General Financial Rules, 2017 (GFR 2017)
Rule 1: Short Title and Commencement
•
These rules are called General Financial Rules, 2017 (GFR 2017).
•
They apply to all Central Government Ministries/Departments and subordinate bodies.
•
Also apply to Autonomous Bodies, unless their own financial rules (approved by the
government) state otherwise.
Rule 2: Key Definitions
Term
Meaning
1) Accounts Officer
Head of Accounts or Pay & Accounts Office
2) Administrator
Head of Union Territory
3) Appropriation
Allocation of funds for specific expenditure
4) Audit Officer
Head of Audit Office
5) Competent Authority
President or delegated authority
7. Consolidated Fund
Main government fund (Article 266(1))
9. Contingency Fund
Emergency fund (Article 267(1))
10. Controlling Officer
Responsible for expenditure/revenue control
12. Drawing & Disbursing Officer (DDO) Officer authorized to draw and pay bills
14. Financial Year
1st April to 31st March
Head of Department
Declared officer (min. Deputy Secretary)
Primary Unit of Appropriation
Final budget head (Object Head)
27. Recurring Expenditure
Happens regularly (e.g., salaries)
21 Non-Recurring Expenditure
One-time expenditure
31 CAPEX Model
Capital purchase model (buy, maintain, dispose)
32 OPEX Model
Operating model (seller provides, maintains, takes back)
Rule 3: Interdepartmental Consultations
•
If a decision affects more than one department, it must be consulted with all.
•
If there's disagreement, it must go to the Cabinet.
Rule 4: Departmental Financial Regulations
•
Any financial-related rules of departments must be made with the approval of the Ministry
of Finance.
Rule 5: Removal of Doubts
•
Any confusion or dispute about interpreting these rules must be sent to the Ministry of
Finance for clarification.
Rule 6: Modifications
•
Rules can only be changed by the Ministry of Finance.
•
No other authority can modify GFR procedures without Finance Ministry’s approval.
Chapter 1: Government Receipts and Accounts
Rule 7: Receipts into Government Account
•
All money received (as dues, deposits, remittances, etc.) must be credited to the
Government Account without delay, as per rules under Articles 150 and 283(1) of the
Constitution.
Rule 8: Public Account Deposits
•
As per Article 284:
o
Money received by any Union government officer (not revenue) → goes to the
Public Account.
o
Money received by the Supreme Court or Courts in UTs (except High Courts) → also
goes to the Public Account.
Rule 9: Responsibility of Departments
•
Departments must correctly assess, collect, and credit receipts to either the Consolidated
Fund or Public Account.
Rule 10: Role of Controlling Officer
•
Must obtain monthly reports from subordinates and match collections with the Accounts
Officer’s records to ensure proper credit.
Rule 11: Revenue Collection Procedure
•
Departments must have detailed rules for collecting and remitting revenue.
•
Use of GAR-6 receipts must be tracked properly (issue, usage, return).
Rule 12: Outstanding Dues
•
Government dues must not remain unpaid without valid reasons. If irrecoverable, must be
written off with competent authority’s approval.
Rule 13: Revenue Realization
•
Revenue cannot be shown as received by using a suspense head; actual realization must
happen first.
Rule 14: Reporting Revenue Collection
•
Collecting departments must inform the Ministry of Finance about revenue trends and
significant deviations from budget estimates.
Rule 15: Rent Collection
•
Responsible for rent recovery:
o
If non-CPWD, then Head of Dept/Administrator is responsible.
o
Recovery rules follow CPWD standards.
Rule 16: Fines
•
Realization and deposit of fines must be ensured by authorities.
•
Refunds must be properly checked to avoid double refunds or unauthorized refunds.
Rule 17: Miscellaneous Demands
•
Accounts Officers must monitor collections that fall outside routine revenue (e.g.,
contributions from states, contractors).
Rule 18: Remission of Revenue
•
Revenue claims cannot be abandoned or waived without approval from the competent
authority.
Rule 19: Annual Reporting of Remissions
•
On 1st June each year, departments must submit remission statements to Audit and
Accounts Officers, unless amount is less than ₹1,000.
Rule 20: Rules for Remissions
•
Departments may create their own rules to define what counts as a remission or
abandonment.
Chapter 2: General Principles of Expenditure
Rule 21: Standards of Financial Propriety
Every officer should:
1. Spend public money as carefully as they would their own.
2. Ensure expenditure is reasonable.
3. Not use powers to benefit themselves.
4. Spend only when there’s a legal claim or public policy reason.
Rule 22: Sanction Before Spending
•
No money can be spent or transferred from public funds (Consolidated/Contingency/Public
Account) without sanction from competent authority.
Rule 23: Delegation of Financial Powers
•
Financial powers are delegated via Delegation of Financial Powers Rules.
•
If not delegated, Finance Ministry holds the power.
Rule 24: Role of Financial Advisers
•
All draft proposals to Expenditure Committees or Cabinet must be sent after consultation
with the Financial Adviser.
•
A confirmation of consultation must be included.
Rule 25: Sanction and Fund Provision
1. (25.1) Every expenditure sanction must mention the budget head (grant/appropriation) it
will be charged to.
2. (25.2) It must state whether the amount can be covered through valid appropriation or reappropriation.
3. (25.3) If sanction is issued before budget allocation, it must clearly mention “subject to
availability of funds.”
Rule 26: Duties of Controlling Officers
Controlling officers must ensure:
•
(i) Expenditure does not exceed budget allocation.
•
(ii) Spending is only for authorized purposes.
•
(iii) Expenditure is in public interest.
•
(iv) Strong internal checks exist to prevent errors, waste, and financial irregularities.
Rule 27: Effective Date of Sanctions
1. (27.1) All financial orders take effect from the date of issue, unless a different effective date
is mentioned.
2. (27.2) For temporary posts, the start date and duration must be clearly stated.
Rule 28: Special Sanctions Requiring Finance Ministry Approval
No subordinate authority can issue orders without Finance Ministry’s prior consent if the order:
•
(i) Involves land grants, revenue assignments, natural resource concessions (mines, water,
forests, etc.).
•
(ii) Involves waiver or loss of revenue.
Rule 29: How Sanctions Are to Be Communicated
All sanctions/orders must be formally communicated to Audit and Accounts Officers as per the
following procedure:
Clause
Communication Requirement
(i)
If sanction relates to the department and payment is through
Accounts Officer → Address the sanction to him.
Clause
Communication Requirement
(ii)
Other sanctions → Issue as an order and endorse a copy to
Accounts Officer.
(iii)
For non-recurring expenditure, signing the bill/voucher can
be enough (no separate sanction).
(iv)
Sanctions with Finance concurrence must follow the process
in the Delegation of Financial Powers Rules.
(v)
Sanctions from MHA, CAG, or DOPT → Mention the
concurrence letter/date/number.
(vi)
All sanctions must mention the amount both in figures and
words.
(vii)
Head of Dept sanctions can be signed by an authorized
Gazetted Officer.
(viii)
Special allowances must include a brief justification.
(ix)
In Union Territories:
(a) No separation of audit/accounts
→ Send direct to Audit authority.
(b) Separation exists → Send copy to
both.
If Central Govt consulted, mention
letter number/date.
(x)
GFR Orders with CAG’s concurrence → Send copy to CAG.
(xi)
Some routine sanctions need not be sent to Audit Officers
(e.g., advances to employees, appointments, promotions,
etc.).
(xii)
Land grant sanctions → Send monthly consolidated return
with details to Audit/Accounts Officers.
Rule 30: Lapse of Sanctions
Sanctions expire after 12 months if no payment is made, unless:
•
(i) A specific expiry date is mentioned.
•
(ii) It is tied to a specific financial year (then it lapses at FY end).
•
(iii) It is for purchase of stores (in such cases, special provisions may apply and it may not
lapse).
Rule 31 – Exception to Lapse of Sanction
Some sanctions do not lapse after one year:
•
When posts or allowances are sanctioned yearly under a general scheme, but not drawn,
they remain valid.
Rule 32 – Audit Disallowances and Overpayments
•
Any remission of audit objections or writing off of overpayments to Government servants
must be done as per Delegation of Financial Powers Rules and related instructions.
DEFALCATION AND LOSSES (Rules 33–38)
Rule 33 – Reporting of Losses
1. All losses (money, revenue, property, stamps, opium, stores, etc.) must be reported
immediately to:
o
Next higher authority
o
Statutory Audit Officer
o
Principal Accounts Officer
(Even if the amount is recovered)
2. No need to report:
o
Losses due to assessment errors not correctable
o
Losses due to overruled interpretation of law
o
Time-barred refunds
o
Petty losses under ₹10,000
3. Serious cases must be reported to:
o
Financial Adviser
o
Chief Accounting Authority
o
Controller General of Accounts
4. Two-stage reporting:
o
Initial Report: As soon as suspicion arises
o
Final Report: After full investigation, stating:
▪
Nature and amount of loss
▪
Rule violations
▪
Recovery prospects
5. Department Head disposes of the case if empowered; else refers it to Finance Ministry.
6. In misappropriation cases, amount may be redrawn on simple receipt pending full
resolution.
7. If Government servants are at fault, the loss is borne by the concerned Department or
State.
8. Recoveries made from such officials are credited back to the concerned Govt. account.
9. Cases of loss due to cheque errors or receipt issues must be reported to Controller General
of Accounts for corrective action.
Rule 34 – Loss due to Fire, Theft, Fraud
•
If loss > ₹50,000, must be reported to Police.
•
Cooperate with Police and obtain formal investigation report.
Rule 35 – Loss of Immovable Property
•
Loss of immovable assets (buildings, etc.) > ₹50,000 due to natural calamities must be
immediately reported to Government.
•
Smaller losses → report to higher authority.
Rule 36 – Report to Audit and Accounts
After full inquiry, submit a detailed report through the usual channel.
Also send a copy or summary to:
•
Audit Officer
•
Pay & Accounts Officer
Rule 37 – Responsibility for Loss
•
Officers are personally responsible for any loss due to their fraud or negligence.
•
If they contributed to loss caused by someone else, they’re partly responsible.
•
Departmental enquiry must be conducted as per Appendix 1 and Ministry of Personnel
rules.
Rule 38 – Prompt Disposal
•
All loss cases must be processed quickly, including:
o
Detection
o
Reporting
o
Write-off
o
Recovery
o
Disciplinary action
o
Strengthening controls to avoid future losses
SUBMISSION OF RECORDS & INFORMATION (Rules 39–41)
Rule 39 – Information to Audit & Accounts Officers
•
All subordinate authorities must:
o
Provide full information and documents
o
Cooperate with Audit and Accounts Officers during review or reporting
Rule 40 – No Withholding of Information
•
Subordinate authorities cannot withhold any records or data required by Audit/Accounts
Officers.
Rule 41 – Classified Files Handling
•
If a file is "Secret" or "Top Secret", it should be:
o
Sent personally to the Head of Audit Office
o
Handled as per confidential document guidelines
Rule 42 – Financial Year
•
The Government’s financial year runs from 1st April to 31st March.
Rule 43 – Presentation of Budget to Parliament
1. The Finance Minister presents an Annual Financial Statement (Budget) under Article 112
before the new financial year begins.
2. Since 2017–18, the Railway Budget is merged with the General Budget.
3. Rules for budget preparation are based on Articles 112–116 of the Constitution.
4. The Budget Division (Ministry of Finance) issues guidelines, and all departments must
follow them strictly.
Rule 44 – Contents of the Budget
The budget must include:
•
(i) Estimated revenue
•
(ii) Estimated expenditure (programme/scheme/project-wise)
•
(iii) Interest, loan repayments, and debt servicing
•
(iv) Any other required information
Rule 45 – Receipt Estimates
•
Prepared head-wise (Major, Minor, Sub-heads)
•
Show last 3 years’ actuals
•
Provide breakup of tax and non-tax items
•
Major variations from past must be justified
•
Classification done in consultation with Budget Division
Rule 46 – Non-Tax Revenues
•
Collected by all Ministries/Departments
•
Includes revenue from autonomous bodies, implementing agencies
•
A major source of Government income
Rule 47 – User Charges
•
Ministries must list user charges on their websites
•
Charges should:
o
Recover current cost + reasonable return
o
Be revised every 3 years
o
Be fixed via Rules or executive orders (not statutes) for flexibility
Rule 48 – Dividends and Profits
•
Includes dividends from PSUs and RBI surplus
•
Must be paid immediately after AGM decision
•
Ministries must monitor timely payments
•
Governed by DIPAM guidelines
Rule 49 – Receipts Portal
•
Government provides online portal for collecting non-tax revenue (e-Receipts)
•
All Ministries must migrate promptly to ensure:
o
User convenience
o
Instant credit to Government
Rule 50 – Expenditure Estimates
1. Show separately:
o
Charged expenditure (Art. 112(3)) – No vote needed
o
Voted expenditure (Art. 113(2)) – Requires Lok Sabha approval
2. Distinguish between:
o
Revenue and capital accounts
o
Loans, repayments, treasury bills, etc.
3. Prepared up to object head level
4. Include liabilities from past years
5. Must be scrutinized by FAs, approved by Secretary, and sent to Budget Division
Rule 51 – Demands for Grants
1. Expenditure needing Lok Sabha vote is presented as Demands for Grants
2. Usually one per Ministry/Department, more if necessary
3. Contains revenue, capital, grants, and loans
4. Two levels of presentation:
o
Main Demands by Finance Ministry
o
Detailed Demands by concerned Ministries to Departmentally Related Standing
Committees (DRSCs)
Rule 52 – Form of Budget Documents
1. Form & classification of Budget/Grants is decided by Finance Ministry
2. No change without their approval
3. Budget heads in Detailed Demands must match the Main Demands
Instructions for preparation are given in Appendix 2, 3 & 4.
