. The term “service rendered” will be taken to mean an
individual act of service, like providing police escort to a high dignitary and will not apply to supply of stores etc. Claims
relating to Commercial undertakings under the Government of India or the State Governments such as those of the
Railways, the Department of Post, the Electrical undertakings, etc., shall fall outside the purview of the proposed
reciprocal arrangements and shall continue to be settled as hitherto.
If a doubt arises as to whether a particular claim would fall within or outside the purview of the proposed arrangement,
it shall be decided by mutual consultation. The above arrangements will remain in force without any time limit in
respect of all State Governments.
Rule 106. Projects jointly executed by several State Governments : 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 other participating Governments recovered
subsequently; such recoveries from other Governments shall be exhibited as abatement of charges under the relevant
expenditure Head of Account in the books of the Governments incurring the expenditure initially.
Rule 107. Claims of State Governments, on account of the extra cost of agency functions : Claims of State
Governments, on account of the extra cost of agency functions entrusted to them under Article 258 of the Constitution
shall be dealt with and settled in accordance with such directions as may be issued by the President in this regard
from time to time.
Rule 108. Principles to be observed in dealing with State Government claims : The following principles shall be
generally observed in dealing with claims preferred by State Governments under Clause (3) of Article 258 of the
Constitution:-
(a) If the agency work involves the employment of a State Commercial Department, it would be open to that
department to charge its normal commercial costs.
(b) Public Works Department agency costs shall be represented by such percentage charges on the cost of
Central Works executed by the State as may be agreed between the Central and the State Government
concerned, works outlay being treated as an amount placed at the disposal of the State Government for
actual expenditure on the execution of the work.
(c) The cost of regular joint establishment shall be shared as far as practicable on the basis of fixed annual
sums settled in agreement with the State Government concerned.
(d) In other cases, the following procedure shall be adopted unless there are special orders to the contrary:-
(i) Details of claims preferred by State Governments shall be ascertained.
(ii) If the work has been performed by the State Government in the past, the charges shall be compared
with those charged in the past but it is not necessary to be meticulous in the matter.
(iii) If the charges are found to be reasonable and do not exceed Rupees twenty thousand per annum for
any individual item (or connected group of items), a five years’ contract shall be offered to the State
Government during which the Central Government would pay the fixed sum per annum for the work.

22
The amount will be subjected to review at the end of each period of five years.
(iv) If the amount agreed upon exceeds Rupees twenty thousand, it shall be necessary to have an annual
statement of proposed charges from the State Government at the time of preparation of the Budget.
However, if in any individual case, the charges are obviously static, then the contract system may be
adopted in these cases also.
(e) In exceptional cases in which arbitration has to be resorted to, the Finance Ministry will make the requisite
arrangement in the matter.
(f) The Finance Ministry shall be consulted on all matters arising under Article 258 (3) of the Constitution.
Rule 109. Principles governing transactions in connection with the agency functions entrusted to State
Government : The following procedure shall be followed in regard to transactions arising in connection with the
agency functions entrusted to the State Governments under Article 258 of the Constitution:
(a) The expenditure on extra staff or contingencies which the State Government have to incur.-The extra cost
to the State Government arising mainly in respect of the additional staff employed or contingent and other
expenditure, as in the case of work devolving on the State Governments in connection with the administration
of the Census Act, is reimbursable under Article 258 (3) of the Constitution. Expenditure in this regard shall
be provided in the State Budget in the first instance and adjusted in the accounts of the State Governments
under the normal Heads ofAccounts. These will be reimbursed in lump to the State Governments, necessary
provision being made under a distinct sub-head” Amounts paid to other Governments, Departments, etc.”,
under the concerned Demand of the Ministry administratively concerned with the subject. In computing the
extra cost, the element of leave and pensionary charges can also be included, provided the relevant service
and financial rules of the State Governments provide for this.
(b) The expenditure on work entrusted to the State Government, such as expenditure on construction and
maintenance of National Highways, expenditure on Defence Works, Aviation Works, etc. -The expenditure
directly connected with the execution of the scheme or work entrusted to the State Government such as
expenditure on the construction or maintenance of National Highways, etc., will be adjusted direct in the
accounts of the Central Government under the relevant Head of Account. The question of including the
estimates in this regard in the Budget of the State Governments and subjecting them to the vote of the
State Legislature will not arise. The expenditure will be adjusted under the Head “8658 – Suspense Accounts
–PAO Suspense” in the Remittance Section of the StateAccounts in the first instance pending their eventual
clearance in accordance with the prescribed procedure.
Note: In the converse case relating to the entrustment of a State function to the Central Government under Article
258-A of the Constitution, a procedure similar to that indicated in the Rule 109 above shall be followed. The extra cost
on staff and other contingent expenditure, etc., will accordingly have to be provided in the Budget of the Central
Government in the usual manner and recovery made in lump from the State Government concerned. The other
expenditure on execution of the work proper should be debited to the State Government concerned direct and the
question of obtaining a vote of the Parliament for the same will not arise.
Rule 110. Crucial date for closure of inter-Government adjustments : Inter-Governmental adjustments can be
carried out upto the 15th of April on which date the books of the Reserve Bank are closed for the month of March.
Every endeavour must, therefore, be made to settle as far as possible all transactions with State Governments before
the close of the year.
Rule 111. Adjustments with foreign Governments, outside bodies, etc. : Unless exempted by Government by
general or special orders, services shall not be rendered to any foreign Government or non-Government body or
institution or to a separate fund constituted as such except on payment.
Rule 112. Recoveries of expenditure for services rendered to non-Government parties : Recoveries of expenditure
for services rendered 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.
Rule 113. Recoveries of expenditure for services rendered as an agent : When a Government undertakes a
service merely as an agent of a private body, the entire cost of the service shall be recovered from that body so that
the net cost to Government is nil. The recoveries shall be taken as reduction of expenditure.
Explanation: The term ‘recovery’ is used in these rules to denote repayment of, or payment by non-Government
parties or other Governments towards charges initially incurred and classified by a Central Government Department
in the account, as final expenditure by debit to a Revenue or Capital Head of Account. Recoveries towards

23
establishment charges, tools and plants, fees for procurement of inspection of stores or both etc., effected at percentage
rates or otherwise, are some examples.
Rule 114. Payments to outside body or fund to be through grant-in-aid : Any relief in respect of payment for
services rendered or supplies made to any outside body or fund shall ordinarily be given through a grant-in-aid rather
than by remission of dues.
Rule 115. Charges relating to the maintenance and demarcations and disputes over boundaries : The incidence
of charges relating to the maintenance and demarcations and disputes over boundaries between India and a foreign
country is regulated by the following principles;-
(a) Maintenance – Half the maintenance charges will be borne by the Central Government, the other half being
recovered, as far as practicable, from the foreign country, failing which the foreign country’s share will also
be borne by the Central Government.
(b) Demarcation and Disputes – Charges relating to demarcation of boundaries and boundary disputes will be
borne by the Central Government under Entry 10 of the Union List, subject to such recovery as shall be
made from the Foreign Country.
(c) Where streams or other watercourses form the boundaries and where the ordinary principle of median line
applies, the Government concerned (i.e., Foreign Country or India) will bear the cost of maintenance of the
boundary line on its side. Where a separate set of survey marks is maintained by each of the two Governments
on its side, the cost of maintenance of the survey marks shall be borne by the Government concerned.
Exception:
(i) The arrangement in (a) above in its application to Nepal will be subject to special arrangements worked
out in consultation with the Nepal Government.
(ii) The share of the Bhutan Government for maintenance and demarcation of and disputes over boundaries
will be borne by the Central Government for the present.
INTER-DEPARTMENTAL ADJUSTMENTS
Rule 116. Inter-Departmental Adjustments : Save as expressly provided by any general or special orders, a Service
Department shall not charge other departments for services rendered or supplies made which falls within the class of
duties for which the former department is constituted. However, a commercial department or undertaking shall ordinarily
charge and be charged for any supplies made and services rendered to, or by, other departments of Government.
Rule 117. Principles for division of Departments for purposes of inter-departmental payments : 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-
(i) Are inseparable from and form part of the idea of Government e.g. Departments of Administration of
Justice, Jails, Police, Education, Medical, Public Health, Forest, Defence; or
(ii) Are necessary to and form part of, the general conduct of the business of Government e.g. Departments
of Survey, Government Printing, Stationery, Public Works (Building and Roads Branch), Central Purchase
Organisation (Director-General of Supplies and Disposals, New Delhi).
(b) Commercial Departments or Undertakings.-These are established mainly for the 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 governmental functions. They are
required to work to a financial result determined through accounts maintained on commercial principles.
Rule 118. Period for preferment of claims : All claims shall ordinarily be preferred between Departments, both
commercial and non-commercial of the Central Government, within the same financial year and not beyond three
years from the date of transaction. This limitation, however, may be waived in specific cases by mutual agreement
between the departments concerned.
Rule 119. Procedure for settlement of inter-departmental adjustments : The settlement of inter-departmental
adjustments shall be regulated by the directions contained in Chapter 4 of Government Accounting Rules, 1990.
Rule 120. Inter-departmental and other adjustments to be made in the account year : Under the directions

24
contained in the Account Code for Accountants General, inter-departmental and other adjustments are not to be
made in the accounts of the past year, if they could not have been reasonably anticipated in time for funds being
obtained from the proper authority. In all cases, where the adjustment could have reasonably been anticipated as, for
example, recurring payments to another Government or department and payments which, though not of fixed amount,
are of a fixed character, etc., the Accounts Officer will automatically make the adjustment in the accounts before they
are finally closed. The onus of proving that the adjustments could not have been reasonably anticipated should lie
with the Controlling Officer.
As between different Departments of the same Government, the recoveries effected for services rendered shall
be classified as deductions from the gross expenditure. However, recoveries made by a Commercial Department,
e.g., Railways, Posts or a departmental commercial undertaking in respect of services rendered in pursuance of the
functions for which the Commercial Department is constituted shall be treated as receipts of the Department but
where it acts as an agent for the discharge of functions not germane to the essential purpose of the Department, the
recoveries shall be taken as reduction of expenditure.
Exception.-Recoveries of fees for purchase, inspection, etc., effected by the Central Purchase Organizations of
Government of India, are treated as receipts of the Department concerned.
NOTE I.-The term ‘recovery’ is used in this rule to denote repayment of/or payment by one Department of the same
Government towards charges initially incurred and classified by another Department in its accounts as final expenditure
by debit to a Revenue or Capital Head of Account. 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.
NOTE 2.-Recoveries effected from another Department of the same Government which are to be classified as deduction
from the gross expenditure, shall be shown in the relevant Demand for Grant as “below the line” recovery under the
appropriate major, etc., Head of Account. Recovery actually effected, irrespective of the year to which it relates shall
be adjusted in accounts in the schedule of recovery to be attached to the Appropriation Account of the year in which
the recovery is effected.
Rule 121. Adjustment of Pensionary Charges of certain Commercial Departments : Except as otherwise provided,
the pensionary liability of commercial departments and undertakings, for which pro forma commercial accounts are
maintained, shall be assessed on a contribution basis at such rates as may be fixed by Government from time to time.
In the case of departments and undertakings, for which no regular commercial accounts are maintained either within
or outside the regular Government accounts but which are allowed to charge for their products or services rendered,
the pensionary liability shall be taken into account in the estimate of overhead charges and manufacturing costs for
the purpose of calculating the issue price of goods manufactured or fees for services rendered. The calculation shall
be made at rates prescribed for the purpose by Government.
NOTE: The Railways, Posts and Defence Departments are regarded as separate Governments for the purpose of
adjustment of pensionary charges.
Rule 122. Pensionary liability in the case of Government Departments/Undertakings declared as commercial
: In the case of Government Departments and Undertakings declared as commercial, adjustment of Pensionary
liability shall be made in the regular accounts by charging the average of the percentage for 15th year of service
stipulated inAppendix-ll-Ato the P & T Compilation of Fundamental and Supplementary Rules, Volume-II, duly rounded
to the nearest whole number. The average of the rates for Groups ‘A’ to ‘D’ employees prescribed in O.M. No. F. 8 (9)-
E. 111/81, dated the 29th July, 1982, issued by the Ministry of Finance (Department of Expenditure), works out to
twelve per cent.

CHAPTER - 5
WORKS
Rule 123. Original works means all new constructions, additions and alterations to existing works, special repairs to
newly purchased or previously abandoned buildings or structures, including remodeling or replacement.
Repair works means works undertaken to maintain building and fixtures.
Rule 124. Administrative control of works includes:
(i) assumption of full responsibility for construction, maintenance and upkeep;
(ii) proper utilization of buildings and allied works;
(iii) provision of funds for execution of these functions.
Rule 125. Powers to sanction works : The powers delegated to various subordinate authorities to accord
administrative approval, sanction expenditure and re-appropriate funds for works are regulated by the Delegation of
Financial Powers Rules, 1978, and other orders contained in the respective departmental regulations.
Rule 126.
(1) A Ministry or Department at its discretion may directly execute repair works estimated to cost upto Rupees
ten Lakhs after following due procedure indicated in Rule 132.
(2) A Ministry or Department may, at its discretion, assign repair works estimated to cost above Rupees ten
Lakhs and upto Rupees thirty Lakhs to any Public Works Organisation, which includes State Public Works
Divisions, other Central Government organisations authorised to carry out civil or electrical works such as
Central Public Works Department (CPWD), Military Engineering Service (MES), Border Roads Organisation
etc. or Public Sector Undertakings set up by the Central or State Government to carryout civil or electrical
works.
(3) All original works costing upto Rupees ten Lakhs may be assigned by the Ministry or Department concerned
to a Public Works Organisations as defined in Rule 126(2).
(4) All original works estimated to cost above Rupees ten Lakhs and repair works estimated to cost above
Rupees thirty Lakhs may be got executed through a Public Works Organisations as defined in Rule 126(2)
after consultation with the Ministry of Urban Development.
Rule 127. Work under the administrative control of the Public Works Departments : Works not specifically
allotted to any Ministry or Department shall be included in the Grants for Civil Works to be administered by Central
Public Works Department. No such work may be financed partly from funds provided in departmental budget and
partly from the budget for Civil works as mentioned above.
Rule 128. General Rules : Subject to the observance of these general rules, the initiation, authorization and execution
of works allotted to a particular Ministry or Department shall be regulated by detailed rules and orders contained in the
respective departmental regulations and by other special orders applicable to them.
Rule 129.
(1) No works shall be commenced or liability incurred in connection with it until, -
(i) administrative approval has been obtained from the appropriate authority in each case;
(ii) sanction to incur expenditure has been obtained from the competent authority;
(iii) a properly detailed design has been sanctioned;
(iv) estimates containing the detailed specifications and quantities of various items have been prepared on
the basis of the Schedule of Rates maintained by CPWD or other Public Works Organisations and
sanctioned;
(v) funds to cover the charge during the year have been provided by competent authority;
(vi) tenders invited and processed in accordance with rules;
(vii) a Work Order issued.
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(2) On grounds of urgency or otherwise, if it becomes necessary to carry out a work or incur a liability under
circumstances when the provisions set out under sub rule 1 of rule 129 cannot be complied with, the
concerned executive officer may do so on his own judgement and responsibility. Simultaneously, he should
initiate action to obtain approval from the competent authority and also to intimate the concerned Accounts
Officer.
(3) Any development of a project considered necessary while a work is in progress, which is not contingent on
the execution of work as first sanctioned, shall have to be covered by a supplementary estimate.
Rule 130. For purpose of approval and sanctions, a group of works which forms one project, shall be considered as
one work. The necessity for obtaining approval or sanction of higher authority to a project which consists of such a
group of work should not be avoided because of the fact that the cost of each particular work in the project is within
the powers of such approval or sanction of a lower authority. This provision, however, shall not apply in case of works
of similar nature which are independent of each other.
Rule 131. Any anticipated or actual savings from a sanctioned estimate for a definite project, shall not, without special
authority, be applied to carry out additional work not contemplated in the original project.
Rule 132. Procedure for Execution of Works : The broad procedure to be followed by a Ministry or Department for
execution of works under its own arrangements shall be as under :-
(i) the detailed procedure relating to expenditure on such works shall be prescribed by departmental regulations
framed in consultation with the Accounts Officer, generally based on the procedures and the principles
underlying the financial and accounting rules prescribed for similar works carried out by the Central Public
Works Department (CPWD);
(ii) preparation of detailed design and estimates shall precede any sanction for works;
(iii) no work shall be undertaken before Issue of Administrative Approval and Expenditure Sanction by the
competent Authority on the basis of estimates framed;
(iv) open tenders will be called for works costing Rupees five lakhs to Rupees ten lakhs;
(v) limited tenders will be called for works costing less than Rupees five lakhs;
(vi) execution of Contract Agreement or Award of work should be done before commencement of the work;
(vii) final payment for work shall be made only on the personal certificate of the officer-in-charge of execution of
the work in the format given below:
“ I …………………..……, Executing Officer of (Name of the Work), am personally satisfied that the work
has been executed as per the specifications laid down in the Contract Agreement and the workmanship is
upto the standards followed in the Industry.”
Rule 133. For original works and repair works entrusted to a ‘Public Works Organisation’ as defined in Rule 126(2),
the administrative approval and expenditure sanction shall be accorded and funds allotted by the concerned authority
under these rules and in accordance with the Delegation of Financial Power Rules 1978. The Public Works Organisation
shall then execute the work entrusted to it in accordance with the rules and procedures prescribed in that organisation.
Rule 134. Review of Projects : After a project costing Rupees ten crores or above is approved, the Administrative
Ministry or Department will set up a Review Committee consisting of a representative each from the Administrative
Ministry, Finance (Internal Finance Wing) and the Executing Agency to review the progress of the work. The Review
Committee shall have the powers to accept variation within 10% of the approved estimates. For works costing less
that Rupees ten crores, it will be at the discretion of the Administrative Ministry/Department to set up a Review
Committee on the above lines.

CHAPTER - 6
PROCUREMENT OF GOODS AND SERVICES
I. PROCUREMENT OF GOODS
Rule 135. This chapter contains the general rules applicable to all Ministries or Departments, regarding procurement
of goods required for use in the public service. Detailed instructions relating to procurement of goods may be issued
by the procuring departments broadly in conformity with the general rules contained in this Chapter.
Rule 136. Definition of Goods : The term ‘goods’ used in this chapter includes all articles, material, commodities,
livestock, furniture, fixtures, raw material, spares, instruments, machinery, equipment, industrial plant etc. purchased
or otherwise acquired for the use of Government but excludes books, publications, periodicals, etc. for a library.
Rule 137. Fundamental principles of public buying : Every authority delegated with the financial powers of procuring
goods in public interest shall have the responsibility and accountability to bring efficiency, economy, transparency in
matters relating to public procurement and for fair and equitable treatment of suppliers and promotion of competition
in public procurement.
The procedure to be followed in making public procurement must conform to the following yardsticks :-
(i) the specifications in terms of quality, type etc., as also quantity of goods to be procured, should be clearly
spelt out keeping in view the specific needs of the procuring organisations. The specifications so worked
out should meet the basic needs of the organisation without including superfluous and non-essential features,
which may result in unwarranted expenditure. Care should also be taken to avoid purchasing quantities in
excess of requirement to avoid inventory carrying costs;
(ii) offers should be invited following a fair, transparent and reasonable procedure;
(iii) the procuring authority should be satisfied that the selected offer adequately meets the requirement in all
respects;
(iv) the procuring authority should satisfy itself that the price of the selected offer is reasonable and consistent
with the quality required;
(v) at each stage of procurement the concerned procuring authority must place on record, in precise terms,
the considerations which weighed with it while taking the procurement decision.
Rule 138.Authorities competent to purchase goods : An authority which is competent to incur contingent expenditure
may sanction the purchase of goods required for use in public service in accordance with Schedule V of the Delegation
of Financial Powers Rules, 1978, following the general procedure contained in the following rules.
Rule 139. Procurement of goods required on mobilisation : Procurement of goods required on mobilisation and/
or during the continuance of Military operations shall be regulated by special rules and orders issued by the Government
on this behalf from time to time.
Rule 140. Powers for procurement of goods : The Ministries or Departments have been delegated full powers to
make their own arrangements for procurement of goods. In case however, a Ministry or Department does not have
the required expertise, it may project its indent to the Central Purchase Organisation (e.g. DGS&D) with the approval
of competent authority. The indent form to be utilised for this purpose will be as per the standard form evolved by the
Central Purchase Organisation.
Rule 141. Rate Contract : The Central Purchase Organisation (e.g. DGS&D) shall conclude rate contracts with the
registered suppliers, for goods and items of standard types, which are identified as common user items and are
needed on recurring basis by various Central Government Ministries or Departments. Definition of Registered suppliers
is given in Rule 142 below. The Central Purchase Organisation will furnish and update all the relevant details of the
rate contracts in its web site. The Ministries or Departments shall follow those rate contracts to the maximum extent
possible.
Rule 142. Registration of Suppliers :
(i) With a view to establishing reliable sources for procurement of goods commonly required for Government
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use, the Central Purchase Organisation (e.g. DGS&D) will prepare and maintain item-wise lists of eligible
and capable suppliers. Such approved suppliers will be known as “Registered Suppliers”. All Ministries or
Departments may utilise these lists as and when necessary. Such registered suppliers are prima facie
eligible for consideration for procurement of goods through Limited Tender Enquiry. They are also ordinarily
exempted from furnishing bid security along with their bids.AHead of Department may also register suppliers
of goods which are specifically required by that Department or Office.
(ii) Credentials, manufacturing capability, quality control systems, past performance, after-sales service, financial
background etc. of the supplier(s) should be carefully verified before registration.
(iii) The supplier(s) will be registered for a fixed period (between 1 to 3 years) depending on the nature of the
goods. At the end of this period, the registered supplier(s) willing to continue with registration are to apply
afresh for renewal of registration. New supplier(s) may also be considered for registration at any time,
provided they fulfil all the required conditions.
(iv) Performance and conduct of every registered supplier is to be watched by the concerned Ministry or
Department. The registered supplier(s) are liable to be removed from the list of approved suppliers if they
fail to abide by the terms and conditions of the registration or fail to supply the goods on time or supply
substandard goods or make any false declaration to any Government agency or for any ground which, in
the opinion of the Government, is not in public interest.
Rule 143. Enlistment of Indian Agents : As per the Compulsory Enlistment Scheme of the Department of Expenditure,
Ministry of Finance, it is compulsory for Indian agents, who desire to quote directly on behalf of their foreign principals,
to get themselves enlisted with the Central Purchase Organisation (eg. DGS&D). However, such enlistment is not
equivalent to registration of suppliers as mentioned under Rule 142 above.
Rule 144. Reserved Items : The Central Government, through administrative instructions, has reserved all items of
handspun and handwoven textiles (khadi goods) for exclusive purchase from Khadi Village Industries Commission
(KVIC). It has also reserved all items of handloom textiles required by Central Government departments for exclusive
purchase from KVIC and/or the notified handloom units of ACASH (Association of Corporations and Apex Societies
of Handlooms). The Central Government has also reserved some items for purchase from registered Small Scale
Industrial Units. The Central Departments or Ministries are to make their purchases for such reserved goods and
items from such units as per the instructions issued by the Central Government in this regard.
Rule 145. Purchase of goods without quotation : Purchase of goods upto the value of Rs. 15,000/- (Rupees
Fifteen Thousand) only on each occasion may be made without inviting quotations or bids on the basis of a certificate
to be recorded by the competent authority in the following format.
“I, ___________________, am personally satisfied that these goods purchased are of the requisite quality
and specification and have been purchased from a reliable supplier at a reasonable price.”
Rule 146. Purchase of goods by purchase committee : Purchase of goods costing above Rs. 15,000/- (Rupees
Fifteen Thousand) only and upto Rs. 1,00,000/- (Rupees One lakh) only on each occasion may be made on the
recommendations of a duly constituted Local Purchase Committee consisting of three members of an appropriate
level as decided by the Head of the Department. The committee will survey the market to ascertain the reasonableness
of rate, quality and specifications and identify the appropriate supplier. Before recommending placement of the purchase
order, the members of the committee will jointly record a certificate as under.
“Certified that we _____________________, members of the purchase committee are jointly and individually
satisfied that the goods recommended for purchase are of the requisite specification and quality, priced at the prevailing
market rate and the supplier recommended is reliable and competent to supply the goods in question. “
Rule 147. Purchase of goods directly under rate contract :
(1) In case a Ministry or Department directly procures Central Purchase Organisation (e.g. DGS&D) rate
contracted goods from suppliers, the prices to be paid for such goods shall not exceed those stipulated in
the rate contract and the other salient terms and conditions of the purchase should be in line with those
specified in the rate contract. The Ministry or Department shall make its own arrangement for inspection
and testing of such goods where required.
(2) The Central Purchase Organisation (e.g. DGS&D) should host the specifications, prices and other salient
details of different rate contracted items, appropriately updated, on the web site for use by the procuring
Ministry or Department.

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Rule 148. A demand for goods should not be divided into small quantities to make piece meal purchases to avoid the
necessity of obtaining the sanction of higher authority required with reference to the estimated value of the total
demand.
Rule 149. Purchase of goods by obtaining bids: Except in cases covered under Rule 145, 146 and 147(1),
Ministries or Departments shall procure goods under the powers referred to in Rule 140 above by following the
standard method of obtaining bids in :
(i) Advertised Tender Enquiry;
(ii) Limited Tender Enquiry;
(iii) Single Tender Enquiry.
Rule 150. Advertised Tender Enquiry.
(i) Subject to exceptions incorporated under Rules 151 and 154, invitation to tenders by advertisement should
be used for procurement of goods of estimated value Rs. 25 lakh (Rupees Twenty Five Lakh) and above.
Advertisement in such case should be given in the Indian Trade Journal (ITJ), published by the Director
General of Commercial Intelligence and Statistics, Kolkata and at least in one national daily having wide
circulation.
(ii) An organisation having its own web site should also publish all its advertised tender enquiries on the web
site and provide a link with NIC web site. It should also give its web site address in the advertisements in ITJ
and newspapers.
(iii) The organisation should also post the complete bidding document in its web site and permit prospective
bidders to make use of the document downloaded from the web site. If such a downloaded bidding document
is priced, there should be clear instructions for the bidder to pay the amount by demand draft etc. along with
the bid.
(iv) Where the Ministry or Department feels that the goods of the required quality, specifications etc., may not
be available in the country and it is necessary to also look for suitable competitive offers from abroad, the
Ministry or Department may send copies of the tender notice to the Indian embassies abroad as well as to
the foreign embassies in India. The selection of the embassies will depend on the possibility of availability
of the required goods in such countries.
(v) Ordinarily, the minimum time to be allowed for submission of bids should be three weeks from the date of
publication of the tender notice or availability of the bidding document for sale, whichever is later. Where
the department also contemplates obtaining bids from abroad, the minimum period should be kept as four
weeks for both domestic and foreign bidders.
Rule 151. Limited Tender Enquiry.
(i) This method may be adopted when estimated value of the goods to be procured is up to Rupees Twenty-
five Lakhs. Copies of the bidding document should be sent directly by speed post/registered post/courier/
e-mail to firms which are borne on the list of registered suppliers for the goods in question as referred under
Rule 142 above. The number of supplier firms in Limited Tender Enquiry should be more than three.
Further, web based publicity should be given for limited tenders. Efforts should be made to identify a higher
number of approved suppliers to obtain more responsive bids on competitive basis.
(ii) Purchase through Limited Tender Enquiry may be adopted even where the estimated value of the
procurement is more than Rupees twenty-five Lakhs, in the following circumstances.
(a) The competent authority in the Ministry or Department certifies that the demand is urgent and any
additional expenditure involved by not procuring through advertised tender enquiry is justified in view of
urgency. The Ministry or Department should also put on record the nature of the urgency and reasons
why the procurement could not be anticipated.
(b) There are sufficient reasons, to be recorded in writing by the competent authority, indicating that it will
not be in public interest to procure the goods through advertised tender enquiry.
(c) The sources of supply are definitely known and possibility of fresh source(s) beyond those being
tapped, is remote.
(iii) Sufficient time should be allowed for submission of bids in Limited Tender Enquiry cases.
Rule 152. Two bid system : For purchasing high value plant, machinery etc. of a complex and technical nature, bids
may be obtained in two parts as under :-
(a) Technical bid consisting of all technical details alongwith commercial terms and conditions; and
(b) Financial bid indicating item-wise price for the items mentioned in the technical bid.

30
The technical bid and the financial bid should be sealed by the bidder in separate covers duly superscribed and
both these sealed covers are to be put in a bigger cover which should also be sealed and duly superscribed. The
technical bids are to be opened by the purchasing Ministry or Department at the first instance and evaluated by a
competent committee or authority. At the second stage financial bids of only the technically acceptable offers should
be opened for further evaluation and ranking before awarding the contract.
Rule 153. Late Bids : In the case of advertised tender enquiry or limited tender enquiry, late bids (i.e. bids received
after the specified date and time for receipt of bids) should not be considered.
Rule 154. Single Tender Enquiry.
Procurement from a single source may be resorted to in the following circumstances :
(i) It is in the knowledge of the user department that only a particular firm is the manufacturer of the required
goods.
(ii) In a case of emergency, the required goods are necessarily to be purchased from a particular source and
the reason for such decision is to be recorded and approval of competent authority obtained.
(iii) For standardisation of machinery or spare parts to be compatible to the existing sets of equipment (on the
advice of a competent technical expert and approved by the competent authority), the required item is to be
purchased only from a selected firm.
Note : Proprietary Article Certificate in the following form is to be provided by the Ministry/Department before procuring
the goods from a single source under the provision of sub Rule 154 (i) and 154 (iii) as applicable.
‘(i) The indented goods are manufactured by M/s……..………………..
(ii) No other make or model is acceptable for the following reasons :
……………………….
……………………….
……………………….
(iii) Concurrence of finance wing to the proposal vide : ………………..
(iv) Approval of the competent authority vide :………………………
________________________
________________________
(Signature with date and designation
of the procuring officer)’
Rule 155. Contents of Bidding Document : All the terms, conditions, stipulations and information to be incorporated
in the bidding document are to be shown in the appropriate chapters as below :-
Chapter – 1 : Instructions to Bidders.
Chapter – 2 : Conditions of Contract.
Chapter – 3 : Schedule of Requirements.
Chapter – 4 : Specifications and allied Technical Details.
Chapter – 5 : Price Schedule(to be utilised by the bidders for quoting their prices).
Chapter – 6 : Contract Form.
Chapter – 7 : Other Standard Forms, if any, to be utilised by the purchaser and the bidders.
Rule 156. Maintenance Contract : Depending on the cost and nature of the goods to be purchased, it may also be
necessary to enter into maintenance contract(s) of suitable period either with the supplier of the goods or with any
other competent firm, not necessarily the supplier of the subject goods. Such maintenance contracts are especially
needed for sophisticated and costly equipment and machinery. It may however be kept in mind that the equipment or
machinery is maintained free of charge by the supplier during its warranty period or such other extended periods as
the contract terms may provide and the paid maintenance should commence only thereafter.
Rule 157. Bid Security :
(i) To safeguard against a bidder’s withdrawing or altering its bid during the bid validity period in the case of
advertised or limited tender enquiry, Bid Security (also known as Earnest Money) is to be obtained from the
bidders except those who are registered with the Central Purchase Organisation, National Small Industries
Corporation (NSIC) or the concerned Ministry or Department. The bidders should be asked to furnish bid

31
security along with their bids. Amount of bid security should ordinarily range between two percent to five
percent of the estimated value of the goods to be procured. The exact amount of bid security, should be
determined accordingly by the Ministry or Department and indicated in the bidding documents. The bid
security may be accepted in the form of Account Payee Demand Draft, Fixed Deposit Receipt, Banker’s
Cheque or Bank Guarantee from any of the commercial banks in an acceptable form, safeguarding the
purchaser’s interest in all respects. The bid security is normally to remain valid for a period of forty-five days
beyond the final bid validity period.
(ii) Bid securities of the unsuccessful bidders should be returned to them at the earliest after expiry of the final
bid validity and latest on or before the 30th day after the award of the contract.
Rule 158. Performance Security :
(i) To ensure due performance of the contract, Performance Security is to be obtained from the successful
bidder awarded the contract. Performance Security is to be obtained from every successful bidder irrespective
of its registration status etc. Performance Security should be for an amount of five to ten per cent. of the
value of the contract. Performance Security may be furnished in the form of an Account payee Demand
Draft, Fixed Deposit Receipt from a Commercial bank, Bank Guarantee from a Commercial bank in an
acceptable form safeguarding the purchasers interest in all respects.
(ii) Performance Security should remain valid for a period of sixty days beyond the date of completion of all
contractual obligations of the supplier including warranty obligations.
(iii) Bid security should be refunded to the successful bidder on receipt of Performance Security.
Rule 159.
(1) Advance payment to supplier : Ordinarily, payments for services rendered or supplies made should be
released only after the services have been rendered or supplies made. However, it may become necessary
to make advance payments in the following types of cases :-
(i) Advance payment demanded by firms holding maintenance contracts for servicing of Air-conditioners,
computers, other costly equipment, etc.
(ii) Advance payment demanded by firms against fabrication contracts, turn-key contracts etc.
Such advance payments should not exceed the following limits :
(i) Thirty per cent. of the contract value to private firms;
(ii) Forty per cent. of the contract value to a State or Central Government agency or a Public Sector
Undertaking; or
(iii) in case of maintenance contract, the amount should not exceed the amount payable for six months
under the contract.
Ministries or Departments of the Central Government may relax, in consultation with their Financial Advisers
concerned, the ceilings (including percentage laid down for advance payment for private firms) mentioned
above. While making any advance payment as above, adequate safeguards in the form of bank guarantee
etc. should be obtained from the firm.
(2) Part payment to suppliers : Depending on the terms of delivery incorporated in a contract, part payment
to the supplier may be released after it despatches the goods from its premises in terms of the contract.
Rule 160. Transparency, competition, fairness and elimination of arbitrariness in the procurement process :
All government purchases should be made in a transparent, competitive and fair manner, to secure best value for
money. This will also enable the prospective bidders to formulate and send their competitive bids with confidence.
Some of the measures for ensuring the above are as follows:-
(i) the text of the bidding document should be self-contained and comprehensive without any ambiguities. All
essential information, which a bidder needs for sending responsive bid, should be clearly spelt out in the
bidding document in simple language. The bidding document should contain, inter alia;
(a) the criteria for eligibility and qualifications to be met by the bidders such as minimum level of experience,
past performance, technical capability, manufacturing facilities and financial position etc.;
(b) eligibility criteria for goods indicating any legal restrictions or conditions about the origin of goods etc
which may required to be met by the successful bidder;
(c) the procedure as well as date, time and place for sending the bids;
(d) date, time and place of opening of the bid;
(e) terms of delivery;
(f) special terms affecting performance, if any.

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(ii) Suitable provision should be kept in the bidding document to enable a bidder to question the bidding
conditions, bidding process and/ or rejection of its bid.
(iii) Suitable provision for settlement of disputes, if any, emanating from the resultant contract, should be kept
in the bidding document.
(iv) The bidding document should indicate clearly that the resultant contract will be interpreted under Indian
Laws.
(v) The bidders should be given reasonable time to send their bids.
(vi) The bids should be opened in public and authorised representatives of the bidders should be permitted to
attend the bid opening.
(vii) The specifications of the required goods should be clearly stated without any ambiguity so that the prospective
bidders can send meaningful bids. In order to attract sufficient number of bidders, the specification should
be broad based to the extent feasible. Efforts should also be made to use standard specifications which are
widely known to the industry.
(viii) Pre-bid conference : In case of turn-key contract(s) or contract(s) of special nature for procurement of
sophisticated and costly equipment, a suitable provision is to be kept in the bidding documents for a pre-bid
conference for clarifying issues and clearing doubts, if any, about the specifications and other allied technical
details of the plant, equipment and machinery projected in the bidding document. The date, time and place
of pre-bid conference should be indicated in the bidding document. This date should be sufficiently ahead
of bid opening date.
(ix) Criteria for determining responsiveness of bids, criteria as well as factors to be taken into account for
evaluating the bids on a common platform and the criteria for awarding the contract to the responsive
lowest bidder should be clearly indicated in the bidding documents.
(x) Bids received should be evaluated in terms of the conditions already incorporated in the bidding documents;
no new condition which was not incorporated in the bidding documents should be brought in for evaluation
of the bids. Determination of a bid’s responsiveness should be based on the contents of the bid itself
without recourse to extrinsic evidence.
(xi) Bidders should not be permitted to alter or modify their bids after expiry of the deadline for receipt of bids.
(xii) Negotiation with bidders after bid opening must be severely discouraged. However, in exceptional
circumstances where price negotiation against an ad-hoc procurement is necessary due to some unavoidable
circumstances, the same may be resorted to only with the lowest evaluated responsive bidder.
(xiii) In the rate contract system, where a number of firms are brought on rate contract for the same item,
negotiation as well as counter offering of rates are permitted with the bidders in view and for this purpose
special permission has been given to the Directorate General of Supplies and Disposals (DGS&D).
(xiv) Contract should ordinarily be awarded to the lowest evaluated bidder whose bid has been found to be
responsive and who is eligible and qualified to perform the contract satisfactorily as per the terms and
conditions incorporated in the corresponding bidding document. However, where the lowest acceptable
bidder against ad-hoc requirement is not in a position to supply the full quantity required, the remaining
quantity, as far as possible, be ordered from the next higher responsive bidder at the rates offered by the
lowest responsive bidder.
(xv) The name of the successful bidder awarded the contract should be mentioned in the Ministries or
Departments notice board or bulletin or web site
Rule 161. Efficiency, Economy andAccountability in Public Procurement System : Public procurement procedure
is also to ensure efficiency, economy and accountability in the system. To achieve the same, the following keys areas
should be addressed :-
(i) To reduce delay, appropriate time frame for each stage of procurement should be prescribed by the Ministry
or Department. Such a time frame will also make the concerned purchase officials more alert.
(ii) To minimise the time needed for decision making and placement of contract, every Ministry/Department,
with the approval of the competent authority, may delegate, wherever necessary, appropriate purchasing
powers to the lower functionaries.
(iii) The Ministries or Departments should ensure placement of contract within the original validity of the bids.
Extension of bid validity must be discouraged and resorted to only in exceptional circumstances.
(iv) The Central Purchase Organisation (e.g. DGS&D) should bring into the rate contract system more and
more common user items which are frequently needed in bulk by various Central Government departments.
The Central Purchase Organisation (e.g. DGS&D) should also ensure that the rate contracts remain available
without any break.