Rule 53 – Acceptance of Estimates
•
Estimates of all Ministries/Departments are scrutinized in Budget Division
•
Secretary (Expenditure) may hold review meetings with concerned Secretaries or Financial
Advisers
Rule 42: Financial Year
•
Government's financial year is from 1st April to 31st March.
Rule 43: Presentation of Budget to Parliament
1. Annual Financial Statement (Budget) is laid before both Houses of Parliament (Article 112).
2. Railway Budget merged with General Budget from 2017–18.
3. Budget-related provisions are in Articles 112 to 116 of the Constitution.
4. Ministry of Finance issues budget guidelines, which all departments must follow.
Rule 44: Budget Contents
Budget must show:
1. Estimated revenues,
2. All planned expenditures (programs, schemes, etc.),
3. Interest payments and debt repayments,
4. Other prescribed financial information.
Rule 45: Receipt Estimates
•
Each department prepares detailed revenue estimates under major/minor heads with
actuals of past 3 years.
•
Major differences must be explained with reasons.
Rule 46: Non-Tax Revenue
•
Collected by all Ministries/Departments.
•
Includes fees, fines, interest, dividends, and profits.
Rule 47: User Charges
•
Departments must publish and revise user charges.
•
Charges should cover the cost of services + reasonable return.
•
Linked with inflation and revised every 3 years.
Rule 48: Dividends and Profits
•
Includes dividends from PSUs and RBI surplus.
•
Must be paid promptly after AGM.
•
Follow DIPAM guidelines.
Rule 49: Receipts Portal
•
Government uses e-Receipts portal for online non-tax collections.
Rule 50: Expenditure Estimates
1. Separate estimates for charged and voted expenditure.
2. Separate estimates for revenue and capital expenditure.
3. Detailed estimates prepared up to object head level.
4. Must include past liabilities.
5. Revised/Budget Estimates must be approved by Secretary and submitted to Budget Division.
Rule 51: Demands for Grants
1. Vote-required expenses are shown as Demands for Grants.
2. Usually one demand per Ministry, more for large ones.
3. Two levels:
o
Main demand: by Ministry of Finance.
o
Detailed demand: by each department to Parliament’s Standing Committee.
Rule 52: Forms of Budget
•
Format and classification set by Finance Ministry.
•
Any change needs Finance Ministry’s approval.
•
Budget and Detailed Demands must match exactly.
Rule 53: Acceptance of Estimates
1. Budget Division checks all estimates and conducts pre-budget meetings.
2. Final estimates from this process are included in the Budget.
Rule 54: Outcome Budget
•
Prepared by Ministry of Finance & NITI Aayog.
•
Links allocations with results (outputs and outcomes).
•
Results must be measurable and used to decide continuation of schemes.
Rule 55: Vote on Account
•
If Budget isn't passed by 1st April, Vote on Account allows temporary expenditure (under
Article 116).
•
Cannot be used for new schemes.
Rule 56: Distribution of Budget
•
After Appropriation Bill is passed, Ministry of Finance distributes grants to departments, who
pass it to sub-offices and Pay & Accounts Officers (PAO).
CONTROL OF EXPENDITURE AGAINST BUDGET
Rule 57: Control of Expenditure
1. Departments are responsible for keeping spending within approved grants.
2. Money can be spent only within the same financial year.
3. No overspending unless Parliament passes supplementary grant.
4. Expenditure heads (revenue/capital, charged/voted) are distinct; no shifting allowed.
➤ Procedures:
•
DDOs (Drawing & Disbursing Officers) must:
o
Prepare separate bills for charged/voted expenses.
o
Mention full account classification.
o
Track cumulative spending in the bill.
o
•
•
•
Maintain separate register (GFR 5).
Monthly reporting:
o
On 3rd of each month, DDO sends report to Controlling Officer (CO).
o
CO checks classification, totals, balance, signs.
CO Responsibilities:
o
Keep broadsheet (GFR 6) for monitoring.
o
Compile statement (GFR 7) from all DDOs.
o
Inform DDOs about any account adjustments.
o
Prepare consolidated statement (GFR 8).
Reconciliation:
o
DDOs use TR 28-A Bill Register.
o
Verify payments via PFMS (Public Financial Management System).
o
Monthly reconciliation by Head of Department & Accounts Officer.
Rule 57(6): Monthly Departmental Returns
•
Departments must collect monthly expenditure figures (Form GFR 8) from subordinate
offices by the 15th of the following month.
•
Revenue and capital expenditures should be shown separately.
•
Progressive totals must be tracked.
•
If actual Accounts Office figures differ from departmental data, the Accounts Office data will
be treated as final.
Rule 57(7): Physical Progress Reports
•
Departments must get monthly updates from sub-offices about the physical progress of
schemes.
•
This report should include:
o
Scheme name
o
Budget allocation
o
Amount spent so far
o
Actual physical achievements
o
Reasons for any shortfall or excess
Rule 57(8): Return Monitoring Broadsheet
•
A broadsheet in Form GFR 9 must be maintained to monitor timely receipt of returns and
take corrective action if any are missing.
Rule 58: Liability Register
•
To monitor liabilities, Controlling Officers must:
o
Collect monthly liability statements (Form GFR 3A) from spending units starting
October every financial year.
o
Maintain a Liability Register (Form GFR 3).
Rule 59: Estimating Savings/Excess
•
Heads of Departments/Controlling Officers must estimate monthly whether savings or excess
expenditures are likely and regularize them as per Rule 62.
Rule 60: Final Responsibility for Budget Control
•
Though Accounts Officers report disproportionate expenditure, final responsibility for
budget control lies with the authority managing the grant/appropriation.
Rule 61: No Excess Without Approval
•
Accounts Officers can’t allow payments over the budget unless the Chief Accounting
Authority approves.
•
Before giving such approval, Financial Advisers must ensure fund availability via reappropriation or supplementary grant.
Rule 62: Surrender of Savings
1. Rule 62(1): Unused funds should be surrendered to Finance Ministry before year-end;
lapsed funds cannot be used after the financial year.
2. Rule 62(2): Savings that cannot be used should be returned as soon as identified, not held
for future use.
3. Rule 62(3): Avoid last-minute spending at year-end—it’s financially improper.
4. Rule 62(4): Financial Advisers must ensure quarterly expenditure follows approved plans.
Rule 63: Expenditure on New Services
•
No spending on new schemes or services not approved in the annual budget unless a
supplementary grant or Contingency Fund is obtained.
•
See Annexure-1 to Appendix-3 for definitions of “New Service”.
Rule 64: Additional Allotment for Excess
1. Rule 64(1): Subordinate officers must request more funds if their budget is likely to be
exceeded. They should also maintain a Liability Register.
2. Rule 64(2): Disbursing Officers cannot authorize excess payments on their own. If they
receive such claims, they must get permission from higher authorities who will arrange extra
funds through re-appropriation or supplementary grants.
Rule 65: Re-appropriation of Funds
(1) Funds may be transferred from one object head (final appropriation unit) to another within a
grant before the financial year ends, if allowed by the competent authority and as per Financial
Power Rules.
(2) Re-appropriation is only allowed when it is certain that the original unit will have savings.
(3) You cannot divert funds temporarily and then restore them later.
(4) Re-appropriation proposals must include Form GFR 1 (or other prescribed form) with
justifications. Amounts of ₹1 lakh or more must be explained. Copies of approval must go to the
Accounts Officer.
Rule 66: Supplementary Grants
If there are no savings or if it’s for a new service, a Supplementary Grant under Article 115(1) of the
Constitution must be obtained before making payments (refer Appendix 5).
Rule 67: Advance from Contingency Fund
(1) If urgent expenditure arises and there’s no time to get Parliament’s approval, money can be taken
from the Contingency Fund of India (Article 267(1)).
(2) This includes overspending on services already approved in a Vote on Account.
(3) Application must include all expenditure details and clearly identify the sub-head and object head
of the relevant grant. If confused, refer to the Finance Ministry.
(4) Rules for using and replenishing the Contingency Fund are in the Contingency Fund of India
(Amendment) Rules, 2021 (Appendix 6).
Rule 68: Inevitable Payments
(i) Payments that the Government must make should not be unnecessarily delayed.
(ii) Expected liabilities must be provided for in the Demands for Grants submitted to Parliament.
Rule 69: Accounts Office Procedures
Details about how the Accounts Office checks fund availability before clearing bills are provided in
Appendix 10.
Rule 70: Duties & Responsibilities of Chief Accounting Authority (CAA)
The Secretary of each Ministry/Department acts as the Chief Accounting Authority (CAA) and must:
1. Manage the financial affairs of the Ministry/Department.
2. Ensure funds are used only for their sanctioned purpose.
3. Promote economical, efficient, and transparent use of public funds to achieve project goals.
4. Appear before the Public Accounts Committee (PAC) and other parliamentary committees.
5. Regularly monitor and evaluate performance of projects.
6. Prepare expenditure reports and financial statements as per Ministry of Finance rules.
7. Ensure proper record-keeping and internal control systems.
8. Follow Government procurement procedures fairly and competitively.
9. Ensure:
o
All Government dues are collected, and
o
There is no unauthorized or wasteful spending.
Rule 71: Preparation of Accounts
•
The Union Government's annual accounts must show receipts, payments, surplus/deficit,
and changes in assets and liabilities.
•
Prepared by Controller General of Accounts (CGA) and certified by Comptroller and Auditor
General (CAG).
•
Must be submitted to the President of India within 6 months after the financial year ends
and then laid before Parliament.
Rule 72: Form of Accounts
•
As per Article 150, the President (based on CAG's advice) decides the form of government
accounts.
•
CGA is responsible for designing and updating the format for both Union and State accounts.
Rule 73: Accounting Principles
•
Government accounts follow:
o
Government Accounting Rules, 1990
o
Treasury Rules
o
Accounts Codes
o
Department-specific manuals
Rule 74: Cash-Based Accounting
•
Government accounts are kept on a cash basis, not accrual.
•
Only actual receipts and payments are recorded, except permitted book entries.
Rule 75: Accounting Period
•
Financial year: 1st April to 31st March.
Rule 76: Currency
•
Accounts are in Indian Rupees.
•
Foreign transactions are converted into INR.
Rule 77: Structure of Accounts
•
Divided into 3 parts:
1. Part I – Consolidated Fund (Revenue & Capital sections)
2. Part II – Contingency Fund
3. Part III – Public Account (e.g., deposits, advances)
Rule 78: Classification in Accounts
•
Based on functions, programs, schemes, and nature of expenditure.
•
Accounts hierarchy:
o
Major Head → Minor Head → Sub Head → Detailed Head → Object Head
(Total 15-digit code for transactions)
Rule 79: Opening New Heads
•
Only CGA (Ministry of Finance) can open new Major/Minor Heads on advice of CAG.
•
Departments can open Sub/Detailed Heads in consultation with the Budget Division.
Rule 80: Budget Head Alignment
•
Budget estimates must match the official classification structure.
Rule 81: Officer’s Responsibility
•
Officers collecting or spending government money must:
o
Maintain accurate accounts.
o
Submit reports/returns as required.
Rule 82: Proper Classification
•
Drawing officers must mention correct classification on all bills and challans.
•
For doubts, consult the Principal Accounts Officer or CGA.
Rule 83: Charged vs. Voted Expenditure
•
Charged Expenditure: Automatically debited; not voted in Parliament (e.g., President’s
salary).
•
Voted Expenditure: Requires Parliament’s approval.
•
Must be shown separately in budget and accounts.
Rule 84: Capital vs. Revenue Expenditure
•
Capital: Spent on creating/adding value to assets.
•
Revenue: Day-to-day maintenance and running costs.
•
Should be shown separately.
Rule 85: Banking
•
RBI is the official banker.
•
It handles payments/receipts via its own branches or agent banks.
•
Accredited banks and branches are designated for each Ministry.
Rule 86: PFMS (Public Financial Management System)
1. PFMS handles: bills, payments, receipts, DBT, tracking, reporting.
2. All grant-sanctioning ministries must register all agencies on PFMS.
3. Payments should be just-in-time through PFMS.
4. Demand for Grants, re-appropriation, surrender orders to be uploaded on PFMS.
5. Utilisation Certificates must be submitted via PFMS.
Rule 87: Direct Benefit Transfer (DBT)
1. Benefits under schemes must be directly transferred using ICT to avoid delays and fraud.
2. Includes both cash and in-kind transfers (like food, materials).
3. Payments can be made:
o
Directly by Ministries
o
Through State Treasuries
o
Via Implementing Agencies
II. ANNUAL ACCOUNTS
Rule 88 – Appropriation Accounts
Prepared by each ministry/department’s Principal Accounts Officer, consolidated by CGA, signed by
Secretaries/Heads, and submitted to Parliament.
Rule 89 – Finance Accounts
CGA prepares Finance Accounts showing receipts, disbursements, and balances, countersigned by
Secretary (Expenditure), MoF.
Rule 90 – Presentation of Accounts
Certified by CAG and submitted to the President under Article 151 of the Constitution.
Rule 91 – Disclosure of Financial Stakes
If a ministry has stakes in PPPs, JVs, etc., it must disclose them in its Annual Report.
III. PROFORMA ACCOUNTS (Commercial-Like Accounts)
Rule 92 – Subsidiary Accounts for Commercial Activities
Govt. departments with commercial functions (like factories) must maintain commercial-format
accounts (Profit & Loss, Balance Sheet, etc.)
Rule 93 – Method of Commercial Accounts
Each department must follow instructions issued by the Government for maintaining these accounts.
Rule 94 – Accuracy of Cost Estimation
Proper regulations must be in place to ensure cost data is accurate.
Rule 95 – Submission of Proforma Accounts
Heads must follow government orders on submission and append them with Appropriation
Accounts.
IV. PERSONAL DEPOSIT (PD) ACCOUNTS
Rule 96 – What is a PD Account?
PD Account is opened for specific purposes where receipts and payments are managed directly by
designated officers through banks. No overdrafts allowed.
Rule 97 – Opening PD Accounts
Can be opened with Finance Ministry's approval in specific cases like:
•
Management of estates
•
Court deposits
•
Funds collected under specific laws
•
Defence-related public funds
CAPITAL AND REVENUE ACCOUNTS
Rule 98: Capital vs Revenue Expenditure
Capital Expenditure
Revenue Expenditure
Spent on acquiring or improving assets (like land,
buildings, machinery).
For day-to-day operations, salaries,
maintenance.
Creates long-term benefits.
Used to keep things running.
Not meant for sale.
For regular functioning.
Funded usually through capital receipts (like loans).
Funded through taxes, duties, fees, etc.
Must be authorized to be treated as capital.
Always treated as revenue.
Rule 99: Allocation between Capital and Revenue
•
Capital bears: Cost of building a project, adding new features.
•
Revenue bears: Maintenance, repairs, renewals (unless it increases asset life).
•
Natural calamity repairs: If new asset created → capital; otherwise → revenue.
•
Temporary asset: Not capital unless approved.
Rule 100: Capital and revenue portions of a Capital Scheme must be clearly separated and decided
by government.
Rule 101: If government receives money (capital receipts) during a project’s construction (e.g., sale
of scrap), it must reduce capital cost.
Rule 102: If capital cost already paid is later recovered (e.g., refund), that amount should reduce
the original capital head unless rules say otherwise.
Rule 103: If a loan to a PSU is converted into equity or a grant:
•
Parliament’s approval is required.
•
Changes should be explained in Budget/Supplementary Grants.
•
Books should be adjusted accordingly.
INTEREST ON CAPITAL
Rule 104: Government departments that maintain capital & revenue accounts must pay interest on
capital used.
Rule 105:
•
If capital came from a specific loan, interest = actual loan interest + cost of raising loan.
•
If not from loan, Ministry of Finance will decide rate yearly.
Rule 106: Interest = Last year's capital + Half of current year’s capital used.
Rule 107: If interest during construction was added to capital, it must be repaid (written back)
when the project earns revenue.
ADJUSTMENT WITH STATE GOVERNMENTS
Rule 108: Adjustments with states should follow agreed methods unless law says otherwise.
Certain expenses (e.g., salaries, pensions, police, audit) are covered by Appendix-5 of Government
Accounting Rules.
Rule 109: Re-audit (correction of errors) is allowed up to 3 years back.
Rule 110: Adjustment between Centre and States must be done if:
•
A commercial/store department is involved.
•
Rules say adjustment is required even if with another central department.
Rule 111: Small, occasional claims under ₹10,000 should not be raised between Centre and States.
Rule 112:
•
Only service-related claims are allowed in this arrangement (like providing security).
•
Not applicable to supply of goods/stores.
•
Commercial departments (like Railways/Post) are excluded.
•
If unclear, mutual discussion will decide.
Rule 113: If multiple states share a project and one pays upfront, other states’ contributions will
reduce total expenditure shown.
Rule 114: States doing agency work under Article 258 of Constitution (e.g., running a Central
Scheme) can claim extra costs based on Presidential directions.
Rule 115 – Principles for State Agency Work (Art. 258(3))
•
Commercial departments can charge normal rates.
•
Public Works charges as agreed percent.
•
Fixed annual payments for small items (≤ ₹50,000/year) for 5 years.
•
Above ₹50,000 needs annual budget provision.
Rule 116 – Handling Agency Work
•
Extra cost reimbursed via Central Budget under “amounts paid to other governments.”
•
Actual work costs (e.g., highways) are charged directly to Central Government accounts.
Note: In reverse cases (Centre doing State work under Article 258-A), similar method applies.
Rule 117 – Closure of Inter-Governmental Adjustments
•
Done by 10th April (or RBI-declared date) each year to close March accounts.
Rule 118 – Foreign Governments/Outside Bodies
•
Services not rendered without payment, unless exempted by special order.
Rule 119 – Recoveries from Non-Government
•
All expenses recovered from non-govt parties are treated as Government receipts.
Rule 120 – Services as Agent
•
Entire cost recovered from private body (Net cost to Govt = Zero).
•
Treated as expenditure reduction.
Rule 121 – Grant-in-Aid Preferred
•
If relief is needed, provide grant-in-aid instead of waiving payments.
Rule 122: Charges Related to Maintenance, Demarcation, and Disputes Over Boundaries
•
(i) Maintenance Costs:
50% paid by Central Government; remaining 50% recovered from the foreign country.
If not recoverable, full cost is borne by the Central Government.
•
(ii) Demarcation & Disputes:
All costs are borne by the Central Government (under Entry 10 of the Union List), though
recovery from foreign countries should be attempted.
•
(iii) Watercourse Boundaries:
Each country bears maintenance costs on its side.
If both maintain their own markers, each bears its own cost.
•
Exceptions:
o
Nepal: Special arrangement to be mutually decided.
o
Bhutan: India bears the full cost currently.
VIII. INTER-DEPARTMENTAL ADJUSTMENTS
Rule 123: Inter-Departmental Adjustments
•
Service Departments generally do not charge each other.
•
Commercial Departments must charge and be charged for services/supplies.
Rule 124: Classification of Departments
Type
Definition
Examples
Service
Departments
Perform core government functions, necessary Police, Medical, Defence,
for administration or governance.
Education, PWD, Forest
Commercial
Departments
Provide goods/services on payment; work on
commercial principles.
Railways, Posts, Telecom,
Public Enterprises
Rule 125: Time Limit for Claims
•
Claims should ideally be settled within the same financial year.
•
Maximum limit: 3 years from transaction date.
•
Extension possible by mutual agreement.
Rule 126: Procedure for Settlement
•
Follow Chapter 4 of Government Accounting Rules, 1990 for detailed procedures.
Rule 127: Timing of Inter-Departmental Adjustments
•
Adjustments not to be made for previous years unless unavoidable.
•
If reasonably predictable (e.g., recurring expenses), must be adjusted within the same year.
•
Onus to prove unpredictability lies with the Controlling Officer.
•
Treatment of Recoveries:
•
o
Service Dept. to Service Dept.: Shown as deduction from gross expenditure.
o
Commercial Depts. (Railways, Posts, etc.):
▪
Own core services: Recovery shown as receipt.
▪
Non-core (agency) services: Recovery is expenditure reduction.
Exception:
Recoveries by Central Purchase Organizations (e.g., for inspection/purchase fees) are treated
as departmental receipts.
Rule 128: Pension Charges of Commercial Departments
•
Commercial Departments with pro forma accounts:
o
•
•
Pension liability is calculated on contribution basis at government-fixed rates.
Commercial departments without formal accounts (but who charge for services/products):
o
Pension liability included in overhead costs or issue price calculations.
o
Rates prescribed by Government.
Note:
Railways, Posts, and Defence are treated as separate governments for pension adjustment.
Rule 129: Pension Charges for Departments Later Declared Commercial
•
When a government department becomes commercial:
o
Pension liability is charged in regular accounts using average pension contribution
based on 15th year of service.
o
Governed by Appendix-II of F.R. & S.R. (Fundamental and Supplementary Rules).
Rule 130: Classification of Works
Type of Work
Definition
Original Works
New construction, site preparation, alterations, special repairs to newly acquired
or abandoned buildings, remodeling, or replacement.
Type of Work
Definition
Minor Works
Add capital value to existing assets but do not create new ones.
Repair Works
Maintain buildings/fixtures; includes related services/goods necessary for
maintenance.
Rule 131: Administrative Control of Works
Ministries/Departments responsible for:
1. Construction, maintenance, upkeep.
2. Proper use of buildings/assets.
3. Arranging funds for all such functions.
Rule 132: Sanctioning Powers
•
Governed by the Delegation of Financial Powers Rules and departmental orders.
•
Subordinate authorities have defined limits for approvals, re-appropriations, and expenditure
sanctions.
Rule 133: Execution of Works
Rule 133(1):
•
Ministries can directly execute repair works costing up to ₹60 Lakhs.
Rule 133(2):
•
For:
o
Repair works above ₹60 Lakhs
o
Original/Minor works of any value
→ Can be assigned to Public Works Organisations (PWOs) like CPWD, BRO, MES,
State PWDs, or departmental construction wings.
Rule 133(3):
•
As an alternative, works may be awarded to:
o
Central/State PSUs for civil/electrical works, or
o
Any other notified Government organization after evaluating their capability.
•
Awarding Criteria: Based on lump sum service charge (competition must be ensured).
•
Nomination Basis (Exception): Permitted only as per Rule 194 guidelines.
Special Provision (Valid till 31.03.2025):
•
Scientific Ministries (e.g., DST, DAE, DRDO, ICAR) can award repair works up to ₹5 crore on
nomination basis to eligible organizations.
Rule 134: Works under CPWD
•
Works not assigned to any specific Ministry will fall under CPWD.
•
Cannot split funding between departmental and civil works grants.
Rule 135: Project Execution
Rule 135(1):
•
Works must follow departmental regulations and Rule 144.
Rule 135(2):
•
For large projects, create dedicated empowered project teams focused solely on execution.
Rule 136: Pre-Execution Requirements
No work should start unless:
1. Administrative approval is obtained.
2. Expenditure sanction is in place.
3. Design is finalized (consider life cycle cost).
4. Detailed estimates are prepared and sanctioned.
5. Funds are available.
6. Tenders have been invited and processed.
7. Work order is issued.
Rule 136(2):
If urgent and above steps not possible:
•
Officer may start work on own responsibility.
•
Must inform higher authority and Accounts Officer.
Rule 136(3):
•
Any additional developments not originally sanctioned require supplementary estimates.
Rule 137: Project Grouping for Approval
•
Multiple works forming one project must be treated as one unit for approval.
•
Cannot avoid higher authority’s approval by splitting.
•
Exception: Independent, unrelated works of similar nature.
Rule 138: Use of Savings
•
Savings from a sanctioned project cannot be used for new/additional work without special
approval.
Rule 139: Execution Procedure
•
Ministry must follow procedures in their departmental regulations, developed in
consultation with the Accounts Officer, and based on standard CPWD principles.
Ministries/Departments executing works must follow:
Requirement
Details
Financial & Accounting
Rules
Must align with CPWD norms.
Design & Estimates
Must be ready before sanction.
Approval Before Starting Requires Administrative Approval & Expenditure Sanction based on
Work
approved estimates.
Tendering Rules
<ul><li>Open tenders: ₹10 lakhs to ₹60 lakhs</li><li>Limited tenders:
Less than ₹10 lakhs</li></ul>
Work Commencement
Only after Contract Agreement/Award is signed.
Final Payment
Only after officer-in-charge issues a Personal Certificate confirming the
quality and adherence to specifications.
Rule 140: Sanction & Execution of Works by External Agencies
•
When works are assigned to PWOs or PSUs under Rule 133(2) or (3):
o
The Administrative Approval, Expenditure Sanction, and Fund Allocation must
come from the Ministry/Department.
o
The assigned organization must execute work using its own internal rules.
o
A Memorandum of Understanding (MoU) may be signed for clarity and
accountability.
Rule 141: Review of Projects
Project Cost
Review Requirement
≥ ₹100 crore
A Review Committee (Admin Ministry + Finance + Executing Agency) must be
formed. It can approve cost variations up to 10%.
< ₹100 crore
Formation of review mechanism is at the discretion of the
Ministry/Department.
PROCUREMENT OF GOODS AND SERVICES
Rule 142: Scope
•
Applies to all Ministries/Departments for procurement of goods for public service.
•
Each department may issue detailed guidelines consistent with these general rules.
Rule 143: Definition of Goods
"Goods" include:
•
Articles, materials, equipment, spares, vehicles, aircraft, software, patents, technology
transfers, etc.
•
Also includes services directly linked to supply of goods (e.g., transport, installation,
maintenance).
Excludes:
•
Books, periodicals for libraries.
Rule 144: Fundamental Principles of Public Procurement
Every authority must ensure:
•
Efficiency, economy, transparency, and fair competition in procurement.
Mandatory Procurement Principles
Aspect
Requirement
Specifications
Must be objective, measurable, and non-brand specific.
Quality & Quantity Clearly defined; avoid unnecessary features or over-purchasing.
Standards
Use national/international or building code standards where applicable.
Fair Process
Use fair, open, and transparent procedures for inviting offers.
Evaluation
Offers must fully meet the requirement in all respects.
Aspect
Requirement
Avoid Overbuying Prevent excess inventory and costs.
Rule 144: Fundamental Principles of Public Procurement
Principle Key Requirement
(vii)
Ensure selected offer has a reasonable price for the required quality.
(viii)
Full procurement schedule must be published with the tender.
(ix)
Departments must prepare and upload an Annual Procurement Plan on their website.
(x)
Govt. can impose restrictions (e.g., bans) on procurement from specific countries for
reasons like national security.
Rule 145: Authority for Purchase
•
Any authority with delegated financial powers can sanction purchases of goods for public
service as per the Delegation of Financial Powers Rules (DFPR) and GFRs.
Rule 146: Defence Procurement
•
For goods needed during military mobilisation or operations, special rules issued by the
government will apply.
Rule 147: Procurement Powers
•
Ministries/Departments have full powers to procure goods/services not available on GeM.
•
Common use items available on GeM must be procured mandatorily via GeM.
Rule 149: Government e-Marketplace (GeM)
Purchase Value Procedure on GeM
Up to ₹50,000
Buy directly from any available GeM seller meeting quality & specs. (No limit for
automobiles.)
₹50,000 to ₹10
lakh
Buy from L-1 seller among at least 3 different manufacturers. Use online bidding
or reverse auction if needed.
Above ₹10 lakh Must use online bidding/reverse auction. Select L-1 meeting all criteria.