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Rule 162. Buy-Back Offer : When it is decided with the approval of the competent authority to replace an existing old
item(s) with a new and better version, the department may trade the existing old item while purchasing the new one.
For this purpose, a suitable clause is to be incorporated in the bidding document so that the prospective and interested
bidders formulate their bids accordingly. Depending on the value and condition of the old item to be traded, the time
as well as the mode of handing over the old item to the successful bidder should be decided and relevant details in
this regard suitably incorporated in the bidding document. Further, suitable provision should also be kept in the
bidding document to enable the purchaser either to trade or not to trade the item while purchasing the new one.
II. PROCUREMENT OF SERVICES
Rule 163. The Ministries or Departments may hire external professionals, consultancy firms or consultants (referred
to as consultant hereinafter) for a specific job, which is well defined in terms of content and time frame for its completion
or outsource certain services.
Rule 164. This chapter contains the fundamental principles applicable to all Ministries or Departments regarding
engagement of consultant(s) and outsourcing of services. Detailed instructions to this effect may be issued by the
concerned Ministries or Departments. However, the Ministries or Departments shall ensure that they do not contravene
the basic rules contained in this chapter.
Rule 165. Identification of Work/Services required to be performed by Consultants : Engagement of consultants
may be resorted to in situations requiring high quality services for which the concerned Ministry/ Department does not
have requisite expertise. Approval of the competent authority should be obtained before engaging consultant(s).
Rule 166. Preparation of scope of the required work/service : The Ministries/Departments should prepare in
simple and concise language the requirement, objectives and the scope of the assignment. The eligibility and pre-
qualification criteria to be met by the consultants should also be clearly identified at this stage.
Rule 167. Estimating reasonable expenditure : Ministry or Department proposing to engage consultant(s) should
estimate reasonable expenditure for the same by ascertaining the prevalent market conditions and consulting other
organisations engaged in similar activities.
Rule 168. Identification of likely sources :
(i) Where the estimated cost of the work or service is upto Rupees twenty-five lakhs, preparation of a long list
of potential consultants may be done on the basis of formal or informal enquiries from other Ministries or
Departments or Organisations involved in similar activities, Chambers of Commerce & Industry, Association
of consultancy firms etc.
(ii) Where the estimated cost of the work or service is above Rupees twenty-five lakhs, in addition to (i) above,
an enquiry for seeking ‘Expression of Interest’ from consultants should be published in at least one national
daily and the Ministry’s web site. The web site address should also be given in the advertisements. Enquiry
for seeking Expression of Interest should include in brief, the broad scope of work or service, inputs to be
provided by the Ministry or Department, eligibility and the pre-qualification criteria to be met by the
consultant(s) and consultant’s past experience in similar work or service. The consultants may also be
asked to send their comments on the objectives and scope of the work or service projected in the enquiry.
Adequate time should be allowed for getting responses from interested consultants
Rule 169. Short listing of consultants : On the basis of responses received from the interested parties as per Rule
168 above, consultants meeting the requirements should be short listed for further consideration. The number of
short listed consultants should not be less than three.
Rule 170. Preparation of Terms of Reference (TOR) : The TOR should include
(i) Precise statement of objectives;
(ii) Outline of the tasks to be carried out;
(iii) Schedule for completion of tasks;
(iv) The support or inputs to be provided by the Ministry or Department to facilitate the consultancy.
(v) The final outputs that will be required of the Consultant;
Rule 171. Preparation and Issue of Request for Proposal (RFP) : RFP is the document to be used by the Ministry/

34
Department for obtaining offers from the consultants for the required work/service. The RFP should be issued to the
shortlisted consultants to seek their technical and financial proposals. The RFP should contain :
(i) A letter of Invitation
(ii) Information to Consultants regarding the procedure for submission of proposal .
(iii) Terms of Reference (TOR).
(iv) Eligibility and pre-qualification criteria incase the same has not been ascertained through Enquiry for
Expression of Interest.
(v) List of key position whose CV and experience would be evaluated.
(vi) Bid evaluation criteria and selection procedure.
(vii) Standard formats for technical and financial proposal.
(viii) Proposed contract terms.
(ix) Procedure proposed to be followed for midterm review of the progress of the work and review of the final
draft report.
Rule 172. Receipt and opening of proposals : Proposals should ordinarily be asked for from consultants in ‘Two-
bid’ system with technical and financial bids sealed separately. The bidder should put these two sealed envelops in a
bigger envelop duly sealed and submit the same to the Ministry or Department by the specified date and time at the
specified place. On receipt, the technical proposals should be opened first by the Ministry or Department at the
specified date, time and place.
Rule 173. Late Bids : Late bids i.e. bids received after the specified date and time of receipt, should not be considered.
Rule 174. Evaluation of Technical Bids : Technical bids should be analysed and evaluated by a Consultancy
Evaluation Committee (CEC) constituted by the Ministry or Department. The CEC shall record in detail the reasons
for acceptance or rejection of the technical proposals analysed and evaluated by it.
Rule 175. Evaluation of Financial Bids of the technically qualified bidders : The Ministry or Department shall
open the financial bids of only those bidders who have been declared technically qualified by the Consultancy Evaluation
Committee as per Rule 174 above for further analysis or evaluation and ranking and selecting the successful bidder
for placement of the consultancy contract.
Rule 176. Consultancy by nomination : Under some special circumstances, it may become necessary to select a
particular consultant where adequate justification is available for such single-source selection in the context of the
overall interest of the Ministry or Department. Full justification for single source selection should be recorded in the file
and approval of the competent authority obtained before resorting to such single-source selection.
Rule 177. Monitoring the Contract : The Ministry/Department should be involved throughout in the conduct of
consultancy, preferably by taking a task force approach and continuously monitoring the performance of the consultant(s)
so that the output of the consultancy is in line with the Ministry /Department’s objectives.
OUTSOURCING OF SERVICES
Rule 178. Outsourcing of Services : A Ministry or Department may outsource certain services in the interest of
economy and efficiency and it may prescribe detailed instructions and procedures for this purpose without, however,
contravening the following basic guidelines.
Rule 179. Identification of likely contractors : The Ministry or Department should prepare a list of likely and
potential contractors on the basis of formal or informal enquiries from other Ministries or Departments and Organisations
involved in similar activities, scrutiny of ‘Yellow pages’, and trade journals, if available, web site etc.
Rule 180. Preparation of Tender enquiry : Ministry or Department should prepare a tender enquiry containing, inter
alia :
(i) The details of the work or service to be performed by the contractor;
(ii) The facilities and the inputs which will be provided to the contractor by the Ministry or Department;
(iii) Eligibility and qualification criteria to be met by the contractor for performing the required work/service;
and
(iv) The statutory and contractual obligations to be complied with by the contractor.

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Rule 181. Invitation of Bids:
(a) For estimated value of the work or service upto Rupees ten lakhs or less : The Ministry or Department
should scrutinise the preliminary list of likely contractors as identified as per Rule 179 above, decide the
prima facie eligible and capable contractors and issue limited tender enquiry to them asking for their offers
by a specified date and time etc. as per standard practice. The number of the contractors so identified for
issuing limited tender enquiry should not be less than six.
(b) For estimated value of the work or service above Rupees ten lakhs: The Ministry or Department should
issue advertised tender enquiry asking for the offers by a specified date and time etc. in at least one
popular largely circulated national newspaper and web site of the Ministry or Department.
Rule 182. Late Bids : Late bids i.e. bids received after the specified date and time of receipt, should not be considered.
Rule 183. Evaluation of Bids Received : The Ministry or Department should evaluate, segregate, rank the responsive
bids and select the successful bidder for placement of the contract.
Rule 184. Outsourcing by Choice : Should it become necessary, in an exceptional situation to outsource a job to
a specifically chosen contractor, the CompetentAuthority in the Ministry or Department may do so in consultation with
the Financial Adviser. In such cases the detailed justification, the circumstances leading to the outsourcing by choice
and the special interest or purpose it shall serve shall form an integral part of the proposal.
Rule 185. Monitoring the Contract : The Ministry or Department should be involved throughout in the conduct of the
contract and continuously monitor the performance of the contractor.

CHAPTER - 7
INVENTORY MANAGEMENT
Rule 186. This chapter contains the basic rules applicable to all Ministries or Departments regarding inventory
management. Detailed instructions and procedures relating to inventory management may be prescribed by various
Ministries or Departments broadly in conformity with the basic rules contained in this chapter.
Rule 187. Receipt of goods and materials from private suppliers :
(1) While receiving goods and materials from a supplier, the officer–in-charge of stores should refer to the
relevant contract terms and follow the prescribed procedure for receiving the materials.
(2) All materials shall be counted, measured or weighed and subjected to visual inspection at the time of
receipt to ensure that the quantities are correct, the quality is according to the required specifications and
there is no damage or deficiency in the materials. Technical inspection where required should be carried
out at this stage by Technical Inspector or Agency approved for the purpose. An appropriate receipt, in
terms of the relevant contract provisions may also be given to the supplier on receiving the materials.
(3) Details of the material so received should thereafter be entered in the appropriate stock register. The
officer-in-charge of stores should certify that he has actually received the material and recorded it in the
appropriate stock registers.
Rule 188. Receipt/issue of goods and materials from internal divisions of the same organisation :
(1) The indenting officer requiring goods and materials from internal division(s) of the same organisation should
project an indent in the prescribed form for this purpose. While receiving the supply against the indent, the
indenting officer shall examine, count, measure or weigh the materials as the case may be, to ensure that
the quantities are correct, the quality is in line with the required specifications and there is no damage or
deficiency in the materials. An appropriate receipt shall also be given to this effect by the indenting officer
to the division sending the materials.
(2) In the case of issue of materials from stock for departmental use, manufacture, sale, etc., the Officer-in-
charge of the stores shall see that an appropriate indent, in the prescribed form has been projected by the
indenting officer.Awritten acknowledgement of receipt of material issued shall be obtained from the indenting
officer or his authorised representative at the time of issue of materials.
(3) In case of materials issued to a contractor, the cost of which is recoverable from the contractor, all relevant
particulars, including the recovery rates and the total value chargeable to the contractor should be got
acknowledged from the contractor duly signed and dated.
(4) If the Officer-in-charge of the stores is unable to comply with the indent in full, he should make the supply
to the extent available and make suitable entry to this effect in the indentor’s copy of the indent. In case
alternative materials are available in lieu of the indented materials, a suitable indication to this effect may
be made in the document.
Rule 189. Custody of goods and materials : The officer-in-charge of stores having custody of goods and materials,
especially valuable and/or combustible articles, shall take appropriate steps for arranging their safe custody, proper
storage accommodation, including arrangements for maintaining required temperature, dust free environment etc.
Rule 190. Lists and Accounts :
(1) The Officer-in-charge of stores shall maintain suitable item-wise lists and accounts and prepare accurate
returns in respect of the goods and materials in his charge making it possible at any point of time to check
the actual balances with the book balances.
The form of the stock accounts mentioned above shall be determined with reference to the nature of the
goods and materials, the frequency of the transactions and the special requirements of the concerned
Ministries/Departments.
(2) Separate accounts shall be kept for
(i) Fixed Assets such as plant, machinery, equipment, furniture, fixtures etc. in the Form GFR-40.
(ii) Consumables such as office stationery, chemicals, maintenance spare parts etc. in the Form GFR-41.
(iii) Library books in the Form GFR 35
(iv) Assets of historical/artistic value held by museum/government departments in the Form GFR-42.
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Note : These forms can be supplemented with additional details by Ministries/Departments as required.
Rule 191. Hiring out of Fixed Assets : When a fixed asset is hired to local bodies, contractors or others, proper
record should be kept of the assets and the hire and other charges as determined under rules prescribed by the
competent authority, should be recovered regularly. Calculation of the charges to be recovered from the local bodies,
contractors and others as above should be based on the historical cost.
Rule 192.
(1) Physical verification of Fixed Assets : The inventory for fixed assets shall ordinarily be maintained at
site. Fixed assets should be verified at least once in a year and the outcome of the verification recorded in
the corresponding register. Discrepancies, if any, shall be promptly investigated and brought to account.
(2) Verification of Consumables : A physical verification of all the consumable goods and materials should
be undertaken at least once in a year and discrepancies, if any, should be recorded in the stock register for
appropriate action by the competent authority.
(3) Procedure for verification :
(i) Verification shall always be made in the presence of the officer, responsible for the custody of the
inventory being verified.
(ii) A certificate of verification alongwith the findings shall be recorded in the stock register.
(iii) Discrepancies, including shortages, damages and unserviceable goods, if any, identified during
verification, shall immediately be brought to the notice of the competent authority for taking appropriate
action in accordance with provision given in Rule 33 to 38.
Rule 193. Buffer Stock : Depending on the frequency of requirement and quantity thereof as well as the pattern of
supply of a consumable material, optimum buffer stock should be determined by the competent authority.
Note : As the inventory carrying cost is an expenditure that does not add value to the material being stocked, a
material remaining in stock for over a year shall generally be considered surplus, unless adequate reasons to treat it
otherwise exist.
Rule 194. Physical verification of Library books :
(i) Complete physical verification of books should be done every year in case of libraries having not more than
twenty thousand volumes. For libraries having more than twenty thousand volumes and upto fifty thousand
volumes, such verification should be done at least once in three years. Sample physical verification at
intervals of not more than three years should be done in case of libraries having more than fifty thousand
volumes. In case such a verification reveals unusual or unreasonable shortages, complete verification
shall be done.
(ii) Loss of five volumes per one thousand volumes of books issued/consulted in a year may be taken as
reasonable provided such losses are not attributable to dishonesty or negligence. However, loss of a book
of a value exceeding Rs. 1,000/- (Rupees One thousand only) and rare books irrespective of value shall
invariably be investigated and appropriate action taken.
Rule 195. Transfer of charge of goods, materials etc. : In case of transfer of Officer-in-charge of the goods,
materials etc., the transferred officer shall see that the goods or material are made over correctly to his successor. A
statement giving all relevant details of the goods, materials etc., in question shall be prepared and signed with date by
the relieving officer and the relieved officer. Each of these officers will retain a copy of the signed statement.
Rule 196. Disposal of Goods.
(i) An item may be declared surplus or obsolete or unserviceable if the same is of no use to the Ministry or
Department. The reasons for declaring the item surplus or obsolete or unserviceable should be recorded
by the authority competent to purchase the item.
(ii) The competent authority may, at his discretion, constitute a committee at appropriate level to declare
item(s) as surplus or obsolete or unserviceable.
(iii) The book value, guiding price and reserved price, which will be required while disposing of the surplus
goods, should also be worked out. In case where it is not possible to work out the book value, the original
purchase price of the goods in question may be utilised. A report of stores for disposal shall be prepared in
Form GFR - 17.
(iv) In case an item becomes unserviceable due to negligence, fraud or mischief on the part of a Government
servant, responsibility for the same should be fixed.

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Rule 197. Modes of Disposal :
(i) Surplus or obsolete or unserviceable goods of assessed residual value above Rupees Two Lakh should be
disposed of by :
a) obtaining bids through advertised tender or
b) public auction.
(ii) For surplus or obsolete or unserviceable goods with residual value less than Rupees Two Lakh, the mode
of disposal will be determined by the competent authority, keeping in view the necessity to avoid accumulation
of such goods and consequential blockage of space and, also, deterioration in value of goods to be disposed
of.
(iii) Certain surplus or obsolete or unserviceable goods such as expired medicines, food grain, ammunition
etc., which are hazardous or unfit for human consumption, should be disposed of or destroyed immediately
by adopting suitable mode so as to avoid any health hazard and/or environmental pollution and also the
possibility of misuse of such goods.
(iv) Surplus or obsolete or unserviceable goods, equipment and documents, which involve security concerns
(e.g. currency, negotiable instruments, receipt books, stamps, security press etc.) should be disposed of/
destroyed in an appropriate manner to ensure compliance with rules relating to official secrets as well as
financial prudence.
Rule 198. Disposal through Advertised Tender.
(i) The broad steps to be adopted for this purpose are as follows :
a) Preparation of bidding documents.
b) Invitation of tender for the surplus goods to be sold.
c) Opening of bids.
d) Analysis and evaluation of bids received.
e) Selection of highest responsive bidder.
f) Collection of sale value from the selected bidder.
g) Issue of sale release order to the selected bidder.
h) Release of the sold surplus goods to the selected bidder.
i) Return of bid security to the unsuccessful bidders.
(ii) The important aspects to be kept in view while disposing the goods through advertised tender are as
under:-
(a) The basic principle for sale of such goods through advertised tender is ensuring transparency,
competition, fairness and elimination of discretion. Wide publicity should be ensured of the sale plan
and the goods to be sold. All the required terms and conditions of sale are to be incorporated in the
bidding document comprehensively in plain and simple language. Applicability of taxes, as relevant,
should be clearly stated in the document.
(b) The bidding document should also indicate the location and present condition of the goods to be sold
so that the bidders can inspect the goods before bidding.
(c) The bidders should be asked to furnish bid security along with their bids. The amount of bid security
should ordinarily be ten per cent. of the assessed or reserved price of the goods. The exact bid security
amount should be indicated in the bidding document.
(d) The bid of the highest acceptable responsive bidder should normally be accepted. However, if the price
offered by that bidder is not acceptable, negotiation may be held only with that bidder. In case such
negotiation does not provide the desired result, the reasonable or acceptable price may be counter-
offered to the next highest responsive bidder(s).
(e) In case the total quantity to be disposed of cannot be taken up by the highest acceptable bidder, the
remaining quantity may be offered to the next higher bidder(s) at the price offered by the highest
acceptable bidder.
(f) Full payment, i.e. the residual amount after adjusting the bid security should be obtained from the
successful bidder before releasing the goods.
(g) In case the selected bidder does not show interest in lifting the goods, the bid security should be
forfeited and other actions initiated including re-sale of the goods in question at the risk and cost of the
defaulter, after obtaining legal advice.
(iii) Late bids i.e. bids received after the specified date and time of receipt should not to be considered.

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Rule 199. Disposal through Auction :
(i) A Ministry or Department may undertake auction of goods to be disposed of either directly or through
approved auctioneers.
(ii) The basic principles to be followed here are similar to those applicable for disposal through advertised
tender so as to ensure transparency, competition, fairness and elimination of discretion. The auction plan
including details of the goods to be auctioned and their location, applicable terms and conditions of the sale
etc. should be given wide publicity in the same manner as is done in case of advertised tender.
(iii) While starting the auction process, the condition and location of the goods to be auctioned, applicable
terms and conditions of sale etc., (as already indicated earlier while giving vide publicity for the same),
should be announced again for the benefit of the assembled bidders.
(iv) During the auction process, acceptance or rejection of a bid should be announced immediately on the
stroke of the hammer. If a bid is accepted, earnest money (not less than twenty-five per cent. of the bid
value) should immediately be taken on the spot from the successful bidder either in cash or in the form of
Deposit-at-Call-Receipt (DACR), drawn in favour of the Ministry or Department selling the goods. The
goods should be handed over to the successful bidder only after receiving the balance payment.
(v) The composition of the auction team will be decided by the competent authority. The team should however
include an officer of the Internal Finance Wing of the department.
Rule 200. Disposal at scrap value or by other modes : If a Ministry or Department is unable to sell any surplus or
obsolete or unserviceable item in spite of its attempts through advertised tender or auction, it may dispose off the
same at its scrap value with the approval of the competent authority in consultation with Finance division. In case the
Ministry or Department is unable to sell the item even at its scrap value, it may adopt any other mode of disposal
including destruction of the item in an eco-friendly manner.
Rule 201. A sale account should be prepared for goods disposed of in Form GFR 18 duly signed by the officer who
supervised the sale or auction.
Rule 202.
(1) Powers to write off : All profits and losses due to revaluation, stock-taking or other causes shall be duly
recorded and adjusted where necessary. Formal sanction of the competent authority shall be obtained in
respect of losses, even though no formal correction or adjustment in government accounts is involved.
Power to write off of losses are available under the Delegation of Financial Powers Rules, 1978.
(2) Losses due to depreciation : Losses due to depreciation shall be analyzed, and recorded under following
heads, as applicable :-
(i) normal fluctuation of market prices;
(ii) normal wear and tear;
(iii) lack of foresight in regulating purchases; and
(iv) negligence after purchase.
(3) Losses not due to depreciation : Losses not due to depreciation shall be grouped under the following
heads :-
(i) losses due to theft or fraud;
(ii) losses due to neglect;
(iii) anticipated losses on account of obsolescence of stores or of purchases in excess of requirements;
(iv) losses due to damage, and
(v) losses due to extra ordinary situations under ‘Force Majeure’ conditions like fire, flood, enemy action,
etc.;

CHAPTER - 8
CONTRACT MANAGEMENT
Rule 203.
(1) All contracts shall be made by an authority empowered to do so by or under the orders of the President in
terms of Article 299 (1) of the Constitution of India.
(2) All the contracts and assurances of property made in the exercise of the executive power of the Union shall
be executed on behalf of the President. The words “for and on behalf of the President of India” should
follow the designation appended below the signature of the officer authorized in this behalf.
Note 1: The various classes of contracts and assurances of property, which may be executed by different authorities,
are specified in the Notifications issued by the Ministry of Law from time to time.
Note 2 : The powers of various authorities, the conditions under which such powers should be exercised and the
general procedure prescribed with regard to various classes of contracts and assurances of property are laid down in
Rule 21 of the Delegation of Financial Powers Rules, 1978.
Rule 204. General principles for contract : The following general principles should be observed while entering into
contracts:
(i) The terms of contract must be precise, definite and without any ambiguities. The terms should not involve
an uncertain or indefinite liability, except in the case of a cost plus contract or where there is a price
variation clause in the contract.
(ii) Standard forms of contracts should be adopted wherever possible, with such modifications as are considered
necessary in respect of individual contracts. The modifications should be carried out only after obtaining
financial and legal advice.
(i) In cases where standard forms of contracts are not used, legal and financial advice should be taken in
drafting the clauses in the contract.
(iv) (a) A Ministry or Department may, at its discretion, make purchases of value upto Rupees one lakh by
issuing purchase orders containing basic terms and conditions:
(b) In respect of Works Contracts, or Contracts for purchases valued between Rupees one lakh to Rupees
ten lakhs, where tender documents include the General Conditions of Contract (GCC), Special Conditions
of Contract (SCC) and scope of work, the letter of acceptance will result in a binding contract.
(c) In respect of contracts for works with estimated value of Rupees ten lakhs or above or for purchase
above Rupees ten lakhs, a Contract document should be executed, with all necessary clauses to
make it a self-contained contract. If however, these are preceded by Invitation to Tender, accompanied
by GCC and SCC, with full details of scope and specifications, a simple one page contract can be
entered into by attaching copies of the GCC and SCC, and details of scope and specifications, Offer of
the Tenderer and Letter of Acceptance.
(d) Contract document should be invariably executed in cases of turnkey works or agreements for
maintenance of equipment, provision of services etc.
(v) No work of any kind should be commenced without proper execution of an agreement as given in the
foregoing provisions.
(vi) Contract document, where necessary, should be executed within 21 days of the issue of letter of acceptance.
Non-fulfilment of this condition of executing a contract by the Contractor or Supplier would constitute sufficient
ground for annulment of the award and forfeiture of Earnest Money Deposit.
(vii) Cost plus contracts should ordinarily be avoided. Where such contracts become unavoidable, full justification
should be recorded before entering into the contract. Where supplies or special work covered by such cost
plus contracts have to continue over a long duration, efforts should be made to convert future contracts on
a firm price basis after allowing a reasonable period to the suppliers/contractors to stabilize their production/
execution methods and processes.
Explanation : A cost plus contract means a contract in which the price payable for supplies or services
under the contract is determined on the basis of actual cost of production of the supplies or services
concerned plus profit either at a fixed rate per unit or at a fixed percentage on the actual cost of production.
(viii) (a) Price Variation Clause can be provided only in long-term contracts, where the delivery period extends
beyond 18 months. In short-term contracts firm and fixed prices should be provided for. Where a price
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variation clause is provided, the price agreed upon should specify the base level viz, the month and
year to which the price is linked, to enable variations being calculated with reference to the price levels
prevailing in that month and year.
(b) A formula for calculation of the price variations that have taken place between the Base level and the
Scheduled Delivery Date should be included in this clause. The variations are calculated by using
indices published by Governments or Chambers of Commerce periodically. An illustrative formula has
been appended to these rules at Appendix -15 for guidance.
(c) The Price variation clause should also specify cut off dates for material and labour, as these inputs
taper off well before the scheduled Delivery Dates.
(d) The price variation clause should provide for a ceiling on price variations, particularly where escalations
are involved. It could be a percentage per annum or an overall ceiling or both. The buyer should ensure
a provision in the contract for benefit of any reduction in the price in terms of the price variation clause
being passed on to him.
(e) The clause should also stipulate a minimum percentage of variation of the contract price above which
price variations will be admissible (e.g. where resultant increase is lower than two per cent. no price
adjustment will be made in favour of the supplier).
(f) Where advance or stage payments are made there should be a further stipulation that no price variations
will be admissible on such portions of the price, after the dates of such payment.
(g) Where deliveries are accepted beyond the scheduled Delivery Date subject to levy of liquidated damages
as provided in the Contract, the liquidated damages (if a percentage of the price) will be applicable on
the price as varied by the operation of the Price variation clause.
(h) No price variation will be admissible beyond the original Scheduled Delivery Date for defaults on the
part of the supplier.
(i) Price variation may be allowed beyond the original Scheduled Delivery Date, by specific alteration of
that date through an amendment to the contract in cases of Force Majeure or defaults by Government.
(j) Where contracts are for supply of equipment, goods etc, imported (subject to customs duty and foreign
exchange fluctuations) and/or locally manufactured (subject to excise duty and other duties and taxes),
the percentage and element of duties and taxes included in the price should be specifically stated,
along with the selling rate of foreign exchange element taken into account in the calculation of the price
of the imported item.
The mode of calculation of variations in duties and taxes and Foreign exchange rates and the documents
to be produced in support of claims for such variations, should also be stipulated in the Contract.
(k) The clause should also contain the mode and terms of payment of the price variation admissible.
(ix) Contracts should include provision for payment of all applicable taxes by the contractor or supplier.
(x) “Lumpsum’ contracts should not be entered into except in cases of absolute necessity. Where lumpsum
contracts become unavoidable, full justification should be recorded. The contracting authority should ensure
that conditions in the lumpsum contract adequately safeguard and protect the interests of the Government.
(xi) Departmental issue of materials should be avoided as far as possible. Where it is decided to supply materials
departmentally, a schedule of quantities with the issue rates of such material as are required to execute the
contract work, should form an essential part of the contract.
(xii) (a) In contracts where government property is entrusted to a contractor either for use on payment of hire
charges or for doing further work on such property, specific provision for safeguarding government
property (including insurance cover) and for recovery of hire charges regularly, should be included in
the contracts.
(b) Provision should be made in the contract for periodical physical verification of the number and the
physical condition of the items at the contractors premises. Results of such verification should be
recorded and appropriate penal action taken where necessary.
(xiii) Copies of all contracts and agreements for purchases of the value of Rupees Twenty-five Lakhs and
above, and of all rate and running contracts entered into by civil departments of the Government other than
the departments like the Directorate General of Supplies and Disposals for which a special audit procedure
exists, should be sent to the Audit Officer and /or the Accounts officer as the case may be.
(xiv) (a) The terms of a contract, including the scope and specification once entered into, should not be materially
varied.
(b) Wherever material variation in any of the terms or conditions in a contract becomes unavoidable, the
financial and other effects involved should be examined and recorded and specific approval of the
authority competent to approve the revised financial and other commitments obtained, before varying
the conditions.

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(c) All such changes should be in the form of an amendment to the contract duly signed by all parties to the
contract.
(xv) Normally no extensions of the scheduled delivery or completion dates should be granted except where
events constituting force majeure, as provided in the contract, have occurred or the terms and conditions
include such a provision for other reasons. Extensions as provided in the contract may be allowed through
formal amendments to the contract duly signed by parties to the contract.
(xvi) All contracts shall contain a provision for recovery of liquidated damages for defaults on the part of the
contractor.
(xvii) A warranty clause should be incorporated in every contract, requiring the supplier to, without charge, repair
or rectify defective goods or to replace such goods with similar goods free from defect. Any goods repaired
or replaced by the supplier shall be delivered at the buyers premises without costs to the buyer.
(xviii) All contracts for supply of goods should reserve the right of Government to reject goods which do not
conform to the specifications.
Rule 205. Management of Contracts :
(1) Implementation of the contract should be strictly monitored and notices issued promptly whenever a breach
of provisions occur.
(2) Proper procedure for safe custody and monitoring of Bank Guarantees or other Instruments should be laid
down. Monitoring should include a monthly review of all Bank Guarantees or other instruments expiring
after three months, alongwith a review of the progress of supply or work. Extensions of Bank Guarantees
or other instruments, where warranted, should be sought immediately.
(3) Wherever disputes arise during implementation of a contract, legal advice should be sought before initiating
action to refer the dispute to conciliation and/or arbitration as provided in the contract or to file a suit where
the contract does not include an arbitration clause. The draft of the plaint for arbitration should be got vetted
by obtaining legal and financial advice. Documents to be filed in the matter of resolution of dispute, if any,
should be carefully scrutinized before filing to safeguard government interest.

CHAPTER - 9
GRANTS-IN-AIDAND LOANS
I. GRANTS-IN-AID
Rule 206. As a general principle grants-in-aid can be given to a person or a public body or an institution having a
distinct legal entity. Thus grants-in-aid including scholarships may be sanctioned by an authority competent to do so
under the Delegation of Financial Powers Rules, 1978 to :-
(a) institutions or organizations set up as Autonomous Organisation under a specific statute or as a society
registered under the Societies Registration Act, 1860 or Indian Trusts Act, 1882 or other statutes.
(b) Voluntary organizations or Non Government Organisations carrying out activities which promote the welfare
schemes and programmes of the Government should be selected on the basis of well defined criteria
regarding financial and other resources, credibility and type of activities undertaken.
(c) Educational and other institutions by way of scholarships or stipends to the students.
(d) Urban and Rural local self government institutions
(e) Co-operative societies.
(f) Societies or clubs set up by Government servants to promote amongst themselves social, cultural and
sports activities as recreational avenue.
Rule 207. The Ministry or Department of the Central Government directly concerned with the aim or activity of the
Institution should consider requests for grants-in-aid in consultation with the concerned FinancialAdviser. The Financial
Adviser may associate a representative of Ministry of Finance wherever considered necessary.
Rule 208. General Principles for setting up of Autonomous Organisations referred to under Rule 206 (a) : -
(i) No new autonomous institutions should be created by Ministries or Departments without the approval of
the Cabinet.
(ii) Stringent criteria should be followed for setting up of new autonomous organisations and the type of activities
to be undertaken by them. The Ministry or Department should examine in detail; (a) whether the activities
proposed to be taken up are necessary at all; (b) whether these activities, if necessary, need to be undertaken
by setting up an autonomous organisation only or whether these could be performed by the concerned
government agency or any other organisation already existing.
(iii) All autonomous organisations, new or already in existence should be encouraged to maximise generation
of internal resources and eventually attain self sufficiency.
(iv) Instead of giving recurring grants, wherever possible, the Ministry or Department may consider creating a
Corpus Fund, the returns on investment of which, alongwith their internally generated resources should
enable the autonomous organisation to meet its revenue expenditure.
(v) A system of external or peer review of autonomous organisations every three or five years depending on
the size and nature of activity should be put in place. Such a review should focus, inter alia, on;
(a) the objective for which the autonomous organisation was set up and whether these objectives have
been or are being achieved;
(b) whether the activities should be continued at all, either because they are no longer relevant or have
been completed or if there has been a substantial failure in achievement of objectives. A zero based
budget approach should be followed in making this assessment.
(c) whether the nature of the activities is such that these need to be performed only by an autonomous
organisation.
(d) whether similar functions are also being undertaken by other organisations, be it in the central government
or state governments or the private sector, and if so, whether there is scope for merging or winding up
the organisations under review.
(e) whether the total staff complement, particularly at the support level, is kept at a minimum, whether the
enormous strides in information technology and communication facilities as also facilities for outsourcing
of work on a contract basis, have been taken into account in determining staff strength; and whether
scientific or technical personnel are being deployed on functions which could well be carried out by non
scientific or non technical personnel etc.
45

46
(f) whether user charges, wherever the output or services are utilised by others, are levied at appropriate
rates
(g) the scope for maximizing internal resources generation in the organisation so that the dependence
upon government budgetary support is minimised.
(vi) An organisation whose performance is found to be outstanding and internationally acclaimed as a result of
the review envisaged under (v) above should be granted greater autonomy and increased flexibility in
matters of recruitment and financial rules thereby enabling it to devise and adopt staff structures, procedures
and rules suited to improving their productivity.
(vii) Autonomous organisations as defined in (vi) above as also others with a budgetary support of more than
Rupees five crores per annum, should be required to enter into a Memorandum of Understanding with the
Administrative Ministry or Department, spelling out clearly the output targets in terms of details of programme
of work and qualitative improvement in output, alongwith commensurate input requirements. The output
targets, given in measurable units of performance, should form the basis of budgetary support extended to
these organisations.
Rule 209. Principles and Procedure for award of Grants-in-aid :
(1) Any Institution or Organisation seeking grants-in-aid from Government will be required to submit an application
which includes all relevant information such as Articles of Association, bye-laws, audited statement of
accounts, sources and pattern of income and expenditure etc. enabling the sanctioning authority to assess
the suitability of the Institution or Organisation seeking grant. The application should clearly spell out the
need for seeking grant and should be submitted in such form as may be prescribed by the sanctioning
authority. The Institution or Organisation seeking grants-in-aid should also certify that it has not obtained or
applied for grants for the same purpose or activity from any other Ministry or Department of the Government
of India or State Government.
NOTE : In order to obviate duplication in grants-in-aid, each Ministry or Department should maintain a list of Institutions
or Organisations alongwith details of amount and purpose of grants given to them on its web site.
(2) The Internal Finance Wing of the Ministry or Department concerned should lay down the rules or pattern of
assistance under the broad guidelines contained in this Chapter and instructions issued by the Ministry of
Finance from time to time. All sanctions of grants-in-aid issued by a Ministry or Department of the Central
Government or an Administrator in exercise of their powers under Rule 20 of the Delegation of Financial
Powers Rule, 1978, as amended from time to time, should conform to the pattern of assistance or rules
governing such grants-in-aid.
(3) Award of grants should be considered only on the basis of viable and specific schemes drawn up in sufficient
detail by the Institution or Organisation. The budget for such schemes should disclose, inter alia, the
specific quantified and qualitative targets likely to be attained against the outlay.
(4) Subject to the following terms and conditions, grants-in-aid towards administrative expenditure may be
sanctioned to voluntary organizations to ensure a certain minimum staff structure and qualified personnel
to improve their effectiveness and expand their activities under the following conditions :-
(a) The grants-in-aid should not exceed twenty-five per cent. of approved administrative expenditure on
pay and allowances of the personnel of the voluntary organisation concerned;
(b) Grants-in-aid to meet administrative expenditure to any private institutions other than the voluntary
organizations should not ordinarily be sanctioned. In exceptional cases such grants can be considered
for sanction in consultation with Internal Finance Wing.
(5) Every order sanctioning a grant shall indicate whether it is recurring or non-recurring and specify clearly the
object for which it is being given and the general and special conditions, if any, attached to the grant. In the
case of non-recurring grants for specified object, the order shall also specify the time limit within which the
grant or each installment of it, is to be spent.
(6) (i) The sanctioning authority may prescribe conditions regarding quantum and periodicity for release of
Grants-in-aid in installments in consultation with the Financial Adviser. However, the release of the last
installment of the annual grant must be conditional upon the grantee institutions providing reasonable
evidence of proper utilization of installments released earlier.
(ii) In order to avoid delay in sanction or release of grants in aid to the grantee Institutions, the Ministry or
Department should impress upon Institution or Organisation desiring grants from Government, to submit
their requirement with supporting details by the end of October in the year preceding the year for which
the grants-in-aid is sought. The Ministry or Department should finalize their examination of the requests
with the utmost expedition and make the necessary budget provision where it is decided to sanction
grants. The Institution or Organisation should be informed of the result of their requests by April of the
succeeding year.