Additional Key Points:
•
All sellers on GeM in a product/service category will get bidding invitations.
•
Price verification through Business Analytics (BA) tools is encouraged.
•
No splitting of demand to avoid thresholds or bypass rules.
•
Procurement can be done via OPEX or CAPEX models as per need.
•
Procurement plan must be uploaded on GeM portal within 30 days of budget approval.
Rule 150: Registration of Suppliers (Outside GeM)
Provision Details
(i)
For non-GeM items, Ministries can register suppliers via transparent, fair, and public
process.
(ii)
Supplier credentials (technical, financial, past performance) must be verified.
(iii)
Registration valid for 1–3 years, after which renewal is needed.
(iv)
Suppliers can be removed for poor performance, delays, false declarations, etc.
(v)
List of registered suppliers must be published online.
Rule 151: Debarment from Bidding
Condition
Debarment Period
(i) Conviction under Prevention of Corruption Act, IPC, or
law causing harm during a procurement contract
Up to 3 years by DoE (List on Central
Public Procurement Portal)
(iii) Misconduct or non-performance in contracts (not
involving criminal conviction)
Up to 2 years by the procuring entity
Rule 152: Enlistment of Indian Agents
•
Ministries/Departments may enlist Indian agents to quote directly for their foreign
principals, if required.
Rule 153: Reserved Items and Purchase Preference Policy
•
Hand-spun & hand-woven textiles (Khadi) must be bought exclusively from KVIC.
•
At least 20% of textile procurement must be from handloom sources like SHGs, cooperatives, etc.
•
MSME Policy: Ministries must follow MSME procurement rules under the MSMED Act, 2006.
•
The government may mandate or prefer local goods/services via notification.
Rule 154: Purchase Without Quotation
•
Goods worth up to ₹50,000 can be bought without quotations, but a certificate must state:
"I am personally satisfied that the goods purchased are of requisite quality and purchased at a
reasonable price."
Rule 155: Purchase by Purchase Committee
•
If goods are not on GeM, a Purchase Committee (3 members) can buy goods costing
₹50,000–₹5,00,000 (or ₹1L–₹10L for scientific departments).
•
Committee must survey market, ensure quality & reasonable price, and certify accordingly.
Rule 156: Deleted
Rule 157: No Piecemeal Purchases
•
Don’t split large demands into smaller ones to avoid higher-level approval or formal bidding.
Rule 158: Purchase by Obtaining Bids
Goods must be purchased using standard bidding methods unless covered under Rule 154 or 155:
1. Advertised Tender Enquiry
2. Limited Tender Enquiry
3. Two-Stage Bidding
4. Single Tender Enquiry
5. Electronic Reverse Auctions
Rule 159: E-Publishing of Tenders
•
All Ministries must publish tenders, corrigenda, bid awards etc., on the Central Public
Procurement Portal (CPPP).
•
Exemptions for national security require top-level approval + financial advisor's
concurrence.
•
Exemption statistics must be sent quarterly to DoE.
•
Applies to all forms of bid invitations (open, limited, single).
•
Not required for purchases under Rules 154 or 155.
Rule 160: E-Procurement
•
All bids must be received online via e-procurement portals.
•
Exceptions may be allowed for small-scale Ministries not having large procurement needs.
•
Ministries may use NIC’s e-procurement solution or any other after due process.
•
National security/strategic procurements may be exempted with Secretary + Financial
Advisor approval.
•
Indian Missions abroad may also be exempted from e-procurement by competent authority.
Rule 161: Advertised Tender Enquiry
•
Use for procurement of goods worth ₹50 lakhs or above (exceptions: Rules 154, 155, 162,
166).
•
Advertisement should be made on:
o
GeM,
o
CPPP (Central Public Procurement Portal), and
o
Organisation's website (if available).
•
Full bidding document must be posted online.
•
Mention website link in advertisements.
•
Global Tender Enquiry (GTE):
o
Allowed only if required goods not available in India.
o
No GTE for tenders below ₹200 crore, unless justified and approved by competent
authority.
•
No cost for downloaded tender documents.
•
Bid submission time:
o
Minimum 3 weeks (Domestic)
o
4 weeks if foreign bids are expected.
Rule 162: Limited Tender Enquiry
•
For procurement up to ₹50 lakhs.
•
Send bids directly to more than 3 registered suppliers (registered under Rule 150).
•
Also publish tenders on:
o
GeM
o
CPPP
o
Organisation's own website (if available).
•
Unsolicited bids are not accepted.
•
Exceptions (can use Limited Tender above ₹50 lakhs):
1.
Urgency certified by competent authority.
2.
Public interest reasons recorded in writing.
3.
Known supply sources only with no chance of new suppliers.
•
Allow sufficient time for bid submission.
Rule 163: Two-Bid System
Used for complex or technical goods (e.g., machinery):
•
Bidder submits:
1. Technical Bid: Technical specs + commercial terms.
2. Financial Bid: Price for each item.
•
Process:
o
Bids submitted in separate sealed envelopes.
o
Open and evaluate technical bids first.
o
Open financial bids only of technically accepted bidders.
Rule 164: Two-Stage Bidding
Used when:
•
Complete specs are not known in advance.
•
Feedback from bidders helps in finalising terms.
Process:
1. Stage 1: Invite technical and performance details without price.
2. Evaluate and finalise specs.
3. Stage 2: Invite financial bids from technically suitable bidders.
Rule 165: Late Bids
•
Late bids will not be considered under advertised or limited tender enquiry.
•
Only bids received before the deadline are eligible.
Rule 166: Single Tender Enquiry
Used when only one source is feasible.
Allowed in three situations:
1. Only one known manufacturer exists.
2. Emergency requires urgent procurement from a specific source.
3. For standardization, goods/spares must match existing equipment (with expert advice).
Proprietary Article Certificate (PAC) Format:
•
(i) Manufacturer's name
•
(ii) No alternatives acceptable (state reasons)
•
(iii) Finance Wing concurrence
•
(iv) Competent Authority approval
Rule 167: Electronic Reverse Auction
An online competitive method where bidders keep lowering prices during a live auction to win the
bid.
When to Use:
•
Detailed product specs can be clearly defined.
•
Enough qualified bidders exist to ensure competition.
•
The criteria for winner selection is quantifiable and monetary.
Process:
•
Publish an auction invitation (like e-procurement).
•
Include details on:
o
Registration
o
Auction start/end
o
Rules and conduct norms
Rule 168: Contents of Bidding Document
A standard bidding document should include the following 7 chapters:
Chapter
Contents
Chapter 1
Instructions to Bidders
Chapter 2
Conditions of Contract
Chapter 3
Schedule of Requirements
Chapter 4
Specifications & Technical Details
Chapter 5
Price Schedule (for quoting)
Chapter 6
Contract Form
Chapter 7
Standard Forms used by purchaser & bidders
Rule 169: Maintenance Contract
•
Based on the cost and nature of goods, departments may enter into maintenance contracts.
•
These can be with:
o
The original supplier or
o
Any other qualified firm
Rule 170: Bid Security (Earnest Money Deposit)
Purpose:
To protect against bidders withdrawing or altering their bid during the validity period.
Key Points:
•
Mandatory in advertised or limited tender enquiries.
•
Exemptions: Micro & Small Enterprises (MSEs), DPIIT-recognized Startups, and firms
registered with the Central Purchase Organisation or Ministry.
•
Amount: 2% to 5% of estimated procurement value (mentioned in tender).
•
Accepted Forms:
o
Insurance Surety Bonds
o
Demand Draft
o
FDR
o
Bank Guarantee (including e-BG)
o
Online payment
Return of Bid Security:
•
Unsuccessful bidders: within 30 days of final bid validity or declaration of first-stage results
(in 2-stage bidding).
•
Successful bidder: upon submission of Performance Security.
Alternative Option: Bid Securing Declaration
•
Departments may opt for a signed declaration instead of security money.
•
If bidder withdraws or fails to sign the contract/performance guarantee – bidder gets
suspended.
Rule 171: Performance Security
Purpose:
To ensure that the successful bidder fulfills all contractual obligations.
Key Points:
•
Required from successful bidder only.
•
Amount: 3% to 5% of contract value (for Goods/Consultancy/Non-Consultancy Services).
•
Accepted Forms:
o
Insurance Surety Bonds
o
Demand Draft
o
FDR
o
Bank Guarantee (including e-BG)
o
Online payment
Validity Period:
•
Valid for 60 days beyond the contract period, including warranty.
Bid Security Refund:
•
Refund bid security only after receipt of performance security from the successful bidder.
Rule 172: Advance and Part Payment to Supplier
(1) Advance Payment
•
Normally, payment after delivery.
•
But advance allowed in special cases:
Limits:
o
Maintenance contracts (e.g., A/C, IT systems)
o
Turnkey/fabrication projects
•
Private Firms: Max 30% of contract value
•
Govt. Agencies/PSUs: Max 40%
•
Maintenance Contracts: Up to 6 months’ value
•
Must take bank guarantee or other safeguard.
(2) Part Payment
•
Allowed based on delivery terms – e.g., after dispatch of goods as per contract.
Rule 173: Transparency, Competition & Fairness
Objective:
Ensure best value for money in government purchases through a transparent and fair procurement
process.
Measures:
•
Clear, complete, and unambiguous bidding documents.
•
Must include all necessary information for bidders.
•
Language should be simple and direct.
•
For Startups, conditions on prior turnover and experience may be relaxed if technical &
quality standards are met.
(i) Contents of Bidding Document:
•
(a) Clear description/specification of goods (type, quantity, delivery time/place).
•
(b) Eligibility and qualification criteria for bidders (experience, financials, capacity).
•
(c) Legal conditions for eligibility of goods (e.g., origin restrictions).
•
(d) Date, time, and procedure to submit bids.
•
(e) Date, time, and place of bid opening.
•
(f) Evaluation criteria.
•
(g) Any special performance terms.
•
(h) Essential contract terms.
•
(i) Clause: Bids with “NIL” charges will be rejected.
•
(j) Any other important information bidders need to know.
(ii) Modification to Bidding Document:
•
Modifications must be published like the original tender.
•
Bid submission deadlines should be extended if needed.
•
Bidders can modify/withdraw/resubmit if key terms are changed.
(iv) Right to Question & Challenge:
•
Bidders can raise questions about bidding conditions, process, or rejection.
•
Rejection reasons must be disclosed on enquiry.
(v) Dispute Resolution:
•
Proper provision should be included for dispute settlement.
🇮🇳 (vi) Indian Law:
•
Contract should state it will be governed by Indian law.
(vii) Reasonable Bid Time:
•
Bidders should get enough time to prepare bids.
(viii) Public Bid Opening:
•
Bids must be opened in public; bidder representatives can attend.
(ix) Clear Specifications:
•
Specs should be clear and broad-based to attract more bidders.
(x) Pre-bid Conference (if needed):
•
For complex projects (e.g., turnkey, costly equipment).
•
Clarify doubts, document minutes, and publish online.
(xi) Responsiveness Evaluation Criteria:
•
Delivery time
•
Product performance/environmental standards
•
Payment and guarantee terms
•
Price
•
Operating and maintenance cost
(xii) Bid Evaluation:
•
Based only on predefined conditions.
•
No new conditions should be introduced during evaluation.
•
Use only what is in the bid (no external evidence).
(xiii) No Bid Changes After Deadline
(xiv) No Negotiation After Opening
•
Negotiation is discouraged unless absolutely necessary and only with the lowest bidder.
(xvi) Contract Award Rule:
•
Award to lowest responsive and eligible bidder.
•
If lowest bidder can't supply full quantity, remaining can be given to next lowest bidder at L1
rates.
(xvii) Energy-Efficient Appliances:
•
Must carry BEE star ratings where notified.
(xviii) Disclosure of Award:
•
Publish name of successful bidder on CPPP, Department website, and notice board.
(xix) Justified Rejection of All Bids:
•
When:
o
No effective competition.
o
Bids are non-responsive.
o
Prices are unreasonably high.
o
Technical proposals don’t meet the minimum score.
(xx) Lack of Competition NOT just based on bidder count:
•
Valid even with one bid, if:
o
Proper advertisement was done.
o
Criteria weren’t restrictive.
o
Price is reasonable.
(xxi) Single Effective Offer = Single Tender
(xxii) Committee Members Rule:
•
For purchases above ₹50 lakhs, no committee member should report to another member.
Rule 174: Efficiency, Economy & Accountability in Procurement
Efficiency Tips:
•
Set time limits for each procurement stage.
•
Delegate appropriate powers to lower levels.
•
Avoid extending bid validity unless unavoidable.
•
Place contracts within original bid validity.
Rule 175(1): Code of Integrity in Public Procurement
No official or bidder should engage in:
•
(i)(a) Bribery, rewards, gifts for unfair advantage.
•
(i)(b) Misrepresentation, omission of facts to mislead procurement.
Bidding Documents: Key Provisions
1. Contents of Bidding Document:
o
Description, quantity, delivery location & timeline of goods.
o
Eligibility & qualification criteria for bidders.
o
Eligibility restrictions for goods (e.g., origin).
o
Bid submission & opening dates, times, and locations.
o
Evaluation criteria & essential contract terms.
o
Clause: NIL charges = unresponsive bid.
o
Special performance-related terms.
o
Right to clarify or modify the bidding document.
2. Bid Modifications:
o
Any changes must be notified publicly.
o
Deadlines must be extended if changes are significant.
o
Bidders can revise or withdraw bids if terms are changed.
3. Transparency & Fairness:
o
Allow bidders to question tender terms or rejection.
o
Provide dispute settlement clauses.
o
Contracts governed under Indian law.
o
Public opening of bids in the presence of bidder reps.
o
Specifications must be clear, fair, and broad where possible.
4. Pre-bid Conference:
o
Needed for complex/sophisticated purchases.
o
Date, time & location should be well in advance.
o
Summary must be shared with all bidders and published online.
5. Evaluation of Bids:
o
Must stick to conditions mentioned in the bid document.
o
Consider delivery time, performance, payment terms, price, and operating costs.
o
No post-deadline bid modifications.
o
No negotiations post-bid opening (except in rare ad-hoc cases).
6. Award of Contract:
o
Normally to lowest responsive and qualified bidder.
o
If lowest bidder can't supply full quantity, go to next lowest.
o
Energy-efficient appliances must meet BEE star ratings.
o
Contract details of winning bidder must be published.
7. Bid Rejection:
o
Allowed if: no competition, bids too expensive, or none qualify technically.
8. Single Bid Validity:
o
Still acceptable if bidding process was fair and price is reasonable.
9. Purchase Committee Integrity:
o
Members should not report to each other if procurement exceeds ₹50 lakhs.
Rule 174: Efficiency, Economy, and Accountability
•
Prescribe timelines for all procurement stages.
•
Delegate powers to lower officials to avoid delays.
•
Avoid extending bid validity unless necessary.
•
Award contracts within original validity.
Rule 175: Code of Integrity
Prohibited actions:
•
Bribes, gifts, collusion, threats, misleading information.
•
Use of confidential info for personal gain.
•
Business dealings with officials involved in the tender.
•
Obstructing investigations or audits.
•
False declarations.
Requirements:
•
Disclose conflicts of interest.
•
Disclose past violations or bans (within last 3 years).
Violators may face penalties after a hearing.
Rule 176: Buy-back Offers
•
If old items are being traded for new ones, include terms in the bid.
•
Mention how and when the old item will be handed over.
•
Purchaser has the option to trade or not.
PROCUREMENT OF SERVICES – CONSULTING SERVICES
Rule 177: What are Consulting Services?
•
Non-physical, expert-based services like:
o
•
Strategy, management, training, legal, finance, engineering, etc.
Does not include hiring retired government officials.
Rules 178–186: How to Hire Consultants
1. Rule 178: Engagement
o
Allowed for defined assignments where internal expertise is lacking.
2. Rule 179: Guiding Principles
o
Must follow this framework; Ministries may issue more detailed instructions.
3. Rule 180: Identification
o
Get approval before hiring consultants.
4. Rule 181: Scope Definition
o
Clearly state the job’s objective, scope, and eligibility criteria.
5. Rule 182: Cost Estimation
o
Use market data or similar past projects.
6. Rule 183: Source Identification
o
< ₹50 lakhs: informal inquiries, associations, etc.
o
₹50 lakhs: must publish Expression of Interest on:
▪
GeM, CPPP, and Department’s website.
7. Rule 184: Shortlisting
o
Select at least 3 eligible consultants from responses.
8. Rule 185: Terms of Reference (ToR)
o
Include: objectives, tasks, schedule, ministry’s support, and final outputs.
9. Rule 186: Request for Proposal (RFP)
o
RFP is issued to shortlisted consultants with all key details.
Rule 186: Request for Proposal (RFP) – What It Must Include
The RFP is sent to shortlisted consultants and must include:
1. Letter of invitation.
2. Instructions for proposal submission.
3. Terms of Reference (TOR).
4. Eligibility and pre-qualification criteria (if not done earlier).
5. Key positions for CV evaluation.
6. Evaluation & selection criteria.
7. Formats for technical & financial proposals.
8. Draft contract terms.
9. Review process (midterm and final report).
Rule 187: Receiving Proposals
•
Use a two-bid system:
o
•
Technical bid and Financial bid sealed separately inside a larger sealed envelope.
Submit by specified deadline; open technical bid first on due date.
Rule 188: Late Bids
•
Bids received after the deadline will not be accepted.
Rule 189: Technical Bid Evaluation
•
Done by a Consultancy Evaluation Committee (CEC).
•
CEC documents reasons for accepting or rejecting each proposal.
Rule 190: Financial Bid Evaluation
•
Only technically qualified bidders’ financial bids are opened and evaluated.
•
Final ranking is based on methods below.
Rule 191–194: Methods of Evaluation
Rule 192: Quality and Cost Based Selection (QCBS)
•
Use when quality is more important than just cost.
•
Technical and Financial scores combined with weightage (like 70:30 or 60:40).
•
Technical weightage must not exceed 80%.
•
Highest combined score wins.
Rule 193: Least Cost Selection (LCS)
•
Used for routine or standard services (e.g., audits).
•
Technically qualified lowest bidder wins.
•
No weightage for technical scores in final selection.
Rule 194: Single Source/Nomination
Used only in exceptional cases, like:
•
Continuation of previous work.
•
Emergency (e.g., disaster).
•
Only one consultant has required expertise.
•
Unique, justified reasons in interest of public service.
Conditions:
•
Must ensure fairness, reasonable pricing, and not split projects to bypass rules.
Rule 195: Contract Monitoring
•
Ministry/Department must closely monitor the consultant’s work using a task-force
approach to ensure alignment with objectives.
Rule 196: Public Design Competitions
•
For logo/symbol designs.
•
Must be transparent, fair, and widely publicized.
•
Jury (if used) should be disclosed.
Non-Consulting Services (Outsourcing) – Rules 197–199
Rule 197: What are Non-Consulting Services?
•
Physical, measurable outputs (not intellectual tasks).
•
Examples:
o
Maintenance
o
Security
o
Janitors
o
Vehicle hiring
o
Photocopying
o
Aerial photography
o
Facility management
Rule 198: Procurement Guidelines
•
Follow rules for efficiency and cost-effectiveness.
•
Departments can make internal procedures but must stick to basic principles.
Rule 199: Finding Contractors
•
Make a list of likely vendors using:
o
Enquiries from other departments.
o
Yellow pages.
o
Trade journals.
o
Online directories.
PROCUREMENT OF NON-CONSULTING SERVICES (Rules 200–206)
Rule 200: Preparing the Tender
The tender must include:
1. Details of the service or work.
2. Facilities/inputs provided by the government.
3. Eligibility and qualification criteria for contractors.
4. Statutory and contractual duties of the contractor.
Rule 201: Invitation of Bids
•
Value ≤ ₹50 lakhs:
o
•
Send limited tender to more than 3 shortlisted capable contractors (as per Rule
199).
Value > ₹50 lakhs:
o
Publish on GeM and GeM-CPPP portals.
o
Also publish on department’s website with a direct download link for tender
documents.
Rule 202: Late Bids
•
Bids received after the deadline must not be considered.
Rule 203: Bid Evaluation
•
Department must evaluate, rank, and select the successful bidder from responsive bids.
Rule 204: Nomination-Based Procurement
•
In exceptional cases, direct procurement from a specific contractor is allowed with Finance
Advisor’s consultation.
•
Must include:
o
Full justification,
o
Special purpose served,
o
Approval by competent authority.
Rule 205: Contract Monitoring
•
Department must continuously monitor the contractor’s performance.
Rule 206: Special Circumstances
•
If any case is not covered under Rules 198–205 (non-consulting services), refer to Rules 142–
176 (which deal with goods procurement).
INVENTORY MANAGEMENT (Rules 207–210)
Rule 207: Scope
•
All Ministries/Departments must follow these basic inventory management rules.
•
Departments may create detailed guidelines based on these rules.
Rule 208: Receiving Materials from Private Suppliers
1. Check goods as per contract terms.
2. Inspect and verify:
o
Quantity,
o
Quality/specifications,
o
Damage/deficiency.
o
Technical inspection, if needed.
3. Enter details in stock register (preferably digital).
4. Officer-in-charge must certify and sign the record.
Rule 209: Internal Material Transfer
(i) When receiving from another division:
•
•
Indenting officer must check:
o
Quantity,
o
Quality,
o
Any damage.
Must issue a receipt to sending division.
(ii) When issuing for internal use/sale:
•
Verify indent form is submitted.
•
Take written or online receipt from receiving officer.
(iii) If issuing to a contractor (with cost recovery):
•
Contractor must sign for:
o
Material value,
o
Recovery rates,
o
Total amount.
(iv) If full supply isn’t possible:
•
Supply available quantity and record it.
•
Suggest alternatives if possible.
Rule 210: Custody of Materials
•
Officer-in-charge must ensure:
o
Safe storage of goods,
o
Especially for valuable or flammable items,
o
Use of appropriate storage spaces.
Inventory Management (GFR Rules 211–218)
Rule 211: Lists and Stock Accounts
•
Store officer must maintain item-wise stock lists and returns to verify book vs. actual
balance at any time.
•
Separate accounts must be kept in standard forms:
•
o
GFR-22: Fixed Assets (plant, equipment, furniture)
o
GFR-23: Consumables (stationery, chemicals, spares)
o
GFR-18: Library books
o
GFR-24: Historical/artistic assets
Ministries can add extra details as needed.
Rule 212: Hiring of Fixed Assets
•
If a fixed asset is rented to contractors/local bodies, keep proper records and recover
charges based on original (historical) cost.
Rule 213: Physical Verification
(1) Fixed Assets:
•
Verify once each year.
•
Record results in the register; report discrepancies immediately.
(2) Consumables:
•
Verify at least once a year.
•
Record shortages or excesses and notify competent authority.
(3) General Procedure:
•
Must be done in presence of responsible officer.
•
A certificate of verification with findings must be recorded.
•
Any losses or damage must follow procedures in Rules 33 to 38.
Rule 214: Buffer Stock
•
Competent authority should determine how much extra (buffer) stock is needed.
•
Any item lying unused for more than 1 year is usually declared surplus, unless justified.
•
Such surplus items are handled as per Rule 217.
Rule 215: Verification of Library Books
•
< 20,000 books: Verify every year.
•
20,000–50,000 books: Verify once in 3 years.
•
> 50,000 books: Sample check every 3 years; full check if losses seem abnormal.
•
Loss allowance: Up to 5 books per 1,000 issued per year allowed.
•
Loss of any rare book or book over ₹1,000 must be investigated.
Rule 216: Transfer of Charge
•
When the store officer changes, goods/materials must be handed over properly.
•
A signed statement with full details must be prepared by both officers and copies retained.
Rule 217: Disposal of Goods
•
An item can be declared surplus/obsolete/unserviceable if it's no longer useful.
•
Reasons must be recorded by competent authority.
•
A committee may be formed for the declaration.
•
Determine book value/reserve price using GFR-10.
•
If loss is due to fraud/negligence, fix responsibility.
•
Hazardous/e-waste must follow rules from Ministry of Environment & Forests and bidders
must be registered recyclers.
Rule 218: Modes of Disposal
•
If residual value > ₹4 lakh:
o
•
Use advertised tender or public auction.
If value < ₹4 lakh:
o
Disposal mode is decided by competent authority, keeping in mind space and value
loss.
Disposal and Loss Management (GFR Rules 219–223)
Rule 219: Disposal through Advertised Tender
•
Steps for tender-based disposal:
1. Prepare tender documents.
2. Invite tenders (wide publicity needed).
3. Open and evaluate bids.
4. Select highest responsive bidder.
5. Collect full payment.
6. Issue sale release order.
7. Deliver goods and return security to unsuccessful bidders.
•
Key points to ensure:
o
Transparency, fairness, no discretion.
o
Mention all terms, location, and condition of goods clearly.
o
Bidders must give bid security (typically 10% of reserve price).
o
If highest bid is too low, negotiate or offer to next-highest.
o
If selected bidder fails to lift goods, forfeit bid security and consider resale.
o
Late bids are not accepted.
Rule 220: Disposal through Auction
•
Can be conducted directly or through approved auctioneers.
•
Ensure:
•
o
Transparency and fair competition.
o
Wide publicity and clear information on terms, condition, and location.
Auction Process:
o
Announce all terms at the start.
o
Accept or reject bids immediately on hammer fall.
•
o
Earnest money (min 25%) must be collected immediately in cash or DACR.
o
Deliver goods only after full payment.
Auction team should include a member from the Finance Wing.
Rule 221: Scrap Value & Other Disposal Modes
•
If items remain unsold via tender/auction:
o
Dispose at scrap value with Finance Division’s approval.
o
If scrap value also not possible → dispose through eco-friendly destruction or any
other mode.
Rule 222: Sale Account (Form GFR 11)
•
After disposal/sale, prepare a sale account in GFR Form 11, signed by the supervising officer
of the sale/auction.
Rule 223: Write-off of Losses
(1) General Losses:
•
All profit/loss from revaluation, stock check, etc., must be recorded.
•
Formal approval of competent authority is needed for writing off losses (as per Delegation of
Financial Powers Rules).
(2) Losses due to Depreciation:
Classified as:
•
Market price fluctuations
•
Normal wear and tear
•
Poor planning of purchases
•
Post-purchase negligence
(3) Losses NOT due to Depreciation:
Grouped under:
•
Theft or fraud
•
Negligence
•
Obsolete or over-purchased stock
•
Damage
•
Force Majeure (natural disasters, war, etc.)
Summary Table
Rule Topic
Key Points
219 Advertised Tender Transparent bidding, bid security, sale order, timely disposal
220 Auction
Public auction, spot earnest money, Finance rep involvement
221 Scrap/Other Modes Use scrap value or eco-friendly disposal if no sale possible
222 Sale Account
Use GFR-11 form, signed by supervising officer
223 Write-Off Powers
Classify losses (depreciation vs non-depreciation), seek approvals
Chapter 8: Contract Management (GFR Rules 224–225)
Rule 224: Authority and Execution of Contracts
(1) Authority to Enter into Contracts:
•
Only officers authorized under the President’s orders (as per Article 299(1) of the
Constitution) can enter into government contracts.
(2) Execution on Behalf of President:
•
All contracts must be executed in the name of the President of India.
•
Must mention: “for and on behalf of the President of India” below the officer's signature.