47
(iii) When recurring grants-in-aid are sanctioned to the same Institution or Organisation for the same purpose,
the unspent balance of the previous grant should be taken into account in sanctioning the subsequent
grant.
(iv) (a) All grantee Institutions or Organisations which receive more than fifty per cent. of their recurring
expenditure in the form of grants-in-aid, should ordinarily formulate terms and conditions of service of
their employees which are, by and large, not higher than those applicable to similar categories of
employees in Central Government. In exceptional cases relaxation may be made in consultation with
the Ministry of Finance.
(b) Grantee Institutions or Organisations should be encouraged to take advantage of the pension or gratuity
schemes or group insurance schemes or house buildings loans or vehicle loans schemes etc. available
in the market for employees instead of undertaking liability on their own or Government account.
(v) In making grants to non-government or quasi-government Institutions or Organisations, a condition should
be laid down that assets acquired wholly or substantially out of Government grants, except those declared
as obsolete and unserviceable or condemned in accordance with the procedure laid down in the General
Financial Rules, shall not be disposed of without obtaining the prior approval of the authority which sanctioned
the grants-in-aid.
(vi) The sanctioning authority, while laying down the pattern of assistance, may decide whether the ownership
of buildings constructed with grants-in-aid may vest with Government or the grantee Institution or
Organisation. Where the ownership is vested in the Government, the grantee Institution or Organisation
may be allowed to occupy the building as a lessee. In such cases suitable record of details of location, cost,
name of lessee and terms and conditions of lease must be maintained in the records of the granting
Ministry or Department. In all cases of buildings constructed with grants-in-aid, responsibility of maintenance
of such buildings should be laid on the grantee Institution or Organisation.
(vii) Any other special terms and conditions or procedures for transaction of business as Government may
desire to be followed by the grantee Institution or Organisation, shall be got incorporated in the Articles of
Association or bye-laws of the Institution or Organisation concerned before release of grants-in-aid.
(viii) Grants-in-aid may be sanctioned to meet the bona fide expenditure incurred not earlier than a year prior to
the date of issue of the sanction.
(ix) Before a grant is released, the members of the executive committee of the the grantee should be asked to
execute bonds in a prescribed format binding themselves jointly and severally to:-
(a) abide by the conditions of the grants-in-aid by the target dates, if any, specified therein; and
(b) not to divert the grants or entrust execution of the scheme or work concerned to another Institution(s)
or Organization(s); and
(c) abide by any other conditions specified in the agreement governing the grants-in-aid.
In the event of the grantee failing to comply with the conditions or committing breach of the conditions of the
bond, the signatories to the bond shall be jointly and severally liable to refund to the President of India, the
whole or a part amount of the grant with interest at ten per cent. per annum thereon or the sum specified
under the bond. The stamp duty for this bond shall be borne by the Government.
(x) Execution of bond will not apply to quasi-Government Institutions, Central Autonomous Organisations and
Institutions whose budget is approved by Government.
(xi) The stipulation in regard to refund of the amount of grant-in-aid with interest thereon should be brought out
clearly in the letter sanctioning the grant as well as in the bond so required to be executed.
(xii) (a) As a precondition to the sanction of grants-in-aid to the agencies where:–
(aa) the recipient body employs more than twenty persons on a regular basis and at least fifty per cent.
of its recurring expenditure is met from grants-in-aid from Central Government; and
(ab) the body is a registered society or a co-operative institution and is in receipt of a general purpose
annual grants-in-aid of Rupees twenty lakhs and above from the Consolidated Fund of India;
the grant sanctioning authority should ensure that a suitable clause is invariably included in the terms
and conditions under which the grants-in-aid are given, to provide for reservation for Scheduled Castes
and Scheduled Tribes or OBC in posts and services under such organizations or agencies. The relative
provision may be on the following lines :-
“…………….. (Name of Institution or Organization etc.) agrees to make reservations for Scheduled
Castes and Scheduled Tribes or OBC in the posts or services under its control on the lines indicated by
the Government of India”.

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(b) While sanctioning grants-in-aid to Institutions or Organisations referred to in (a) above, the grant
sanctioning authority should keep in view the progress made by such Institutions or Organisations in
employing Scheduled Castes and Scheduled Tribes or OBC candidates in their services.
(xiii) Central Autonomous Organisations which receive Plan grants as well as Non-Plan grants, should account
for expenditure (Capital and Revenue) separately under Plan and Non-plan. The Government of India,
Ministry of Finance has formulated standard formats for presentation of final accounts, for all Central
Autonomous Organisations. All grant sanctioning authorities should enforce the condition of maintaining
and presenting their annual accounts in the standard formats on all Central Autonomous Organisations.
(xiv) The grant sanctioning authorities should not only take into account the internally generated resources while
regulating the award of grants but should consider laying down targets for internal resource generation by
the grantee Institutions or Organisations every financial year, particularly where grants are given on a
recurring basis year after year.
Rule 210. Accounts of Grantee Institutions : Institutions or Organisations receiving grants should, irrespective of
the amount involved, be required to maintain subsidiary accounts of the Government grant and furnish to the Accounts
Officer a set of audited statement of accounts. These audited statements of accounts should be required to be
furnished after utilization of the grants-in-aid or whenever called for.
Rule 211. Audit of Accounts of Grants-in-aid :
(1) The accounts of all grantee Institutions or Organisations shall be open to inspection by the sanctioning
authority and audit, both by the Comptroller and Auditor General of India under the provision of CAG(DPC)
Act 1971 and internal audit by the Principal Accounts Office of the Ministry or Department, whenever the
Institution or Organisation is called upon to do so and a provision to this effect should invariably be
incorporated in all orders sanctioning grants-in-aid.
(2) (a) The accounts of the grantee Institution or Organisation shall be audited by the Comptroller and Auditor
General of India under Section 14 of the Comptroller and Auditor General of India (Duties, Powers and
Conditions of Service) Act, 1971, if the grants or loans to the institution in a financial year are not less
than Rupees twenty-five lakhs and also not less than seventy-five percent. of the total expenditure of
the Institution. The accounts may also be audited by the Comptroller and Auditor General of India if the
grants or loans in a financial year are not less than Rupees one crore. Where the accounts are so
audited by the Comptroller and Auditor General of India in a financial year, he shall continue to audit the
accounts for a further period of two years notwithstanding that the conditions outlined above are not
fulfilled.
(b) Where any grant and /or loan is given for any specific purpose to any Institution or Organisation or
authority, not being a foreign State or international Body/Organization, the Comptroller and Auditor
General is competent under Section 15 (1) of the CAG’s (DPC) Act, 1971, to scrutinize the procedures
by which the sanctioning authority satisfies itself as to the fulfillment of the conditions subject to which
such grants and/or loans were given and shall, for this purpose, have right of access to the books and
accounts of that Institute or Organisation or authority.
(3) In all other cases, the Institution or Organisation shall get its accounts audited from CharteredAccountants
of its own choice.
(4) Where the Comptroller and Auditor General of India is the sole auditor for a local Body or Institution,
auditing charges will be payable by the auditee Institution in full unless specifically waived by Government.
Rule 212. Utilization Certificates :
(1) In respect of non-recurring grants to an Institution or Organisation, a certificate of actual utilization of the
grants received for the purpose for which it was sanctioned in Form GFR 19-A, should be insisted upon in
the order sanctioning the grants-in-aid. The Utilization Certificate in respect of grants referred to in Rule
209 (6) should also disclose whether the specified, quantified and qualitative targets that should have been
reached against the amount utilised, were in fact reached, and if not, the reasons therefor. They should
contain an output based performance assessment instead of input based performance assessment. The
Utilization Certificate should be submitted within twelve months of the closure of the financial year by the
Institution or Organisation concerned. Receipt of such certificate shall be scrutinised by the Ministry or
Department concerned. Where such certificate is not received from the grantee within the prescribed time,
the Ministry or Department will be at liberty to blacklist such Institution or Organisation from any future
grant, subsidy or other type of financial support from the Government. This fact should also be put on the
website referred to in the Note under Rule 209 (1) above.
In respect of recurring grants, Ministry or Department concerned should release any amount sanctioned
for the subsequent financial year only after Utilization Certificate in respect of grants of preceding financial
year is submitted. Release of grants-in-aid in excess of fifty per cent of the total amount sanctioned for the
subsequent financial year shall be done only after the annual audited statement relating to grants-in-aid

49
released in the preceeding year are submitted to the satisfaction of the Ministry/Department concerned.
Reports submitted by the InternalAudit parties of the Ministry or Department and inspection reports received
from Indian Audit and Accounts Department and the performance reports if any received for the third and
fourth quarter in the year should also be looked into while sanctioning further grants.
NOTE. 1. Utilization certificates need not be furnished in cases where the grants-in-aid are being made as
reimbursement of expenditure already incurred on the basis of duly audited accounts. In such cases the sanction
letters should specify clearly that the utilization certificates will not be necessary.
NOTE 2. In respect of Central Autonomous Organisations, the Utilization Certificate shall disclose separately the
actual expenditure incurred and the Loans and Advances given to suppliers of stores and assets, to construction
agencies, to staff (for house building and purchase of conveyance, etc.), which do not constitute expenditure at that
stage. These shall be treated as unutilized grants but allowed to be carried forward. While regulating the grants for the
subsequent year, the amounts carried forward shall be taken into account.
(2) (i) In the case of private and voluntary organizations receiving recurring grants-in-aid from Rupees ten
lakhs to Rupees twenty-five lakhs, all the Ministries or Departments of Government of India should
include in their annual report a statement showing the quantum of funds provided to each of those
organizations and the purpose for which they were utilized, for the information of Parliament. The
annual reports and accounts of private and voluntary organizations receiving recurring grants-in-aid to
the tune of Rupees twenty-five lakhs and above should be laid on the Table of the House within nine
months of the close of the succeeding financial year of the grantee organisations.
(ii) In the case of organizations receiving one-time assistance or non recurring grants as grants-in-aid
from Rupees ten lakhs to Rupees fifty lakhs, all Ministries or Departments of Government of India
should include in their annual reports, statements showing the quantum of funds provided to each of
these organizations and the purpose for which the funds were utilized, for the information of Parliament.
The annual reports and audited accounts of private and voluntary organizations or societies registered
under the Registration of Societies Act, 1860, receiving one-time assistance/non recurring grants of
Rupees fifty lakhs and above should also be laid on the Table of the House, within nine months of the
close of the succeeding financial year of the grantee Organisations.
(3) Submission of Achievement-cum-Performance Reports :
(i) The grantee Institutions or Organisations should be required to submit performance cum achievement
reports soon after the end of the financial year. A time limit may in this regard be prescribed by the
sanctioning authority concerned. This requirement should be included in the grants-in-aid sanction
order.
(ii) In regard to non-recurring grants such as those meant for celebration of anniversaries, conduct of
special tours and maintenance grants for education, performance-cum-achievement reports need not
be obtained.
(iii) In the case of recurring grants, submission of achievement cum performance reports should usually
be insisted upon in all cases. However, in the case of grants-in-aid not exceeding Rupes five lakhs, the
sanctioning authority may dispense with the submission of performance cum achievement reports and
should, in that event, refer to the utilization certificates and other information available with it with a
view to deciding whether or not the grants-in-aid should continue to be given.
(iv) The annual reports and audited statements of accounts of Autonomous Organisations are required to
be laid on the table of the Parliament. In such cases, the Ministries or Departments of Central Government
need not incorporate performance-cum-achievement reports in the annual reports. In all other cases,
if the grants-in-aid exceed Rupees twenty-five lakhs, the Ministry or Departments of the Central
Government should include in their annual report a review of the utilization of the grants-in-aid individually,
specifying in detail the achievements vis-à-vis the amount spent, the purpose and destination of the
grants. In cases where the grants-in-aid are for Rupees twenty-five lakh or less, the Ministry or
Departments of the Central Government should include in their annual report their own assessment of
the achievements or performance of the Institution or Organizations.
(v) Where the accounts of the grantee Institutions or organisations are audited by the Indian Audit and
Accounts Department, copies of the performance-cum-achievement reports, furnished by the grantee
institution to the Administrative Ministry or sanctioning authority should be made available to audit. In
other cases copies of such reports, received by the Departments of the Central Government or the
sanctioning authority should be made available to audit when local audit of such grants-in-aid in the
Administrative Ministry or Department or sanctioning authority is conducted or when it is called for by
the Accountant General.

50
(4) (a) Register of Grants : A Register of Grants shall be maintained by the sanctioning authority in the
format given in Form GFR - 39.
(b) Columns (i) to (v) of the register in format at Form GFR - 39 should be filled in simultaneously with the
issue of the order sanctioning each grant. These columns should be attested by any Gazetted Officer
nominated for the purpose by the sanctioning authority. The serial number should be recorded on the
body of the sanction at the time the item is entered in the Register as under :
“Noted at serial No ………………… in the Register of Grants”.
(c) Such a record will guard against the possibility of double payment. Columns (vi) and (vii) should be
filled in and attested by the Gazetted Officer concerned as soon as the bill is ready. The bill should then
be submitted to the Gazetted Officer nominated to act as Drawing and Disbursing Officer with the
register for signing the bill and to the sanctioning authority for giving dated initials in column (viii) of
Register. It should also be the duty of the sanctioning authority to verify that the conditions, if any,
attached to the grant have been duly accepted by the grantee without any reservation and that no other
bill for the same purpose has already been paid before. No bill should be signed unless it has been
noted in the Register of Grants against the relevant sanction.This will also facilitate watching of payments
in installments, if any, in the case of lump sum sanctions.
Information at column (xiii) of the Form GFR-39 above should be used also for regulating the subsequent
grants.
(5) State Government to submit utilization certificate when expenditure incurred through local bodies:
When Central grants are given to State Governments for expenditure to be incurred by them through local
bodies or private institutions, the utilization certificates should be furnished by the State Government
concerned.
Rule 213. Discretionary Grants : When an allotment for discretionary grants is placed at the disposal of a particular
authority, the expenditure from such grants shall be regulated by general or special orders of the competent authority
specifying the object for which the grants can be made and any other condition(s) that shall apply to them. Such
discretionary grants must be non-recurring and not involve any future commitment.
Rule 214. Other Grants : Grants, subventions, etc., including grants to States other than those dealt with in the
foregoing rules, shall be made under special orders of Government.
Rule 215.
(1) Regulation of recurring grants-in-aid for Government employees’ welfare :–
1. Grants-in-aid for provision of amenities or of recreational or welfare facilities to the staff of the offices of
the Government are regulated under orders of the Ministry of Home Affairs issued from time to time.
The admissibility of the grants-in-aid for the welfare of the employees of the Government should be
regulated in the following manner :-
(i) The grant in aid will be admissible on the basis of the total strength borne on the regular strength
of an organization, i.e., Ministry or Department, etc., and itsAttached and Subordinate Offices and
such statutory bodies whose budget forms part of Consolidated Fund of India, irrespective of the
fact whether any individual is a member of the staff club, etc., or not. However, grant-in-aid in
respect of Gazetted Officers will be admissible only to that Ministry or Department or Office where
membership of recreation club is open to such officers.
Staff paid from contingencies, work-charged staff etc., will not be taken into calculation for this purpose.
Staff eligible for similar concession under some other rule or statutory provision, e.g., industrial workers will
also not be covered by these orders.
(ii) Amounts of grants-in-aid. –(a) The rate of the grant-in-aid will be Rupees fifty per head per annum.
In addition to this, an additional grant-in-aid up to Rupees twenty-five per head per annum to
match the subscriptions collected during the previous financial year by the existing staff clubs will
be admissible. In the case of staff clubs which are started during the financial year in which grant-
in-aid is to be given, an additional matching grants-in-aid up to Rupees twenty-five per head per
annum, to match the subscription collected by such clubs up to the date on which the proposal for
the grant is mooted, may be sanctioned. The total strength of the eligible staff will be that existing
on the thirty-first March of the previous financial year or that on the date on which proposal for
grant is mooted in the case of new staff clubs.
(iii) An illustrative list of items on which expenditure can be incurred out of grants-in-aid sanctioned by
Government for provision of amenities is given below: –
(i) Articles of sports – Outdoor and indoor games equipment.

51
(ii) Cost of uniforms, etc., supplied to teams of players.
(iii) Magazines and periodicals.
(iv) Entry fee for tournaments
(v) Hiring of playgrounds
(vi) Hiring and repair for furniture, etc.,
(vii) Purchase of furniture.
(viii) Conveyance expenses incurred locally.
(ix) Entertainments.
(x) Prizes.
(xi) Film shows.
(xii) Hiring of accommodation for Club/Association, etc.
(xiii) Cultural, Sports and Physical development programme(s).
(xiv) Inter-Ministry meets.
(xv) Inter-Departmental meets.
2. Amaximum one time grant of Rupees fifty thousand may be sanctioned for setting up of a Recreation
Club.
3. Grants-in-aid to the Ministry or Departments of the Central Government and their Attached and
Subordinate Offices will be allocated by the concerned Ministry or Department on receipt of formal
requests in the prescribed manner. For the purposes of these grants-in-aid, the Departments of
the Central Government and their attached and Subordinate Offices will be treated as a single
unit. It will be the responsibility of that Ministry or Department to distribute the amount further to its
Attached and Subordinate Offices and to their different clubs. The accounts of these clubs for the
preceding year duly audited by an InternalAuditor should be obtained immediately after the close
of the financial year in any case by the thirtieth April by the Ministry or Department before allocating
funds for the next financial year.
4. Grants-in-aid for the provision of amenities or recreational or welfare facilities to the staff of the
Indian Audit and Accounts Department are regulated by separate orders.
(2) General Principles for award of Grants-in-aid for Centrally Sponsored Schemes : The following
principles should be kept in view by Ministries/Departments of the Central Government at the time of
designing Centrally Sponsored Schemes for implementation in States Governments or Union Territories
and approving and releasing assistance to State Governments or Union Territories for such schemes: -
(i) Every Centrally Sponsored Scheme should be treated as a Project with time bound targets for monitoring,
midterm evaluation and detailed impact studies.
(ii) The scheme should be designed in consultation with individual States or Union Territories and the
outlays should be demand driven. States should be delegated adequate powers to change the details
of the schemes to suit local conditions, subject to reporting such changes to the concerned Ministry or
Department.
(iii) Where plan schemes are in operation with similar objectives targeting the same population, the schemes
should be converged and the schemes not yielding results should be weeded out.
(iv) To ensure monitoring and effective control over such schemes, the number of schemes should be
restricted, so that the gain from the expenditure on such schemes is maximized. The role of the Central
Ministries or Departments should be capacity building, inter-sectoral coordination and detailed monitoring.
(v) Apart from making provisions in the budget and releasing funds, the Ministries or Departments should
establish a mechanism to ensure that the funds earlier released have been effectively utilised and that
the data and facts reported by the State Governments or Union Territories relating to physical and
financial performance are correct. Before releasing further funds, it should also be ensured that the
State Governments or Union Territories have the capacity to actually spend the balance from the previous
years and the releases during the current year.
(vi) The Ministries or Departments should focus attention on the attainment of the objectives and not on
expenditure only. A mechanism for avoiding release of large part of funds towards the end of the year
should be devised and incorporated in the Scheme design itself.
(vii) An evaluation mechanism should be built into the Project, providing for concurrent reviews and applying,
mid-course corrections where necessary.
(viii) A post-completion review of every Centrally Sponsored Scheme should be undertaken by the State

52
Government(s) or Union Territories implementing the scheme, highlighting the time and cost overruns,
if any, and suggestions for formulating and implementing future schemes. A copy of the review should
be obtained by the Ministry concerned and kept in view while formulating new Centrally Sponsored
Schemes.
(3) Funding of Sponsored Projects or Schemes :-
1) Ministries or Departments of Government sponsor projects or schemes to be undertaken by Universities,
Indian Institutes of Technology and other similar autonomous organizations such as ICAR, CSIR, ICMR,
etc., the results from which are expected to be in national interest. Normally the entire expenditure on
such projects or schemes including capital expenditure, is funded by the Ministry or Department. The
funds released for such projects or schemes in one or more installments are not treated as grants-in-
aid in the books of the implementing agency. Apart from the requirement of submission of technical
and financial reports on completion of the project or scheme, a stipulation should be made in such
cases that the ownership in the physical and intellectual assets created or acquired out of such funds
shall vest in the sponsor. While the Project or Scheme is ongoing, the recipients should not treat such
assets as their own assets in their Books of Accounts but should disclose their holding and using such
assets in the Notes to Accounts specifically.
2) On completion of the Projects or Schemes and the receipt of technical and financial reports, the Ministries
or Departments should decide and communicate to the implementing agencies whether the assets
should be returned, sold or retained by them.
3) If the assets are to be sold, the proceeds therefrom should be credited to account of the sponsor. If the
assets are allowed to be retained by the Institution/Organisation, the implementing agency should
include the assets at book value in their own accounts.
II. LOANS
Rule 216. The rules in this section shall be observed by all authorities competent to sanction loans of public moneys
to State Governments, Local Administrations of Union Territories, local bodies, private individuals, institutions and
others.
Rule 217. Powers and Procedure for sanction of loans : The powers of Departments of the Central Government
andAdministrators as well as other subordinate authorities to sanction loans are contained in Rule 20 of the Delegation
of Financial Powers Rules, 1978 and other general and special orders issued under that rule.
Rule 218. All sanctions of loans issued by a Department of Central Government or an Administrator in exercise of
their powers under Rule 20 of the Delegation of Financial Powers Rules, 1978, should include a suitable certificate to
the effect that the same is in accordance with the rules or principles prescribed with the previous consent of the
Ministry of Finance and that the rate of interest on the loan and the period of repayment thereof have been fixed with
the approval of that Ministry.
Rule 219.
(1) All sanctions to loans shall be subject to proviso (b) to Rule 20 of the Delegation of Financial Powers Rules,
1978, and shall specify the terms and conditions relating to them including the terms and conditions of their
repayment and payment of interest.
(2) Borrowers shall be required to adhere strictly to the terms settled for the loans made to them. Modifications
of these terms in their favour can be made subsequently only for very special reasons.
Rule 220.
(1) General conditions for regulating all loans : All loans, other than loans to cultivators, etc., which are
governed by special rules, should be regulated by the following general conditions :-
(i) A specific term should be fixed which should be as short as possible, within which each loan should be
fully repaid with interest due. The terms may, in very special cases, extend to thirty years.
(ii) The term is to be calculated from the date on which the loan is completely drawn or declared by
competent authority to be closed.
(iii) The repayment of loans should be effected by installments, which should ordinarily be fixed on annual
basis, due dates of payment being specially prescribed.
(iv) Any installment paid before its due date may be taken entirely towards the principal, provided it is
accompanied by payment toward interest due up-to-date of actual payment of installment; if not, the

53
amount of the installment will first be adjusted towards the interest due for preceding and current
periods and the balance, if any, will alone be applied towards the principal. If, however, the payment of
the installment is in advance of the due date by fourteen days or less, interest for the full period (half-
year or full year, as the case may be) will be payable.
(v) When the due date of repayment of any installment of principal or interest falls on a Sunday or a public
holiday, the payment made on the next working day following the Sunday or the public holiday, shall be
regarded as payment on the due date and no interest shall be charged for the day or days by which the
recovery is so postponed.
Exception. –If an installment of principal or interest is payable on the thirty-first March of a year, and if that day
happens to be a public holiday the recoveries should be made on the immediately preceding working day. In case, the
due date for the repayment of a loan or payment of interest falls on a holiday observed by the Reserve Bank of India,
at which the effective credit is to take place this should be shifted to the next working day, except when the due date
is thirty-first March.
(vi) The payment of interest and the repayment of principal of a loan are always to be made with reference
to the calendar date on which the loan in question is paid. However, where payment of installment is in
advance of the due date by fourteen days or less, interest for the full year or half year (depending on
the prescribed mode of recovery) will be charged thereon. In the case of a loan sanctioned by the
Central Government to a State Government on or before thirty-first March of a year, which is adjusted
in the books of the Reserve Bank of India in the month of April but in the accounts of the previous year
the installment of principal and/or interest will fall due for payment on the thirty-first March of the
succeeding year and not on the anniversaries of the calendar date in April on which the inter-
Governmental adjustment was carried out.
(vii) The date of drawal of a loan by a State Government will be determined as indicated below –
(a) When monetary settlement is involved -Normally the calendar date on which amount of a loan is
actually credited to the account of the State Government by the Reserve Bank is to be treated as
the date of its drawal.
This position will also hold in cases where adjustment in accounts is made in one month but date
of adjustment in the books of the Reserve Bank of India falls in the following calendar month. The
calendar date on which the credit is actually afforded to the State Government in the books of the
Reserve Bank of India in such cases will be treated as the date of its drawal.
Exception. –An exception to this arrangement is in the case of loans for which credit is afforded to the recipient State
Government in the month of April by the Reserve Bank of India but in the accounts of previous year. In such cases, a
loan should be deemed to have been paid on the thirty-first March of the financial year in the accounts of which the
payment is adjusted. Consequently, payment of annual interest as also repayment of installment of principal in respect
of such loans will fall due on the thirty-first March of the succeeding years and not on the anniversaries of the calendar
date in April on which inter-Governmental adjustment on account of such loans was carried out in the books of the
Reserve Bank of India.
(b) Where no monetary settlement is involved. –In regard to cases where adjustment in the books of
the Accounts Offices are only involved and actual credit through the Reserve Bank of India is not
necessary, the last date on the month of account in which the adjustment is effected should be
taken as the date of drawal of loan for purposes of repayment and charging interest.
(viii) In order to avoid any default in the payment of loan, the Principal Accounts Officers or Pay and Accounts
Officers who maintain the detailed accounts of loans, should issue notices in Form GFR-36 to the
loanees (other than State and Union Territory Governments) i.e. Public Sector Undertakings, statutory
bodies and institutions etc., say, a month in advance of the due date for the repayment of any installment
of the principal and/ or interest thereon. However, omission to give notice does not give the loanees
any claim to exemption from the consequences of default in the repayment of the principal and/or
interest thereon.
(2) Before sanctioning a loan to private Institutions the lending Ministry or Department should ensure that such
private institution has the necessary adequate managerial ability and experience.
(3) (i) Before considering a loan application from parties other than State Governments and Local
Administrations of Union Territories, the following requirements should be fulfilled:-
(a) it should be seen that there is adequate budget provision;
(b) it should be seen whether the grant of the loan would be in accordance with approved Government
policy and accepted patterns of assistance.
(ii) Before approving the loan, the applicant should be asked to furnish the following materials and
information:-

54
(a) copies of profit and loss (or income and expenditure) accounts and balance sheets for the last 3
years;
(b) the main sources of income and how the loan is proposed to be repaid within the stipulated period;
(c) the security proposed to be offered for the loan together with a valuation of the security offered by
an independent authority and a certificate to the effect that the asset offered as security is not
already encumbered.
(d) Details of loan or loans taken from the Central Government or a State Government in the past,
indicating amount, purpose, rate of interest, stipulated period of repayment, date of original loan
and amount outstanding against the loan(s) on the date of the application and the assets, if any,
given as security;
(e) a complete list of all other loans, outstanding on the date of application and the assets given as
security against them;
(f) the purpose for which the loan is proposed to be utilized and the economics of the scheme.
NOTE. – Where the loan is to be given to an institution on the strength of a guarantee given by the trust managing it,
similar information should be called for in respect of the trust also.
(iii) On receipt of the information called for as mentioned in (ii) above, confidential enquiries should be
made from the other Departments of the Central Government or State Governments from which the
party has taken loans, to judge the performance in regard to the previous loans. If the replies indicate
that the performance was not satisfactory, the loan should be refused. It must be analysed that the
financial position of the party is sound. It should also be ensured that the security offered is adequate
and its value is at least thirty-three and one-third per cent. above the amount of the loan. If possible, an
independent valuation of the security offered should be obtained. The applicant for the loan must
satisfy both the criteria for financial soundness and adequacy of security before a loan is sanctioned.
(iv) In the case of institutions which receive grants-in-aid from Government to meet a part of their deficits
and the balance is met by the State Government and the Trustees of Management, it should be ensured–
(a) that in computing the deficit for purpose of the grant-in-aid, the income from the scheme, if any,
earmarked for servicing the loan and the installment of repayment of the loan and interest (if any)
is not included;
(b) that as far as possible the scheme for which the loan is given is self-financing and does not throw
an additional burden on the general income of the institutions, e.g., in the case of hostels for
colleges that the rents proposed are adequate;
(c) the institution produces an undertaking from the State Government or the Management that any
shortfall towards repayment of the loan and interest will be made good by them. In the latter case
the financial position of the Management (Trust) should be investigated after calling for information
on the lines of Rule 220. (3) (i) above.
(v) Ministries or Departments of the Central Government should lay down a procedure for periodical review
of the old loans so that prompt action can be taken, if necessary, for enforcing regular payments.
(4) The detailed procedure to be followed in connection with the grant of loans to local bodies will be regulated
by the provisions of the Local Authorities Loans Act and other special Acts and by rules made thereunder.
Rule 221. Interest on Loans :
(1) Interest shall be charged at the rate prescribed by the Government for any particular loan or for the class
of loans concerned.
(2) A loan shall bear interest for the day of payment but not for the day of repayment. Interest for any shorter
period than a complete year shall be calculated as –
Number of days X Yearly rate of interest
365 (366 in case of Leap Year)
unless any other method of calculation is prescribed in any particular case of class of cases.
Rule 222.
(1) Procedure to be followed for recovery of loans and interest thereon and grant of moratorium: (i)
The instructions issued by the Ministry of Finance from time to time prescribing the interest rates and other
terms and conditions of loans to State and UnionTerritory Governments, Local Bodies, Statutory Corporations,
financial, industrial and commercial undertakings in the Public Sector, Private institutions or parties and
individuals, should be strictly followed.
(2) The recovery of loans should ordinarily be effected in annual equal instalments of principal together with
interest due on the outstanding amount of principal from time to time. The repayment and interest instalments

55
may be rounded off to the nearest rupee subject to final adjustment at the time of payment of last instalment
of principal and/or interest.
(3) A suitable period of moratorium towards repayment might be agreed to in individual cases having regard to
the projects for which the loans are to be utilized. However, no moratorium should ordinarily be allowed in
respect of interest payable on loans.
Rule 223. Loans to State and Union Territory Governments, Local Bodies, Statutory Corporations, Public
Sector Undertakings, Private Institutions or Parties and Individuals, etc. :
(1) – Loans should ordinarily be sanctioned at the normal rates of interest prescribed by Government for the
particular category of the loanee. In cases where the normal rate is considered too high and a concession
is justified, it should take the form of direct subsidy debitable to the grants of the sanctioning authority. In
such cases interest should, however, be paid by the borrower in the first instance at the normal rates and
subsidy should be claimed separately:
Provided that the provisions of this decision should not apply where the number of borrowers is very large
and amount of individual loans is comparatively small (as in the case of loans to displaced persons, taccavi
loans, loans for land improvement, etc.) and where the accepted policy is to lend money at rates of interest
below the normal rates, or to waive the recovery of interest in whole or in part. In such cases, a token
provision should be made in the budget of the Department or Office concerned for obtaining the specific
approval of Parliament for the grant of the concession. No actual adjustment of accounts will, however, be
necessary in such cases.
(2) Agreements and other documentation : (i) In the case of loans to parties other than State Governments
and wholly owned Government Companies, a loan agreement specifying all the terms and conditions shall
be executed. A clause shall invariably the inserted in all such agreements enabling Government at any time
to call for accounts of the applicant relating to any accounting year with power to depute an officer specially
authorized for this purpose to inspect the applicant’s books, if necessary.
(ii) A written undertaking in Form GFR 32 should be obtained from a wholly Government-owned company
at the time of sanctioning the loan. The sanction should specifically state that such an undertaking
would be obtained from the loanee before the drawal of the amount of loan and a certificate that the
undertaking has been obtained should be recorded by the Drawing Officer of the office of the sanctioning
authority in the bill for drawal of the amount of loan. The sanction in respect of loans to other organizations,
where a formal agreement is required to be executed, will also be issued in the same manner.
(iii) In the case of loans sanctioned to the Departmental or Cooperative canteens or tiffins rooms in Central
Government Offices, no formal agreement need be executed, but a written undertaking in Form GFR
32 suitably modified should be obtained from the loanee.
Rule 224. Undertaking to be obtained from wholly-owned Government Companies : In the case of loans to
wholly-owned Government Companies, a written undertaking to the effect that the fixed assets of the company
shall not be hypothecated without prior approval of the Government should be obtained in Form GFR 32. No
stamp duty need be paid on these written undertakings.
Rule 225. Loans to parties other than State Governments, wholly owned Government Companies and Local
Administration of Union Territories shall be sanctioned only against adequate security. The security to be taken
shall ordinarily be at least thirty-three and one-third per cent. more than the amount of the loan. However, a
competent authority may accept security of less value for adequate reasons to be recorded.
Rule 226. Submission of utilization certificate, reports, statements, etc. :
(1) In cases in which conditions are attached to the utilization of loan, either in the shape of the specification of
the particular objects on or the time within which the money must be spent or otherwise, the authority
competent to sanction the loan shall be primarily responsible for certifying to the Accounts Officer where
necessary, the fulfillment of the conditions attaching to the loan, unless there is any special rule or order to
the contrary. The loans sanctioned to the State Governments and the LocalAdministration of UnionTerritories
shall not, however, come within the purview of this rule.
(2) (i) The certificate referred to in Rule 226 (1) above should be furnished as in Form GFR 19-B and at such
intervals as may be agreed to between the Audit Officer and/or the Accounts Officer, as the case may
be, and the Ministry or Department concerned. Before recording the certificate, the certifying officer
should take steps to satisfy himself that the conditions, on which the loan was sanctioned, have been
or are being fulfilled. For this purpose, he may require the submission to him at suitable intervals of
such reports, statements, etc., which will establish the utilization of loan for the purpose for which it was
sanctioned. The loanee institution may also be required to furnish a certificate from itsAuditors that the
conditions attaching to the loan have been or are being fulfilled. The certificate should give details of
the breaches, if any, of those conditions.

56
(ii) A certificate of utilization of the loan should be furnished to the Accounts Officer in every case of loan
made for specific purposes, even if any conditions are not specifically attached to the grant. Such
certificates are not, however, necessary in cases where loans are sanctioned not for any specific
purpose or object but take the shape of a temporary financial aid or where the plan loans have been
sanctioned to the Public Sector Undertakings intended for financing of their approved capital outlays.
The repayment of loan, however, has to be watched in the usual manner.
(iii) In respect of loans the detailed accounts of which are maintained in the Audit Offices, the authorities
sanctioning the loan should furnish the utilization certificate in respect of each individual case.
(iv) Where the detailed accounts of the loans are maintained by the departmental authorities, a consolidated
utilization certificate should be furnished to Audit by the Ministries/Departments sanctioning the loans
to Institutions/Organisations for the total amount of the loans disbursed during each year for different
purposes including the loans sanctioned by their subordinate officers. This certificate will not cover the
loans to individuals for which utilization certificates need not be furnished to the Accounts Officer. The
certificate should indicate the year-wise and object wise break-up of loans disbursed and the loans for
which utilizations certificates are furnished.The utilization certificate should also show the loans disbursed
separately for each sub-head of account to facilitate verification by the Accounts Officer.
(v) The utilization certificates should be furnished within a ‘reasonable time’ after the loan is paid to the
institutions. The Department of Central Government should prescribe, in consultation with the Finance
Ministry, target dates for the submission of the utilization certificates by the Department concerned to
the Accounts Officer. The target date should, as far as possible, be not later than eighteen months from
the date of sanction of the loan.
(vi) In respect of loans, the detailed accounts of which are maintained by Departmental Officers and where
consolidated utilization certificates are to be furnished to Accounts Officer, the period of 18 months
should be reckoned from the expiry of the financial year in which the loans are disbursed. The
consolidated utilization certificates in respect of such loans paid each year should, therefore, be furnished
not later than September of the second succeeding financial year.
(vii) The due dates for submission of the Utilization Certificates should be specified in the letter of sanction
for loan. The target date as specified should be rigidly enforced and extension should only be allowed
in very exceptional circumstances in consultation with the Ministry of Finance under intimation to the
Audit Officer and/or the Accounts Officer, as the case may be. No further loans should be sanctioned
unless the sanctioning authorities are satisfied about the proper utilization of the earlier loan sanctioned
to an Institution, etc.
(viii) In respect of loans sanctioned to departmental co-operative canteens in Government Offices the Heads
of Departments should furnish the utilization certificate.
Rule 227. Installments of Loans : When a loan of public money is taken out in installments, each installment of the
loan so drawn shall be treated as a separate loan for purposes of repayment of principal and payment of interest
thereon except where the various installments drawn during a financial year are, for this purpose, allowed to be
consolidated into a single loan as at the end of that particular financial year. In the latter event, simple interest at the
prescribed rate on the various loan installments from the date of drawal of each installment to the date of their
consolidation shall be separately payable by the borrower. Repayment of each loan or the consolidated loan, as the
case may be, and the payment of interest thereon shall be arranged by the borrower annually on or before the
anniversary date of drawal or consolidation of the loan in such number of installments as the sanctioning authority
may prescribe. The sanctioning authority may allow, in deserving cases a moratorium towards repayment of principal
but not for the payment of interest. Should it appear that there is an undue delay on the part of the debtor in taking out
the last installment of a loan the authority sanctioning the loan may at any time declare that loan closed, and order
repayment of capital to begin. The Accounts Officer shall bring to notice any delay that appears to him to require this
remedy and he shall take this step whether or not there are any dates fixed for taking of installments.
NOTE 1. These instructions are applicable mutatis mutandis to loans, the repayments of which are made by other
than annual installments.
NOTE 2. – It must be remembered that the calculation fixing the amount of equal periodical installments, by which a
loan is repaid with interest, presupposes punctual payment of the installment and that, if any installment is not punctually
repaid, the interest amount will need to be recalculated.
Rule 228. Defaults in Payment :
(1) The loan sanctions in favour of State or Union Territory Governments and the loan sanctions or undertakings
or agreements in case of wholly Government owned companies or Public Sector Undertakings should
invariably include provision for the levy of penal interest on overdue installments of interest or principal and
interest. The loan sanctions and agreements in all other cases should invariably stipulate a higher rate of
interest and provide for lower rate of interest in the case of punctual payments. The penal or the higher rate
of interest, as the case may be, shall not, except under special orders of Government, be less than two and

57
half per cent. per annum above the normal rate of interest prescribed by Government from time to time for
the loans advanced.
(2) Any default in the payment of interest upon a loan or in the repayment of principal, shall be promptly
reported by the Accounts Officer, to the authority which sanctioned the loan. The responsibility of the
Accounts Officer, under this rule refers only to the loans, the detailed accounts for which are kept by
him.
(3) Procedure to be followed in case of defaults in repayment of interest free loans or loans sanctioned at
concessional rates of interest :
(i) In the case of grant of interest free loans e.g., loans to technical educational institutions for
construction of hostels, prompt repayment should be made a condition for the grant of interest
free loans. The sanction letter in such cases should provide that in the event of any default in
repayment, interest at rates prescribed by Government from time to time will be chargeable on the
loans.
(ii) In the case of loans sanctioned at concessional rates of interest e.g., loans under the State Aid to
Industries Act and Rules, the payment of subsidy (to cover the concession, viz., difference between
the normal rate and concessional rate), should be made conditional upon prompt repayments of
principal and payment of interest thereon by the party concerned.
(iii) In the cases where in addition to interest free loans, subsidy is also provided to meet running
expenses e.g., loans to departmental canteens, the sanction letter should provide that in the event
of any default in repayment, the defaulted dues would be recovered out of the subsidy payable.
(4) On receipt of a report of default referred to in sub-rule (2) above, the authority concerned shall immediately
take steps to get the default remedied and also consider enforcement of penal or higher rate of interest
on the overdue amounts. Where the sanctioning authority is satisfied, having regard to the circumstances
of the case, that penal or higher interest need not be recovered, the borrower should ordinarily be
asked to pay interest, at the normal rate prescribed in the loan sanction, on the overdue amount (of
principal and/or interest) from the due date of payment up to the date of settlement of the default. The
recovery of additional interest should not be waived except in special circumstances or where the
period of defaults is very short, e.g., a few days.
Rule 229. Irrecoverable Loans : A competent authority may remit or write off any loans owing to their irrecoverability
or otherwise.
Rule 230. Accounts and Control :
(1) Subject to such general or specific directions as may be given by the Comptroller and Auditor-General in
this behalf, detailed accounts of loans to Institutions and Organizations, etc., shall be maintained by the
Accounts Officer who shall watch their recovery and see that the conditions attached to each loan are
fulfilled.
(2) In the case of loans to private individuals the detailed accounts of such loans shall be maintained by the
departmental authorities concerned who shall also watch their recovery and see that the conditions attached
to each loan are fulfilled. The detailed procedure to be followed for the various categories of loans to private
individuals should be laid down in consultation with Finance Ministry and the Comptroller and Auditor-
General of India.
Rule 231. The instructions contained in this Chapter relating to cost of audit of grants-in-aid are applicable mutatis
mutandis in the case of loans as well.
Rule 232. Annual Returns : Each PrincipalAccounts Officer shall submit to the concerned Ministry or Department of
Government a statement in Form GFR 20 showing the details of outstanding Central Loans borne on his books as on
thirty-first March each year. This statement should be submitted not later than the following thirtieth September and
should indicate the aggregate of outstanding balance of loans, details of defaults, if any, in repayment of principal and/
or interest and the earliest period to which the default pertains, against each State or Union Territory Government,
foreign Government, Railway or Department of Posts funds, public sector and private sector enterprises, Co-operative
and other institutions etc. Where, however, detailed accounts are not required to be maintained by the Accounts
Office, the statement should contain departmental authority-wise aggregate balances of outstanding loans.
Rule 233. Review of annual statements with a view to enforce repayments of the principal and interest due :
The Administrative Ministries should keep watch over the receipt of the annual statements in Form GFR 20 regularly
from the Accounts Officer and conduct a close review of the cases of defaults in repayment of the instalments of
principal and/or interest due, as revealed from these annual statements and take suitable measures for enforcing
repayments of the principal and interest due. If these statements are not received in time, the Accounts Officer should
be reminded promptly. To facilitate a proper review of the position of outstanding loans, the Ministries may also
arrange to maintain centrally a list of all sanctions issued relating to loans advanced to State Governments and other
parties.

CHAPTER - 10
BUDGETING AND ACCOUNTING
OF EXTERNALLY AIDED PROJECTS
Rule 234. Implementation of Projects or Schemes through external aid receipt:
(1) The projects or schemes of the Government of India to be implemented through external aid receipt from
multilateral or bilateral funding agencies shall be shown in the budget proposals approved annually by the
Parliament.
(2) The external aid comes from bilateral and multilateral sources as follows :
(i) Bilateral funding to finance specific project(s) by the funding agency(ies) under Government to
Government agreement(s); and,
(ii) Multi-lateral funding by Multi-Lateral FundingAgencies, like the World Bank under agreement(s) between
the borrower (Government of India) and the Multilateral Funding Agency(ies).
(3) The Department of Economic Affairs, Ministry of Finance as the nodal agency shall execute the legal
agreement for loans or grants from external funding Agency(ies). However, grant agreements for Technical
Assistance can also be executed by the beneficiary Ministries or Departments with the approval of Ministry
of Finance, Department of Economic Affairs.
(4) The Office of the Controller,Aid Accounts andAudit (CAAA) in the Department of Economic Affairs, Ministry
of Finance shall be responsible for implementing the financial covenants laid down in the agreement(s)
executed by Department(s) of Government of India and the External Funding Agency(ies). A copy of all
such agreements shall be sent to the Office of Controller,AidAccounts andAudit, Department of Economic
Affairs for this purpose.
Rule 235. Currency of external aid : The external aid shall flow from the Funding Agency in foreign currency or
Indian Rupees and shall be received by the Reserve Bank of India, Mumbai who shall remit the rupee equivalent to
the account of Controller, Aid Accounts and Audit, Department of Economic Affairs at Reserve Bank of India, New
Delhi. The remittances shall be accounted as external loan/Grant receipts in the Consolidated Fund of India.
Rule 236. Accounting of Cash grants : Cash grants, as distinct from commodity grant or other assistance in kind
received from external sources shall be accounted for only by the office of Controller of Aid Accounts and Audit,
Department of Economic Affairs.
Rule 237. Procedure for withdrawal : The concerned administrative Ministries or Departments shall be required to
make provision of funds under the relevant head of account as ‘External Aided Component’ in their Detailed Demands
for Grants for release of external aid amounts during the year to the respective Project Implementing Agencies. There
are mainly two procedures laid down for withdrawal of funds from the loan or grant account: –
(i) Reimbursement procedure : Under the reimbursement procedure the Project ImplementingAgency shall
initially spend or incur expenditure and subsequently claim the amount from the Funding Agency through
the office of the Controller, Aid Accounts. The remittances shall be accounted as External Loan or Grant
receipt in the Consolidated Fund of India. There are two ways of dealing with the reimbursement claims as
given below:
(a) Reimbursement through Special Account (Revolving Fund Scheme) : Under the Revolving Fund
Scheme, the Funding Agency disburses the estimated expenditure of four months for the projects as
initial advance to Government of India under the respective loan or credit or grant agreement. Office of
Controller of Aid Accounts & Audit withdraws the amount specified in the agreement as initial deposit
from the Funding Agency, by sending a simple withdrawal application in the prescribed format after the
loan is declared effective. Such initial deposit designated in US Dollars is received by Reserve Bank of
India, Mumbai and Rupee equivalent shall be passed on to Controller of Aid Accounts & Audit through
Government ForeignTransaction (GFT) advice. However, Reserve Bank of India, Mumbai shall maintain
a loan wise proforma account for liquidation of advance received from Funding Agency. Office of
Controller, Aid Accounts and Audit, on receipt of reimbursement claims from Project Implementing
Agency, shall send an advice to Reserve Bank of India, Mumbai advising them to debit the Special
Account with the US Dollars equivalent of the amount of the eligible claim. Office of Controller, Aid
Accounts and Audit shall consolidate all such claims and submit to Funding Agency for replenishment
59

60
of Special Account. This will be accompanied by a statement of debits and credits made during the
period by Reserve Bank of India, Mumbai and supporting documents received from the Project
Implementing Agency.
(b) Reimbursement outside Special Account : Under the reimbursement procedure (where there is no
provision in the loan or credit agreement for the Special Account or the balance in the Special Account
is ‘Nil’) office of Controller of Aid Accounts and Audit shall send the reimbursement claims received
from the Project Implementing Agency direct to the FundingAgency after checking the eligibility aspect.
The Funding Agency shall disburse the eligible expenditure to the borrower’s account with Reserve
Bank of India, Mumbai, who shall pass on the Rupee equivalent to the account of the Controller of Aid
Accounts and Audit at Reserve Bank of India, New Delhi by issue of Government Foreign Transaction
(GFT) advice.
(ii) Direct Payment Procedure : Under this procedure adopted in some cases the Funding Agency, on the
request of the Project Implementing Agency (received through Controller of Aid Accounts and Audit), duly
supported by relevant documents, shall directly pay to the contractor or supplier or consultant from the
loan or credit or grant account. The FundingAgency, after satisfying itself as to the eligibility of the expenditure
etc. remits the amount directly to the account of the payees as per the payment instructions. The Funding
Agency apprises the office of Controller of AidAccounts andAudit and the Project Implementing Agency of
the particulars of the payment made. Office of Controller of Aid Accounts and Audit shall work out the rupee
equivalent of the foreign currency payment. This rupee equivalent shall be recovered by office of Controller
of Aid Accounts and Audit from the Project Implementing Agencies or State Governments which have
availed of the Direct Payment Procedure.
Note : In the case of Central Projects, Centrally Sponsored Projects and Public Sector or Financial Institutions, the
concerned administrative Ministry or Department shall release the fund to the Project Implementing Agency with the
instruction to deposit rupee equivalent of the foreign currency that have been availed of under Direct Payment Procedure
by them to the account of Controller of Aid Accounts and Audit at Reserve Bank of India, New Delhi or State Bank of
India, Tis Hazari, Delhi through a challan.
Rule 238.
(1) Fund Flow for State Projects financed from external aid source: The respective Departments of the
State Government shall provide in the Budget such expenditure proposed to be incurred under Plan Schemes
during the financial year by the Project Implementing Agencies. These shall be in respect of State projects
to be financed from external aid sources both under loan or credit and grants and eligible for disbursement
from Funding Agency under Reimbursement or Direct Payment Procedure.
(2) Fund flow for State Projects under Reimbursement Procedure: The disbursements under the
“Reimbursement through Special Account” and “Reimbursement out side Special Account”, referred to in
Rule 237 (i), shall be consolidated at periodical intervals under each loan or credit State-wise by the office
of the Controller of Aid Accounts and Audit. The details of the same shall be sent to Plan Finance Division
of the Department of Expenditure in the Ministry of Finance for release of funds to the respective State
Governments. The Plan Finance division of Department of Expenditure in the Ministry of Finance shall
issue sanctions for actual release of the disbursement for each State. A copy of such sanction shall be
endorsed to the Finance Department of the concerned State Government for information. The office of the
Chief Controller of Accounts, Ministry of Finance shall issue the Inter-Government (IG) Advice to Reserve
Bank of India, Central Accounts Section, Nagpur, for effecting the release to the concerned State
Governments. The account of the State Government maintained at Reserve Bank of India, CentralAccounts
Section, Nagpur, shall be credited with the amount so released, thus, completing the cycle of funds from
the expenditure incurred from the Budget of the State till receipt of funds of such expenditure from
Government of India to the State.
(3) Fund flow for State Projects under Direct Payment Procedure: Under Direct Payment Procedure the
claims shall be processed as mentioned in Rule 237 (ii). Office of Controller of Aid Accounts andAudit shall
work out the Rupee equivalent of such Direct Payment based on Reserve Bank of India buying rate applicable
for the value date on which the Direct Payment was made. Office of Controller of Aid Accounts and Audit
shall consolidate such disbursement in Rupees, and send a list of such disbursement State-wise to Plan
Finance Division of Department of Expenditure at periodical intervals requesting them to release the amount
to the State concerned notionally and recover the same for credit to Controller of Aid Accounts and Audit’s
account. The Plan Finance Division shall issue a separate sanction for the amount to be released to the
State concerned and for simultaneous recovery and credit back to the account of the Controller of Aid
Accounts andAudit. A copy of such sanction shall also be endorsed to the Finance Department of the State
Government concerned. The office of the Chief Controller of Accounts, Ministry of Finance shall advise

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Reserve Bank of India, Central Accounts Section, Nagpur, for making necessary adjustment entries in the
accounts of the State concerned under intimation to the Finance Department of the State and Controller of
Aid Accounts and Audit. This completes the cycle of funds flow in the case of direct payment claims.
Rule 239. Fund flow for Central or Central sponsored Projects : Under the Central or Central sponsored project
financed from external aid, whether loan or grant, the process of disbursement of such claims by the Funding Agency
shall be the same as explained in Rule 237. The respective Ministry or Department get funds when Demands for
Grants are passed in the Parliament and advised by the Budget Division of the Ministry of Finance. The funds shall be
released to Project Implementing Agency by the administrative Ministry or Department with reference to expenditure
incurred by the Project Implementing Agency.
Rule 240. Fund flow for Public Sector or Financial Institutions : When the Project Implementing Agency under
Loan or Credit Agreement is a Public Sector or Financial Institution or Autonomous Body and Government of India is
the Borrower, the Administrative Ministry concerned shall provide in its budget funds required to be passed on to the
Project Implementing Agency for the expenditure incurred by the latter under the externally aided project. The Project
Implementing Agency shall submit claims under reimbursement or direct payment procedures to the office of the
Controller of Aid Accounts and Audit, Department of Economic Affairs. The disbursement of the claims by the Funding
Agency shall be similar as explained in Rule 237. The concerned administrative Ministry or Department releases the
amount to Project Implementing Agency based on the certification of disbursement received from the Funding Agency
as certified by the office of the Controller of Aid Accounts and Audit.
However, where the loan is negotiated directly by a particular Public Sector Undertaking or Financial Institution,
the funds from the Funding Agency will flow direct to the borrowing entity.
Rule 241. Repayment of loans : Office of Controller of Aid Accounts and Audit shall be responsible for prompt
repayment of principal on the due date as per the agreements. The remittance of foreign currency is arranged through
designated Public Sector Commercial Banks and Reserve Bank of India. The Rupee equivalent and the amount of
foreign currency remitted shall be intimated by the Banks to Controller ofAid Accounts andAudit.The Rupee equivalent
of the foreign currency remitted is credited to the respective Banks’ account maintained at Reserve Bank of India,
New Delhi, by debit to Controller of Aid Accounts and Audit’s account as per standing arrangement. On the receipt of
the advice from Reserve Bank of India, New Delhi, Controller of Aid Accounts and Audit shall debit the concerned loan
account in the Consolidated Fund of India. The repayment of loans shall be classified as charged expenditure.
Rule 242. Interest Payments : Interest on external loans shall be paid on the due date as stipulated in the loan or
credit agreements against the budget provision made for this purpose. Interest payments shall be accounted for as
debit under the Major Head ‘2049-Interest Payments’ for external loans in the Consolidated Fund of India. The
procedure for transfer of amount shall be the same as followed in the case of repayment of loans, referred to in Rule
241 above. The interest payment shall be classified as charged expenditure.
Rule 243. Accounting of exchange variation : The exchange variation in respect of foreign loans that have been
fully repaid shall be written off to “8680-Miscellaneous Government Accounts - Write off from Heads of Accounts
closing to balance” per contra credit to relevant Minor Head, Sub Head under “6002-External Debt” to which the
expenditure or repayment stands debited.
Rule 244. Aid in form of materials and equipments : In cases where materials, equipments and other commodities,
without involving any cash inflow, are received as aid from foreign countries, the Funding Agency issues an advice to
the concerned Ministry or Department giving details of materials supplied along with the value thereof. The Ministry
or Department concerned in turn shall intimate the details to the office of the Controller of Aid Accounts and Audit,
Department of Economic Affairs for making the budget provision in regard to aid material or equipment.
Note : Refer to Para 4.8.1 of CivilAccounts Manual and Note (1) below Major Head ‘3606-Aid Materials and Equipments’
of List of Major and Minor Heads of Account of Union and States for detail procedure of adjustment of value of the
materials etc. received.

CHAPTER - 11
GOVERNMENT GUARANTEES
Rule 245. The power of the Union Government to give guarantees emanates from and is subject to such limits as
may be fixed in terms of Article 292 of the Constitution of India, the Fiscal Responsibility and Budget Management
Act, 2003 and Rules framed there under.
Rule 246.
(1) Guidelines for grant of Government of India Guarantee :Powers to grant Government of India Guarantee
vest with the Ministry of Finance, Budget Division. The following guidelines should be followed by the
Ministries or Departments of the Government of India for recommending guarantee or counter guarantee:-
(i) A proposal for guarantee by Government must be justified by public interest such as in the case of
borrowings by public sector institutions for approved development purposes or borrowings by public
sector undertakings from Banks for working capital and other purposes.
(ii) The concerned Ministry or Department shall examine the proposal in consultation with the Financial
Adviser in the same manner as a proposal for loan. While examining the proposal the following
considerations shall be kept in view :-
(a) Public interest which the guarantee is expected to serve.
(b) Credit worthiness of the borrower to ensure that no undue risk is involved.
(c) Terms of the borrowing take into account the yields as applicable on Government paper of similar
maturity.
(d) The conditions prescribed in the guarantees in order to ensure continued credit worthiness of the
borrower.
(iii) After examination in the concerned Ministry or Department, all proposals for extending guarantees
shall be referred to Ministry of Finance (Budget Division) for approval. No guarantees shall be given
without the approval of the Ministry of Finance (Budget Division).
(iv) Government guarantees shall not be provided to the private sector.
(v) Government guarantees should normally not be extended for external commercial borrowings.
(vi) Government guarantees may be given on all soft loan components of the bilateral aid. However guarantee
should not be given for the commercial loan components of such aid. In case of power sector, extension
of Government guarantee even in respect of commercial components may be considered on a case to
case basis.
(vii) Government of India guarantee will not be given in cases of grants. However, if the donor or insists on
ensuring performance, the same may be listed as a negotiating condition for getting the grant.
(viii) The conditions, if any which should be made by Government while giving the guarantee e.g. period of
guarantee, levy of fee to cover risk representation for Government on the Board of Management,
Mortgage or lien on the assets, submission to Government of periodical reports and accounts, right to
get the accounts audited on behalf of Government etc. Even if fee, representation and mortgage are
not considered necessary, the right to verify the continued credit–worthiness of the borrower should be
ensured.
(2) The Department of Economic Affairs (DEA) shall act as the nodal agency for external borrowings. The
credit divisions of DEA shall prescribe limits for external borrowings, sector wise or lender wise and play a
role in negotiating external assistance and evolving monitoring systems. In the case of external borrowings
where guarantees, are sought to be provided, credit divisions of Department of Economic Affairs should
obtain prior approval of Budget Division.
Rule 247. Borrowings from multilateral agencies by Central Public Sector Undertakings :
(a) All borrowings from the multilateral agencies by Central Public Sector Undertakings would be direct (without
Government of India’s intermediation) on the terms as agreed mutually between the borrower and the
lender and approved by the Government of India. However, where such terms involve grant of Government
of India Guarantee, prior approval of the Budget Division of the Ministry of Finance may be obtained.
(b) The borrowing should relate to approved Projects.
(c) Wherever guarantee is to be given by Government of India, the borrower shall enter into an agreement with
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the Government of India for the payment of guarantee fee on the principal amount of the loan drawn and
loan outstanding from time to time.
(d) The borrower shall bear the exchange risk and get the funds directly on terms and conditions prescribed by
the lending agency.
Rule 248. Levy of Guarantee Fees :
(1) The rates of fee on guarantees are laid down by the Budget Division in the Ministry of Finance, Department
of Economic Affairs, from time to time. The rates of guarantee fee prevalent in July, 2004 are given in
Appendix - 16. Ministries or Departments should levy the prescribed fee in respect of all cases. The fees
are also to be levied in respect of non-fund based borrowings or credits (viz. letters of credit, Bank guarantees
etc.). In case of any doubt with regard to the categorisation of any particular undertaking or organization or
the nature of borrowing for the purpose of levy of fee, the matter may be referred to the Budget Division for
clarification. The Ministries or Departments should also take adequate steps to ensure prompt recovery of
the prescribed fees.
(2) The guarantee fee should be levied before the guarantee is given and thereafter on first April every year.
The rate of guarantee fee is to be applied on the amount outstanding at the beginning of the guarantee
year. Where the guarantee fee is not paid on the due date, fee should be charged at double the normal
rates for the period of default.
Rule 249. Review of Guarantees
(1) All Ministries or Departments shall ensure that all guarantees are reviewed every quarter. The monitoring
or review undertaken should examine whether the borrower is discharging repayment obligations or interest
obligations as per terms of the loan agreement. The Financial Advisers of the Ministries or Departments
should undertake these reviews.
(2) The Financial Adviser of the Ministries or Departments would be responsible for ensuring that the periodical
reviews are carried out by the Ministries or Departments concerned. They shall also ensure that a register
of guarantees in Form GFR 43 is maintained :-
(i) to keep a record of guarantees;
(ii) to retain information required from time to time in respect of guarantees;
(iii) to keep record of the periodical reviews to see that these are carried out regularly;
(iv) to keep record of levy and recovery of guarantee fee;
(v) to send data as contained in Form GFR 43, duly updated every quarter to the Budget Division in the
Ministry of Finance, Department of Economic Affairs by tenth of the month following the quarter.
(3) In respect of guarantees issued by the Ministry of Finance for external loans, the respective credit divisions
shall conduct a quarterly review. For this purpose the Financial Adviser (Finance) shall ensure the
maintenance of the required registers, as well as ensure that the periodical reviews are carried out by the
concerned credit divisions, and report forwarded to the Budget Division in the Form GFR 43. In cases,
where the guarantees on external loans are issued by the concerned administrative Ministry, that Ministry
would be responsible for conducting the review.
(4) Classification of guarantees : For the purpose of record keeping, guarantees shall be classified as
under:-
(i) guarantees given to the RBI, other banks and industrial and financial institutions for repayment of
principal and payment of interest, cash credit facility, financing seasonal agricultural operations and/or
providing working capital to companies, corporations and cooperative societies and banks;
(ii) guarantees given for repayment of share capital, payment of minimum annual dividend and repayment
of bonds or loans, debentures issued or raised by the statutory corporations and financial institutions;
(iii) guarantees given in pursuance of agreements entered into by the Government of India with international
financial institutions, foreign lending agencies, foreign governments, contractors, suppliers, consultants
etc., towards repayment of principal, of interest or commitment charges on loans etc., and /or for
payment against supplies of material and equipment;
(iv) counter guarantees to banks in consideration of the banks having issued letters of credit or authority to
foreign suppliers for supplies made or services rendered;
(v) guarantees given to Railways or State Electricity Boards and other entities for due and punctual Payment
of dues by companies or Corporation;
(vi) performance guarantees given for fulfillment of contracts or projects awarded to Indian companies in
foreign countries;

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(vii) performance guarantees given for fulfillment of contracts or projects awarded to foreign
companies in foreign countries.
(viii) Others.
Rule 250. Accounting for Guarantees : A statement showing the guarantees given by the Central Government is
required to be annexed to the Detailed Demands for grants prepared by the Ministries or Departments. The statements
should show the position upto thirty-first March of the second preceding year, to the year to which the Budget documents
relate. For example, the Budget documents for 2004-05 will show the position of guarantees outstanding as at thirty-
first March 2003. The form in which the statement of guarantees is to be shown would be as prescribed in the Budget
circulars. Where interest payments are also guaranteed, the outstanding shown under the columns for sums guaranteed
and outstanding should disclose the interest element outstanding, if any, separately. While furnishing the summary
statement of guarantees to the Finance Ministry, the Ministries or Departments should ensure and certify that the
amounts shown tally with the total figures in the statement to be included in the Detailed Demands for grants. While
furnishing the summary statements, the Ministries or Departments should also certify that the information tallies with
the material furnished to the Controller General of Accounts for the purpose of inclusion in the Finance Accounts of
the relevant year.
Rule 251. Invocation of Guarantee : In the event of invocation of a guarantee, the obligation may be discharged by
sanctioning loan equal to the amount of guarantee outstanding with the approval of Budget Division, Ministry of
Finance. However, any payment on this account will finally be charged to the Guarantee Redemption Fund maintained
in the Public Account.
Rule 252. Furnishing of data regarding Guarantees : With a view to enable the Ministry of Finance to examine
cases of Government of India guarantees and extension thereto, all Ministries or Departments should furnish to that
Ministry, data of certain operational parameters of the Public Sector Undertaking or Entity. In case the accounts of the
Public Sector Undertaking have been audited by the Comptroller & Auditor General of India under Section 619 (4) of
the Companies Act, the effect of the comments of the Comptroller & Auditor General of India on the Public Sector
Undertaking’s profitability should be brought out. Further, where BIFR targets have been assigned to the Company,
the actuals vis-à-vis targets for the preceding three years should be indicated. The data should be furnished in the
Form GFR 44 along with the proposal.

CHAPTER - 12
MISCELLANEOUS SUBJECTS
I. ESTABLISHMENT
Rule 253. Proposal for additions to Establishment :
(1) All proposals for additions to establishment shall be submitted to sanctioning authority in accordance with
the instructions contained in Rule 11 of the Delegation of Financial Powers Rules and other such instructions
which may be prescribed in this regard.
(2) All proposals for creation of a new establishment or a revision in an existing establishment, whether temporary
or permanent in excess of delegated powers should contain, inter alia:-
(a) the present cost of the establishment in existence;
(b) cost implications of the change proposed giving details of pay and allowances of post(s) proposed;
(c) expenditure in respect of claim to pension or gratuity or other retirement benefits that may arise in
consequence of the proposals;
(d) details on how the expenditure is proposed to be met including proposed re-appropriations.
(3) Afull review of the justification for continuation or conversion of temporary posts in consultation with Integrated
Finance or Ministry of Finance where necessary, should precede any order for continuation of temporary
posts or conversion into permanent posts.
(4) All proposals for increase in emoluments for an existing post(s) shall be referred to the Ministry of Finance
for approval.
Rule 254. Adjustment in Appointments : AMinistry or Department competent to make appointment to posts in any
cadre may make appointments in a lower post in the cadre to the extent of vacancies left unfilled in the higher posts.
Rule 255. Transfer of Charge :
(1) A report of transfer of a Gazetted Government servant duly made in Form GFR 33 and signed both by the
relieved and relieving Government servants, shall be sent on the same day to the Head of the Department
or other Controlling Officers concerned except in the following types of cases in respect of which report of
transfer of charge need not be signed both by the relieving and relieved Government servants simultaneously
and may be sent independently:-
(i) Where a Gazetted Government servant assumes charge of a newly created or vacant post or
relinquishes charge of a post which has been abolished.
(ii) Where a Gazetted government servant vacates a post for a short period and no formal appointment or
officiating arrangement is made in his place.
(iii) Where due to administrative exigencies a government servant is required to move to another post
relinquishing his post against local arrangement.
(2) In cases in which the transfer of charge involves assumption of responsibility for cash, stores, etc., the
following instructions should be observed :-
(i) The Cash Book or imprest account should be closed on the date of transfer and a note recorded in it
over the signatures of both the relieved and the relieving Government servants, showing the cash and
imprest balances and the number of unused cheques/receipt books, if any, made over and received by
them respectively.
(ii) The relieving Government servant should bring to notice anything irregular or objectionable in the
conduct of business that may have come officially to his notice. He should examine the accounts,
count, weight and measure certain selected articles, as applicable, in order to test the accuracy of the
returns.
(iii) In the case of any sudden casualty occurring or any emergent necessity arising for a Government
servant to relinquish his charge, the next senior officer of the department present shall take charge.
When the person who takes charge is not a Gazetted Government servant, he must at once report the
circumstances to his nearest departmental superior and obtain orders as to the cash in hand, if any.
(3) The additional procedure to be followed by an Audit Officer or Accounts Officer, etc., in making over charge
of his functions in connection with the Charitable Endowments and other Trust Accounts is laid down in
Appendix -12.
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Rule 256. Date of Birth : Every person newly appointed to a service or a post under Government shall, at the time of
the appointment, declare the date of birth by the Christian era with confirmatory documentary evidence such as a
Matriculation Certificate, where prescribed qualification for appointment is Matriculation or above. In other cases
Municipal Birth Certificate or Certificate from the recognised school last attended shall be treated as a valid document.
Rule 257.
(1) Service Book : Detailed Rules for maintenance of Service Books are contained in SR 196 to 203. Service
Books maintained in the establishment should be verified every year by the Head of Office who, after
satisfying himself that the services of Government servants concerned are correctly recorded in each
Service Book shall record the following certificate “Service verified from ……(the date record from which
the verification is made)……….. upto ………(date)………….” .
(2) The service book of a government servant shall be maintained in duplicate. First copy shall be retained and
maintained by the Head of the Office and the second copy should be given to the government servant for
safe custody as indicated below :-
(a) To the existing employees - within six months of the date on which these rules become effective.
(b) To new appointees - within one month of the date of appointment.
(3) In January each year the Government servant shall handover his copy of the Service Book to his office for
updation. The office shall update and return it to the Government Servant within thirty days of its receipt.
(4) In case the Government servants’ copy is lost by the government servant, it shall be replaced on payment
of a sum of Rs. 500/-.
Rule 258. Retrospective claim due from date of sanction : In the case of sanction accorded with retrospective
effect the charge does not become due before it is sanctioned. In such cases the time-limit specified in Rule 264 (1)
should be reckoned from the date of sanction and not from the date on which the sanction takes effect.
Rule 259. Due date of T.A. claim : Travelling allowance claim of a government servant shall fall due for payment on
the date succeeding the date of completion of the journey. He shall submit the travelling allowance claim within one-
year of its becoming due failing which it shall stand forfeited.
Rule 260. Reckoning the date in case of T.A. claims by retired Government servants appearing in a Court of
Law for defending himself : Retired Government servants become eligible for reimbursement of Travelling expenses
in respect of travel(s) for appearing in court of law for defending himself only when the judgement relating to his
honorable acquittal is pronounced by the court. In such cases the date of pronouncements of the judgement shall be
the reference point for submission and forfeiture of his T.A claim.
Rule 261. Due date of Leave Travel Concession claim : Leave Travel Concession claim of a government servant
shall fall due for payment on the date succeeding the date of completion of return journey. The time limit for submission
of the claims shall be as under :-
(i) In case advance drawn : Within one month of the due date.
(ii) In case advance not drawn : Within three month of the due date.
In case of (i) above if the claim is not submitted within one month of the due date, the amount of advance shall be
recovered but the Government employee shall be allowed to submit the claim as under (ii) above.
In case of failure to submit the claim in both the cases within three months of the due date, the claim shall
stand forfeited.
Rule 262. Due date of Over Time Allowance claims : A claim for overtime allowance shall fall due for payment on
first day of the month following the month to which the overtime allowance relates. The claim shall stand forfeited if
not submitted within one year of the due date.
Rule 263. Due date of a withheld increment : In the absence of any specific order withholding an ordinary increment
under FR 24 before the date on which it falls due for payment, the period of one year should be counted from the date
on which it falls due and not with reference to the date on which the Increment Certificate is signed by the competent
authority. Even where an increment is withheld, the time-limit should be reckoned from the date on which it falls due
after taking into account the period for which it is withheld.
Rule 264. Arrear Claims :
(1) Any arrear claim of a Government servant which is preferred within two years of its becoming due shall be
settled by the Drawing and Disbursing Officer or Accounts Officer, as the case may be, after usual checks.
(2) For the purpose of the above provisions the date on which the claim is presented at the office of disbursement
should be considered to be the date on which it is preferred.

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(3) (i) A claim of a government servant which has been allowed to remain in abeyance for a period exceeding
two years, should be investigated by the Head of the Department concerned. If the Head of Department
is satisfied about the genuineness of the claim on the basis of the supporting documents and there are
valid reasons for the delay in preferring the claims, the claims should be paid by the Drawing and
Disbursing Officer or Accounts Officer, as the case may be, after usual checks.
(ii) A Head of Department may delegate the powers, conferred on him by sub rule (i) above to the
subordinate authority competent to appoint the Government servant by whom the claim is made.
Rule 265. Procedure for dealing with time-barred claims :
(1) Even a time barred claim of a Government servant, shall be entertained by the concerned authority provided
that the concerned authority is satisfied that the claimant was prevented from submitting his claim within
the prescribed time limit on account of causes and circumstance beyond his control.
(2) A time barred claim referred to in Rule 265 (1) shall be paid with the express sanction of the Government
issued with the previous consent of the Internal Finance Wing of the Ministry or Department concerned.
Rule 266. Time barred claims of persons not in Government service : The provisions of Rule 258 to Rule 265
shall apply mutatis mutandis to arrear claims preferred against Government by persons not in Government service.
Rule 267. Retrospective sanctions : Retrospective effect shall not be given by competent authorities to sanctions
relating to revision of pay or grant of concessions to Government servants, except in very special circumstances with
the previous consent of the Finance Ministry.
Rule 268. Currency of sanction of Provident Fund advance/withdrawal : A sanction to an advance or a non-
refundable part withdrawal from Provident Fund shall, unless it is specifically renewed, lapse on the expiry of a period
of three months.
This will, however, not apply to withdrawals effected in instalments. In such cases the sanction accorded for
non-refundable withdrawals from Provident Fund will remain valid up to a particular date to be specified by the
sanctioning authority in the sanction order itself.
II. REFUND OF REVENUE
Rule 269. Sanctions of refunds of revenue : All sanctions to refunds of revenue, shall be regulated by the orders of
an Administrator or of the departmental authority, as the case may be, according to the provisions of the rules and
orders contained in the departmental manuals etc.
Rule 270.
(1) Communication of refund sanctions to audit : The sanction to a refund of revenue may either be given
on the bill itself or quoted therein and a certified copy of the same attached to the bill in the latter case.
(2) Suitable note of refund to be made in original Cash Book entry and other documents : Before a
refund of revenue is made, the original demand or realization, as the case may be, must be linked and a
reference to the refund should be recorded against the original entry in the Cash Book or other documents
so as to make the entertainment of a double or erroneous claim impossible.
(3) Remission of revenue before collection is not refund : Remissions of revenue allowed before collection
are to be treated as reduction of demands and not as refunds.
(4) Refunds not regarded as expenditure for allotment : Refunds of revenues are not regarded as
expenditure for purposes of grants or appropriation.
(5) Competent authority in case of credits wrongly classified : In cases where revenue is credited to a
wrong head of account or credited wrongly under some misapprehension, the authority competent to order
refund of revenue shall, in such cases, be the authority to whom the original receipts correctly pertain.
Rule 271. Compensation for accidental loss of property : No compensation for accidental loss of property shall be
paid to an officer except with the approval of the Finance Ministry. Compensation will not ordinarily be granted to an
officer for any loss to his property which is caused by floods, cyclone, earthquake or any other natural calamity or
which is due to an ordinary accident, which may occur to any citizen, for example, loss by theft or as the result of a
railway accident or fire etc. The mere fact that at the time of the accident, the Government servant is technically on
duty or is living in Government quarters in which he is forced to reside for the performance of his duties will not be
considered as a sufficient ground for the grant of compensation.
III. DEBT AND MISCELLANEOUS OBLIGATIONS OF GOVERNMENT.
Rule 272. Public Debt : The public debt raised by Government by issue of securities shall be managed by the
Reserve Bank. The Reserve Bank shall also manage securities created and issued under any other law or rule having
the force of law, provided such law or rule provides specifically for their management by the Reserve Bank.
Rule 273. Provident Funds : The procedure relating to the recovery of, subscriptions to and withdrawals from, the
Provident Funds established under the provisions of Provident FundsAct, 1925 shall be regulated strictly, in accordance

70
with the provisions of the respective Provident Fund Rules. Following instructions should be carefully observed by the
Head of the Offices for correct preparation of the Provident Fund schedules:-
(i) A complete list of subscribers to each fund should be maintained in each disbursing office in the form of the
schedule.
(ii) Each new subscriber should be brought on this list and any subsequent changes resulting from his transfer
or in the rate of subscription etc. clearly indicated in the schedule.
(iii) When a subscriber dies, quits service or is transferred to another office, full particulars should be duly
recorded in the list.
(iv) In the case of transfer of a subscriber to another office, the necessary note of transfer should be made in
the list of both the offices.
(v) From this list the monthly schedule to be appended to the pay bill should be prepared and tallied with
recoveries made before the submission of the bill for payment.
Rule 274.
(1) Crediting of Interest : The deposit accounts of these funds on the Government book will be credited with
interest at such rates and at such intervals as may be prescribed by Finance Ministry in each case.
(2) Maintenance of a register for recovery of Postal Life Insurance Premia : All drawing officers should
maintain in Form (GFR 38) record of Postal Life Insurance policy (PLI) holders. The register should be kept
up to date, the names of the policy holders should be noted in alphabetical order according to surnames,
leaving sufficient space between two entries to enable newcomers names being inserted in the right place.
A separate entry should be made in the register for each policy in the case of a policy holder having more
than one policy. On receipt of an intimation from the Director, Postal Life Insurance, Kolkata, about the
issue of a policy in favour of a subscriber authorizing the Drawing Officer to commence recovery from pay,
or on receipt of a Last Pay Certificate in respect of the subscriber transferred from another office, the
Drawing Officer should make a note of the particulars of the policy in the register. The name of the office
from which the subscriber has been transferred should be invariably be noted in the remarks column.
Wherever a subscriber is transferred to another office or his policy is discharged, his name should be
scored out from the register giving necessary remarks regarding discharge of policy or indicating the office
to which the insurant has been transferred as the case may be.
After the preparation of the monthly pay bill, the amount of recovery on account of PLI premium shown in
the bill should be posted in the monthly column in the register with proper reference to the bills or the
vouchers. The fact of excess or non-recovery should be briefly noted in the remarks column. Extracts
should be attached to the relevant bills in support of the recoveries. While taking extracts it should be seen
that the names of those insurants from whom recoveries were made in previous months but no recoveries
have been made during the current month either on account of transfer or discharge of that policy or on
account of leave salary being not drawn or the official being on leave without pay, should be included in the
current month’s schedule and necessary remarks noted against their names. Similarly, the remarks ‘New
Policy’ or Transferred from……………. Office, should be given in the schedule against the names of insurants
entered for the first time in current month. Reasons for short or excess recovery should be noted briefly in
the remarks column. In short, schedule of Postal Life Insurance recoveries to be attached to the bills, would
be a record not only of those from whom the recovery has actually been effected but also of those from
whom recovery was being effected previously but has not been effected.
IV. SECURITY DEPOSITS
Rule 275. Furnishing of security by Government servants handling cash :
(1) Subject to any general or special instructions prescribed by Government in this behalf, every Government
servant, who actually handles cash or stores shall be required to furnish security, for such amount and in
such form as Central Government or an Administrator may prescribe according to circumstances and local
conditions in each case, and to execute a security bond setting forth the conditions under which Government
will hold the security and may ultimately refund or appropriate it.
(2) The amount of security to be obtained from a Government servant shall be determined on the basis of
actual cash handled which shall not include account payee cheques and drafts.
(3) In cases, where the security is furnished in the form of cash, the security bond should be executed in Form
GFR 30 and, in cases where security is furnished in the form of a Fidelity Bond in GFR 34, the security
bond should be executed in Form GFR 31. In cases where security is furnished by way of Fidelity Bond (in
Form GFR 34), the Administration shall see that the government servant pays the premia necessary to
keep the Bond alive, for which the government servant shall submit premimum receipt in time. If the
government servant fails to submit the premium receipt he shall not be allowed to perform the duties of his
post and he shall be dealt with in accordance with the terms of his appointment.
(4) A Government servant who is officiating against the post of another cash or store handling Government
servant shall be required to furnish the full amount of the security prescribed for the post.