•
Classes of contracts and powers of different authorities are defined in:
o
Notifications from Ministry of Law.
o
Rule 11 of the Delegation of Financial Powers Rules.
Rule 225: General Principles for Contracts
Clarity & Legal Soundness
•
Contracts must be:
o
Clear, definite, and unambiguous.
o
Avoid open-ended liability (except in special cases like cost-plus or price variation
contracts).
o
Use standard contract forms wherever possible with proper legal and financial
vetting.
o
If not using standard forms, always take legal and financial advice while drafting.
Simplified Purchase Rules (Based on Value)
Contract Value Type
Requirements
Up to ₹2.5 lakh Purchase
Purchase Order with basic terms
₹1 lakh–₹10
lakh
Works or
Purchase
Letter of Acceptance (LOA) creates binding contract
Above ₹10 lakh
Works or
Purchase
Full Contract Document must be executed (or one-pager with
attached documents)
Turnkey /
Services
Any amount
Full contract document is a must
No Work Without Contract
•
Never start work or supply without proper agreement.
•
Contracts should ideally be signed within 21 days of LOA. Failure to do so may lead to
cancellation and forfeiture of EMD.
Cost Plus Contracts
•
Avoid unless necessary. If used:
o
Justify in writing.
o
Shift to firm price contracts for future.
Cost Plus = Actual cost + fixed profit
Price Variation Clause (PVC)
Allowed only in long-term contracts (delivery beyond 18 months)
Key Guidelines:
Element
Rule
Base Price
Must mention month & year for reference
PVC Formula
Must be included, using government indices
Cut-off Dates
For inputs like labour/material
Ceiling
Put cap on price increase (e.g. % limit)
Element
Rule
Minimum
Threshold
No adjustment for minor changes (e.g. <2%)
Advance
Payments
No PVC allowed on already-paid amounts
Delayed Delivery
LD applies on varied price, but no PVC for supplier’s delay
Force Majeure
PVC allowed if contract is amended
Duties/Taxes
Must clearly state all % elements (e.g., customs, exchange rate), and provide
proof for adjustment
Payment Terms
Mention how and when price changes will be paid
Tax Provisions in Contracts
•
All applicable taxes and duties must be included in contract terms.
Summary Table
Rule Topic
Key Points
224
Contract
Authority
Only empowered officers; on behalf of the President
225
Contract
Principles
Clarity, standard forms, legal review, tiered procedures, avoid cost-plus unless
justified
-
Price Variation
Only for long-term contracts; base month, ceiling, formula, no PVC beyond
original schedule unless amended
Rule 225 (contd.): More Key Principles for Government Contracts
Clause Principle
Key Point
(x)
Lump Sum Contracts
Avoid unless absolutely necessary. Full justification and safeguards
are required.
(xi)
Dept. Issue of
Materials
Avoid supplying materials departmentally. If done, include a
schedule with issue rates in contract.
(xii)
Govt. Property with
Contractor
Include safeguards (insurance, hire charges) and allow regular
physical verification.
Clause Principle
Key Point
(xiii)
Reporting to Audit
All contracts ≥ ₹25 Lakhs must be sent to Audit/Accounts Officer.
(xiv)
Variation of Contract
No major changes unless unavoidable; must be approved, recorded,
and signed as contract amendment.
(xv)
Extensions
Not allowed unless under force majeure or specified terms; must be
amended formally.
(xvi)
Liquidated Damages
Must be included for contractor defaults. Waiver only in justified
exceptions.
(xvii)
Warranty
Mandatory clause – supplier must repair/replace defective goods at
no cost.
(xviii) Rejection Clause
Govt. can reject goods not meeting specifications.
(xix)
No claim entertained after 3 years from date of arising.
Claim Time Limit
Rule 226: Management of Contracts
Area
Key Action
Contract
Monitoring
Strictly monitor execution. Send notices immediately for any breach.
Bank Guarantees
Monthly review of guarantees expiring in 3+ months. Extend if necessary. Keep
BGs safe.
Rule 227: Legal Advice in Disputes
•
If disputes arise:
o
Always take legal advice before referring to conciliation, arbitration, or filing suit.
o
Get plaint (legal filing) vetted legally and financially.
o
Check all documents before filing to protect government interests.
Rule 227A: Arbitration Awards
Provision Description
(i)
If government challenges an arbitral award, it must pay 75% of the award (including
interest) to contractor against a Bank Guarantee (BG).
Provision Description
(ii)
Payment is made into an Escrow Account. The funds will be used in this order:
1. Lender dues
2. Completion of current project
3. Completion of other govt. projects (with agreement)
4. Any leftover may be used by contractor with permission.
Retention money can also be released against BG.
Final Recap: Key Themes in GFR Contract Management
Theme
Summary
Legal Authority Only empowered officers can sign contracts on behalf of President.
Clarity
Contracts must be precise and reviewed legally.
Documentation Must include specs, GCC/SCC, price clauses, delivery terms.
Monitoring
Track implementation, guarantees, and breaches regularly.
Disputes
Handle through arbitration/legal process with advice.
Accountability Maintain audit trails and impose penalties/warranties/liquidated damages.
Rule 228: Who Can Receive Grants-in-Aid?
Grants-in-aid (including scholarships) can be given by competent authorities to:
Eligible Entities
Examples/Conditions
(a) Autonomous
Organisations
Created under specific statutes or registered societies (e.g., under
Societies Act 1860, Indian Trust Act 1882).
(b) NGOs/Voluntary
Organisations
Should align with government welfare schemes; selected based on
credibility and resource capacity.
(c) Educational Institutions
For scholarships or stipends to students.
(d) Local Self-Govt. Bodies
Urban & rural local bodies.
(e) Co-operative Societies
Eligible based on relevant schemes.
(f) Government Servant
Clubs/Societies
For social, cultural, or sports activities.
Rule 229: Setting Up Autonomous Organisations
Principle Summary
(i)
Creation of new autonomous bodies needs Cabinet approval.
(ii)
Existing autonomous bodies cannot create new ones without proper approval. Regional
centers need approval from Administrative Ministry + MoF.
(iii)
Check if the activity is necessary and if it must be done via an autonomous body.
(iv)
Organisations must try to become financially self-sufficient.
(v)
Corpus Fund from budget requires MoF approval; from internal funds needs Ministry’s
approval.
(vi)
User Charges must be reviewed yearly by the governing body and shared with the
ministry.
(vii)
Maintain a detailed database of grants, income, expenditure, assets, and staff.
(viii)
Appoint an internal financial advisor for approving expenditures. CEO responsible for
overall financial management.
(ix)
Peer Review every 3 or 5 years to evaluate performance, relevance, efficiency, overlaps
with others, staffing, and revenue generation.
(x)
Outstanding organisations can be granted greater autonomy and flexibility.
(xi)
Autonomous bodies getting ₹5 crore+ annually must sign an MoU with the Ministry
outlining clear performance metrics.
(xii)
Grants should be conditional on peer review outcomes.
Rule 230: Procedure for Grant Sanction
230(1): Application for Grants
•
Organisation must submit:
o
Articles of Association, by-laws
o
Audited accounts, income-expenditure details
o
Justification for grant
o
Declaration: No double application to other departments.
230(2): Avoiding Duplication
•
Ministries must:
o
Maintain a public list of organisations receiving grants.
o
Upload details (amount + purpose) on the ministry website.
230(3): Conditions for Awarding Grants
•
Only for viable and detailed schemes with measurable outcomes.
•
For reimbursement-type grants (CFA), no Utilization Certificate (UC) is needed.
230(4): Types of Grants
Type
Meaning
Recurring Grant
Released periodically for the same purpose.
Non-Recurring Grant One-time grant for a specific purpose (may be in installments).
•
Sanction Order Must Specify:
o
Type of grant
o
Purpose
o
Time limits
o
Special/general conditions
230(5) (Continues beyond this rule – can be covered in the next part)
Key Takeaways
Area
Quick Points
Grants Allowed To
NGOs, Local bodies, Edu institutions, Autonomous orgs, Co-ops, Govt staff
clubs.
Approval Process
Follow strict criteria. Cabinet/MoF approval needed for new autonomous orgs.
Monitoring
Use peer reviews, MoUs, yearly revenue reviews, and maintain records.
Transparency
Publish grant details online.
Application
Process
Must include full financial and legal background of the applicant.
Rule 228: Who Can Receive Grants-in-Aid?
Grants can be given to:
•
Autonomous bodies (registered societies/trusts)
•
NGOs & voluntary organizations (based on credibility)
•
Educational institutions (for scholarships/stipends)
•
Local bodies (urban/rural)
•
Co-operative societies
•
Government employee clubs (for social/cultural/recreational purposes)
Rule 229: Guidelines for Creating Autonomous Bodies
•
Cabinet approval needed for new bodies.
•
Existing bodies can't create new ones without approval.
•
Set up only if activities are necessary and can’t be done by Govt.
•
Aim for self-sufficiency through internal revenue.
•
Corpus Fund needs Finance Ministry approval (if from Govt funds).
•
Review user charges annually.
•
Maintain database of grants, income, staff, assets.
•
Appoint finance officer in every body.
•
Peer review every 3–5 years to assess performance and relevance.
•
High-performing bodies may get more flexibility.
•
Bodies with grants over ₹5 crore must sign MoU detailing targets and output.
•
Further grants depend on peer review findings.
Rule 230: Procedure for Sanctioning Grants
1. Application must include audited accounts, sources of income, and confirmation that the
same grant is not taken from other departments.
2. Avoid duplication by maintaining a list of grantees with purpose and amount (also to be
uploaded on website).
3. Grant based on viable, specific projects, with measurable outputs.
4. Recurring Grant – given every year;
Non-recurring – one-time purpose with time limit.
5. Separate accounts for capital and revenue expenses, in standard format.
6. Consider internal resources of grantee before granting more.
7. Check unspent balance via PFMS before next grant (Just-in-time principle: no extra funds).
o
Cash balance shouldn't exceed 3 months' need.
8. Interest earned on grant money must be returned to Govt.
9. Assets from grant money cannot be sold without Govt. approval.
10. Last grant installment given only after proving proper use of earlier grants.
11. Grantees must submit budget request by September for next year.
12. Staff terms in grantee institutions should match Govt norms if >50% of budget is grantsupported.
13. Buildings made with grants: Govt or grantee can own; if Govt owns, grantee is lessee.
14. Any special Govt conditions must be added to bye-laws.
15. Reimbursement for expenses within last 2 years is allowed.
16. Unspent grants must be refunded with interest.
17. Institutions that:
•
Employ >20 persons,
•
Get ₹20+ lakh annual grants,
•
And get 50% or more recurring grants
must reserve jobs for SC/ST/OBCs and show progress in doing so.
Rule 231: Grants to Voluntary Organisations
•
Govt may fund up to 25% of their administrative salaries to help them grow.
•
Other private institutions usually not eligible for admin grants unless approved by Finance
Wing.
•
Bond requirement: Executive Committee must sign bonds to:
o
Follow grant conditions,
o
Not divert funds or subcontract without permission,
o
Return grant (with 10% interest) if conditions breached.
(No bond needed for Central autonomous bodies or quasi-govt institutions.)
Rule 232: Grants under Centrally Sponsored Schemes
•
Schemes must have clear outcomes, timeframes, and monitoring.
•
States should be consulted before launching schemes and allowed some flexibility.
•
Avoid duplication by merging similar schemes.
•
Limit the number of schemes for better focus.
•
Use PFMS for fund monitoring.
•
Don't focus only on spending, but on results.
•
Build evaluation and review processes into scheme design.
•
After scheme ends, states must review it and send report.
Rule 233: Sponsored Projects by Govt Ministries
•
Projects may be given to institutions like IITs, universities, etc., with clear funding and
monitoring rules (further details follow this rule).
Special Funding Rules for Scientific Institutions (e.g. ICAR, CSIR, ICMR)
•
Projects in national interest are fully funded by Ministries/Departments.
•
Funds are not treated as grants-in-aid by the implementing agency in their books.
•
Assets (physical/intellectual) created from the funds belong to the sponsoring department.
•
Institutions must disclose usage of assets in “Notes to Accounts” during the project.
•
After project completion, the government will decide whether:
•
o
Assets should be returned, sold, or retained by the institute.
o
If sold, proceeds go back to the government.
o
If retained, assets enter institute's accounts at book value.
These provisions also apply to private sector/NGOs for commissioned scientific projects.
Rule 234: Register of Grants
•
Ministries must maintain a Register of Grants (Form GFR-21).
•
Grant details must be recorded when sanctioned and again when disbursed.
•
Helps prevent double payment and ensures tracking of installment-based grants.
Rule 235: Accounts of Grantee Institutions
•
All grantees must:
o
Maintain subsidiary accounts of the grant.
o
Submit audited statements after using the grant.
Rule 236: Audit of Accounts
•
CAG (Comptroller & Auditor General) audits apply when:
o
Annual grant ≥ ₹25 lakhs and 75% of institute’s total spending.
o
Or annual grant ≥ ₹1 crore.
o
In such cases, CAG will audit for 2 more years, even if criteria not met later.
•
CAG can inspect how Ministries ensure grant conditions are met.
•
If CAG doesn't audit, institute must get audit done by a Chartered Accountant.
•
Audit fees are payable by institutions unless waived.
Rule 237: Audit Timeline
•
30 June – Institute submits accounts to audit office.
•
31 Oct – Final Audit Report and Certificate issued.
•
31 Dec – Annual Report and Accounts to be submitted to Parliament.
Rule 238: Utilization Certificates (UCs)
•
UC in Form GFR 12-A is mandatory for non-recurring grants.
•
Must include output-based performance, not just financial details.
•
Must be submitted within 12 months of financial year close.
•
If not submitted:
o
Institute may be blacklisted from future grants.
Recurring grants:
•
•
Future grants released only after:
o
Provisional UC of previous year is submitted.
o
75% of earlier funds used.
o
Audit reports and performance reviews checked.