71
The Ministry or Department of Central Government,Administrators and the Comptroller andAuditor-General
in respect of persons serving in IndianAudit andAccounts Department may, however, exempt a Government
servant officiating in such a short-term vacancy from furnishing security if the circumstances warrant such
exemption provided that -
(i) they are satisfied that there is no risk involved;
(ii) such exemption is granted only in the case of a permanent Government servant; and
(iii) the period of officiating arrangement does not exceed four months.
Rule 276. Notwithstanding anything contained in Rule 275, security need not be furnished in cases of -
(a) Government servants who are entrusted with the custody of stores, which in the opinion of the competent
authority are not considerable.
(b) Government servants, who are entrusted with the custody of office furniture, stationery and other articles
required for office management, if the Head of Office is satisfied about the safeguards against loss through
pilferage.
(c) Librarian and Library Staff.
(d) Drivers of Government vehicles.
Rule 277. Retention of Security : A security deposit taken from Government servant shall be retained for at least six
months from the date he vacates his post, but a security bond shall be retained permanently or until it is certain there
is no further necessity for keeping it.
V. TRANSFER OF LAND AND BUILDINGS
Rule 278. Save as otherwise provided in any law, rule or order relating to the transfer of Government land, no land
belonging to the Government shall be sold to a local authority, body or any person or institution without previous
sanction of the Government.
Rule 279. Transfer of Land :
(1) Transfer of land from a Union Territory to a Central Government Department (i.e. Ministry or Department of
the Union Government including Defence, Railways, and Posts and Telegraphs) or vice versa shall be on
‘no profit no loss’ basis.
(2) Transfer of land from one Department of the Government (as defined in Rule 278) to another shall be on
‘no profit no loss’ basis.
(3) Transfer of buildings and superstructures on land vide above shall be at the present day cost minus
depreciation of these structure(s) standing on the land. Valuation for this purpose shall be obtained from
the Central Public Works Department at the time of transfer.
(4) The allotment of land to, and recovery of cost of buildings from the Public Sector Undertakings shall be at
‘market value’ as defined in paragraph - 2 of Appendix - 11.
(5) The transfer of land and building between the Union and State Governments shall be regulated by the
provisions of Articles 294, 295, 298 and 299 of the Constitution and subsidiary instructions issued by the
Union Government which are reproduced as Appendix - 11.
VI. CHARITABLE ENDOWMENTS AND OTHER TRUSTS
Rule 280. Detailed instructions relating to Charitable Endowments and other Trusts are embodied in Appendix -12.
VII. LOCAL BODIES
Rule 281. Financial arrangements between Central Government and Local Bodies :
(1) Unless any one of the following arrangements is authorized by specific orders of Government, a local body
will be required to pay, in advance, the estimated amount of charges to be incurred or cost of services to be
rendered, by Government on account of the fund :-
(i) payments made by Government are debited to the balances of the deposits of the local fund with
Government; or
(ii) payments are made as advances from public funds in the first instance pending recovery from the local
funds.
(2) Notwithstanding the provision contained in Rule 281 (1) in case of emergency such as epidemics pre-
payment will not be insisted upon from local bodies for supply of medicines from Medical Stores Depots of
the Ministry of Health.
Rule 282. Any amount or loan not paid on due date to Government by a local body, may be adjusted from any non-
statutory grant sanctioned for payment to it.

72
Rule 283. Taxes etc. collected by Government on behalf of Local Bodies : Proceeds of taxes, fines or other
revenues levied or collected by Government for or on behalf of local bodies shall not be appropriated direct to a local
fund without passing them through the Consolidated Fund unless expressly authorised by law.
Rule 284. Payments to Local Bodies : Subject to provision of relevant act and rules, payments to local bodies in
respect of revenue and other moneys raised or received by Government on their behalf will be made in such manner
and on such date, as may be authorized by general or special orders of Government.
Rule 285. Audit of Account of Local Bodies : Subject to the provisions of any law made under Article 149 of the
Constitution, the accounts of local bodies, other non-Government bodies, or institutions will be audited by the Indian
Audit and Accounts Department under such terms and conditions as may be agreed upon between the Government
and the Comptroller and Auditor-General of India.
Rule 286. Audit Fees : Audit fees on the basis of daily rates prescribed by Government from time to time shall be
charged by the IndianAudit andAccounts Department for the audit of local and other non-Government funds, excluding
funds for the audit of which the rates of fees recoverable are prescribed by law or by rules having the force of law:
Provided that nothing contained in this rule shall be held to override any special instructions of Government
exempting any particular local body or institution wholly or partially from the payment of audit fees.
Rule 287. In the case of Government Companies, the recovery of the cost of Supplementary audit conducted under
Section 619(3) (b) of Companies Act, 1956 as amended from time to time, should be waived in those cases where the
audit is done by the Comptroller and Auditor-General through his own departmental staff but should be enforced in
cases where the Comptroller and Auditor-General employs professional auditors for the Supplementary audit.
Rule 288. Financial transactions between Government and local bodies shall be rounded off to the nearest Rupee.
VIII. DESTRUCTION OF RECORDS CONNECTED WITH ACCOUNTS
Rule 289. Subject to any general or special rules or orders applicable to particular departments as prescribed in their
departmental manuals, no Government record connected with accounts shall be destroyed except in accordance
with the provisions of Appendix -13.
IX. CONTINGENT & MISCELLANEOUS EXPENDITURE
Rule 290. Rules relating to contingent expenditure are available at Rule 13 of the Delegation of the Financial Powers
Rules, 1978 and Rules 96 to 98 of the Government of India (Receipts and Payments) Rules, 1983.
Rule 291. Permanent Advance or Imprest : Permanent advance or Imprest for meeting day to day contingent and
emergent expenditure may be granted to a government servant by the Head of the Department in consultation with
Internal Finance Wing, keeping the amount of advance to the minimum required for smooth functioning. Procedures
for maintenance of permanent advance or imprest are available in para 10.12 of the Civil Accounts Manual, Volume.I.
Rule 292. Advances for Contingent and Miscellaneous purpose :
(1) The Head of the Office may sanction advances to a Government Servant for purchase of goods or services
or any other special purpose needed for the management of the office, subject to the following conditions:-
(i) The amount of expenditure being higher than the Permanent Advance available, cannot be met out of
it.
(ii) The purchase or other purpose can not be managed under the normal procedures, envisaging post-
procurement payment system.
(iii) The amount of advance should not be more than the power delegated to the Head of the Office for the
purpose.
(iv) The Head of the Office shall be responsible for timely recovery or adjustment of the advance.
(2) The adjustment bill, along with balance if any, shall be submitted by the government servant within fifteen
days of the drawal of advance, failing which the advance or balance shall be recovered from his next
salary(ies).
Rule 293. The Ministry or Department may sanction the grant of an advance to a Government Pleader in connection
with law suits, to which Government is a party, up to the maximum limit of Rupees five thousand at a time. The
amount so advanced should be adjusted at the time of settlement of Counsel’s fee bills.

APPENDICES
APPENDIX - 1
[ See Rule 37 ]
INSTRUCTIONS FOR REGULATING THE ENFORCEMENT OF RESPONSIBILITY FOR LOSSES, ETC.
1. The cardinal principle governing the assessment of responsibility is that, every Government officer should
exercise the same vigilance in respect of expenditure from public fund generally as a person of ordinary prudence
would exercise in respect of the expenditure and the custody of his own money. While, the competent authority may,
in special cases, condone an officer's honest errors of judgement involving financial loss if the officer can show that
he has acted in good faith and done his best up to the limits of his ability and experience, personal liability shall be
strictly enforced against all officers who are dishonest, careless or negligent in the duties entrusted to them.
2. In cases where loss is due to delinquencies of subordinate officials and where it appears that this has been
facilitated by laxity of supervision on the part of a superior officer, the latter shall also be called strictly to account and
his personal liability in the matter carefully assessed.
3.(a) The question of enforcing pecuniary liability shall always be considered as well as the question of other
forms of disciplinary action. In deciding the degree of an officer's pecuniary liability, it will be necessary to
look not only to the circumstances of the case but also to the financial circumstances of the officer, since
it should be recognized that the penalty should not be such as to impair his future efficiency.
(b) In particular if the loss has occurred through fraud, every endeavour should be made to recover the whole
amount lost from the guilty persons and if laxity of supervision has facilitated the fraud, the supervising
officer at fault may properly be penalized either directly by requiring him to make good in money a sufficient
proportion of the loss or indirectly by reduction or stoppage of his increments of pay.
(c) It should always be considered whether the depreciated value of the Government property or equipment
lost, damaged or destroyed by the carelessness of individuals entrusted with their care should be recovered
from the delinquent official. The depreciated value of the stores may be calculated by applying the 20% of
depreciation in the case of vehicles, including cycles, and 15% in the case of calculating machines, on the
reduced balance every year. The amount to be recovered may be limited to the Government servant's
capacity to pay.
4. When a pensionable Government servant is concerned in any irregularity or loss, the authority investigating
the case shall bear in mind the provisions contained in Central Civil Services (Pension) Rules 1972 as amended from
time to time and immediately inform the Audit Officer and/or theAccounts Officer, as the case may be, responsible for
reporting on his title to Pension or Death-Cum-Retirement Gratuity, and the authority competent to sanction Pension
or Death-Cum-Retirement Gratuity and it will be the duty of the latter to make a note of the information and see that
the Gratuity or Death-Cum-Retirement Gratuity is not paid before a conclusion is arrived at as regards the Government
servant's culpability and final orders are issued thereon.
5. The fact that Government servants who were guilty of frauds or irregularities have been demobilized or have
retired and have thus escaped punishment, should not be made a justification for absolving those who are also guilty
but who still remain in service.
6. It is of the greatest importance to avoid delay in the investigation of any loss due to fraud, negligence, financial
irregularity, etc. Should the administrative authority require the assistance of the Audit Officer and/or the Accounts
Officer, as the case may be, in pursuing the investigation, he may call on that officer for all vouchers and other
documents that may be relevant to the investigation; and if the investigation is complex and he needs the assistance
of an expert Audit Officer/ Accounts Officer to unravel it, he should apply forthwith for that assistance to Government
which will then negotiate with Audit Officer and/or the Accounts Officer concerned for the services of an investigating
staff. Thereafter, the administrative authority and the Audit /Accounts authority shall be personally responsible within
their respective spheres, for the expeditious conduct of the enquiry. In any case in which it appears that recourse to
judicial proceedings is likely, the Special Police Establishment or the State Police should be associated with the
investigation.
7. Depending upon the results of the inquiry, departmental proceedings and/or prosecution shall be instituted at
the earliest moment against the delinquent officials concerned and conducted with strict adherence to the Central Civil
Services (Classification, Control andAppeal) Rules, 1957, and other instructions prescribed in this regard by Government.
73

74
APPENDIX - 2
[ See Note below Rule 48 ]
PROCEDURE FOR PREPARATION OF DETAILED ESTMATES OF RECEIPTS
1. Revenue receipts. - These comprise (i) Central taxes, duties and cesses administered by the Central
Board of Direct Taxes and the Central Board of Excise and Customs; (ii) local taxes and duties and other receipts in
relation to the Union Territories without Legislature; (iii) interest receipts of loans and advances by the Central
Government as also interest charged to commercial departments, etc., (iv) notional receipts from adjustments based
on principles of accounting like grant assistance from foreign Governments or International institutions; and (v) all
other revenue receipts including dividends on equity investments of the Central Government, cesses collected by the
Ministries and Departments, etc.
2. Capital Receipts. - These comprise (i) Internal debt (market loan, treasury bills, etc.); (ii) External debt; (iii)
Repayment of loans and advances made by the Central Government; (iv) Disinvestment Receipts (v) Other Liabilities.
3.(1) Estimates of receipts of Central Taxes and Duties and External Aid receipts are prepared within the
Finance Ministry by the Central Board of Direct Taxes, the Central Board of Excise and Customs and the
Controller ofAid Accounts and Audit. Estimates of internal debt (market loans) receipts are framed by the
Budget Division.
3.(2) Estimates of revenue receipts of the Union Territory Administrations will be furnished to the Finance
Ministry by the concerned Audit Officer / Accounts Officer wherever departmentalization of accounts has
not taken place and by the Controller of Accounts of the Union Territory Administrations where
departmentalization of accounts has been introduced.
3.(3) Estimates of receipts in all other cases will be prepared by Controller of Accounts of each Department
after obtaining necessary data by the 30th November from the various organizations / field units and such
scrutiny as may be necessary in the light of policy decisions and other post Budget developments.
4. Estimates will be furnished to the Finance Ministry in prescribed forms (GFR 5, 5-A and 5-B) by the 31st
December, each year for the ensuing Budget.
5.(1) In preparing the Revised Estimates, while previous year's actuals and current year's trends will be material
factors to review the original Budget Estimates, special attention should be devoted to making as realistic
an estimate as possible of receipts which are likely to materialize during the rest of the financial year.
5.(2) In framing the Budget Estimates for the ensuing year, the estimating authorities should exercise utmost
care. While all receipts which can be foreseen in the light of latest trends, decisions and developments must
be provided for, care should be taken to ensure that undue optimism does not influence these estimates.
Similarly, where the receipts have a seasonal character, due note should be taken thereof in preparing the
estimates.
5.(3) Receipts by way of recoveries from Central Government Ministries / Departments, are to be excluded in
preparing Receipt Estimates. Other recoveries (from the State and Union Territory Governments, foreign
Governments, companies and statutory bodies, individuals, etc.) will, however, be included in the Receipt
Estimates.
5.(4) Estimates of receipts by way of interest on loans and advances will be based on the terms of the loans
sanctioned, as entered in the Loan Registers, including defaults, if any. The estimates should be realistic;
that is to say, that the estimates should reflect not merely what is due but what is likely to be realized
during the year together with the reasons for non-recovery of the difference between receipts due and
assumed in the estimates. In the case of Public Sector Units, interest receipts expected from their internal
resources should be distinguished from notional recoveries offset by corresponding expenditure provisions
in the form of Plan/Non-plan subsidies and loans.
Similarly, where repayments due are refinanced by further Non-Plan loans or by conversion of past loans into
equity, the details should be furnished.
5.(5) In reporting estimates of receipts by way of foreign grant assistance in cash or in kind, care should be
taken to classify foreign grant receipts in cash under the Major Head '1605 External Grant Assistance' and those in the
form of commodities under the Major Head '1606 Aid Materials and Equipment'. In the case of commodities grants,
identical provision will be made in expenditure estimates under the Major head '3606 Aid Materials and Equipments'
(both as debits to represent the notional payment therefor and as credits - recoveries in reductions of expenditure - to
reflect the counter-balancing entries), as well as under the final functional Head ofAccount showing the final destination
and use of the aid materials and equipment.

75
NOTE. - For utilization of cash grants, provision in expenditure estimates under the final functional Heads of
Account will be necessary.
5.(6) In reporting the estimates, the estimating authorities should confine their estimates to those items of
receipts which are to be accounted for finally in their own accounts and ultimately in the accounts of the Ministry/
Department to which they are subordinate. All other receipts/recoveries entering the accounts of another Ministry/
Department should be communicated to the concerned Ministry/Department for consolidation in their estimates (e.g.,
receipts of CGHS contributions and rent recoveries in respect of Government accommodation).
APPENDIX - 3
INSTRUCTIONS FOR PREPARATION OF DETAILED ESTIMATES OF
EXPENDITURE FROM THE CONSOLIDATED FUND
1. For purpose of Budget Estimates, expenditure from the Consolidated Fund falls in two categories - Non-Plan
expenditure and Plan expenditure -each comprising expenditure on revenue account and on capital account including
loans and advances.
A. NON-PLAN EXPENDITURE ESTIMATES
2. To facilitate appropriate scrutiny and consolidation of Expenditure Estimates for reporting to the Finance Ministry,
the FinancialAdviser in each Ministry / Department will obtain detailed estimates and other supporting data from each
of the estimating authorities under the control of the Ministry / Department, in appropriate forms, sufficiently in advance.
3. The framing of the Revised Estimates for the current year should always precede estimation for the ensuing
year. The Revised Estimates should be framed with great care to include only those items which are likely to materialize
for payment during the current year, in the light of (i) actuals so far recorded during the current year, compared with
the actuals for corresponding period of the last and previous years, (ii) seasonal character or otherwise of the nature
of expenditure, (iii) sanctions for expenditure and orders of appropriation of re-appropriation already issued or
contemplated and (iv) any other relevant factor, decision or development.
The Budget Estimate for the ensuing year should likewise be prepared on the basis of what is expected to be
paid, under proper sanction, during the ensuring year, including arrears of previous years, if any. Due attention to
considerations of economy must be paid and while all inescapable and foreseeable expenditures should be provided
for, care should be taken that the estimate is not influenced by undue optimism.
4. No lump sum provision will be made in the Budget except where urgent measures are to be provided for
meeting emergent situations or for meeting preliminary expenses on a project/scheme which has been accepted in
principle for being taken up in the financial year. In latter cases Budget provision will be limited to the requirements of
preliminary expenses and for such initial outlay, as, for example, on collection of material, recruitment of skeleton
staff, etc.
Provision for a 'token' demand should not be made in the Budget Estimates for the purpose of seeking approval
in principle for big schemes without the full financial implications being worked out and got approved by the appropriate
authorities. In accordance with instructions contained in Paragraph (vii) of Appendix (6), a 'token' demand can be
made during the course of a year for a project / scheme when the details thereof are ready and funds are also
available for undertaking it but it cannot be started without Parliament's approval, it being in the nature of a 'New
Service/New Instrument of Services'.
5. All estimates should be prepared on gross basis and 'voted' and 'charged' portions must be shown separately;
even expenditure met partly or fully from receipts taken in reduction of such expenditure or those counterbalanced by
receipts credited as revenue to the Consolidated Fund, must be reported in such estimates on gross basis. Care
should also be taken to ensure that all notional receipts reported in 'Receipt Estimates' (such as interest receipts fully
or partly subsidized, loan repayment receipts partly or fully refinanced through further loans or conversions into equity,
receipts of foreign grant assistance in the form of commodities or material, etc.) are properly matched by adequate
provisions in expenditure estimates.
6. The estimates of Non-Plan expenditure should include all items which are fully accounted for in the accounts
of the Ministry/Departments to which the estimating authority is subordinate; they shall also cover expenditure, if any,
in Union Territories without Legislature, whether provided for in the demands of the said Ministry / Department or in
the 'Area' demand of the concerned Union Territory. Estimates of 'Works Expenditure', if any, against the provisions
in the demands of the Ministry of Urban Development, as well as expenditure on pensions (including commutation
payments, gratuity payments, pension contributions, etc.) interest payments, loans and advances to Government
servants, etc., which are provided for in the centralized Grants/Appropriations controlled by the Finance Ministry
should be furnished to the Ministry of Urban Development and the Finance Ministry.

76
7. The estimate of establishment charges should be framed taking into account the trends over preceding three
years and other relevant factors like changes in rates of pay, allowances, number of posts and their filling and the
economy instructions issued by the Ministry of Finance from time to time.
8. Expenditure estimates will be prepared with full accounts classification, i.e., by Major/Sub-Major Head, Minor
Head, Sub-Head and Detailed Head and Object Head ofAccount. The correctness of accounts classification must be
ensured in each case an in case of any doubt, cleared beforehand with the Ministry of Finance, Budget Division/CGA.
The relevant Grant number and title of Appropriation should also be mentioned to facilitate identification of the provision
in Budget Estimates for the current year.
9. Unless otherwise indicated by the Finance Ministry, estimates of Non-Plan expenditure (both Revised Estimates
for the current year and Budget Estimates for the ensuing year) should reach the Finance Ministry, Department of
Economic Affairs, Budget Division, by the date prescribed by the Ministry of Finance, each year, in triplicate in Form
GFR 7, a separate form being used for each Major Head of Account.
10. To facilitate appreciation and scrutiny of the estimates, any major variations between the Budget and Revised
Estimates for the current year and also between the Revised Estimates for the current year and Budget Estimates for
the ensuing year should be explained cogently. In particular, all Non-Plan provisions for subsidy, capital investment or
loan to a Public Sector Undertaking, must be explained by indicating their purpose and the extent to which they are
intended to cover losses, working capital needs, debt or interest liabilities of the undertaking.
11. Wherever the proposed estimates attract the limitations of 'New Service/New Instrument of Service', the fact
must be specifically highlighted. The guidelines to be followed in this regard are indicated in Annexure - I to this
Appendix. For all 'new' schemes, other than purely 'works' projects, the estimates proposed should be supported by
details set out inAnnexure - II to this Appendix. In the case of provisions of 'Grants-in-aid' to non-Government entities,
the full purpose thereof and the nature of the grants, whether recurring or non-recurring, should also be indicated.
12. All provisions for transfer of Government assets to Public Sector Undertaking and other non-Government
entities must also be highlighted, indicating whether the transfer is by way of grants or by way of equity investment or
loan. Similarly, in the case of nationalization or take-over of any private sector assets, the related provisions in estimates
must be supported by full details, such as the effective date of take-over, the agreed compensation amount and the
manner of its payment, etc. In cases of takeover, where the assets are simultaneously transferred to a Public Sector
Undertaking, it must be ensured that the estimates provide for (i) payment of compensation for the take-over, (ii) for
transfer of assets to the Public Sector Undertaking, by means of recovery of compensation payment to be taken in
reduction of expenditure, and (iii) provisions for equity or loan to the Public Sector Undertaking.
B. PLAN EXPENDITURE ESTIMATES
13. The Planning Commission prescribe each year the form and the manner in which proposals are required to be
submitted to them for determining the Plan allocations for the ensuing year. The Financial Adviser in each Ministry /
Department of the Central Government will accordingly call for requisite data from the estimating authorities, public
sector and other enterprises under the control of the Ministry / Department, etc. The approved Plan allocations will be
communicated by the Planning Commission to the Central Ministries / Departments, indicating the total Plan outlay
approved for each scheme / organization and the extent to which it is to be met from extra-budget resources and from
provisions in the Demands for Grants.
14. Subject to such directions as may be issued by the Finance Ministry from time to time, the Revised Estimates for
the current year and Budget Estimates of the ensuing year, in respect of Plan provisions, are to be sent to the Finance
Ministry in Form GFR 7. For furnishing these estimates, instructions for preparation and submission of Non-Plan
Expenditure Estimates will apply to the extent relevant; in addition, the following points should also be borne in mind :-
(i) Such part of the approved budgetary support for Plan outlay as relates to 'works expenditure' and has been
accepted by the Ministry of Urban Development for inclusion in their Demands for Grants should be excluded
by the other Ministries / Departments in reporting the estimates to the Finance Ministry in Form GFR 7.
(ii) In the case of Plan, provisions for equity investments and loans to public sector and other enterprises, as
well as those for grants-in-aid, specific schemes, for which the outlay is provided and the extent for each
of them is also to be indicated clearly.
(iii) Provisions for Plan expenditure on Central and Centrally Sponsored Plan Schemes, including such
expenditures in Union Territories, are to be included in the relevant demand of the Administrative Ministry/
Department and not in 'Area' Demand of the concerned Union Territory.

77
ANNEXURE - 1 TO APPENDIX - 3
(Refer: Ministry of Finance, Budget Division's OM No. F(15)-B(RA)/82 dated 13.4.1982)
[ See Paragraph 11 of Appendix - 3 ]
FINANCIAL LIMITS TO BE OBSERVED DETERMINING CASES RELATING TO
“NEW SERVICE”/NEW INSTRUMENT OF SERVICE
Nature of transaction Limits up to which expenditure can be Limits beyond which prior approval of
met by reappropriation of savings in a Parliament is required for expenditure
Grant subject to report to Parliament from the Consolidated Fund
1. Capital Expenditure:
A. Departmental Undertakings:
(i) Setting up a new undertaking,
or taking up a new activity by an
existing undertaking. ... All cases
(ii) Additional investment in an existing Above Rs. 50 lakhs but not
undertaking. exceeding Rs. 1 crore Up to Rs. 1 crore.
B. Public Sector Companies/Corporations :
(i) Setting up of a new Company, or
splitting up of an existing Company,
or amalgamation of two or more
Companies, or taking up a new All cases
activity by an existing Company.
(ii) Additional investment in /loans to an
existing Company :
(a) Where there is no Budget Provision. Above Rs. 10 lakhs but not Above Rs. 20 lakhs
exceeding Rs. 20 lakhs
(b) Where Budget Provision exists for
investment and / or loans.
Paid up Capital of Company:
Upto Rs. 1 crore. Above Rs. 10 lakhs but not Above Rs. 20 lakhs
exceeding Rs. 20 lakhs
Above Rs. 1 crore and up to Above Rs. 1 crore but not Above Rs. 2 crores
Rs. 25 crores exceeding Rs. 2 crores.
Above Rs. 25 crores and up Above Rs. 5 crores but not Above Rs. 10 crores.
to Rs. 100 crorers. exceeding Rs. 10 crores.
Above Rs. 100 crores Above Rs. 7.5 crores but Above Rs. 15 crores.
not exceeding Rs. 15 crores.
NOTE 1. - In computing additional requirements for applying the
above limits, loan and capital investments, over and above the Budget
provision therefor, should be taken together.
NOTE 2. - For additional fund requirements of terms lending
institutions which are under theAudit of the Comptroller and Auditor-
General of India, the limits will be twice those specified above.
Where an institution does not have paid up capital, the limits will be
applied with reference to Central Loans outstanding against it at
the end of the previous financial year.
NOTE 3. - For financing projects under construction, within the
approved cost estimates already brought to the notice of Parliament,
augmentation of Budget provisions beyond the monetary limits
prescribed above will be permissible subject to availability of savings
in the Grant. A report of such cases to Parliament will, however, be
necessary.
NOTE 4. - Short terms (working capital) loans, repayable within five
years, will not be treated as "New Instrument of Service" but will
require to be reported to Parliament.

78
C. Port Trusts, Delhi Municipal Corporation,
Khadi and Village Industries Commission,
Tea Board and Coffee Board.
Loans : The limits prescribed for public sector companies will
apply with reference to central loans outstanding against
them at the end of the previous financial year.
D. Private Sector Companies / Private Institutions:
(i) Investments to be made for the first time except
in Units coming under Government Management ... All cases
with the approval of Parliament.
(ii) Additional investments in or loans to an existing
company / institution including private sector units Above Rs. 50 lakhs but Above Rs. 1 crore
coming under Government Management with the not exceeding Rs.1 crore
approval of Parliament.
NOTE 1. - While applying these limits loans and capital investments
are to be taken together.
NOTE 2. - In the case of loans to statutory and other public
institutions (other than those mentioned under item 'C' above)
substantially financed by grants-in-aid from Government, e.g.,
University Grants Commission, Indian Institute of Technology and
Joint sector enterprises, limits as applicable to private sector
companies / institutions should be applied.
NOTE 3. - Where there is no Budget provision for investment /
loans to a company / institution, prior approval of Parliament will be
necessary for investment / loans exceeding Rs. 10 lakhs except in
the case of units brought under Government Management.
E. Expenditure on new Works Above Rs. 10 lakhs but not Above Rs. 50 lakhs
(Land, Building and /or Machinery) exceeding Rs. 50 lakhs.
2. Revenue Expenditure
F. Grants-in-aid to statutory and other
public institutions
(i) Institution in receipt of grant-in-aid
up to Rs. 1 crore. ... Rs. 10 lakhs
(ii) Institutions in receipt of grant-in-aid ...
of more than Rs. 1 crore. 10% of the Budget
provision or Rs. 2
crores, whichever is less.
NOTE 1. -These limits will apply with reference to moneys disbursed
by an individual Ministry / Department and not by the Government
as a whole.
NOTE 2. - The above limits will also apply to institutions which are
substantially financed by grants-in-aid from Government and to
Pubic Sector Undertakings in receipt of grants-in-aid.
NOTE 3. - Where a lump sum provision is made for providing grant-
in-aid under a particular scheme in the absence of institutions-wise
break up at the time the provision is made, the aforesaid limits will
not apply to releases to such institutions within the Budgeted
provision. The details will, however, be reported to Parliament.
G. Grants-in-aid to Private institutions
other than for Export Promotion Scheme:
(i) Recurring. .... Above Rs. 5 lakhs.
(ii) Non-recurring .... Above Rs. 10 lakhs.

79
NOTE 1. - In the case of recurring grants exceeding Rs. 5 lakhs per
annum, the financial implications should be reported to Parliament
where the grant is to be made for 2 years or more.
NOTE 2. - The limits for non-recurring and recurring grants-in-aid
will apply with reference to moneys disbursed by an individual
Ministry / Department and not Government as a whole.
NOTE 3. - Where a lump sum provision is made for providing grant-
in-aid under a particular scheme in the absence of institution-wise
break up at the time the provision is made, the aforesaid limits will
not apply to releases to such institutions within the budgeted
provisions. The details will, however, be reported to Parliament.
H. Subsidies and Grants under Export The Budget provision should be split up as under -
Promotion Schemes.
(i) Product Promotion and Commodity Development (this sub-head
will accommodate payment of cash compensatory support on all
items of exports including textiles.)
(ii) Grants-in-aid to Export Promotion and Market Development
Organisation (this sub-head would accommodate grants to Export
Promotion Councils and other organizations like Trade Development
Authority, Indian Institute of Foreign Trade, etc., for their
establishment expenditure as well as developmental activities and
also to recognized export houses for specified export houses for
specified export promotion activities).
(iii) Export Credit Development (This sub-head will cover payments
made to commercial Banks towards interest subsidy under the
Export Credit Subsidy Scheme.)
Limits for augmentation of total provision under the Export Promotion
Scheme :
Above Rs. 50 lakhs but not Above Rs. 2 crores
exceeding Rs. 2 crores.
I. Food Subsidy. Above Rs. 50 lakhs but not Above Rs. 2 crores.
exceeding Rs. 2 crores.
J. Other subsidies. ... Above Rs. 10 lakhs
K. Payments against cess collections. Limits as applicable to grants- Limits as applicable to grants-
in-aid to statutory or public in-aid to statutory or public
institutions will apply. institutions will apply.
L. New Commissions or Committees ... Above Rs. 4 lakhs (total
of Enquiry. expenditure)
M. Write-off of Government loans. Above Rs. 50,000 but not Above Rs. 1 lakh (Individual
exceeding Rs. 1 lakh cases).
(Individual cases).
NOTE. - This limit will also apply where it is decided to sanction
grant to a private institution / individual for repayment of loan.
N. Others cases of Government Each case to be considered on merits.
expenditure.
O. P & T, Railways and Defence. The aforesaid limits, including those relating to Works expenditure
will also apply to these Departments subject to considerations of
security in the case of Defence.

80
NOTE 1. - For investment in Ordnance Factories, the limit
of Rs. 1 crore mentioned in 'item 'A' (ii) will be applicable
with reference to investment in all the factories as a whole.
NOTE 2. - Civil Works, which do not form part of any project
of the departmental undertakings (Ordnance Factories)
should be treated as ordinary Defence works.As such, prior
approval of Parliament will be necessary if the cost of
individual works exceeds Rs. 50 lakhs and in cases where
the individual works cost RS. 10 lakhs or more but not
exceeding Rs. 50 lakhs, a report to Parliament will be
required. Alist of such works should, however, be supplied
to Director of Audit, Defence Services.
ANNEXURE - II TO APPENDIX - 3
MEMORANDUM FOR PROPOSALS INVOLVING
EXPENDITURE ON NEW SERVICE OR NEW INSTRUMENT OF SERVICE
Government of India
Ministry of …………………………
Department of …………………….
New Delhi, the ……………………
MEMORANDUM
1. Statement of proposal :
(a) Title of the proposal / scheme.
(b) Description of the proposal / scheme and its objects.
(c) Justification for the proposal / scheme and what alternatives have been considered.
(d) Description of the manner in which the proposal / scheme is proposed to be implemented including
mention of agency through which the scheme will be executed.
(e) Schedule of programme and target date of completion.
2. Financial implications of the proposal :
(a) Nature of the scheme (Plan-Central or Centrally sponsored - or Non-Plan.)
(b) Total outlay (recurring and non-recurring separately), its broad details and its year-wise phasing.
(c) (i) Plan allocation, in a Plan scheme; and
(ii) Budget provision in the current financial year;
if no Budget provision exists, how is the expenditure proposed to be met?
(d) Foreign exchange component of the outlay and how it is proposed to be met.
(e) Component of grant, loan and subsidy, if any, in the total outlay involved and their proposed terms.
(f) Number of posts, their pay scales and the basis adopted for staffing (Statement attached).
(g) Broad details of construction works, their justification and basis of estimates (Statement attached).
(h) Requirement of stores and equipment together with justification and cost (Statement attached).
(i) Achievement / return expected and other economic implications, if any.
3. (a) Comments, if any, of the Planning Commission (for Plan Schemes only).
(b) Comments, if any, of other Ministries / Departments which may have been consulted.
4. Supplementary information, if any.
5. Points on which decision / sanctions are required.
Secretary to the Government of India.
Ministry of ……………………………..
Department of …………....................

81
APPENDIX – 4
[See Note below Rule 48]
PROCEDURE FOR COMPILATION OF DETAILED DEMANDS FOR GRANTS
1. The Demand for Grants are presented to Parliament at two levels. The Main Demands for Grants are presented
to Parliament by the Ministry of Finance along with the Annual Financial Statement while the Detailed Demands for
Grants are laid on the Table of the Lok Sabha by the concerned Ministries a few days in advance of the discussion of
the respective Ministries Demands in that House.
Both the Main Demands for Grants as also the Detailed Demands for Grants comprise three parts each, viz.-
Part - I shows the Service for which the Demand (orAppropriation) is intended and the estimates of the gross
amount, separately for Voted and Charged Expenditure, under Revenue and Capital (including Loan) sections required
in the ensuing year in respect of that Service.
Part - II shows break up of the estimates separately for Plan and Non-Plan expenditure. In the Main Demands
for Grants, the break up is exhibited up to the level of Major Heads of Account which correspond to functions of the
Government.
In the Detailed Demands for Grants the break up in respect of activities/schemes/organization up to the
object head level is given.
The Detailed Demands for Grants also exhibit actuals of the previous year in Part - II.
Both in the Main Demands for Grants as well as in the Detailed Demands for Grants, the details of recoveries
taken in reduction of expenditure provided for in the Demand or Appropriation are also depicted.
2. All Detailed Demands for Grants of a Ministry / Department are consolidated in a single volume and presented
to Lok Sabha by the concerned Ministry / Department. The Detailed Demands show ‘actual expenditure’ as per
accounts in the previous year, Budget and Revised Estimates for the current years and Budget Estimates for the
ensuing year, each showing ‘Plan’ and ‘Non-Plan’ items separately.
(i) The process of compilation should start in July / August with the preparation of a manuscript skeleton.
Manuscript skeletons of Detailed Demands for the ensuing year should be prepared by using the printed
Detailed Demands for the current year by making necessary alterations therein. New sub-heads sanctioned
by the Finance Ministry, if any, and those expected to be required should also be added in the manuscript
at appropriate places. The manuscript should then be sent to the designated press for a proof. Where
necessary, a second proof may be obtained. The printed skeletons should be available with the Ministries/
Departments preferably by the 15
th
October each year.
(ii) Two copies of the Demand skeleton may then be sent to the Principal Accounts Officer, as the case may
be, for filling the ‘Actuals’ column for the previous year and to return one copy duly filled in.
(iii) In the master copy of the Demand, the Ministry / Department will then post (1) the figures of actuals as
reported by the Principal Accounts Officer / Accountant-General; (2) Revised Estimates for the current year
and the Budget Estimates for the ensuing year from the office copy of the SBEs /Demands for Grants sent
to Finance Ministry. While posting these entries, care should be taken to ensure that –
(a) “Charged” items are shown in italics and are not mixed up with “Voted” provisions;
(b) posting is done accurately against the proper item / head of account including “recoveries”, if any,
taken as reduction of expenditure;
(c) new items are inserted at the proper place under the relevant minor head;
(d) “Plan” and “Non-Plan” provisions are noted in the relevant columns;
(e) totals of sub-heads, minor heads, major heads, etc., are correctly worked out and posted; that totals of
Revenue section and Capital section as well as the grand totals are correct and show “Charged” and
“Voted” figures distinctly; and
(f) new sub-head (opened through Supplementary Demands) or otherwise or any change in the numbering
and nomenclature sanctioned by the Budget Division since the proof of the skeleton should also be
incorporated in the Master Copy.
NOTE :– A sub-head should appear in the Demand only when there is provision thereunder, either in the currentyear
(Budget or Revised) or the ensuing year. Wherever only actuals of the previous year pertaining to a sub-head are to
be exhibited, this should be done by inserting suitable footnote on the relevant page.
(iv) The process of compilation and printing of the Demands should be undertaken in stages.
81

82
3. The first proof of individual Demands may be obtained after posting actuals of previous year and Non-Plan
estimates (preferably by 15
th
December). The second proof may be similarly obtained (preferably by 15
th
January)
after “Plan” Revised estimates are posted in the first proof. As soon as “Plan” provisions for the ensuing year are
finalized and communicated to the Finance Ministry, they should be posted in the second proof. Before obtaining the
third proof, the following material may also be added.
(A) Main Demands for Grants :
(i) Notes on the Demands for Grants highlighting the following :-
(a) The objectives of the concerned Ministry / Department, how the programmes undertaken or contemplated
contribute towards attainment of such objectives and the agencies entrusted with the execution of
such programmes;
(b) Details of important provisions included in Demands for Grants with particular emphasis on Plan
provisions and new items of expenditure;
(c) Cogent reasons for significant variations between the Budget Estimates and Revised Estimates for the
current year and between the Revised Estimates, for the current year and the Budget Estimates for the
ensuing year;
(d) Provisions for subsidy in lieu of interest on loans by the Government or token provisions for concessional
rate of interest (along with number of likely cases involved and financial implications, if determinable;
and
(e) Complete details of the estimated cost of a project together with its economics and financial implications
(whenever these estimates are revised and the cost of escalation exceeds 20 percent of the sanctioned
cost or Rs. 3 crores, whichever is more, full reasons therefor and the effect thereof on the economics
of the projects should also be included in the Notes on Demands).
(ii) A statement giving details of provisions in the Budget which attract limitations of “New Service”/”New
Instrument of Service”.
(B) Detailed Demands for Grants :
The Detailed Demands for Grants will be accompanied by the following schedules/statements:-
(i) Schedule showing the estimated strength of establishment and provision therefor.
(ii) Statement showing project-wise provision for expenditure on externally aided projects in the Central Plan.
(iii) Schedule showing broad details of Non-Plan expenditure provisions of Rs. 25 lakhs and above.
(iv) Schedule showing provision for payment of grants in aid to non-Government bodies.
(v) Statement showing details of individual works and projects costing Rs. 5 crore or above.
(vi) Statement showing revised cost estimates of projects of public sector enterprises and departmental
undertakings.
(vii) Statement showing transfer or gift of Government properties of value exceeding Rs. 5 lakhs to non-
Government bodies.
(viii) Statement showing contributions to International bodies. This statement will include only items of contribution,
membership fees to international bodies, which constitute revenue expenditure. Subscriptions to international
bodies, which represent investments and are accounted for in the Capital section, are to be excluded from
it.
(ix) Statement showing guarantees given by the Central Government and outstanding as on 31
st
March of the
preceding year.
(x) Statement showing grants-in-aid exceeding Rs. 5 lakhs (recurring ) or Rs. 10 lakhs (non-recurring) actually
sanctioned to private institutions/organizations/individuals.
4. In addition the Detailed Demands for Grants will also include where necessary, “Notes on Important Projects and
Schemes”, e.g., where the Ministry / Department do not bring out performance Budgets.
5. The third proof on receipt from the press should be thoroughly checked for accuracy of all estimates and other
data, as these must necessarily conform with the main Demands for Grants. Therefore for obtaining page proof, all
pages should be serially numbered and table of contents prepared. The page proof received from the Press should
be fully scrutinized.
6. A sample printed copy of the Demands should be scrutinized on receipt from Press and where necessary an
errata may be prepared, got printed and pasted by the Press in individual copies of the Printed Demands.
7. The Demands of smaller Departments like Lok Sabha, Rajya sabha, Department of Parliamentary Affairs, Staff,
Household and Allowances of the President, Secretariat of the Vice-President and Union Public Service Commission
which are clubbed in a single volume are to be prepared and presented by the Ministry of Finance.

83
APPENDIX – 5
[ Deleted ]
APPENDIX – 6
Procedure to be followed in connection
with the Demands for Supplementary Grants
An excess over the sanctioned Grant or Appropriation may arise owing to either –
(a) an unforeseen emergency; or
(b) under-estimated or insufficient allowance for factors leading to the growth of expenditure.
In the case of an excess of either type the Head of the Department or the Controlling Officer concerned should
proceed as follows :-
(i) He should, in the first place, examine the allotments given to other Disbursing Officers under the same
detailed head within the unit of appropriation, and transfer to the Disbursing Officer who requires an additional
allotment such sum as can be permanently or temporarily spared. Since appropriation audit is ordinarily
conducted against total allotments for a unit, reappropriation in the technical sense of the word is not
involved in such cases.The process amounts only to redistribution which the Controlling Officer can ordinarily
effect without reference to any other authority.
(ii) Should he find such redistribution impossible he should examine the allotments against other detailed
heads inside the primary units of appropriation, with the object of discovering probable savings and effecting
a transfer. Where such redistribution is feasible, he should if he has been vested with the necessary
powers, carry it out. Otherwise, he should obtain the sanction of the competent authority.
(iii) If the provision of funds from within the primary units proves to be impossible, an examination of the whole
grant should be undertaken to see whether there are likely to be savings under any of the other units of
grant or appropriation which can be utilized to meet it. If so, he should proceed as indicated in Clause (ii)
above.
(iv) If such savings are not available, it should be seen whether special economies can be effected under other
primary units of appropriation. If funds cannot be provided by either of these methods, it will have to be
considered whether the excess should be met by postponement of expenditure or whether an application
for supplementary grant or appropriation should be made.
(v) The Supplementary Demand for Grants shall be presented to the Parliament in a number of batches as
decided by the Ministry of Finance, Department of Economic Affairs. The first batch shall normally consist
of requirements of the following nature :-
(a) Cases where advances from Contingency Fund of India have been granted, which are required to be
recouped to the Fund.
(b) Payment against a court decree, which cannot be postponed; and
(c) Cases of additional requirement of funds for making immediate payments, which can be met by re-
appropriation of savings in the Grant but attract the limitation of New Service / New Instrument of
Service.
(vi) All applications for supplementary grants or appropriations should be submitted by the Department of the
Central Government administratively concerned to the Finance Ministry on such dates and in such forms /
batches as may be prescribed by the latter from time to time.
(vii) On receipt of an application for a supplementary grant, the Finance Ministry will review the position of the
grant of appropriation as a whole with reference to the known actuals of the year to date and the actuals
and estimates for previous years. If after this examination, the Finance Ministry comes to the conclusion
that it should be possible for theAdministrative Department to meet the expenditure from within the sanctioned
grant either from normal savings or by special economics or in the last resort by judicious postponement of
other expenditure or in the last resort by judicious postponement of other expenditure, the Administrative
Department will be so informed and no supplementary demand will be presented to Parliament. If, on the
other hand, the Finance Ministry considers that a supplementary grant will be necessary, a demand will be
placed before Parliament.
(viii) If during the course of the year it is found necessary to incur expenditure on a ‘New Service’ not provided
for in the annual budget the Administrative Department shall explain to the Finance Ministry why the
expenditure was not provided for in the original budget and why it cannot be postponed for consideration in
connection with the next budget. The Finance Ministry, if satisfied on these points, will consider whether it
would not be reasonable to ask the department concerned to curtail its other expenditure so as to keep the
total within the grant. Ordinarily, no “new service” or item will be accepted by the Finance Ministry, unless
the department concerned can guarantee that the extra expenditure will be met from normal savings or by
special economies within the grant. Cases which involve additional grant will normally be accepted by the
Finance Ministry only if they relate to matters of real imperative necessity or to the earning or safeguarding
of revenue. The demand for a supplementary grant of appropriation or a token vote in respect of a “new
service” will be presented to Parliament as soon as practicable after the need arises.
NOTE. – The expression ‘New Service’ wherever used in this Appendix includes – ‘New Instrument of Service’.
83

APPENDIX – 7
[ See Note below Rule 61. (4) ]
THE CONTIGENCY FUND OF INDIA RULES
SRO 1358. - In exercise of the powers conferred by Section 4 of the Contingency Fund of India Act, 1950 (XLIX
of 1950), the Central Government hereby makes the following rules :-
CONTINGENCY FUND OF INDIA RULES
1. These rules may be called the Contingency Fund of India Rules.
2. The Contingency Fund of India shall be held on behalf of the President by the Secretary to the Government
of India, Ministry of Finance, Department of Economic Affairs.
3. From out of the Balance in the Fund, such amounts as may be agreed upon from time to time shall be
placed at the disposal of the Financial Commissioner of Railways for the purpose of meeting the unforeseen
expenditure of the Railways.
4. Subject to the provisions of Rule 5 below, all applications for advances from the Fund shall be made to the
Secretary to the Government of India, Ministry of Finance, Department of EconomicAffairs. The applications
shall give -
(i) brief particulars of the additional expenditure involved.
(ii) the circumstances in which provision could not be included in the budget,
(iii) why its postponement is not possible,
(iv) the amount required to be advanced from the Fund with full cost of the proposal for the year or part of
the year, as the case may be, and
(v) the grant or appropriation under which supplementary provision will eventually have to be obtained.
5. Applications for advances required by Railways shall be made to the Financial Commissioner of Railways
in the manner provided for in Rule 4.
6. Advances from the Fund shall be made for the purpose of meeting unforeseen expenditure including
expenditure on a new service not contemplated in the annual financial statement.
7. A copy of the order sanctioning the advance, which shall specifiy the amount, the grant or appropriation to
which it relates and give brief particulars by sub-heads and units of appropriation of the expenditure for
meeting which it is made, shall be forwarded by the Ministry of Finance or the Financial Commissioner of
Railways, as the case may be, to the Audit and Accounts Officers concerned. In addition, the Ministry of
Finance and the Financial Commissioner of Railways shall forward copies of such orders to theAccountant-
General, Central Revenues and the Director of Railway Audit respectively.
8. (1) Supplementary Estimates for all expenditure so financed shall be presented to Parliament at the first
session meeting immediately after the advance is sanctioned unless such advance has been resumed to
the Contingency Fund in accordance with the provisions of sub-rule (2).
NOTE 1. -While presenting to Parliament Estimates for expenditure financed from the Contingency Fund, a note to
the following effect shall be appended to such Estimates :-
‘A sum of Rs. ………………………… has been advanced from the Contingency Fund in ……………………………
and an equivalent amount is required to enable repayment to be made to that Fund.’
NOTE 2. - If the expenditure on a new service not contemplated in the Annual Financial Statement can be met, ‘wholly
or partly’ from savings available within the authorized appropriation, the note appended to the Estimates submitted
shall be in the following form :-
‘The expenditure is one a new service. A sum of Rs. ………………….. has been advanced from Contingency
Fund in ……………….. and an equivalent amount is required to enable repayment to be made to that Fund.’
The amount, viz., Rs. …………………………… can be found by re-appropriation.
‘A part of that amount, viz., Rs. ……………………… of savings within the grant and a token vote only is now
required, viz., Rs. ……………………. only.
a vote is required for the balance
84

85
(2) As soon as Parliament has authorized additional expenditure by means of a Supplementary Appropriation Act,
the advance or advances made from the Contingency Fund, whether for meeting the expenditure incurred before the
Supplementary Estimates were presented to the Parliament or after they were so presented, shall be resumed to the
Fund to the full extent of the appropriation made in Act.”
8. A. If in any case, after the order sanctioning an advance from the Contingency Fund has been issued in
accordance with Rule 7 and before action is taken in accordance with Rule 8, it is found that the advance sanctioned
will remain wholly or partly unutilized, an application shall be made to the sanctioning authority for cancelling or
modifying the sanction, as the case may be.
8. B. All advances sanctioned from the Contingency Fund to meet expenditure in excess of the provision for the
service included in an appropriation (Vote on Accounts) Act shall be resumed to the Contingency Fund as soon as the
Appropriation Act in respect of the expenditure on the service for the whole year, including the excess met from the
advances from the Contingency Fund has been passed.
8. C. If during an Election year, two Budgets are presented to the Parliament, all advances, sanctioned from the
Contingency Fund of India during the period between the presentation of first and second Budgets or during the
period between the presentation of the second Budget and the passing of the connected Appropriation Act to meet
expenditure on a service not included in an Appropriation (Vote on Account) Act and the advances outstanding at the
end of the preceding financial year being advances the estimates for which are included in the second Budget, shall
be resumed to the Contingency Fund as soon as theAppropriation Act in respect of the expenditure on the service for
the whole year has been passed.
NOTE. - A suitable explanation regarding the advance and the recoupment thereof shall be incorporated in the
“Notes on Demands for Grants”. Wherever required, such a case will be included in the statement of ‘New Service’ /
‘New Instrument of Service’ appended at the end of the demands.
9. A copy of the order resuming the advance, which shall give a reference to the number and date of the order
in which the original advance was made and to the Supplementary Appropriation Act referred to in Rule 8, shall be
forwarded by the Ministry of Finance and the Financial Officers concerned. In addition, the Ministry of Finance and the
Financial Commissioner of Railways, as the case may be, to the Audit and Accounts Officers concerned. In addition,
the Ministry of Finance and the Financial Commissioner of Railways, shall forward copies of such orders to the
Accountant General, Central Revenues, and the Director of Railways Audit respectively.
10. An account of the transactions of the Fund shall be maintained by the Ministry of Finance in Form ‘A’ annexed
to these rules.
NOTE. - The Financial Commissioner of Railways shall maintain in the same form an account of the sum placed at
his disposal under Rule 3 above.
11. Actual expenditure incurred against advances from the Contingency Fund shall be recorded in the account
relating to the Contingency Fund in the same details as it would have been shown if it had been paid out of the
Consolidated Fund.

86
ANNEXURE
FORM‘A’
[SeeParagraph10ofAppendix-7]
CONTINGENCYFUNDOFINDIA
AmountoftheFund…………………………………………………………………………………Rs.……………………….
AmountplacedatthedisposaloftheFinancialCommissionerofRailways………………….Rs.……………………….
SI.DateofNumberandNumberandNumberandAmountofSupplementaryAmountofBalanceInitialsofRemarks
No.transactionnameofdateofthedateoftheadvanceAppropriationadvanceaftereachOfficer-
grantofapplicationordermakingresumedactprovidingresumedtransactionin-
appropriationforadvancetheadvanceforthecharge
Additional
Expenditure
(1)(2)(3)(4)(5)6)(7)(8)(9)(10)(11)
NOTE1.-Thebalanceshouldbestruckaftereachtransaction.
NOTE2.-Theamountoftheadvancesshouldbeenteredinblackinkwhenmadeandinredinkwhenresumed.

APPENDIX - 8
Deleted
APPENDIX - 9
Deleted
APPENDIX - 10
Deleted
APPENDIX - 11
[See Rule 279. (4) and 279. (5) ]
TRANSFER OF LAND AND BUILDINGS BETWEEN
THE UNION AND STATE GOVERNMENTS
1. These rules apply to the transfer of land and buildings between the Union and the State Governments and also
to the surrender to the State Governments of land belonging to Railways.
The general position under Article 294 of the Constitution is that as from the commencement of the Constitution -
(a) all property and assets which immediately before such commencement were vested in His Majesty for the
purposes of the Government of the Dominion of India and all property and assets which immediately before
such commencement were vested in His Majesty for the purpose of the Government of each Governor’s
Province, shall vest respectively in the Union and the corresponding State; and
(b) all rights, liabilities and obligations of the Government of the Dominion of India and of the Government of
each Governor’s Province, whether arising out of any contract or otherwise, shall be the rights, liabilities
and obligations respectively of the Government of India and the Government of each corresponding State.
subject to any adjustment made or to be made by reason of the creation before the commencement of the construction
of the Dominion of Pakistan or of the Province, of West Bengal, West Punjab and East Punjab.
Article 294, as is evident, relates to succession to property, assets, rights, liabilities and obligations in certain
cases only;Article 295 of the Constitution which relate to succession to property, assets, rights, liabilities and obligations
in other cases, provides that -
(I) As from the commencement of the Constitution :
(a) all property and assets which immediately before such commencement were vested in any Indian
State corresponding to a State specified in Part -B of the First Schedule shall vest in the Union if
specified in Part - B of the First Schedule shall vest in the Union if the purpose for which such property
and assets were held immediately before such commencement will thereafter be purposes of the
Union relating to any of the matters enumerated in the Union List; and
(b) all rights, liabilities and obligations of the Government of any Indian State corresponding to a State
specified in Part -B of the First Schedule, whether arising out of any contract or otherwise, shall be the
rights, liabilities and obligations of the Union Government, if the purposes for which such rights were
acquired or liabilities or obligations were incurred before such commencement will thereafter be purposes
of the Union Government relating to any of the matters enumerated in the Union List:
subject to any agreement entered into in that behalf by the Union Government with the Government of that State.
(II) Subject as aforesaid, the Government of each State specified in Part ‘B’ of the First Schedule shall, as from
the commencement of the Constitution, be the successor of the Government of the corresponding Indian
State as regards all property and assets and all rights, liabilities and obligations, whether arising out of any
contract or otherwise, other than those referred to in Clause (1).
All property and assets, which include land and buildings, and which vest in the State Government under Articles
294 and 295 of the Constitution or otherwise shall be at the disposal of the respective State Governments, who will be
87

88
at liberty to dispose them of by sale, mortgage, etc., and the proceeds thereof shall be credited to the revenues of the
respective State Governments.
From the commencement of the Constitution, the transfer of land between the Union and the State Government
shall be regulated by mutual agreement except when they are acquired under some Act. The Union Government
have laid down the following principles to be observed in regard to certain points :-
(i) (a) When land belonging to a private party has to be acquired on behalf of the Union Government acquisition
shall be at the expense of that Government.
(b) In cases where the Union Government require any land, which is in occupation of the State Government,
to be transferred to them, the amount payable by the Union Government will ordinarily be the market
value of the land and buildings, if any, thereon.
(c) The amount payable will include the capitalized value of land revenue assessable on the land when the
transfer causes actual loss of land revenue to the State Government.
(d) Solatium of 15 per cent payable under the Land Acquisition Act will not apply to such transfers.
(ii) Land surplus to the requirements of the Union Government :- When the Union Government no longer
required land in their possession, the Government of the State in which it is situated will be given the option
of assuming possession of the whole or any portion thereof subject to the following conditions :-
(a) the Union government themselves shall be the judges of whether they require to retain any particular
land or not;
(b) if the State Government desire to assume possession of the land, the option to do so shall be exercised
within six months of the date on which the Union Government signify their intention of surrendering the
land;
(c) the amount payable for the land will in all cases be its market value at the date of transfer;
(d) when the State Government desire to assume possession of only a portion of the land surrendered,
they shall be entitled to do so only if the value of the land as a whole is not materially reduced by the
division; and
(e) if the State Government do not desire to assume possession of any land on the foregoing terms, the
Union Government will be free to dispose if of to a third party. Before, however, so disposing of the
land, the Union Government will consult the State Government as to the levy of ground rent or assessment
and the conditions, if any, subject to which it should be sold and they will, as far as possible, dispose of
the land subject to the conditions which the State Government may desire to impose. The Union
Government are not, however, bound to obtain the concurrence of the State Government in all cases,
and in cases of disagreement the Union Government shall be the sole judge of the terms and conditions
to be imposed.
(iii) Determination of Disputes as to Titles. - Disputes as to title between the Union Government and a State
Government shall be determined by the Supreme Court.
2. Market value defined. -Market value when applied to land may be defined as the price which the land would
fetch if sold in the open market subject to the ground rent or assessment shown against it in the revenue
registers, or, if no ground rent or assessment shown against it in the revenue registers, subject to a ground
rent or assessment levied at the rate at which ground rent or assessment is actually being levied on similar
lands in the neighborhood excluding all cases in which such similar lands in the neighborhood are held free
of ground rent or assessment at favorable or unfavorable rates of ground or assessment. This is the
market value which has to be credited or debited, as the case may be, in the case of all transactions
between the State Governments and the Union Government or between the Union Government and State
Governments or the Railways.

APPENDIX - 12
[ See Rule 255. (3) and Rule 281 ]
CHARITABLE ENDOWMENTS AND OTHER TRUSTS
I. CHARITABLE ENDOWMENTS
1. The duties of the Treasurer of Charitable Endowments for India are prescribed in the Charitable Endowments
Act, 1890 (Act VI of 1890), and the rules framed thereunder, which are printed as an Annexure hereto.
2. Under sub-section (1) of Section 3 of the Charitable Endowments Act, the Deputy Secretary (Budget) in the
Ministry of Finance, Department of Economic Affairs, nominated for the purpose, has been appointed ex officio to be
the Treasurer of Charitable Endowments for India with effect from the 1
st
April, 1954. All the property of Charitable
Endowments, the objects of which extend beyond a single State or which are objects to which the executive authority
of the Central Government extend, vest in him.
The Treasurer of Charitable Endowments for India is authorized to employ the agency of the Treasurer of Charitable
Endowments of a State, with the consent of the State Governments, for discharging any of the functions assigned to
his under the rules referred to in Paragraph 1 above.
3. When a copy of a vesting order is received by the Treasurer of Charitable Endowments for India, he should at
once place himself in communication with the persons who appear from the order to be the holders of the documents
of title relating to the property or of the securities mentioned in the order, and request them to forward the Title Deeds,
or securities in a registered cover and to insure the cover for Rs. 100. These do not require to be endorsed, as the
vesting order operates to transfer the securities to the Treasurer.
4.At every change of Office of the Deputy Secretary (Budget) in the Ministry of Finance, Department of Economic
Affairs nominated for the purpose, a formal transfer of charge of the Treasurer of Charitable Endowments for India
should also take place and as separate charge report, supported by a statement of the total of the balances of the
Funds vested in the Treasurer, duly signed by the relieved and the relieving Treasurers should be sent to Government.
A list of receipts granted by the Reserve Bank in acknowledgement of the securities forwarded to it for safe
custody as also of the securities kept in the custody of the Treasurer should also be prepared and signed by the
relieved and the relieving Treasurers, and sent to Government along with the charge report.
NOTE. - Whenever there is a change in the Office of a Treasurer of Charitable Endowments of a State who has been
acting as an agent of the treasurer of Charitable Endowments for India, a charge report prepared in the manner
indicated in this paragraph should be furnished to the latter.
II.MISCELLANEOUS TRUST ACCOUNTS
5. If, under any general or special orders of Government, an Audit Officer / Accounts Officer or any other
Government officer is required to act in his official capacity as a Trustee or Depository of any public or quasi-public
fund, which does come within the scope of the accounts of Government, or of any Charitable Endowment and is not
a Government security held in trust under the rules in Chapter IX of the Government Securities Manual, such an
officer should endeavor to have the trust vested, if possible, in the Treasurer of Charitable Endowments for India; but,
if that course is not possible, he should open an account with the State Bank of India, or with any other approved
Bank, for the deposit of moneys received by him on account of Trust. Full and clear record of all transactions relating
to the trust fund should be kept in the books of accounts in his personal custody in a form complying with the terms
and conditions of the Trust. The securities, if any, deposited with him should be dealt with in accordance with the
instructions contained in Chapter IX of the Government Securities Manual.
6. The books of accounts should be supported by a short statement descriptive of the nature and obligation of the
Trust, with reference to the documents bearing upon it, so that any other Government officer on receiving charge may
know by reference to it exactly what his obligations are in the matter.
NOTE. - The receipt and disposal of interest should be recorded in these accounts which are meant for the
principal of the Trusts only.
7. The accounts should be balanced and closed every 31
st
day of March. They should also be balanced and
closed when the Government officer acting as the Trustee makes over charge of his office to a successor or substitute,
a balance sheet being appended to the charge report and signed both by the officer receiving and the officer giving
over charge.
8. The accounts will be subject to such audit check as may be prescribed by Government.
89

ANNEXURE
[ See Paragraph 1 of Appendix -12 ]
In exercise of the powers conferred by Section 13 of the Charitable Endowments Act, 1890 (VI of 1890), and in
supersession of the late Home Department Notification No. 1569 - Judicial, dated the 24
th
October, 1890, the Central
Government is pleased to make the following rules and forms :-
THE CHARITABLE ENDOWMENTS (CENTRAL) RULES, 1942
1. Short Title. -
(1) These rules may be called the Charitable Endowments (Central) Rules, 1942.
(2) They apply to charitable endowments the objects of which extend beyond a single State or are objects,
to which the executive authority of the Central Government extends.
2. Interpretation.- In these rules -
a) “the Act” means the Charitable Endowments Act, 1890;
(b) “Treasurer” means the Treasurer of Charitable Endowments for India for the time being, appointed
under sub-section (1) of Section 3 of the Act, and includes such other officer as the Treasurer may
appoint to discharge any of the functions assigned to him under these rules;
(c) “Form” means a form appended to these rules.
3. Previous publication of vesting orders and schemes. - On cases in which private persons apply for a
vesting order or a scheme or modification of a scheme, and in all cases in which it is proposed to depart in
any respect from the ascertained wishes or presumable intentions of the founder of an endowment, there
shall ordinarily, and unless the Central Government otherwise directs, be precious publication of the proposed
vesting order or scheme or modification.
4. Mode of previous publication. -
(1) Unless the Central Government is of opinion that a proposed vesting order or proposed scheme or
modification of a scheme may be made or settled without previous publication, it shall publish a draft of the
proposed order, scheme or modification or a sufficient abstract thereof, for the information of persons likely
to be affected thereby.
(2) The publication shall be made in the Official Gazette and in such other manner as the Central Government
may direct.
(3) A notice specifying a date on or after which the proposed order, scheme or modification will be taken into
consideration by the Central Government should be published with the draft or abstract.
(4) The Central Government shall consider any objection or suggestion which it may receive from any person
with respect to the proposed order, scheme or modification thereof before the date specified in the notice
under sub-rule (3).
5. Costs.- The cost of the previous publication under Rule 4 of any proposed order, scheme or modification of a
scheme, and any other costs incurred or which may be incurred in the making of the orders or in the settlement of a
scheme or modification of a scheme, shall be paid by the applicant for the order, scheme or modification, as the case
may be, and, if the Central Government so directs may be paid by him out of any money in his possession pertaining
to the trust to which his application relates.
6. Securities which may vest in the Treasurer. - No securities for money except the securities mentioned in
Clauses (a), (b), (bb), (c) and (d) of Section 20 of the Indian Trusts Act, 1882 (II of 1882), shall be vested in the
Terasurer.
7. Accounts of trusts consisting of immovable property. -In the case of property vested in the Treasurer
other than securities for money, the person acting in the administration of the trust and having, under sub-section (3)
of Section 8 of the Act, the possession, management and control of the property and the application of the income
thereof, shall in books to be kept by him, regularly enter or cause to be entered full and true accounts of all moneys
received and paid respectively on account of the trust, and shall, on the demand of the Central Government, submit
annually to such public servant as the Central Government may appoint in this behalf, in such form and at such time
as the Central Government may prescribe, an abstract of those accounts and such returns as to other matters
relating to the administration of the trust as the Central Government may from time to time see fit to require.
8. Fees. -
(1) The following are prescribed as the fees to be paid to the Central Government in respect of any property
vested under the Act in the Treasurer :-
90

91
(i) In the case of property other than securities for money, the actual charge incurred by the Treasurer in
the discharge of his functions in respect of he property.
(ii) In the case of securities for money, at the rate of one Paisa for every rupee of interest collected. The
fee shall be charged on interest by rounding off the amount to the nearest rupee, fractions of a rupee
below fifty Paisa or more being reckoned as one rupee.
(2) The Treasurer may deduct any fees payable to the Central Government under this rule on account of any
endowment from any money in his hands on account of such endowment. If he holds no such moneys the
amount shall be claimed form the administrators of the endowment.
9. Vesting orders how filed. - All copies of vesting orders received by the Treasurer shall be filed together and
shall be numbered in consecutive order of their receipt; when a sufficient number have been received they shall be
bound in volumes. A note shall be made on each vesting order of any entries in the registers prescribed under these
rules relating to the property vesting in the Treasurer under the order.
10. Registers of securities. - On the receipt of any securities for money, or on their purchase by himself, the
Treasurer shall record their receipt in a register in Form 1. He shall also keep a separate account for each endowment
in Form 2, in which he shall record all receipts including any amount sent for investment, and all disbursements. In the
cash account in Part - II of Form 2 the Treasurer shall record only his own transactions (such as the payment of the
money to the administrator), and not the transactions of the administrators of the endowment fund.
11. Stock Disposal Register. - The Treasurer shall enter all securities returned or sold by him in a register in Form
3. Returns shall also be entered in Form 2, where the amount returned will be deducted from the capital of the
endowment concerned.
12. Custody of Securities. - On the issue of a vesting order under Section 4 of the Act in respect of any securities
for money, the person authorized under Section 6 of the Act to make the application for such vesting order shall, as
soon as practicable, forward to the Treasurer the said securities. The Treasurer shall, after recording the receipt of
the said securities in the registers kept under Rulef10, take steps, as soon as practicable, to have them converted into
stock and keep the stock certificate in his custody. After conversion, entries shall be made in the Treasurer’s Stock
Register in Form 7.A consolidated register showing the securities (e.g., Promissory Notes and the Stock Certificates)
in the custody of the Treasurer shall also be maintained in Form 8.
13. Accounting of Interest. - The Treasurer, on receipt of any interest securities, shall pass it through his
General Trust Interest Account under a special Sub-Head “Interests on Charitable Endowments under Act VI
of 1890”. The interest will then be distributed to the various ledger accounts in the register in Form 2, in which
the gross amounts shall be shown, any deductions for fees, etc., being shown as a charge, and the payment of
the balance to the administrators being shown as a disbursement. The Treasurer shall maintain personal, ledger
account in the Reserve Bank and shall make payment to the administrators by cheques. The entries in the ledger of
interest received shall be taken out and agreed annually with the total amount of the interest drawn.
14. Balance Sheet. - The registers in Form 1 shall show all securities vested in the Treasurer as such. In order
to prove the balance actually held by the Treasurer in his own hands, a balance sheet in Form 4 shall be made out
actually and agreed with the actual securities in the Treasurer’s possession. Such agreement shall be certified on the
balance sheet.
15. Publication of accounts. - A list of all properties vested in the Treasurer and an abstract of the accounts of
the interest and the annual agreement of balance shall be published in the Official Gazette on the 15
th
June of each
year.
16. Register of property other than securities. - The Treasurer shall enter in a register in Form 5 any property
other than securities which becomes vested in him, and shall record in the same register against the original entry a
note of any property of which he is divested.
17. Form of publication of list and abstract. - The list of properties vested in the Treasurer to be published
annually under Rule 15 shall be in Form 6. Part - I will relate to properties other than securities; Part - III will relate to
securities and will also contain the abstract of accounts required by the Act to be published. The Treasurer shall
demand and receive acknowledgements of the correctness of the balances when so published, from the administrators
of endowment funds or from any one or more of their body who may have been authorized by the administrators to
give such acknowledgements and such acknowledgements shall be furnished within 3 months from the date of
publication of accounts in the Official Gazette.
18. Audit. - Arrangements for annual audit of the Treasurer’s accounts shall be made by the Comptroller and
Auditor-General.

92
FORM1
RegisterofSecuritiesheldunderActVIof1890
ParticularsofSecuritiesreceived
SI.No.DateofNumberorbriefFromwhomNo.anddateNatureofSecurities,DistinguishingNominalvalueTotalnominalLedgerRemarks
Receiptdescriptionofreceivedofforwardinge.g.GovernmentnumberofofeachsecurityvalueofeachFolio
Charitablelettersecurities3½percenteachsecurityseparate
EndowmentsLoanof1865,Guaranteedendowment
RailwayDebentures,
etc.,etc.
1.2.3.4.5.6.7.8.9.10.11.

93
FORM2
LedgerAccountofSecuritiesheldunderActVIof1890.
1.NameofEndowment…………
2.Particularsofvestingorder…………
3.WhenvestedinTreasurer…………
4.NameofAdministrators…………
5.Towhominterestistobesent…………
PART-I-AccountofCapital
Valueofeachsecurity
(separatecolumnforeachkind)
SI.No.Particulars(e.g.Detailsofsecurities3½percentGuaranteedAmountofhalfDatetowhichInitialsofTreasurer
inFormreceivedor(distinguishingLoanof1865RailwayyearlyinterestinteresthasbeenorAssistant-in-
1returned)number,etc.)DebenturespaidonreceiptCharge
1.2.3.4.5.6.7.8.9.10.11.
NOTE.-Thebalanceofthevaluecolumnsmustbeworkedoutoneverydayonwhichthereisanewentry.

94
PART-II-CashAccount
ReceiptsExpenditure
DateParticularsAmountDateParticularsAmount
NOTE.-Tobeclosedannuallytobalance.Thetransactionswillnotbenumerous.Afewpagesoftheledger(ruleonlyfortheCashAccount)maybeleft
foreachaccount,sothattheaccountmaybecarriedonforseveralyearswithoutopeningafreshLedgerAccount.

95
FORM3
StockDisposalRegister
SI.No.DateofentryNameoftheNo.ofentriesinAmountsHowGO’sOfficialDesignation
FundorTrustStockRegisterdisposedofdisposedofinitialsofOfficer

96
FORM4
BalanceSheetofSecuritiesheldunderActVIof1890
Particulars3½percentLoanof1865(ApairofcolumnsforeachTotal
No.Valuedifferentkindofsecurityheld)No.Value
OpeningBalance(fromlastyear)……
Securitiesreceived…………
StockCertificatesreceived…………
GRANDTOTAL
Deduct-
SenttothePDOReserveBankof
Indiaforconversionintostock…………
BALANCE
Deduct-
Returnedorsold…………
BALANCE
Add-
Sentforconversionoutofwhichstock
certificateshavenotbeenreceived……
CLOSINGBALANCE
CertifiedthattheaboveclosingbalancehasbeencomparedwiththeSecuritiesinTreasurer’spossessionandhasbeenfoundtobeagreebothastonumber
andvalue.

97
FORM5
RegisterofpropertiesotherthanSecuritiesheldunderActof1890
SI.No.ParticularsofvestingorderNameofendowmentAdministratorsofpropertyPropertyheld
No.DateDescriptionValueAnnualincome
ifknown
12345678
DescriptionTitleDeedsheldInitialsofTreasurerRemarks
orAssistant-in-Charge
DateofWhereDateofTowhomAuthorityforreturn
receiptdepositedreturnreturned
910111213141516

98
FORM6
ListandAbstractAccountofPropertiesheldunderActVIof1890
PART-I-Listofproperties,otherthanSecurities
SI.No.ParticularsofvestingorderNameofAdministratorsofpropertyPropertyheld
No.DateendowmentDescriptionValueAnnualincomeRemarks
ifknown
123456789
PART-II-ListofAbstractAccountofSecurities
CaseNo.NameofPersonsinParticularsTotalofCashReceiptsCashexpenditureBalanceinRemarks
endowmentwhosebehalfofSecuritiesSecuritiesInterestorOtherTotalcashPayments*cash
helddividendCashReceipts
realisedReceipts*
1234567891011
*Enterdetailsinthesecolumns

99
FORM7
Treasurer’sStockRegisterof
percentloanof
No.ofCaseSerialNo.DateofentryTowhatfundorTowhominterestAmountofAmountof(PairofcolumnsRemarks
inFormNo.trusttheistoberemittedinvestmenthalf-yearlyfornotinginterest
investmentinterestpaymentorder
belongs
123456789
Rs.PRs.PRs.P

100
FORM8
RegisterofCleanGovernmentPromissoryNotesandStockCertificatesheld
bytheTreasurerofCharitableEndowmentsforIndia
Particulars
ReceiptsDisposals
SI.No.DateofentryInconversionofNo.AmountsNo.AmountsApairofcolumnsforRemarks
notinginterestfor
half-yearending
123456789

APPENDIX - 13
[ See Rule 289 ]
DESTRUCTION OF OFFICE RECORDS CONNECTED WITH ACCOUNTS
The destruction of records (including correspondence) connected with accounts shall be governed by the
following Rules and such other subsidiary rules consistent therewith as may be prescribed by Government in this
behalf with the concurrence of the Comptroller and Auditor-General.
1. The following shall on no account be destroyed :-
(i) Records connected with expenditure, which is within the period of limitation fixed by law.
(ii) Records connected with expenditure on projects, schemes or works not completed, although
beyond the period of limitation.
(iii) Records connected with claims to service and personal matters affecting persons in the service
except as indicated in the Annexure to this Appendix.
(iv) Orders and sanctions of a permanent character, until revised.
(v) Records in respect of which an audit objection is outstanding.
101

101
2.Thefollowingshallbepreservedfornotlessthantheperiodspecifiedagainstthem:-
Sl.No.
(1)
1.
Main-Head
(2)
Paymentsandrecoveries.
Sub-Head
(3)
(i)ExpenditureSanctionsnotcovered
byParagraph1above(including
sanctionsrelatingtogrants-in-aid)
(ii)CashBooksmaintainedbythe
DrawingandDisbursingOfficers
underCentralGovernmentAccount
(ReceiptsandPayments)Rules,
1983.
(iii)Contingentexpenditure.
(iv)Arrearclaims(includingsanctionfor
investigation,wherenecessary).
Papersrelatingto:
(v)GPFMembership.
(vi)GPFNomination.
(vii)AdjustmentofmissingcreditsinGPF
Accounts.
(viii)FinalwithdrawalfromGPF,e.g.,for
housebuilding,highertechnical
educationofchildren,etc.
(ix)GPFannualstatements.
(x)T.A./TransferT.A.claims
RetentionPeriod
(4)
2years,oroneyearaftercompletionof
audit,whicheverislater.
10years.
3years,oroneyearaftercompletionof
3years,or1yearaftercompletionofaudit,
whicheverislater.
1year.
1year-afterfinalsettlementofGPF
Account.
1year.
1year.
1year.
3years,or1yearaftercompletionofaudit,
whicheverislater.
Remarks
(5)
Subjectto:
(a)Originalnominationbeing
placedinVol.IIofthe
ServiceBookofGroup‘D’
Governmentservants;and
(b)Nominationinoriginaloran
authenticatedcopythereof
beingplacedinVol.IIofthe
ServiceBook/PersonalFile
incaseofother
Governmentservants.
Subjecttoanauthenticatedcopy
ofthesanctionbeingplacedon
thepersonalfile.
Descriptionofrecords
102

102
(1)(2)(3)(4)(5)
(a)Nominationrelatingtofamilypension
andDCRgratuity.
(b)CivilListGradation/Senioritylist-
(i)inthecaseofDepartments
preparingandbringingoutthe
compilation.
(ii)InthecaseofotherDepartments
(i.e.,thosesupplyinginformation
forsuchcompilation)
(c)Alterationinthedateofbirth.
(d)Admissionofpreviousservicenot
supportedbyauthenticatedservice
record,e.g.,throughcollateral
evidence.
3years.
3yearsafterissueoffinalpension/
gratuitypaymentorder.
3yearsaftertheyhaveceasedtobein
service.
3yearsafterissueoffinalpension/
gratuitypaymentorder.
3yearsaftertheyhaveceasedtobein
service.
1year-aftersettlementofbenefits.
3years.
1yearafterissueofrelevant
compilation.
3years.
3years;or1yearaftercompletionof
Theretentionperiodhere
relatedtotheBudget/Revised
Estimatesascompiledbythe
Budget/AccountsSectionfor
theDepartmentasawhole.
Subjecttothenominationin
originaloranauthenticated
copythereof(whereoriginalis
keptwiththeauditasthecase
maybebeingplacedinVol.II
oftheServiceBook/Personal
File.
Subjecttosuitableentrybeing
madeintheappropriateservice
recordandanauthenticated
copyoftheorderbeingkeptin
Vol.IIofServiceBook/Personal
File.
–do–
BudgetEstimates/Revised
Estimates.
ServiceBooksof:
(a)Officialsentitledto
retirement/terminal
benefits.
(b)Otheremployees.
LeaveAccountof:
(a)Officialsentitledto
retirement/terminal
benefits.
(b)Otheremployees.
Servicerecords.
2.
3.
4.
5.
103