Scientific Ministries may allow next grant after receiving UC for 75% usage.
Exemption from UC:
•
Not required if grant reimburses already audited expenditure.
Special Disclosures in UC:
•
For Autonomous Bodies: Separate details of funds spent and those still pending (like
construction or purchases) must be shown as "unutilized but carried forward".
High-value recurring grants (₹10–₹50 lakhs) to private/NGO organizations:
•
Details must be included in Annual Reports of Ministries.
Very high-value grants (≥ ₹50 lakhs or one-time ≥ ₹5 crore):
•
Reports and audited accounts must be tabled in Parliament within 9 months of year-end.
Rule 239–240: State Governments
•
Utilization Certificates (Form GFR 12-C) to be submitted:
o
For central grants received for schemes.
o
When funds are passed on to local bodies/private institutions.
Rule 241: Direct Benefit Transfer (DBT)
•
For DBT schemes:
o
Bank confirmations or NPCI intimation of credit into beneficiary accounts will be
treated as UC.
Rule 242: Performance Oversight
•
Ministries must:
o
Define performance parameters for each Autonomous Body.
o
Ensure achievement reports are submitted for accountability.
I. Grants
1. Performance Reports for Grants
•
•
Recurring Grants (given every year):
o
Must submit Performance-cum-Achievement Reports annually, within 6 months
after the financial year ends.
o
If grant is ≤ ₹25 lakhs, submission may be skipped, based on Utilization Certificate
and other available info.
Non-recurring Grants (one-time support):
o
Reports not needed for events like anniversaries or education support.
2. Autonomous Organisations
•
If grant ≥ ₹2 crore, their Annual Reports + Audited Accounts are placed before Parliament;
no separate performance report needed in Ministry report.
•
If grant < ₹2 crore, Ministry must mention fund amount and usage in its own report.
3. Performance Reporting in Annual Reports
Grant Type
Amount Range
Ministry Action Required
Recurring
₹10 – ₹50 lakhs
Include performance assessment in
annual report
Non-recurring
₹10 lakhs – ₹5 crore
Same as above
Rec./Nonrecurring
Above ₹50 lakhs (recurring) or ₹5 cr
(non-recurring)
Give detailed review in annual report
4. Audit Requirements
•
If audited by CAG, then reports must be shared with audit.
•
Otherwise, share when local audit is conducted or requested.
Rule 243 – Discretionary Grants
•
These are non-recurring grants under a specific authority’s discretion.
•
Must not create future financial obligations.
Rule 244 – Other Grants
•
All other grants not covered earlier need special Government approval.
Rule 245 – Grants for Employee Welfare
1. Eligibility:
o
Based on regular staff strength as of 31st March.
o
Excludes: contract workers, work-charged staff, already covered under other
schemes.
2. Amount:
o
₹50 per head/year (basic grant)
o
▪
₹25 per head/year (if matched by club's own subscription)
3. Items Allowed (Illustrative):
o
Sports equipment, uniforms, magazines, entry fees, furniture, entertainment, prizes,
film shows, hiring rooms, cultural & sports programs.
4. Club Setup Grant:
o
One-time maximum of ₹50,000.
5. Fund Flow:
o
Central Ministry allocates funds and audits club accounts before next year’s release.
II. Loans (Rules 246–250)
1. Who Can Give Loans?
•
Central Govt. Departments, under powers delegated by Ministry of Finance.
2. Loan Sanction Requirements
•
Must certify that:
o
Rules of Ministry of Finance are followed.
o
Interest rate and repayment period approved.
3. General Loan Conditions
•
Must have a fixed term, usually short, max 30 years.
•
Repayment in installments, usually annually.
•
Early repayment:
o
If paid early, it first clears interest, then principal.
o
If early by ≤14 days, full interest still charged.
•
Due date on holiday: payment on next working day is acceptable.
•
Exception: If due on 31st March (and it’s a holiday), pay on previous working day.
•
Interest & Repayment Dates are tied to the exact date of loan drawal.
4. Loan Drawal Dates (Special Rule for States)
•
Treated as the calendar date when RBI credits the State’s account.
•
If credited in April but counted in previous year, loan considered drawn on 31st March of
that year.
Loan Adjustment in Accounts
•
If no money is actually transferred and the adjustment is done only in account books, then
the last date of the accounting month in which the adjustment is made is taken as the loan
drawal date (for interest & repayment).
Notices to Borrowers (Form GFR-19)
•
Loan repayment notices must be sent 1 month before the due date to PSUs, statutory
bodies, etc.
•
But not getting a notice doesn’t mean the loanee is excused from paying on time.
Loans to Private Institutions (Rule 250)
Before sanctioning:
•
Check financial health and management ability.
•
Ensure:
o
Budget provision exists.
o
Loan aligns with govt policy.
Applicant must provide:
•
Last 3 years’ financials.
•
Loan repayment plan & income sources.
•
Details and valuation of security.
•
List of past and current loans with status.
•
Loan purpose and financial logic.
Review:
•
Make confidential inquiries from other departments about prior loan history.
•
Ensure security is worth at least 133.33% of the loan.
•
Financial position and security both must be sound.
For institutions that get grants:
•
Loan repayment should not burden general income.
•
Rent/fee from project (e.g. hostel) should be adequate.
•
Undertaking from State Govt/Trust to cover shortfall is required.
Review of Loans
•
Ministries must review old loans periodically to ensure timely recovery.
Loans to Local Bodies (Rule 250(4))
•
Governed by Local Authorities Loans Act and applicable rules.
Interest on Loans (Rule 251)
•
Charged at govt-prescribed rate.
•
Interest is charged on the day of payment, not on the day of repayment.
•
Formula for partial year interest:
Interest=No. of Days×Annual Rate365 (or 366)\text{Interest} = \frac{\text{No. of Days} \times
\text{Annual Rate}}{365\ \text{(or 366)}}Interest=365 (or 366)No. of Days×Annual Rate
Loan Recovery & Moratorium (Rule 252)
•
Follow Finance Ministry's guidelines.
•
Recovery usually in equal yearly installments of principal + interest.
•
Rounding off to the nearest rupee allowed.
•
Moratorium (delay) on principal may be given based on project.
•
But no moratorium allowed on interest.
Loans to PSUs, Corporations, Local Bodies (Rule 253)
•
Interest at normal government rate.
•
If concession given, pay full interest first and then apply for subsidy.
Agreements & Documentation (Rule 253(2))
•
Loan agreement is mandatory (except for State Govt. and wholly-owned govt cos).
•
Must include clause allowing government audit.
•
GFR Form 15 undertaking needed from wholly govt-owned company.
•
Certificate confirming this must be attached at loan drawal.
✍ Undertaking from Govt Companies (Rule 254)
•
Written undertaking in GFR Form 32 that assets will not be mortgaged without prior govt
approval.
•
No stamp duty needed for this.
Loan Security (Rule 255)
•
Loans (except to State Govts, etc.) should be backed by security ≥ 133.33% of loan.
•
Less security may be accepted with valid reasons in writing.
Utilization Certificate (Rule 256)
If loan has usage conditions:
•
Sanctioning authority must certify compliance.
•
Certificate must be in GFR Form 12-B.
•
Officer must verify reports and auditor’s certificate.
•
UC must be submitted:
o
Even if no specific condition, if loan is for a specific purpose.
o
Not needed for general-purpose loans (e.g., to PSUs for capital expenses).
•
If accounts are with Audit Office → UC per loan case.
•
If with Department → consolidated UC submitted to Audit.
Rule 257 – Installments of Loans
•
Each installment of a loan is considered a separate loan unless consolidated at the end of
the financial year.
•
Interest is calculated from the drawal date of each installment.
•
Repayment is annual on the anniversary of the loan/consolidation.
•
Moratorium (postponement) may be allowed only for the principal, not interest.
•
If there's delay in taking the last installment, the loan may be declared closed and repayment
begins.
Rule 258 – Defaults in Payment
•
Penal interest is mandatory in case of delay in repayment or interest, usually 2.5% higher
than the normal rate.
•
Prompt reporting of defaults by Accounts Officer to sanctioning authority is essential.
•
For interest-free or concessional loans:
•
o
Default may convert them to interest-bearing loans.
o
Subsidy can be used to recover the defaulted amount.
Penalty interest may be waived in rare or justified cases (e.g., very short delay).
Rule 259 – Irrecoverable Loans
•
Loans can be written off only with prior approval from the Ministry of Finance if deemed
irrecoverable.
Rule 260 – Accounts and Control
•
Accounts Officers maintain detailed loan accounts and ensure all conditions are met and
recoveries are made.
Rule 261 – Audit Cost
•
Rules for audit cost of grants-in-aid apply similarly to loans.
Rule 262 – Annual Returns
•
Each Principal Accounts Officer must submit a loan status report (Form GFR 13) to the
Ministry by 30th September each year.
•
It should show:
o
Outstanding loan balances
o
Defaults (amount and period)
o
Department-wise or authority-wise data where detailed accounts aren't required.
Rule 263 – Review of Loans
(1) Review of Annual Statements
•
Ministries must review GFR 20 statements to:
o
Identify default cases
o
Enforce repayments
o
Maintain a central list of all loan sanctions.
(2) Annual Assessment Report
•
The Ministry’s Financial Advisor must submit an Annual Loan Assessment Report to the
Ministry of Finance by 30th June, detailing:
o
All outstanding loans
o
Timely payments
o
Defaults
Rule 264 – External Aid for Projects/Schemes
1. Government projects with external funding must be included in the Union Budget approved
by Parliament.
2. Types of external aid:
o
Bilateral aid: Government-to-Government project funding.
o
Multilateral aid: From international institutions like the World Bank.
3. Department of Economic Affairs (DEA), Ministry of Finance:
o
Executes loan/grant agreements with external agencies.
o
Beneficiary ministries can sign Technical Assistance grant agreements with DEA
approval.
4. Controller of Aid Accounts and Audit (CAAA) ensures financial compliance of agreements
and maintains records.
Rule 265 – Currency of External Aid
•
Aid may be in foreign currency or INR.
•
It is received by RBI Mumbai, and the rupee equivalent is credited to CAAA’s account at RBI
New Delhi.
•
It is treated as loan/grant income under the Consolidated Fund of India.
Rule 266 – Accounting of Cash Grants
•
Only CAAA will account for cash grants (not commodity/in-kind assistance) from external
sources.
Rule 267 – Fund Withdrawal Procedures
Administrative ministries must:
•
Make budget provisions for “Externally Aided Component” in their Detailed Demands for
Grants.
Two main fund withdrawal methods:
1. Reimbursement Procedure
The Project Implementing Agency (PIA) first spends and then claims reimbursement from the
Funding Agency via CAAA.
Two types:
•
•
(i) Through Special Account (Revolving Fund Scheme):
o
CAAA receives a 4-month advance from the agency in USD.
o
Claims are submitted to replenish this account.
(ii) Outside Special Account:
o
If no special account exists or has zero balance.
o
Reimbursement claims are sent directly to the funding agency.
2. Direct Payment Procedure
•
Payment goes directly from funding agency to contractors/suppliers/consultants.
•
Based on PIA request through CAAA.
•
The rupee equivalent of the foreign currency paid is recovered from PIA or State Govt.
•
For central/CSS/PSU projects, the ministry must instruct PIAs to deposit the rupee
equivalent to CAAA’s account at RBI New Delhi or an authorized SBI branch.
Rule 268 – Fund Flow for State Projects
(1) State Project Funding
•
State departments must budget for external-aid funded expenditure under Plan schemes.
(2) Reimbursement for State Projects
•
CAAA consolidates disbursements (state-wise and loan-wise) under both reimbursement
methods.
•
Sent to Plan Finance Division of Ministry of Finance for fund release.
•
MoF issues sanction, sends copy to concerned State Finance Dept.
•
Chief Controller of Accounts issues Inter-Government Advice to RBI Nagpur for fund
transfer.
Rule 268(3): Fund Flow for State Projects – Direct Payment Procedure
•
Controller of Aid Accounts and Audit (CAAA) calculates the rupee equivalent of the foreign
currency disbursed under Direct Payment Procedure, based on RBI’s buying rate.
•
CAAA sends state-wise disbursement details to Plan Finance Division, Department of
Expenditure.
•
Plan Finance Division issues a sanction to:
•
o
Release funds notionally to the State Government.
o
Simultaneously recover and credit back the same amount to CAAA’s account.
Chief Controller of Accounts instructs RBI Nagpur to make adjustment entries in the State’s
account — this completes the fund flow cycle.
Rule 269: Fund Flow for Central or Centrally Sponsored Projects
•
For such projects:
o
Ministries/Departments get funds under a separate EAP (Externally Aided Projects)
budget head via Demand for Grants.
o
Funding process follows Rule 267 (reimbursement/direct payment).
o
Funds must be released to the Project Implementing Agency (PIA) within 6 weeks
after the PIA incurs the expenditure.
Rule 270: Fund Flow for Public Sector or Financial Institutions
•
•
If a PSU, Financial Institution, or Autonomous Body is the PIA and GoI is the borrower:
o
The Administrative Ministry budgets and releases funds to the PIA.
o
PIA submits claims to CAAA, which processes and sends them to the Funding
Agency.
o
Upon certification by the Funding Agency (verified by CAAA), the ministry releases
the amount to the PIA.
If a PSU or FI negotiates a loan directly, the funds flow directly from the funding agency to
that entity.
Rule 271: Repayment of Loans
•
CAAA is responsible for timely repayment of loan principal.
•
Repayment is arranged via designated banks and RBI.
•
The rupee equivalent of the remitted amount is debited to CAAA’s account and credited to
the bank’s account at RBI New Delhi.
•
The relevant loan account in the Consolidated Fund of India is debited.
•
Loan repayments are treated as charged expenditure.