103
(1)(2)(3)(4)(5)
6.
7.
8.
9.
10.
11.
Expenditurestatements.
SuretyBondsexecutedin
favourofatemporaryora
retiringGovernmentservant.
(a)PayBillregister.
(b)Officecopiesof
Establishmentpaybills
andrelatedschedules(in
respectofperiodfor
whichpaybillregisteris
notmaintained).
(c)Schedulestothe
Establishmentpaybills
fortheperiodforwhich
paybillregisteris
maintained.
(d)AcquaintanceRoll.
MusterRolls.
BillRegistermaintainedin
FormTR-28-A
Paidchequesreturnedbythe
(e)Verificationofservice.
(a)Inrespectoflowerformations.
(b)InrespectofDepartmentitself.
(c)Registerofmonthlyexpenditure
(FormGFR9)
5years.
Tobeweededoutattheendoffinancialyear.
TobeweededoutaftertheAppropriation
Accountsfortheyearhavebeenfinalized.
TobeweededoutaftertheAppropriation
Accountsfortheyearhavebeenfinalized.
3yearsaftertheBondceasestobe
enforceable.
35years
35years
3years,oroneyearafterthecompletionof
3years,oroneyearafterthecompletionof
Suchperiodasmaybeprescribedinthis
behalfinthedepartmentalregulationssubject
toaminimumofthreefinancialyearsof
paymentexcludingthefinancialyearof
payment
5years.
5years
Subjecttoasuitablerecordbeing
keptsomewhere,e.g.,intheService
BookorHistorySheet.
Thecounterfoilsofpaidcheques
104

104
(1)(2)(3)(4)(5)
12.
13.
BanktotheAudit/Accounts
Office.
Files,papersand
documentsrelatingto
contracts,agreements,etc.
Sub-vouchersrelatingtothe
SecretServiceExpenditure.
5yearsafterthecontract/agreementis
fulfilledorterminated.Incaseswhereaudit
objectionshavebeenraised,however,the
relevantfilesanddocumentsshallnot,under
anycircumstances,beallowedtobe
destroyedtillsuchtimeastheobjections
havebeenclearedtothesatisfactionofthe
auditauthoritiesorhavebeenreviewedby
thePublicAccountsCommittee.
3yearsaftertheexpiryofthefinancialyear
inwhichtheexpenditurewasincurred,
subjecttocompletionofadministrativeaudit
andissueofauditcertificatebythe
nominatedControllingOfficer.
shouldbepreservedforthesame
periodasprescribedfor
preservationofpaidcheques,viz.,
5years.However,incaseswhere
thecounterfoilsarerequiredtobe
preservedinconnectionwith
settlementofsomeenquiry,etc.,
theseshouldnotbedestroyed
unlessotherwiseadvisedbythe
authoritiesconductingtheenquiry.
Theotherinstructionscontainedin
thisAppendixwillcontinuetobe
applicableinthiscasebeforethe
counterfoilswhicharemorethan
fiveyearsoldareactuallydestroyed.
105

105
INSTRUCTIONS
1.TheretentionperiodspecifiedinColumn(4),inthecaseofafile,istobereckonedformtheyearinwhichthefileisclosed(i.e.,actionthereonhasbeen
completed)andnotnecessarilyfromtheyearinwhichitisrecorded.
2.Inthecaseofrecordsotherthanfiles,e.g.,registers,theprescribedretentionperiodwillbecountedfromtheyearinwhichithasceasedtobecurrent.
3.Inexceptionalcases,arecordmayberetainedforaperiodlongerthanthatspecifiedintheschedule,ifithascertainspecialfeaturesorsuchacourseis
warrantedbythepeculiarneedsofthedepartment.Innocase,however,willarecordberetainedforaperiodshorterthanthatprescribedintheschedule.
4.Ifarecordisrequiredinconnectionwiththedisposalofanotherrecord,theformerwillnotbeweededoutuntilafteralltheissuesraisedinthelatterhave
beenfinallydecided,eventhoughtheretentionperiodmarkedontheformermayhaveexpiredinthemeantime.Infact,theretentionperiodsinitially
markedonsuchrecordsshouldbeconsciouslyreviewedand,wherenecessary,revisedsuitably.
NOTES.-
(1)Beforeanypaybills/payregistersaredestroyed,theserviceoftheGovernmentservantsconcernedshouldbeverifiedinaccordancewithRule257(1).
(2)TheperiodsofpreservationofaccountrecordsinPublicWorksOfficesareprescribedseparatelybyGovernment.
(3)Whereaminimumperiodafterwhichanyrecordmaybedestroyedhasbeenprescribed,theHeadofaDepartmentoranyotherauthorityempoweredby
himtodoso,mayorderinwritingthedestructionofsuchrecordintheirownandsubordinateofficesontheexpiryofthatperiodcountingfromthelastday
ofthelatestfinancialyearcoveredbytherecord.
(4)HeadsofDepartmentsshallbecompetenttosanctionthedestructionofsuchotherrecordsintheirownandsubordinateofficesasmaybeconsidered
useless,butalistofsuchrecordsaspropertyappertaintotheaccountsauditedbytheIndianAuditandAccountsDepartmentsshallbeforwardedtothe
AuditOfficerandortheAccountsOfficers,asthecasemaybe,forhisconcurrenceintheirdestructionbeforethedestructionisorderedbytheHeadof
Department.
(5)Fulldetailsshallbemaintainedpermanently,ineachoffice,ofallrecordsdestroyedfromtimetotime.
106

ANNEXURETOAPPENDIX–13
DestructionofrecordsreferredtoinPara.1(iii)ofthisAppendix
Sl.No.
(1)
1.
2.
3.
Main-Head
(2)
Creation&Classificationof
posts.
Reviewfordetermining
suitabilityofemployeesfor
continuanceinservice.
Arbitrationandlitigation
cases.
Sub-Head
(3)
(i)Continuance/revivalofposts.
(ii)Conversionoftemporaryposts.
(iii)Creationofposts.
(iv)Revisionofscalesofpay.
(v)Upgradingofposts.
Establishment/SanctionRegister.
RetentionPeriod
(4)
1year
10years
10years
PermanentinthecaseofDepartments
issuingordersandDepartmentsconcerned;
otherDepartmentsneedkeeponlythe
standingorders,weedingoutsuperseded
onesasandwhentheybecomeobsolete.
10years.
Permanent.
3years
Remarks
(5)
Subjecttoparticularsofsanctions
beingnotedinEstablishment/
SanctionRegister.
–do–
–do–
–do–
–do–
Where,foranyreasontheregister
isre-written,theoldvolumewill
bekeptfor3years.
Subjectto:
(a)thefilenotbeingcloseduntil
theaward/judgmentbecomes
finalinallrespectsby
limitationorfinaldecisionin
appeal/revision;and
(b)casesinvolvingimportant
issuesorcontainingmaterial
ofahighprecedent/reference
Descriptionofrecords
107

107
(1)(2)(3)(4)(5)
4.
5.
6.
NoticesunderSection80
ofCivilProcedureCode.
Recruitment.
Advance.
Condonationofbreakinservice.
(i)CarAdvanceRules
(ii)ConveyanceAdvanceRules.
(iii)CycleAdvanceRules
(iv)FestivalAdvanceRules
(v)GPFAdvanceRules
(vi)HouseBuildingAdvanceRules
(vii)MotorCycle/ScooterAdvance
Rules
(viii)PayAdvanceRules
(ix)T.A.AdvanceRules
(x)TravelConcessionRules
(xi)OtherAdvanceRules
(xii)GrantofcarAdvance
(xiii)Grantofconveyanceallowance
(xiv)Grantofcycleadvance
(xv)Grantoffestivaladvance
(xvi)GrantofGPFadvance
(xvii)Grantofhousebuildingadvance
(xviii)Grantofmotorcycle/scooter
advance
(xix)Grantofpayadvance
(xx)GrantofT.A.advance
(xxi)GrantofLTCadvance
(xxii)Grantofotheradvances
1year
5years.
issuingtherules,ordersandinstructions;
standingrules,etc.,weedingoutthe
supersededonesasandwhenthey
becomeobsolete.
1year
valuebeingretainedforan
appropriatelylongerperiod
eitherinitiallyoratthetimeof
review.
Ifsuchanoticeisfollowedupbya
civilsuit,itwouldbecomearbitration
/litigationcaseandwould,
therefore,needtoberetainedfor3
years.
Subjecttoasuitableentrybeing
madeintheappropriateservice
recordandanauthenticatedcopy
oftheorderbeingkeptinVol.IIof
ServiceBook/PersonalFile.
Subjectto:
(i)suitableentriesbeingmadein
paybillregister;and
(ii)incaseofmotorcar/motor
cycle/scooterandhouse
buildingadvances.
(a)copiesofsanctionbeingplaced
onpersonalfiles;and
(b)mortgagedeedsandother
agreementsexecutedbeing
keptseparatelyinsafecustody
fortheperiodtheyarevalid.
108

108
(1)(2)(3)(4)(5)
7.
8.
SuretyBondsexecutedin
favorofatemporaryora
retiringGovernment
servant.
Pension/retirement.(i)RulesandOrders
(generalaspects.)
(ii)InrespectofGroups‘A’,‘B’,‘C’and‘D’
Governmentservants.
(a)Pre-verificationofpensioncases.
(b)Invalidpension
(c)Familypension
(d)Otherpensions
(e)Gratuity
(f)Commutationofpension
3yearsaftertheBondceasestobe
enforceable.
issuingtherules,ordersandinstructions;
standingrulesandordersweedingoutthe
supersededonesasandwhenthey
becomeobsolete.
3years
Tilloneyearafterthelastbeneficiaryof
thefamilypensionceasestobeentitled
toreceiveor5yearswhicheverislater.
5years
15years
Note–Theprincipletobeadoptedinrespectoffileshavingfinancialimplicationsandhenceliabletobecalledbyauditforinspectionisthatsuchfilesshouldbe
retainedforaperiodoffiveyearsaftertheyhavebeenrecorded.If,atanytimeduringtheperiodoffiveyears,anauditobjectionhavingreferencetothetransaction
dealtwithinthatfilearises,isreceived,thefilewillnotbedestroyeduntilaftertheauditobjectionhasbeensettledtothesatisfactionoftheaudit.Also,iflocalaudit
doesnottakeplacewithintheperiodoffiveyears,theHeadoftheOfficeshouldascertainfromtheauditauthoritieswhethertheyhaveanyobjectiontothefiles
relatingtotheearlieryears,dueforweedingoutbytheapplicationofthefiveyearformula,beingdestroyedorretainedforafurtherperiodforscrutinybytheaudit
partyand,ifso,forwhatperiod.
Whilerecordsmaybereviewedandweededoutatperiodicalintervalsinthelightoftheretentionperiodsprescribedtoavoidtheirbuild-up,theattemptshould
betomakeacontinuousandconsciouseffortthroughouttheyeartoweedoutunnecessaryrecords.Inotherwords,theworkingrulesshouldbe“weedasyougo”.
INSTRUCTIONS:
1.TheretentionperiodspecifiedinColumn(4)inthecaseofafile,istobereckonedfromtheyearinwhichthefileisclosed(i.e.,actionthereonhasbeen
completed)andnotnecessarilyfromtheyearinwhichitisrecorded.
2.Inthecaseofrecordsotherthanfiles,e.g.,registers,theprescribedretentionperiodwillbecountedfromtheyearinwhichithasceasedtobecurrent.
3.Inexceptionalcases,arecordmayberetainedforaperiodlongerthanthatspecifiedintheSchedule,ifithascertainspecialfeaturesorsuchacourseis
warrantedbythepeculiarneedsoftheDepartment.Innocase,however,willarecordberetainedforaperiodshorterthanthatprescribedintheschedule.
4.Ifarecordisrequiredinconnectionwiththedisposalofanotherrecord,theformerwillnotbeweededoutuntilafteralltheissuesraisedonthelatterhave
beenfinallydecided,eventhoughtheretentionperiodmarkedontheformermayhaveexpiredinthemeantime.Infact,theretentionperiodsinitiallymarked
onsuchrecordsshouldbeconsciously“reviewedandwherenecessaryrevisedsuitably”.
109

110
APPENDIX - 14
[ See Rule 57 and Rule 63 ]
“CHECK AGAINST PROVISION OF FUNDS”
The pre-check to be applied to all payments by the departmentalized Accounts Officers includes a check
against provision of funds also. It is an important part of the functions of the Accounts Office to see that no payment
is made in excess of the budget allotment. In order to exercise an effective check in this behalf, a separate register
(DDO-wise Bill Passing-cum-Expenditure Control Register –Form CAM –9) should be maintained in the Accounts
Officer for each Drawing Officer and by sub-heads and units of appropriation so as to ensure at the time of passing
each bill that the amount of the bill under check is covered by Budget allotment. If the amount of any bill leads to
excess over the Budget allotment or is not covered by an advance from the Contingency Fund, the Accounts Officer
should decline payment under advice to the authority controlling the grant so that the latter could arrange for additional
funds. An Appropriation Audit Register (Form CAM – 62) shall be maintained.
NOTE. – In cases where payment of a bill/claim would lead to excess over the provision under any unit of
appropriation the payment may be made by the Pay and Accounts Office only on receipt of an assurance in writing
from the Ministry/Head of Department controlling the grant that the expenditure involved is not on a New Service, or
New Instrument of Service; that necessary funds to accommodate the expenditure will be provided for in time by
issue of re-appropriation order, etc., that a note to the effect has been kept for further action, and that the grant as a
whole (i.e., separately under Revenue and Capital Sections) is not likely to be exceeded. This applies in respect of
any new item of expenditure, provision for which does not exist in the Budget (as distinct from expenditure on “New
Service” or “New Instrument Service” not provided in the Budget) as well as in cases where the existing provisions is
not sufficient to cover the payments.
If such a contingency in regard to inevitable payment of a bill should arise towards the close of financial year
and the grant as a whole is likely to get exceeded thereby, order of the FA on behalf of the Chief AccountingAuthority
would have to be sought.
In case the additional funds required are to be made available merely by reallocation (and not by re-
appropriation) of savings, if any, under the same sub-head of appropriation, the related claim will be passed for
payment only after additional funds therefor are allocated in writing by the Controlling Officer.

111
APPENDIX - 15
[ See Rule 204 (vii) (b) ]
FORMULA FOR PRICE VARIATION CLAUSE
The formula for Price Variation should ordinarily include a fixed element, a material element and a labour element.
The figures representing the material element and the labour element should reflect the corresponding proportion of
input costs, while the fixed element may range from 10 to 25%. That portion of the price represented by the fixed
element, will not be subject to variation. The portions of the price represented by the material element and labour
element alone will attract Price variation. The formula for Price variation will thus be :
P1
= P0
F + a M1
+ b L
1
- P0
M0
L0
Where P1
is the adjustment amount payable to the supplier (a minus figure will indicate a reduction in the
Contract Price)
P0
is the Contract Price at the base level.
F is the Fixed element not subject to Price variation.
a is the assigned percentage to the material element in the Contract price.
b is the assigned percentage to the labour element in the Contract Price.
L0
and L1
are the wage indices at the base month and year and at the month and year of calculation respectively.
M0
and M1
are the material indices at the base month and year and at the month and year of calculation
respectively.
If more than one major item of material is involved, the material element can be broken up into two or three
components such as Mx, My & Mz. Where price variation clause has to be provided for services (with insignificant
inputs of materials) as for example in getting Technical assistance normally paid in the form of per diem rates, the
price variation formula should have only two elements viz. a high fixed element and a labour element. The fixed
element can in such cases be 50% or more, depending on the markup by the supplier of the Perdiem rate vis-à-vis
the wage rates.

112
APPENDIX - 16
[ See Rule 248 (1). ]
Rates of Guarantee Fee prevalent in July, 2004
Type of Borrowing Rate of Fee
(Per Annum)
1. Borrowing under the market borrowing programme approved by the RBI 0.25 %
2. Borrowing under inter corporate transfers envisaged in the Annual Plan 0.25 %
3. Other Domestic Borrowings :
(i) Pubic Sector including the cooperative sector. 1.00 %
(ii) Other sectors 2.50 %
4. External borrowings 1.20 %
FORMS
FORM GFR 1
Deleted
FORM GFR 2
Deleted
FORM GFR 3
Deleted

109
FORMGFR4
[SeeRule59(4)]
ApplicationforanAdditionalAppropriation,year………………………….forDistrictDepartment
BudgetHeadOriginalAppropriationasExpenditureAdditionalappropriationExpenditureduringthepastthreeyears
modifiedbycompetentappliedfor
authority
MajorandAmountupNecessaryfor20.2020.2020.2020.20
MinorHeadsAccounttotheremaining
ofAccountmonthofmonth
andPrimaryunit
ofAppropriationRs.Rs.Rs.Rs.Rs.Rs.Rs.Rs.
123456789
No………………………………….,dated……………………………..20.
Explanationofinsufficiencyofgrant,recommendationsandproposalsforre-appropriationby-
(1)DisbursingOfficer:
(2)ControllingOfficer:
(3)HeadofDepartment:
(4)SecretarytoGovernmentinAdministrativeDepartment.
No…………………………………,dated………………………………20.
OrderofsanctionwithdetailsAdditionalappropriationofRs.…………………….
ofsourceofappropriationSanctioned.
Theamountwillbemetbyre-appropriationform
……………………………………………………………
Signature……………………………………………….
Designation…………………………………………….
113

114
FORM GFR 5
[ REVENUE RECEIPTS ]
Ministry / Department / Union Territory :
Major Head :
(In thousands of Rupees)
First Month Last Month
Seven Eight Five Four Total
ACCOUNTS
Third
Last year
Second
Last year
Last year
Current Budget
Year Revised
Ensuing
Year Budget
Accounts Accounts Current year Ensuing
7 months Minor Heads Year
Last Current Third Last Second Last Budget Revised Budget
year year Year Last Year Year Estimate Estimate Estimate
Explanation for increase / decrease (Minor Headwise)
Signature ………………………
Designation ……………………
Date ……………………………

115
FORM GFR 5 - A
Estimates of Foreign Grants concerning the
Ministry / Department …….............................................…………..
( In thousands of Rupees )
Amounts to be provided in
Name of Date Particulars Total Receipt Manner
the of aid of assistance Major Current Current Ensuring of
grant or agreement assistance expected Head Year BE Year RE Year BE utilization
country/ to be of aid*
body received
1 2 3 4 5 6 7 8 9
Signature …………………………….
Designation ………………………….
Date ………………………………….
* A brief note may be added indicating the project on which aid is to be utilized. In the case of material and
equipment, the relevant grant and expenditure Heads ofAccount under which (i) utilization of material by Central
Government Departments / Projects, (ii) transfer of material to States, Union Territories and other Bodies will be
adjusted and also whether the utilization on transfer will be on Plan (State / UT / Centrally Sponsored or Central)
or Non-Plan Schemes should also be indicated. In cases where the aid material is proposed to be sold the
Receipt Major Head under which the proceeds will be credited should be indicated.
NOTE : Cash grants and assistance in the form of material and equipment should be indicated separately in
Columns 3 to 8.

116
FORM GFR 5 - B
ESTIMATES OF INTEREST RECEIPTS AND LOAN REPAYMENTS
Ministry / Department ………….................…………………….
( In thousands of Rupees )
Interest Receipts Loan Repayments
BE RE BE BE RE BE
Current Current Ensuing Current Current Current
Year Year Year Year Year Year
1. State Governments*.
2. Union Territory Governments*.
3. Interest on Capital Outlay in
departmental commercial
undertakings.
4. Foreign Governments*.
5. Industrial/Commercial/Financial
undertakings (undertaking-wise details
to be given) :
(a) Public Sector Undertakings.
(b) Private Sector Undertakings.
6. Statutory Bodies (Port Trusts,
Municipalities, KVIC, Tea/Coffee
Boards, etc.)
7. Railways / P&T Reserve Funds.
8. Other parties (Co-operatives,
Educational Institutions, displaced
persons and other individual loanees
except Governments servants)*
9. Government servants.
Total
* Estimates for each State / Union Territory / Foreign Government Statutory Body or Institution should be separately
appended to the Annexure.
No............................
Ministry / Department ………......……………………
Date the ………....……………………………………
Forwarded in duplicate to the Ministry of Finance, Budget Division.
Signature ………………...…………............………..
Designation………………………………....…………

117
FORMGFR6
[SeeRule53andRule58(1)]
Officeof………………………………………
GrantNo……………………………………..
LiabilityRegisterfortheyear…………………………..
SI.No.DesignationMonthSerialNatureofNo.&dateAgencyonEstimatedPermissibleTotal
ofofnumberinLiabilityofindentorwhichCostexcessoverLiability
DisbursingReportLiabilityconnectedindentisthe(Cols.8+9)
OfficerStatementletterplacedestimated
cost,inany
12345678910

118
Probablemonthandyear
inwhichtheexpenditureRecordofPaymentBalancecommitments
willbeaccountedforin[Col.10minusCol.14(b)]
thedepartmental
expenditurestatement
(a)(b)(a)(b)*InitialsofRemarks
MonthandAmountofInitialsoftheMonthAmountAmountYear(s)intheBranch
yearexpenditureBranchOfficerandyearwhichitisOfficer
tobeincurredlikelytobe
discharged
111213141516171819
NOTE:-Cols.2,3and4willbeoperatedupononlyintheRegisterofLiabilitiesmaintainedbytheControllingOfficersinrespectofthecasereportedbytheirDisbursing
Officers.
*Ifthebalanceofcommitmentistobedischargedduringmorethanonefinancialyear,theyear-wisebreak-upoftheamountshouldbeindicated.

119
FORMGFR6-A
[SeeRule53]
Officeof……………………………………
GrantNo.………………………………….
LiabilityStatementforthemonthof…………………………..
Part-I-StatementofLiabilitiesincurredduringthemonthofreport
SI.No.NatureofNo.andAgencyEstimatedPermissibleTotalProbablemonthin
liabilitydateonwhichcostexcessoverliabilitywhichtheexpenditureRemarks
ofindentorindentisthe(Col.5+willbeaccountedfor
connectedplacedorestimatedCol.6)inthedepartmental
letterdemandcost,ifanyexpenditurestatement
ismade
MonthExpenditure
likelytobe
incurred
12345678910

120Part-II-PaymentsmadeagainstLiabilitiesandLiabilitiescancelledorfinallypaidoff
RecordofpaymentBalancecommitmentRemarks
(a)(b)(a)(b)
MonthinwhichSerialNo.Year(s)inwhich
LiabilitywasMonthandyearAmountAmountthebalanceof
reportedCommitmentsis
likelytobe
discharged.
1234567
NOTE1-InCol.2,thenumbertobeenteredwillbetheserialnumberoftheliabilityintheLiabilityStatementinwhichiswasfirstreported.
NOTE2-IntheRemarkscolumn,thefollowinginformationshouldalsobegiven:-
(i)Ifpaymentagainstaliabilityislikelytobemade,notinthemonthoriginallyindicated,butinsomeothermonth,thelattershouldbeindicated.Ifchange
inthemonthofpaymentistheonlyinformationtobegiveninrespectofaliability,theColumnstobeusedwillbe1,2and5.
(ii)Similarly,ifthewholeorpartofaliabilityhasbeencancelledorotherwiseextinguished,thefactmaybementionedandbriefreasonsgiven.
*Ifthebalanceofcommitmentsistobedischargedduringmorethanonefinancialyear,theyear-wisebreak-upoftheamountshouldbeindicated.

121Part-III-Progressiveamountofoutstandingcommitments
MonthinwhichliabilitywasSerialNo.Balancecommitments
reported(a)(b)*
AmountYear(s)inwhichthebalanceof
commitmentsislikelytobedischarged
1234
Total
NOTE.1-Thisisalistofliabilitieswhicharepending,thatis,thosewhichhavenotbeenpaidofforotherwiseextinguishedorcancelled.
NOTE.2-InColumn2,thenumbertobeenteredwillbetheserialnumberoftheliabilityintheLiabilityStatementinwhichitwasfirstreported.
*Ifthebalanceofcommitmentsistobedischargedduringmorethanonefinancialyear,theyear-wisebreak-upoftheamountshouldbeindicated.

122
FORM GFR 7
Statement of proposals for pre-Budget discussion
Demand No.
(in crores of Rupees)
Part A-Non-Plan items
Sl. Description as Actuals Actuals B.E. Actuals upto R.E. B.E
No. shown in the ———————— (current September (of (current (next
Exp.Bud.Vol.2(SBE) For the last two year) current year) year) year)
Preceding yeas
1 2 3 4 5 6 7 8
Note: Salary component under any particular item may be indicated separately within brackets.
Part B-Plan Items
Sl. Description as Actuals Actuals B.E. Actuals upto R.E. B.E
No. shown in the ———————— (current September (of (current (next
Exp.Bud.Vol.2(SBE) For the last two year) current year) year) year)
Preceding yeas
1 2 3 4 5 6 7 8
Note: Salary component under any particular items may be indicated separately within brackets.
Part C-Object headwise summary of Non-Plan estimates
Sl. Object head Actuals Actuals B.E. Actuals upto R.E. B.E
No. ______________ (current September (of (current (next
For the last two year) current year) year) year)
Preceding yeas
1 2 3 4 5 6 7 8

123
FORM GFR 8
Deleted
FORM GFR 9
[ See Rule 52 (4) (ii) (a) and Rule 52 (5) (iii)]
Register showing expenses by Heads of Account
Office of …………………………………… Head of Account……………………………..
Major Head…………………………………….
Minor Head…………………………………….
Sub-Head ……………………………………...
Month
Year
(Unit of Appropriation)
Allotment Sub-Head of Grants
SI. No. Voucher No./Token No. &
Date/Serial No. in Bill Register*
1.
2.
3.
4.
Add adjustment communicated by PAO
Total for the month
Total from 1st
April Balance of the appropriation
NOTE 1. - If an allotment is changed, necessary correction in the register should be made in red ink.
NOTE 2. - Allotment of expenditure under ‘Charged’ portion should be indicated distinctly.
NOTE 3. - This account should be despatched on the 3rd
of the following month.
* Serial No. in Bill Register to be entered only in respect of bills passed by Cheque Drawing DDOs under their
cheque-drawing powers.
Signature ............................................
Designation ........................................
Date ...................................................
Deduction,
if any
Net
amount of
the bill

124FORMGFR10
[SeeRule52(4)(iii)(a)]
BroadsheetforwatchingreceiptofaccountfromDisbursingOfficers
Officeof……….………………………….
MajorHead…….…………………………
MinorHead………………………………
Sub-Head……….………………………..
SerialNo.NamesofDisbursingOfficersDistrictDateofreceiptofaccount
AprilMayMarch
NOTE1.-Districtsaretobearrangedaccordingtoalphabeticalorder.
NOTE2.-Datesofreceiptsshouldbenotedinmonthlycolumns.Remindershouldbesentifnotreceivedbythe7th
ofthemonth.

125FORMGFR11
[SeeRule52(4)(iv)]
CompilationSheet
MajorHead………………….………………
MinorHead………………………………….
Sub-Head……………………………………
MonthSerialNo.oftheDisbursingOfficersTotalforRemarks
eachofficer
Totalexpenditure………………........……………
AddAdjustmentcommunicatedbyAccounts
OfficerandnotreckonedbyDDOs…………
……………..................................…………………
GrandTotal……….........………………………….
AddTotaluptopreviousmonth…………………
…………………...................................…………..
ProgressiveTotalup-to-date……………
……………………........................……………..

126FORMGFR12
[SeeRule52(4)(vi)]
NameofOffice……….
GrantNo……................…..
Appropriation
FinancialYear………...…..
ConsolidatedAccounts
UnitsofappropriationGrantssanctionedGrantsdistributedProportionateGrantActualExpenditure
(Part-IIIofDemandsfromApriltodate
forGrants)April
12345
(i)Salaries……ChargedVotedChargedVotedChargedVotedChargedVoted
(ii)Totalofallunitsof
appropriation
UnitsofappropriationActualExpenditure
(Part-IIIofDemands
forGrants)
MayProgressiveJuneProgressive
expenditureuptoexpenditure
endofMay
(i)Salaries……ChargedVotedChargedVotedChargedVotedChargedVoted
(ii)Totalofallunitsof
appropriation
NOTE1.-Subsequentcharges,ifany,underColumn2aretobemadeinredink.
NOTE2.-FiguresunderColumn4maybeenteredinpencilforfacilityofupdatingfrommonthtomonth.
NOTE3.-Wherevervariationsbetweenactualexpenditureandproportiongrantarelarge,suitableexplanationsshouldbegivenina
“Remarks”column.
567

127FORMGFR13
[SeeRule52(8)]
BroadsheetforwatchingreceiptofthereturnsfromtheHeadsofDepartments
underaDepartmentoftheCentralGovernment
SI.GrantDateofreceiptofreturns
No.No.
AprilMayJuneJulyAugustSep.Oct.Nov.Dec.Jan.Feb.March
NOTE1.-Datesofreceiptshouldbenotedinmonthlycolumns.Remindersshouldbesentifreturnsarenotreceivedbytheprescribeddate.
NOTE2.-ReturnsrelatingtotheSecretariatpropershouldalsobemaintainedintheaboveform.

128FORMGFR14
Deleted
FORMGFR15
Deleted
FORMGFR16
Deleted
FORMGFR17
[SeeRule196(iii)]
ReportofSurplus,ObsoleteandUnserviceableStoresforDisposal
ItemNo.ParticularsofQuantity/BookValue/ConditionandModeofdisposalRemarks
storesWeightOriginalyearof(sale,public
purchasepurchaseauctionor
priceotherwise)
1234567
Signature…………………….………………………
Designation………….………………………………
Date………………………………………………….

129FORMGFR18
[SeeRule201]
SaleAccount
ItemParticularsQuantity/NameandHighestHighestEarnestDateonwhichWhethertheAuctioneer’s
No.ofStoresWeightfulladdressbidbidmoneythecompletearticleswereCommission
ofpurchaseracceptedrejectedrealizedamountisactuallyhandedand
onthespotrealizedandoverontheacknowledge-
creditedintospot.Ifnot,thementfor
treasuryactualdateofitspayment
handingover
ofthearticles
withquantities
12345678910
Signature……….………………………………
Designation………….…………………………
Date…………….……………………………….

130
FORM GFR 19
Deleted
FORM GFR 19- A
[ See Rule 212 (1) ]
Form of Utilization Certificate
SI. No. Letter No. Amount
and date.
Total
2. Certified that I have satisfied myself that the conditions on which the grants-in-aid was sanctioned have been duly
fulfilled/are being fulfilled and that I have exercised the following checks to see that the money was actually utilized for
the purpose for which it was sanctioned.
Kinds of checks exercised
1.
2.
3.
4.
5.
Signature ….…………………………….
Designation ……………………………..
Date ……………………………………..
Certified that out of Rs. ………........……. of grants-in-aid
sanctioned during the year …...…….. in favour of …..………. Under
this Ministry/Department Letter No. given in the margin and
Rs………….. on account of unspent balance of the previous year,
a sum of Rs. ……...........…….. has been utilized for the purpose
of ……....……. For which it was sanctioned and that the balance
of Rs…….. remaining unitilized at the end of the year has been
surrendered to Government (vide No…………., dated ………….)/
will be adjusted towards the grants-in-aid payable during the next
year ………...........………

131
FORM GFR 19- B
[ See Rule 226 (2) ]
Form of Utilization Certificate
(1) Certified that out of the Loan of Rs. …….........………. SANCTIONED under ………........……………, dated
…………………….….., in favour of …………...……….. during the year …………………. an amount of Rs. ……………..
has been utilized for the purpose for which it was sanctioned, and that the balance of Rs. ……….. remaining unutilized
at the end of the year ……............………… has been surrendered to the Government (vide No. ………………., dated
…………… ) / will be adjusted towards the loan payable during the next financial year.
(2) Certified that I have satisfied myself that the conditions on which the loan was sanctioned have been duly
fulfilled/are being fulfilled and that I have exercised the following checks to see that the money was actually spent for
the purpose for which the loan was made.
Kinds of checks exercised
1.
2.
3.
4.
Signature……….…………………….
Designation ………………………….
Date …………………………………..

132FORMGFR20
[SeeRule232]
Statementofaggregatebalanceofloan(s)outstanding
ason31st
March,20…anddetailsofdefaults
PAO/Pr.AOMinistryof……………………………………….MajorHead………………………..
Sub-MajorDetailsofdefaultsAmountofdefault
Head
NameofAggregateOriginalletterAmountofPrincipalInterest
SI.No.MinorHeadtheborroweroutstandingNo(s).andDate(s)loan(s)
ofAccountbalanceofsanctioningsanctioned
loan(s)theloan(s)
Rs.Rs.Rs.
123456789
NOTE.-StatementsmaybepreparedonseparatesheetsforeachMajorHead,withMinorHead-wisebreak-up.Partieshavingaggregate
outstandingbalancesoflessthanRs.5lakhseachandwhicharenotdefaultersmaybegroupedtogetherwithacommon
descriptiveheadsuchas“RegionalEngineeringColleges”,etc.,ifpossibleor“partieswithsmalloutstandingbalance”under
Column3.
Earliest
dateto
whichthe
default
pertains

133
FORM GFR 21
Deleted
FORM GFR 22
Deleted
FORM GFR 22-A
Deleted
FORM GFR 22-B
Deleted
FORM GFR 23
Deleted
FORM GFR 23-A
Deleted
FORM GFR 24
Deleted
FORM GFR 25
Deleted
FORM GFR 25-A
Deleted
FORM GFR 26
Deleted
FORM GFR 27
Deleted

134
FORM GFR 28
Deleted
FORM GFR 29
Deleted
FORM GFR 30
[ See Rule 275. (3) ]
Form of Cash Security Bond
KNOW ALL MEN BY THESE PRESENTS THAT I, A.B …………………… am held and firmly bound unto the
President of India, his successors and assigns (hereinafter referred to as “Government”) in the sum of Rs.……………
(Rupees …………………) to be paid to the Government for which payment, well and truly to be made, I bind myself,
my heirs, executors, administrators and legal representatives by these presents. Signed and dated this
…………………… day of …………………… two thousand and ……………………
2. WHEREAS the above bounden A.B was on the ……………………… day of …………………… 20
………………… appointed to and now holds the office of ……………………… in the office of …………………AND
WHEREAS the said A.B. ……………………… by virtue of holding such office is bound to collect …………… (here
describe the nature of Cashier’s / Storekeeper’s / Sub-storekeeper’s / Subordinate’s duties) and to keep and render
true and faithful accounts of his dealings with all property and money which may come into his hands or possession
or under his control, such accounts to be kept in the form and manner that may, from time to time, be prescribed by
duly constituted authority, and also to prepare and submit such returns, accounts and other documents as may from
time to time be required of him.
3. AND WHEREAS the said A.B. ……………… has, in pursuance of Rule 270 of the General Financial Rules,
1963, delivered to and deposited with …………………………… the above-mentioned ………………………………
sum of Rupees………………… (Rupees. ………………………) in cash as Security for the due and faithful performance
by the said A.B. ……………………… of the duties of his office and of any other office requiring security to which he
may be appointed at any time and of other duties which may be required of him while holding any such office as
aforesaid and for the purpose of securing and indemnifying the Government against all loss, injury, damage, costs or
expenses which the Government may, in any way, suffer, sustain or pay, by reason of the misconduct, neglect,
oversight or any other act of omission of the said A.B. ………………… or of any person or persons acting under him
for whom he may be responsible.
4.AND WHEREAS the said A.B. …………………… has entered into the above Bond in the sum of ………………
conditioned for the due performance by him the said A.B. ………………… of the duties of the said office and of other
duties appertaining thereto or which may lawfully be required of him and to indemnify the Government against loss
from or by reason of the acts or defaults of the said A.B. ……………… and of all and every other person and persons
aforesaid.
5. NOW THE CONDITION OF THE ABOVE WRITTEN BOND is such that if the said A.B. …………………… has
whilst he has held the said office of …………………… as aforesaid, always duly performed and fulfilled the duties of
his said office and if he shall, whilst he shall hold the said office or any other office requiring Security to which he may
be appointed, or in which he may act, always duly perform and fulfil all and every duties thereof respectively and other
duties which may from time to time be required of him while holding any such office as aforesaid, and shall duly pay
into the Government Treasury at ………………… all such moneys and securities for moneys as are payable or
deliverable to Government and shall come into his possession or control by reason of the said office and if the said
A.B. ……………… his heirs, executors, administrators or legal representatives, shall pay or cause to be paid unto the
Government the amount of any loss or defalcation in the accounts of the said …………………… within 24 hours after
the amount of such loss and/or defalcation shall have been demanded from the said A.B………………… by the
……………… such demand to be in writing and left at the office or last known place of residence of the said
A.B……………………… and shall also at all times indemnify and save keep harmless the Government from all and
every loss, damage, actions, suits, proceedings, costs, charges or expenses which has been or shall or may at any
time or times hereafter during he service or employment of the saidA.B…………… in such office as aforesaid, or any
such offices aforesaid be sustained, incurred, suffered brought, sued or commenced or paid by the Government by
reason of any act, embezzlement, defalcation, mismanagement, neglect, failure misconduct, default, disobedience,
omission or insolvency of the said A.B…………………… or of any person or persons acting under him or for whom he
may be responsible, them this obligation shall be void and of no effect, otherwise, the same shall be and remain in full

135
force. PROVIDED ALWAYS and it is hereby declared and agreed by and between the parties hereto that the said sum
of Rs….……… (Rupees ………………) so delivered and deposited as aforesaid shall be and remain with the
………………… for the time being as such Security as aforesaid with full power to the …………………for the time
being as occasion shall require, to apply the said sum of Rupees …………………… or any part thereof, in and
towards the indemnity of the Government or otherwise as aforesaid.
6. And it is hereby further agreed that in the event of the death of the said A.B. ………………… or on the final
termination of the service of the said A.B…………………… whether as …………………as aforesaid, or otherwise or
in the event of the saidA.B……………ceasing to hold any office requiring Security the said sum or Rs…………………,
(Rupees…………………) shall be retained by Government for …………………… months after the said
A.B……………… has either died while holding the said office or has quitted the said office or has ceased to hold any
office requiring Security and the said sum or so much thereof as shall then remain in deposit and shall not have been
applied or appropriated as aforesaid shall, on the expiration of the said period of …………………… months be
returned to the said A.B………………… or his heirs and legal representative, as the case may be, without interest and
this Bond shall remain with the …………………… for recovering any loss, injury, damage, costs or expenses that may
have been sustained, incurred or paid by the Government owing to any act, neglect or default of the said
A.B………………………, or any such other person or persons as aforesaid and which may not have been discovered
until after his death or the termination of his said service, or ceasing to hold any office for which the Security was
required.
PROVIDED ALWAYS that the return at any time of the said security shall not be deemed to affect or prejudice the
right of the Government to take proceedings upon or under this Bond against the said A.B…………… or against his
heirs, executors, administrators or legal representatives after his death, in case any breach of conditions of this Bond
shall be discovered after the return of the said security and the responsibility of the said A.B…………… or his estate,
as the case may be, shall at all times continue, and the Government shall be fully indemnified against all such loss or
damage as aforesaid at any time.
7. PROVIDED FURTHER, that nothing herein contained nor the security here given shall be deemed to limit the
liability of the said A.B……………………… in respect of matters aforesaid to the forfeiture of the said sum of
Rs……………… (Rupees …………………) or any part or parts thereof and that should the said sum be insufficient to
indemnify the Government in full for any loss or damage sustained by them in respect of matters aforesaid or any of
them the said A.B……………………… shall pay to the Government on demand such further sum as shall be deemed
by the ………………………… to the necessary, in addition to the said sum of Rs……………(Rupees……………………)
to cover loss or damage as aforesaid and that the Government shall be entitled to recover such further sum payable
aforesaid in any manner open to them.
8. The Stamp Duty, if any, on this Bond shall be borne by the Government.
(1) Signed by the above bounden in the presence of …………………………
(2) Signed for and on behalf of the President of India by ………………… the ……………… being the person
directed or authorized by him in that behalf in the presence of………………………
FORM GFR 31
[ See Rule 275. (3) ]
Form of Security Bond (Fidelity Bond deposited as security)
KNOW ALL MEN BY these presents that I, A.B……………………… of ……………………… and held and firmly
bound unto the President of India, his successors and assigns (hereinafter referred to as “Government”) in the sum
of Rs………………(Rupees…………………) to be paid to the Government for which payment, well and truly to be
made, I bind myself, my heirs, executors, administrators, and legal representatives by these presents. Singed and
dated this ……………………… day of ……………………20
2. WHEREAS the above bounden A.B…………………… was on the day of ………………… 20……………………
appointed to and now holds the office of ……………in the office of ……………AND WHEREAS the said A.B…………
by virtue of holding such office is bound to collect ……………………… (here describe the nature of Cashier’s/
Storekeeper’s/Sub-storekeeper’s/Sub-ordinate’s duties) ………………… and to keep and render true and faithful
accounts of his dealings with all property and money which may come into his hands or possession under his control
such accounts to be kept in the form and manner that may, from time to time, be prescribed by duly constituted
authority, and also to prepare and submit such returns, accounts and other documents as may from time to time be
required of him.

136
3. AND WHEREAS the said A.B…………………has, in pursuance of Rule 270 of the General Financial Rules,
1963, delivered to and deposited with ……………… a Fidelity Bond issued by ……………Company for the sum of
Rs………………… (Rupees ………………) as Security for the due and faithful performance by the said
A.B………………… of the duties of his said office and of any other office requiring security to which he may be
appointed at any time and of other duties which may be required of him while holding any office as aforesaid and for
the purpose of securing and indemnifying the Government against all loss, injury, damage, costs, or expenses which
the Government may, in any way, suffer, sustain or pay by reason of misconduct, neglect, oversight or any other act
of omission of the said A.B……………………… or of any person or persons acting under him or for whom he may be
responsible.
4. AND WHEREAS the said A.B……………………… has entered into the above Bond in the sum of
……………………… conditioned for the due performance by him the said A.B…………………… of the duties of the
said office and of other duties appertaining thereto or which may lawfully be required of him and to indemnify the
Government against loss from or by reason of the acts or defaults of the said A.B………………… and of all and every
person and persons aforesaid.
5. NOW THE CONDITION of the above written Bond is such that of the said A.B…………………… has whilst he
has held the said office of …………………… as aforesaid always duly performed and fulfilled the duties of his said
office and if he shall, whilst he shall hold the said office or any other office requiring security to which he may be
appointed, or in which he may act, always duly perform and fulfil all and every duties thereof respectively and other
duties which may from time to time be required of him while holding any such office as aforesaid, and shall duly pay
into the Government Treasury at ………………………… all such money and securities for money as are payable or
deliverable to Government and shall come into his possession or control by reason of the said office and shall duly
account for and deliver up all moneys, papers and other property which shall come into his possession or control by
reason of the said office and if the said A.B……………… his heirs, executors, administrators or legal representatives
shall pay or cause to be paid unto the Government the amount of any loss and /or defalcation in the accounts of the
said …………………… within 24 hours after the amount of such loss and /or defalcation shall have been demanded
from the said A.B…………… by the ………………… such demand to be in writing and left at the office or last known
place of residence of the said A.B………………… and shall also at all times indemnify and save, and keep harmless
the Government from all and every loss, injury, damage, actions, suits, proceedings, costs, charges and expenses
which has been or shall or may at any time or times hereafter during the service or employment of the said
A.B……………………… in such office as aforesaid, or any such offices aforesaid, be sustained, incurred, suffered
brought, sued or commenced or paid by the Government by reason of any act, embezzlement, defalcation,
mismanagement, neglect, failure, misconduct, default, disobedience, omission, or insolvency of the said
A.B……………………… or of any person or persons acting under him or for whom he may be responsible, then the
above written Bond shall be void and of no effect, otherwise the same shall be and remain in full force.
6. PROVIDED ALWAYS and it is hereby declared and agreed by and between the parties hereto that the said
Fidelity Bond No……………… delivered and deposited as aforesaid shall be and remain at the disposal of the said
officer for the time being or the Government as and for part and additional security over and above the above written
Bond to the Government, for the indemnity and other purposes aforesaid with full power to the Government or an
officer duly authorized in that behalf to obtain and receive payment of the sum or sums of money recoverable or to be
received, upon or by virtue of the said Fidelity Bond or a sufficient portion thereof and all benefits and advantages
thereof and to apply the same in and towards the indemnity as aforesaid of the Government.
7. AND it is hereby further agreed and declared by and between the parties hereto that the said
A.B……………………… shall keep the said Fidelity Bond issued by the said company in full force by payment of the
premia and as when they fall due and by otherwise conforming to the rules of the said company relating thereto.
8. PROVIDED ALWAYS that cancellation or lapse at any time of the said Fidelity Bond shall not be deemed to
affect or prejudice the right of the Government to take proceedings upon or under this said Bond against the said
……………………… in case any breach of the condition of this Bond shall be discovered after the cancellation or
lapse of the said Fidelity Bond but the responsibility of the A.B. ………………………… shall at all times continue and
but the Government shall be fully indemnified against all such loss or damage as aforesaid at any time.
9. PROVIDED FURTHER that nothing herein contained nor in the Fidelity Bond so deposited shall be deemed to
limit the liability of the said A.B…………… in respect of matters aforesaid to the forfeiture of the said sum of Rupees
…………………… or part or parts thereof and that if the said sum be found insufficient to indemnify the Government
in full for any loss or damage sustained by them in respect of matters aforesaid or any of them the said
A.B………………… shall pay to Government on demand such further sum as shall be deemed by
………………………… to be necessary in addition to the said Fidelity Bond of Rs………………………… to cover

137
such loss or damage as aforesaid and that the Government shall be entitled to recover such further sum payable as
aforesaid in any manner open to them.
10. The stamp duty, if any, on this Bond shall be borne by the Government.
Signature
1. Signed and delivered by the above named A.B…………….. in the presence of …………………..
2. Signed for and on behalf of the President of India by ……………… the ……………… being the person
directed or authorized by him in that behalf in the presence of ……………………
FORM GFR 32
[ See Rule 223 (2) (ii) ]
Form of written undertaking to be executed by an Undertaking / Corporation
wholly owned by the Central Government at the time of sanctioning of a loan
Memorandum of written undertaking given on the ……………… day of …………………… two thousand and
……………………… by a company incorporated under the Indian Companies Act, 1913 /the Companies Act, 1956,
having its registered office …………………… a body corporate incorporated under the same name and style and by
under ……………… (Act No…………… of ……………) having its office at ……………………a society registered
under the Societies Registration Act (21 of 1860) having its office at……………… (hereinafter called ‘the Company /
Corporation’ which expression shall include its successors and assigns) to the President of India (hereinafter called
‘the President’ which expression shall include his successors and assigns).
WHEREAS the said Company / Corporation, etc., applied to the President for a loan of Rs……………………
(Rupees………………………) only.
AND WHEREAS the President has agreed to lend an amount of Rs……… (Rupees………………………… only)
to the said Company / Corporation, etc., on the terms and conditions prescribed in the Government of India, Ministry
of ……………………… (Department of ………………………) Letter / Office Memorandum No……………………,
dated…………………… (annexed).
Now IT IS HEREBY AGREED by the said Company / Corporation, etc., that, in consideration of the sum of
Rs……………… (Rupees………………… only) lent by the President to the Company / Corporation etc., the Company
/ Corporation, etc., hereby agree in accordance with the said terms and conditions –
(i) To repay the loan in …………………… annual equal instalments the first instalment repayable from the
…………………… anniversary of the date of drawal;
(ii) To pay interest at the rate or …………% per annum on the principal payable on each anniversary; and
(iii) In case of default in the payment of the instalment of the loan in accordance with (i) above and / or interest
in accordance with (ii) above, pay interest at penal rate of ……………………% per annum on such overdue
payments.
IT IS HEREBY FURTHER AGREED AND DECLARED that the said Company / Corporation, etc., shall not,
without the written consent of the President, encumber or alienate, create, any mortgage lien or charge by way of
hypothecation, pledge otherwise, or create other encumbrances of any kind whatsoever any part of its land or buildings
or other structure, and / or plant, machinery or any other fixed assets owned by them.
AND IT IS HEREBY AGREED that the said principal amount lent by the President as aforesaid shall be used by
the Company / Corporation, etc., only for the purpose or purposes for which the aforesaid amount was sanctioned
and for no other purpose whatsoever.
IN WITNESS WHEREOF these presents have been executed by the said Company / Corporation the day and
year first above written.
THE PRESIDENT of India has agreed to bear the stamp duty, if any, chargeable on this document.
Signed for and on behalf of…………………..
Company / Corporation, etc., by
Shri. ..………… (Name and Designation) in the presence of
1. ……………………………… Seal of the Company / Corporation
2. ………………………………

138
FORM GFR 33
[ see Rule 255 (1) ]
Certificate of transfer of charge
Certified that I /we have in the forenoon / afternoon of this day respectively made over and received charge of the
Office………………………… in pursuance or Order No……………………… dated ………………………………
Received Officer ………………………… Relieving Officer …………………………
Signature ………………………………… Signature …………………………………
(Name in Block Letters) (Name in Block Letters)
Designation……………………………… Designation…………………………………
Station …………………………………… Station ………………………………………
Date ……………………………………… Date …………………………………………
(For use in Audit Office / PAO only)
Noted in A/R at page …………………………
SO/AAO/AO/PAO
Noted in A/R at page……………………………
SO/AAO/AO/PAO
Forwarded …………………………………………………………………………………
NOTE :- Separate certificate (as per Form appended) also to be used where transfer / assumption of charge
involves responsibilities for Cash, Stores etc.
FORM GFR 33 (APPENDIX)
[ See Rule 255 (1) ]
Certificate of transfer of charge in respect of transfer / assumption of
responsibilities for Cash, Stores, etc.
Certified that I/we have in the forenoon / afternoon of this day …………… [date to be indicated] respectively made
over and assumed charge and responsibility of the following :-
Cash Rs…………………………………
Permanent advance Rs…………………
Others……………………………………
Relieved Officer…………………………..
Reliving Officer……………………………
FORM GFR 33-A
“Ministry / Department of ………………………….
Joining Report
I hereby report myself for duty this day…………………… forenoon / afternoon after availing of leave from
……………… to …………………… sanctioned vide Ministry / Department of ……………………… Order No……………,
dated ………………………
Signature ……………………………
(Name in Block Letters)
Designation………………………….”

139
FORM GFR 34
[ See Rule 275. (3) ]
GENERAL INSURANCE CORPORATION OF INDIAAND ITS SUBSIDIARIES
Fidelity Guarantee Policy
POLICY No.
IN CONSIDERATION OF the first premium shown in the First Schedule and subject to the terms and conditions
contained herein or endorsed herein which are to be deemed conditions precedent to any liability on the part of the
Life Insurance Corporation of India (hereinafter called “Corporation”) so far as they relate to anything to be done or
complied with by the Employer, the Corporation agrees and binds itself to make good and reimburse to the Employer
all such direct pecuniary loss not exceeding the amount of guarantee, as the Employer shall sustain by any act or acts
of dishonesty, default or negligence committed by the employed / any of the employed (a) during the currency of this
insurance and (b) during the uninterrupted continuance of employment of such employed and (c) in connection with
his occupation and duties AND DISCOVERED during the currency of this insurance or within a reasonable time
thereafter or within twelve months after determination of such employment whichever event shall first happen.
The proposal for this insurance made by or on behalf of the Employer together with any correspondence relative
thereto shall be incorporated herein and be the basis of this contract and of every renewal.
THE FIRST SCHEDULE
Name
The Employer Business THE PRESIDENT OF INDIA
Address
The Employed : through
The amount of Guarantee Rs.
Occupation and duties:
The first premium Rs.
The renewal date The ………day of ……… in each year.
The currency of this insurance: The period or periods from the date written against the respective names of the
Employed to the then next renewal date and any year thereafter in respect to which the Corporation shall agree to
accept and Employer or Employed shall pay the annual premium specified in the Second Schedule hereto.
THE SECOND SCHEDULE
Period of Name Occupation Amount of Annual Actual
Risk and duties Guarantee Premium Premium
Rs. Rs. P. Rs. P.
In witness whereof this Bond has been signed at ……………… this day of …………………… 20
For
1
……………………………
Prepared by …………………………
Examined by…………………………
N.B.- For your own protection it is incumbent upon you to read your policy and its conditions to ascertain that it is
made out in accordance with your intentions.
1
The name of the Company to be inserted in ink at the time of execution of this form.

140
CONDITIONS
In this policy the expression shall bear the respective meanings attached to them in the First Schedule hereto
1. The Corporation shall not be liable to make any payment hereunder if the nature of the business of the
Employer of the duties or conditions of service shall be changed or the remuneration or any of the Employed reduced
without the sanction of the Corporation or if the precautions and checks for securing accuracy of accounts shall not be
duly observed.
2. Notice in writing shall be given to the Corporation’s office as soon as possible after any act or acts of dishonesty,
default or negligence on the part of any of the employed or of reasonable cause of suspicion thereof or any improper
conduct shall have come to the knowledge of the Employer or of any representatives of the employer to whom is
entrusted the duty of superintendence over any of the Employed and no amount shall be payable under this policy in
respect of that Employed by reason of any act committed after such knowledge shall have come to the Employer or his
said representatives. Within three months after such notice the Employer shall deliver to the Corporation full details of
his claim and shall furnish proof of the correctness of such claim.All books of accounts of the Employer or anyAccountant’s
report thereon shall be open to the inspection of the Corporation and the Employer shall give all information and assistance
to enable the Corporation to sue for and obtain reimbursement by any one of the Employed or by his estate of any
moneys which the Corporation shall have paid or become liable to pay under this Policy. Provided always that the
Corporation shall not be entitled to the disclosure of any record or information in respect of which the Employer is entitled
to claim privilege in a Court of Law under Sections 123 and 124 of the Indian Evidence Act.
3. Any moneys of any one of the Employed in respect of whom a claim is made in the hands of the Employer
and any money which but for any act of fraud or dishonesty committed by such one of Employed would have been due
to that Employed from the Employer shall be deducted from the amount otherwise payable under the Policy. Provided
that the Employee is entitled under the law to make such deduction. Provided further that in cases in which the loss
to the Employer is in excess of the maximum amount payable under the policy, the moneys aforesaid will be applied
in the first place to make good the amount of such excess and the balance, if any, shall be deducted as herein
provided. The Employer and the Corporation shall share any other recovery (excluding insurance and reinsurance
and any counter security taken by Corporation) made by either on account of any loss in the proportions that the
amount of the loss borne by each bears to the total amount of the loss.
4. Notwithstanding anything herein contained to the contrary it is also agreed that the Corporation guarantees to
the Employer that the Employed shall honestly and faithfully account to the Employer for all moneys or valuables or
property which they shall receive or be entrusted with on account of the Employer either in their personal or individual
capacity or as member of group working conjointly with other members and that the Corporation will make good and
reimburse to the Employer such loss not exceeding the amount of guarantee as the Employer may sustain by any act
or acts of default or dishonesty or negligence of the Employed in the capacity and employment aforesaid and that
when individual liability cannot be brought home to the Employed the amount to be made good shall be that which
falls to the share of the Employed calculating from the total number of men forming such group, i.e., the total loss
divided by the total number of men employed on the particular work.
5. The Corporation also agrees that during the period in which the guarantee shall be in force the particulars
contained in the Second Schedule shall be with the consent of Employer and on previous notice to and on payment to
the Corporation of any additional proportionate premium that may become payable in consequence of any change in
the employed by reason of promotion or otherwise be varied as circumstances may require and such additional
persona as may be taken into the employment of the employer referred to in the Schedule hereof during such period
shall with such consent aforesaid and on previous notice to and on payment to the Corporation of a further proportionate
premium at the rate for the time being applicable be added to and included in the said Schedule and the expression
Employed used throughout this policy shall as from the respective date on which the names shall be included in the
said schedule be deemed to include all persons whether previously named in the said Schedule or subsequently
added thereto as aforesaid.
6. If any question or difference shall arise between the parties hereto or their respective representatives touching
these presents or the construction hereof or as to the rights, duties or obligations of any persons hereunder or as to any
other matter in anywise arising out of or connected with the subject-matter of these presents, the same shall be referred
to a singleArbitrator to be named by the Government of India. TheArbitrator so named shall be an officer of Government
and shall have all the powers conferred on Arbitrators under the Indian Arbitration Act. The costs of the reference and
award shall be in the discretion of theArbitrator. The making of an award in such reference shall be a condition precedent
to any liability of the Corporation or any right of action against the Corporation in respect of such difference. If the
Corporation shall disclaim liability for any claim hereunder and such claim shall not within twelve calendar months from
the date of such disclaimer have been referred to arbitration under the provision herein contained then the claim shall for
all purpose be deemed to have been abandoned and shall not thereafter be recoverable hereunder.
7. The expression “Government of India” for the purpose of Clause 6 above shall mean the Secretary to the
Government of India in the Administrative Ministry / Head of Department under which the employed is working.

FORMGFR35
[SeeRule190.(2)(iii)]
ACCESSIONREGISTER
DateAccess-AuthorTitleVol.PlaceandYearofPagesSourceClassBookCostBillWithRemarks
ionPublisherPubli-No.NoNo.drawn
Numbercationanddate
date
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)(14)(15)
141

142
FORM GFR 36
[ See Rule 220. (1) (viii) ]
Notice to Borrower about the Due Date for repayment of loan and interest thereon
No………………………
Office of the Controller of Accounts, Ministry / Department of ……………… New Delhi, dated the ……….
To
……………………………
……………………………
Subject :- Repayment of loan and payment of interest thereon.
Dear Sir,
According to the terms of the loan of Rs………………… sanctioned to you, vide the Ministry / Department
………………………… Letter No……………………, dated………………………… the annual repayment instalment
and / or interest thereon, detailed below, will become due on…………………………
(i) Repayment ……………………… Rs……………………………
(in words and figures)
(ii) Interest …………………………… Rs……………………………
(in words and figures)
2. Please arrange the payment by the due date. It should be noted that the amount of interest has been calculated
on the assumption that payment will be arranged promptly; otherwise it will be revised upwards in accordance with the
terms of the loan.
3. The amounts due should be tendered, on or before the due date at the …………………… (New Delhi Head
Office / Main Office of the Public Sector Bank (PSB) accredited to the Ministry / Department in cash or by cheque or
draft drawn on any Scheduled Bank / New Delhi, in favour of the aforesaid PSB Branch. The payment should be
accompanied by a memorandum or challan, in duplicate, giving the following details :-
(i) Name of the Ministry / Department………………………………
(ii) Name of the Borrower …………………………………………
(iii) No. and date of loan sanction letter with the loan amount sanctioned ………………………….
(iv) Amount due for payment, separately for interest and payment…………………………
(v) Due date of payment……………………………
(vi) The head of the account indicated below, to which the amounts will be adjusted in Government accounts,
should be included in the challan:
Head of Account
(i) Instalment of Principal.
(ii) Interest.
4. Separate cheque / draft and challans should be submitted for payment of principal and interest.
5. For outstation loanees, payment of dues together with memorandum / challans is to be arranged through their
Bank to the aforesaid PSB Branch in New Delhi by the due date.
Yours faithfully
Accounts Officer
FORM GFR 37
Deleted

FORMGFR38
[SeeRule274(2)]
RegisterofPolicyHolder
Amountactuallyrecovered
123456789101112131415161718
143
SI.No
PolicyNo.
NameofPolicyholder
Designation
MonthlyPremiumrate
April
May
June
July
August
September
October
November
December
January
February
March
Remarks

144
FORM GFR 39
[ See Rule 212 (4)]
Register of Grants to be maintained by the sanctioning Authority
(i) Serial Number.
(ii) Number and date of sanction letter.
(iii) Purpose of grant.
(iv) Conditions, if any, attached to the grant.
(v) Amount sanctioned.
(vi) Amount of the Bill.
(vii) Whether conditions attached to the grant have been accepted by the grantee without reservation.
(viii) Dated initials of the sanctioning authority.
(ix) Date by which statements of accounts along with utilization certificate, etc., are required to be furnished
by the grantee.
(x) Date by which utilization certificate is required to be furnished by sanctioning authority to the Accounts
Officer, as the case may be.
(xi) Date by which the statements of accounts, etc., are actually received. (In case there has been delay in the
receipt of these statements, the reasons therefor as well as efforts made by the sanctioning authority to
expedite submission of such statements may be clearly indicated).
(xii) Date of submission of utilization certificate to PAO (in case there has been delay in submission of utilization
certificate, the reasons therefor may be clearly indicated).
(xiii) Unspent balance, if any, also indicating whether the unspent balance has been surrendered by the grantee
Institution / Organisation.

145
FORM GFR - 40
[ See Rule 190. (2) (i) ]
REGISTER OF FIXED ASSETS
Name and description of the Fixed Assets ________________________
Date Particulars of Particulars of supplier Cost of Location of Remarks
Asset the Asset the Asset
Name and Bill No.
address and date
1 2 3 4 5 6 7
NOTE : The items of similar nature but having significant distinctive features (e.g. study table, office table, computer
table, etc.) should be accounted for separately in stock.

146
FORM GFR - 41
[ See Rule 190. (2) (ii) ]
STOCK REGISTER OF CONSUMABLES SUCH AS STATIONERY, CHEMICALS, SPARE PARTS ETC.
Name of Article __________________ Unit of Accounts ___________________
Date Particulars Suppliers Receipt Issue Issue Balance Unit
Invoice No. Voucher Price
and Date No.
1 2 3 4 5 6 7 8
NOTE : User’s indent in original shall be treated as issue voucher. Issue voucher number shall be in consecutive
order, financial year wise and it should be noted on each indent.

FORMGFR-42
[SeeRule190.(2)(iv)]
REGISTEROFASSETSOFHISTORICAL/ARTISTICVALUE
NameofAsset_____________________
DateofSourceofCostprice,ParticularswhichParticularsoftheLocationofRemarks
acquisitionacquisitionifanymakeitanassetofcustodianoftheassettheasset
historic/artisticvalue
NOTE1:Thecustodianshalltakeappropriatemeasuresforpreservationoftheassets.
NOTE2:ThepresentvalueoftheassetshouldbeascertainedbyobtainingappropriatevaluationfromanexpertagencyandthesameisindicatedinColumn3,
everyfiveyears.
147

FORMGFR-43
[SeeRule249.(2)]
GOVERNMENTGUARANTEES
NameofMinistry/Department
[Rs.Incrore]
SI.BeneficiaryLoanAuthorityforPeriodofPurposeClassSectorDetailsDetailsAmount
No[NameoftheHolder/Guaranteevalidity[MOFIDofLoanofofofLoan
PSUetcinEntity[MoFNo.,&dateRescheduleSecurities
whosefavourgivingapprovalthroughwhichpledged
guaranteeisLoanNo.&Date]theguarantee
given]waslast
extended]
1234567891011
ExtentofAdditionsDeletionsInvokedOutstandingRateofGuaranteeFee/Other
GuaranteePrincipal,GuaranteeCommissionconditions&
TotalDischargedNotinterestetcatFee/compliance
dischargedtheendoftheCommissionReceivableReceived
period
121314151617181920212223
NOTES-1:ForthepurposeofColumn-8thesectorsareasunder:-
(i)Power(ii)Cooperative(iii)Irrigation(iv)Roads&Transport(v)UrbanDevelopment&Housing(vi)OtherInfrastructure(vii)Anyother.
2:ForthepurposeofColumn-7theclassificationisindicatedinRule249(4).
Principal
Interest
148

149
FORM GFR 44
[ See Rule 252. ]
Furnishing of data regarding Guarantees to Ministry of Finance
Name of the Ministry / Department :
Name of Public Sector Undertaking / entity :
Year Turnover Profit Sundry Current If audited by In case of
After tax Debtors Ratio CAG, profit after targets set
tax, taking into by BIFR the
account the same for
comments of Turnover and
CAG Profit.
X-2
X-1
X*
Where ‘X’ is the immediate preceding financial year.
2. In case of proposal seeking extension of guarantee it may specifically be indicated whether the guarantee fee
for the preceding financial year has been paid or not. The amount paid and date of payment should be indicated. In
case of default in payment it may be indicated whether default fee in terms of Rule 247 (2) has been levied.

150
KEY TO NEW RULE NUMBER OF THE RULES IN GFRs -1963
RETAINED SUBSTANTIALLY UNCHANGED IN GFRs- 2005
Number in GFRs 1963 Number in GFRs 2005
Rule 3. Rule 7.
Rule 4.(1) a Rule 8 (1) (i)
Rule 4.(1) b Rule 8 (1) (ii)
Rule 4. (2) Rule 8 (2)
G. I. D below Rule 6. Serial no. (i) to (v), retained as Rule 21. The remaining
provisions covered in Chapter - “Procurement of Goods
and Services.
Rule 7 and G. I. D below it Rule 26.
Rule 8. Rule 190.
Rule 10. Rule 39.
Rule 11. Rule 40.
Rule 12 to Rule 15. Rules - 203 - 205.
Rule 16, 17 & 18 and G. I. D below these Rules. Rule 33.
Rule 20. Rule 35.
Rule 22. Rule 4.
G. I. D below Rule 24. Rule 11 (2).
Rule 25. Rule 12.
Rule 26. Rule 13.
Rule 27. Rule 14.
Rule 28. Rule 15 (1).
G. I. D below Rule 28. Rule 15 (2) & 15 (3).
Rule 29 fines. (1) Rule 16 (1).
Rule 29. (2) Rule 16 (2).
Rule 30. Rule 17.
Rule 31. Rule 18.
Rule 32. Rule 19 (1) (slightly modified).
G. I. D (1) below Rule 32. Rule 19 (2).
Rule 33. Rule 20.
Rule 34. Rule 23.
Rule 36. Retained as Rule 28.
Rule 41 and G. I. D (1) & (2) below it. Rules 25 (1), 25 (2) and 25 (3).
Rule 42. Rule 27 (1).
Rule 42-A and G. I. D below it Rule 267.
Rule 43. Rule 30.
G. I. D (1) below Rule 43. Rule 268.
Rule 44. Rule 31.
Rule 46 (a), (b) Rule 46 (1) & 46 (2).
G.I.D below Rule 46. Covered in Rule 47 (2).

151
Rule 48. Rule 48.
Rule 49. Rule 49.
Rule 52. Rule 45.
Rule 53. Rule 46 (3).
Rule 54. Absorbed in Rule 46 (5).
Rule 55 (i) Rule 46 (4).
Rule 55 (ii) Covered in Rule 46 (5) and 49.
Rule 58. First paragraph as stated as Rule 47 (3). Necessary part of
the remaining paragraphs amalgamated with Appendix - 4.
Rule 59. Rule 48 (2).
Rule 60 and G.I.D below it. Rule 50.
Rule 62 and 63 (1). Rule 51.
Annexure - A Appendix - 14.
G.I.D (3) below Rule 78. Rule 255 (2).
Explanation below Rule 82. Rule 264 (2).
Note (1) below Rule 82. Rule 259.
G.I.D (1) (b) (i) below Rule 82. Rule 263.
G.I.D (3) below Rule 82. Rule 258.
Rule 84. Rule 264 (3) (ii).
Rule 87. Rule 266.
G.I.D below Rule 89. Rule 29, item (iii).
Rule 130. Rule 128.
Rule 132 (2) Rule 131.
Rule 132 (3) Rule 129 (3).
G. I. D below Rule 132 (3) First part covered in Rule 129 (1) and the second part
covered in Rule 134.
Rule 131 Rule 129 (1).
Rule 135 Rule 127.
Rule 136, 137, 138, 139 & 140 Rule 126.
Rule 141. Provisions included in Rule 133.
Rule 147 and Explanation below it. Rule 271.
Rule 150 (1). Rule 211 (1).
Rule 150 (2). Rule 211 (2).
Rule 150 (3). Rule 211 (4).
Rule 150 (5). Rule 210.

152
Note below Rule 151 (1). Rule 212 (1).
Rule 151 (2). Rule 212 (2).
Rule 151 (4). Part (d) stated in Rule 212(4).
Rule 152. Rule 213.
Rule 153. Rule 214.
Note below Rule 153. Covered in Rule 215 (1).
Rule 154. Rule 216.
Rule 155 (1) Rule 219 (1).
Rule 155 (2) Rule 219 (2).
G.I.D (1) below Rule 155 (2) and
Note 1, 2, 3 and 4 below it including exception. Rule 220 (1).
G.I.D (3) below Rule 155 (2). Rule 220 (3).
G.I.D (4) below Rule 155 (2). Rule 220 (4).
Rule 156 (1) Rule 221 (1).
Rule 156 (2) Rule 221 (2).
G.I.D (1) below Rule 156. (2) Rule 222 (1), 222 (2) and 222 (3).
G.I.D (2) below Rule 156. (2) Rule 223 (1).
Rule 157 and note (1) and (2) below it. Rule 223 (2).
Rule 158. Rule 225.
Rule 159-A. Rule 226 (1).
G.I.D (1) below Rule 159-A. Rule 226 (2).
Rule 161 (1) Rule 228 (1).
Rule 161 (2) and note (3) below it. Rule 228 (2) & 228 (3).
Rule 161 (3) Rule 228 (4).
Rule 162 Rule 229.
Rule 163 (1) Rule 230 (1).
Rule 163 (2) and Note below it. Rule 230 (2).
G.I.D (1) below Rule 163. (2) Rule 231.
Rule 164. Rule 232.
G.I.D. under Rule 164. Rule 233.
Rule 165 (1) & 165 (2). Rule 165 (1) retained unchanged and 165 (2) rephrased.
Both the rules merged as Rule 272.
Rule 166 & G.I.D below it. Rule 273.
Rule 175. Rule 285.
Rule 163(1) and (2) Rule 230 (1) and (2)
Rule 281 - 282 Rule 278 - 279

153
Rule 176. Rule 286.
G.I.D below Rule 176. Rule 287.
Rule 177. Rule 288 (slightly modified).
Rule 281. Rule 278.
Rule 283. Rule 280.
Rule 284. Rule 289.
Rule 285. Rule 66.
Note (1) & (2) below Rule 286. Rule 73.
Rule 289. Rule 75.
G.I.D (2) below Rule 291(3) Rule 95.
Rule 292. Rule 92.
G.I.D (1) below Rule 292. Rule 91(slightly modified).
Rule 293. Rule 97.
G.I.D (2) below Rule 294. Rule 104 and Rule 105.
Rule 295. Rule 107.
G.I.D (2) below Rule 295. Rule 110 (slightly modified).
Rule 296. Rule 111.
Rule 297. Rule 116.
Rule 297-A and exception below it. Rule 120(part).
Note (1) & (2) below Rule 297-A Note below Rule 120.
Rule 298 and note below it. Rule 121.
Rule 300 (3) Rule 83.

Amendments
To
General Financial
Rules, 2005

157
No. 8/4/E.II(A)/05
Government of India
Ministry of Finance
.....
New Delhi, 29
th
March , 2006
OFFICE MEMORANDUM
Subject: Amendment to General Financial Rules, 2005.
The undersigned is directed to refer to CVC’s guidelines issued vide No. 98/ORD/1 dated 3
rd
August
2001 banning post-tender negotiations except with L-1 bidder (H-1 in case of sale of materials) and to make
necessary amendment in Rule 198(ii)(d) of the GFRs, 2005, in line with CVC’s guidelines.
Also, in order to avoid delay in sanction/release of grant-in-aid for the relevant years to the grantee
institutions, it has been decided to amend Rule 209(6)(viii) and Rule 212(1) of General Financial Rules, 2005.
A copy of the amendment is enclosed.
2. Ministry of Home Affairs etc. are requested to bring these amendments to the notice of all their attached
and sub-ordinate offices for their information.
3. Hindi version of this O.M. will follow.
(Rubina Ali)
Under Secretary to the Government of India
To
All the Secretaries & Financial Advisers of Ministries/Departments of the Government of India.
Copy forwarded to C&AG (with usual no. of spare copies) and to Secretary Union Public Service
Commission, New Delhi and as per standard endorsement.
(Rubina Ali)
Under Secretary to the Government of India
This OM is also available on our website http://finmin.nic.in

158
AMENDMENT TO GENERAL FINANCIAL RULES, 2005
CHAPTER 7 RULE 198, Clause(ii)(d)
Substitute the existing clause of this Rule by the following:-
(ii)(d) The bid of the highest acceptable responsive bidder should normally be accepted. However, if the price
offered by that bidder is not acceptable, negotiation may be held only with that bidder.
CHAPTER 9 RULE 209 (6) (viii)
In Rule 209(6) (viii) for the period “a year”, the period “two years” shall be substituted.
CHAPTER 9 RULE 212(1)
Substitute the existing second para of this Rule by the following para:-
“In respect of recurring grants, Ministry or Department concerned should release any amount sanctioned for the
subsequent financial year only after Utilization Certificate on provisional basis in respect of grants of the preceding
financial year is submitted. Release of grants-in-aid in excess of 75% of the total amount sanctioned for the
subsequent financial year shall be done only after the Utilization Certificate and the Annual Audited Statement
relating to grants-in-aid released in the preceding year are submitted to the satisfaction of the Ministry/Department
concerned. Ministry or Department would, however, ensure even flow of expenditure throughout the year. Reports
submitted by the Internal Audit parties of the Ministry or Department and inspection reports received from
Indian Audit and Accounts Department and the performance reports, if any, received for the year should also be
looked into while sanctioning further grants.”
(Min. of Fin. (Exp.) O.M. No.8/4/E.II(A)/05 dated the 29
th
March, 2006)

159
No. 8(7)/E.II(A)/2007
Ministry of Finance
E.ll (A) Branch
New Delhi, the 6
lh
June, 2007
OFFICE MEMORANDUM
Subject: Amendment to Appendix-12 of the General Financial Rules, 2005.
The undersigned is directed to say that in pursuance of Budget Division, Department of EconomicAffairs’
O.M. No.1/1/2006-TCE dated 25
th
April, 2007, it has been decided to amend the provisions under Part I of Appendix-
12 of General Financial Rules, 2005. Accordingly, in paras 2 and 4 of Appendix-12 of General Financial Rules,
2005, for the words “the Deputy Secretary(Budget)”, the words “the Deputy Secretary (Budget) or the Director
(Budget), as the case may be” shall be substituted.
2. Hindi Version of this O.M. will follow.
(Rubina Ali)
Under Secretary to the Government of India.
To
All the Secretaries & the Financial Advisers of Ministers/ Departments of the Government of India.
Copy forwarded to C&AG (with usual No. of spare copies) and to Secretary, Union Public Service
Commission, etc. as per standard endorsement list.

161
F.No.8( 9 )/E.II(A)/2008
Ministry of Finance
E.II(A) Branch
...
New Delhi, the 13th October, 2008
OFFICE MEMORANDUM
Subject: Amendment in Rule 275(4) of GFRs, 2005 - inclusion of HoDs reg.
The undersigned is directed to invite attention to the provisions of Rule 275(4) of GFRs, 2005 which inter-
alia states that tte Ministry or Department of Central Government, Administrators and the Comptrlier and Auditor-
General in respect of persons serving in Indian Audit and Account Department may, however, exempt a government
servant officiating in such a short-t rm vacancy from furnishing security if the circumstances warrant such exemption
subject t certain conditions mentioned therein.
2. This Ministry has examined references pointing out that in the pre-revised GFR 1963 ‘Heads of Departments’
were also listed as competent authority to exempt Government servant who officiate against the post of cash or
store handling Government servant on short term basis from furnishing security.Accordingly, it has now been decided
to amend Rule 275(4) as in the Annexure to this OM, so as to include ‘Heads of Departments’ also as competent
authority to exmpt such Government servant officiating against the post of cash or store handling government
servant on short-term basis from furnishing security, as was earlier included under pre-revised GFRs,1963.
3. These orders will take effect from date of issue.
4.All the Ministries/Departments are requested to bring the amendments to the notice of their attached and subordinate
offices for their information and necessary action.
Hindi version is enclosed.
(S.Krishnamoorthi)
Under Secretary to the Govt. of India
To
All the Ministries /Departments of Government of India
Copy (with usual number of spare copies) forwarded to C&AG, UPSC etc., as per Standard endorsement list.

162
Annexure to O.M. No.F.8(9)/E.II(A)/2008
AMENDMENT TO RULE 275(4) OF GENERAL FINANCIAL RULES, 2005
In Rule 275(4):-
In line 2 of page 71 of General Financial Rules, 2005,
after the words ‘Indian Audit and Accounts Department’,
insert
‘and Heads of Departments’.
(M/o Fin.(Exp.) O.M. No. 8(9)/E.II (A)/2008 dated 13th October, 2008

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