•
If the project funds are re-loaned, recovery (with interest) is the responsibility of the
concerned Ministry/Department.
Rule 272: Interest Payments
•
Interest is paid on due dates as per agreements, from budgeted provisions.
•
Booked under Major Head 2049 – Interest Payments in the Consolidated Fund of India.
•
The procedure of transfer is the same as for loan repayments.
•
Interest payments are also treated as charged expenditure.
Rule 273: Accounting of Exchange Variation
•
For fully repaid foreign loans, any exchange rate variation is adjusted/written off under:
o
•
Major Head 8680 – Miscellaneous Government Accounts.
Done as per Government Accounting Rules and guidance from CGA/CAG.
Rule 274: Aid in the Form of Materials/Equipment
•
•
If aid is received in kind (materials, equipment, etc.) without cash inflow:
o
The Funding Agency informs the concerned Ministry with details and value.
o
The Ministry must notify CAAA to make budget provision for this aid.
Refer to:
o
Para 4.8.1 of Civil Accounts Manual and
o
Note (1) below Major Head 3606 – Aid Materials and Equipment in the official List
of Heads of Accounts.
Rule 275: Power & Limits on Government Guarantees
1. Legal Basis: The Union Government's authority to issue guarantees comes from Article 292
of the Constitution and the FRBM Act (Fiscal Responsibility and Budget Management).
2. Limit on Guarantees: Central Government cannot exceed guarantee limits set under FRBM
Rules.
3. Authority: The power to approve guarantees rests with the Budget Division, Department of
Economic Affairs (DEA).
Rule 276: Objectives of Government Guarantees
•
Improve viability of socially/economically important projects.
•
Help central PSUs get loans at better interest rates.
•
Required for concessional loans from global agencies where sovereign guarantee is
mandatory.
Rule 277: Guidelines for Granting Guarantees
Ministries/Departments must:
•
Justify the guarantee in public interest.
•
Assess borrower's creditworthiness.
•
Review borrowing terms and risks.
•
Ensure independent risk assessment.
•
Get final approval from Budget Division (DEA).
Other key rules:
•
Only Central Government entities are eligible.
•
Private sector or commercial loans usually not eligible.
•
Guarantee should typically cover only principal and normal interest.
•
Data must be provided using Form GFR 26.
•
Guarantees should not replace budgetary subsidies or loans if those are better options.
Rule 278: Borrowing from Multilateral Agencies by PSUs
•
PSUs may borrow directly from multilateral agencies (e.g., World Bank) with GoI approval.
•
If a GoI guarantee is required, prior clearance from Budget Division is needed.
•
The borrower pays guarantee fees on the loan amount.
Rule 279: Levy of Guarantee Fees
1. Fee is charged before the guarantee is issued and then every April.
2. If payment is late, double fees apply for the default period.
3. GoI usually guarantees up to 80% of the loan to ensure lenders share the risk.
o
In exceptional cases, 100% guarantee may be given (e.g., the entity performs govt.
functions).
Rule 280: Execution of Guarantees
•
Once approved, the Administrative Ministry executes and monitors the guarantee.
•
Must sign a back-to-back agreement with the borrower.
•
Ensure there are no changes in terms without Budget Division approval.
•
Standard formats for international credit must align with Indian rules.
•
Guarantees must be executed in the same financial year as approval.
•
Guarantees are non-transferable and become void if ownership of the entity changes (unless
reconfirmed).
Rule 281: Review of Guarantees
•
Annual review is mandatory for all guarantees.
•
Ministries must check:
o
Repayment behavior
o
Compliance with all terms
o
Proper payment of fees
•
Maintain a Register in Form GFR 25.
•
Annual review reports (GFR 25) must be submitted to DEA by 10th April.
Rule 281 – Annual Review & Classification of Guarantees
1. Annual Review of External Loan Guarantees:
o
Ministry of Finance (Dept. of Economic Affairs) must review all external loan
guarantees annually.
o
The Financial Adviser ensures records are maintained and reviews are reported in
Form GFR 25.
2. If another Ministry issues such guarantees, that Ministry is responsible for review.
3. Classification of Guarantees:
o
(i) For loans and working capital from banks/financial institutions.
o
(ii) For repayment of share capital, bonds, etc., by PSUs/statutory bodies.
o
(iii) For international agreements (loans, supplies, etc.).
o
(iv) Counter-guarantees to banks (like for letters of credit).
o
(v) Guarantees to Railways for payments by government companies.
o
(vi) Others not covered above.
Rule 282 – Accounting and Reporting of Guarantees
•
As per the FRBM Act, 2004, government must disclose all guarantee details annually.
•
Ministries/Departments must:
•
o
Compile and send data to Controller General of Accounts (CGA).
o
Ensure accuracy of data (must match with Detailed Demands for Grants and Finance
Accounts).
o
Certify compliance with IGAS-1 (accounting standard for guarantees).
Final statement is published in the Receipt Budget.
Rule 283 – Invocation of Guarantees
1. A Guarantee Redemption Fund (GRF) is created for paying off invoked guarantees (mainly to
PSUs, etc.).
2. Ministries must alert Budget Division in advance if any guarantee is likely to be invoked.
3. If a guarantee is invoked:
o
Government may issue a loan to the borrowing entity.
o
Actual payment will be made from the GRF.
Rule 284 – Additions to Establishment (Creating New Posts)
1. Any proposal to add posts or change establishment must follow Dept. of Expenditure
guidelines.
2. Proposal must include:
o
Current establishment cost
o
Cost of proposed change (salary, pension, gratuity)
o
How the expense will be funded
3. Extending a temporary post needs explicit Finance Ministry approval.
4. Any increase in emoluments (salary) also needs Finance Ministry approval.
Rule 285 – Service Records
•
All staff records (from joining to retirement – like leave, transfers, promotions, performance,
etc.) must be digitally maintained.
Rule 286 – Transfer of Charge
1. When a Gazetted Officer is transferred:
o
A Transfer Report in Form GFR 16 must be signed by both incoming and outgoing
officers and sent the same day.
o
Exceptions:
▪
When a post is newly created or abolished
▪
When post is vacant for a short time
▪
Due to urgent transfer without formal replacement
2. If cash/stores are involved:
o
Close cash book, sign balances.
o
Report any irregularities.
o
In emergencies, the next senior officer should take over.
3. Audit/Accounts Officers handling Trust Accounts must follow Appendix 8 procedure.
Rule 287 – Date of Birth
•
On joining, every new government employee must declare their date of birth using valid
documents.
Guarantees (Rules 281–283)
•
Rule 281(3): External loan guarantees issued by the Ministry of Finance must be reviewed
yearly by the DEA with the Financial Adviser. If another Ministry issues the guarantee, it must
do the review itself.
•
Rule 281(4): Guarantees are categorized into six types, such as:
1. For loans to banks/financial institutions.
2. For repayment of bonds/loans of PSUs.
3. Agreements with international agencies.
4. Counter-guarantees for letters of credit.
5. For dues of railways by PSUs.
6. Any other types.
•
Rule 282: Ministries must report all guarantees in a standard format for transparency and
include them in the Receipt Budget.
•
Rule 283: When a guarantee is invoked:
o
A Guarantee Redemption Fund (GRF) pays the amount.
o
Ministries must notify the Budget Division in advance.
o
The guarantee may be paid through a loan, and ultimately, the GRF bears the cost.
Establishment Matters (Rules 284–286)
•
Rule 284: For creating new posts or increasing pay, detailed proposals including costs and
funding sources must be submitted to the Ministry of Finance.
•
Rule 285: All service records from appointment to retirement (leave, promotion, etc.) must
be digital.
•
Rule 286:
o
Transfer of Charge: When an officer hands over duties, it must be recorded in Form
GFR 16.
o
Cash/Store Responsibility: Cash books must be signed by both officers, and any
issues must be reported.
o
In sudden cases, the next senior officer takes over and reports.
Service Book & Personal Records (Rules 287–288)
•
Rule 287: Date of birth must be recorded at the time of appointment, using matriculation or
birth certificate.
•
Rule 288:
o
Service Book must be kept in duplicate — one with the office, one with the
employee.
o
Updated every January.
o
Loss of personal copy costs ₹500.
o
All service books must be digitized.
Claims & Payments (Rules 289–299)
•
Rule 289: For retrospective approvals, the claim period starts from the date of sanction, not
from the retrospective effect date.
•
Rule 290–294: Various time limits for submitting claims:
o
T.A. (Travel Allowance): Within 60 days.
o
Court T.A. (Retired Officer): From judgment date.
o
LTC: 30 days (with advance), 60 days (without).
o
OTA: 60 days.
o
Withheld Increment: Time counted from due date, not from approval.
•
Rule 295: Arrear claims up to 2 years can be paid after checks. Delayed claims must be
investigated but may be paid with valid reasons.
•
Rule 296–297: Time-barred claims (over 2 years) require special approval. Same rules apply
to non-government persons too.
•
Rule 298: Retrospective pay changes or concessions need prior Finance Ministry approval.
•
Rule 299: Provident Fund withdrawal approval lasts 3 months unless extended.
Revenue Refunds (Rules 300–302)
•
Rule 300: Refunds must be approved by the proper authority as per department rules.
•
Rule 301:
•
o
Refund sanctions must be documented and matched with original receipts to avoid
double payments.
o
Remissions (cancelled demands before collection) are not refunds.
o
Refunds aren’t counted as expenditure.
o
If wrongly credited, refunding authority is the one responsible for correct head.
Rule 302: No officer can be compensated for accidental property loss unless approved by the
Finance Ministry.
I. Service Records and Claims
Matriculation Certificate
•
Required for appointments where minimum qualification is matriculation or above.
•
Else, municipal birth certificate or last school certificate is valid.
Rule 288: Service Book
•
Maintained in duplicate—one with office, one with employee.
•
Verified yearly by the Head of Office.
•
Updated every January by employee.
•
Lost copy = ₹500 replacement.
•
All service books must be digitized.
Rule 289–299: Claims (TA, LTC, Arrears)
•
TA Claims: Due the day after journey; claim within 60 days or forfeited.
•
LTC Claims:
o
With advance: submit within 30 days of return.
o
Without advance: submit within 60 days.
•
Overtime: Claim due first of next month; forfeit after 60 days.
•
Withheld Increments: Count from due date, not signature date.
•
Arrear Claims: Valid if claimed within 2 years.
o
Claims >2 years require Head of Department approval.
o
Time-barred claims need Finance Wing’s sanction.
II. Refund of Revenue
Rules 300–302
•
Refunds require proper audit reference and must be recorded in original cash books.
•
Remissions before collection are not refunds.
•
Refunds are not expenditure for budgeting.
•
Compensation for property loss is not normally allowed, even if on duty or in government
housing.
III. Debt and Miscellaneous Obligations
Rule 303: Public Debt
•
Managed by Reserve Bank of India.
Rule 304: Provident Fund (PF)
•
Maintain subscriber lists.
•
Monthly schedules prepared from these.
•
Apply same for NPS.
Rule 305: Postal Life Insurance
•
Maintain a register in Form GFR 20.
•
Record changes, transfers, and recovery status every month.
IV. Security Deposits
Rule 306: Security for Cash/Store Handling Staff
•
Security in form of Fidelity Bond (Form GFR 17).
•
Full security required even for officiating staff (some exemptions up to 4 months).
•
No security needed for:
o
Office stationery/furniture custodians (low risk).
o
Library staff.
o
Drivers.
Rule 308
•
Security retained 6 months after leaving post.
•
Bond retained permanently (or till no longer needed).
V. Transfer of Land and Buildings
Rules 309–310
•
No sale of Government land/buildings without prior approval.
•
Inter-department transfers: ‘No profit no loss’ basis.
•
PSUs: Transfer at market value.
•
Building transfers: Value = current cost − depreciation (certified by CPWD).
VI. Charitable Endowments & Trusts
•
Governed by detailed rules in Appendix 8.
VII. Local Bodies
Rules 312–314
•
Local bodies must pay in advance, unless:
o
Charges are debited from their deposit.
o
Government gives advances first, and recovers later.
•
Emergencies (e.g. epidemics): Advance payment not required for medical supplies.
•
Government can adjust unpaid dues against other grants.
•
Government collects taxes/fines on behalf of local bodies and remits them.
VII. Local Bodies (continued)
Rule 315: Payments to Local Bodies
•
Government will make payments to local bodies (money raised or received on their behalf)
as per authorized orders, and in the manner/date specified by the Government.
Rule 316: Audit of Accounts
•
Local bodies and other non-government institutions’ accounts may be audited by the Indian
Audit and Accounts Department, based on terms agreed between Government and CAG
(Comptroller and Auditor General).
Rule 317: Audit Fees
•
Audit fees will be charged as per rates prescribed by Government in consultation with CAG.
•
Special exemptions can be granted (some local bodies may be exempted fully/partially).
Rule 318: Supplementary Audit of Government Companies
•
Fee waived if audit is done by CAG’s own staff.
•
Fee applicable if external professional auditors are used.
Rule 319: Rounding Off
•
Financial transactions between Government and local bodies to be rounded off to the
nearest Rupee.
VIII. Maintenance of Records
Rule 320(1): Destruction of Records
•
Government accounting records cannot be destroyed unless according to provisions in
Appendix-9 or departmental manuals.
Rule 320(2): Electronic Records
•
If records are kept digitally:
o
Backups are mandatory.
o
Must follow retention periods and formats.
o
Must ensure monthly/annual verification and certification.
IX. Contingent and Miscellaneous Expenditure
Rule 321: Contingent Expenditure
•
Rules for incurring contingent expenditure are given in Section III of Subsidiary Instructions
to Central Government Account (Receipts & Payments Rules, 2022).
Rule 322: Permanent Advance / Imprest
•
Heads of Departments may grant a Permanent Advance (Imprest) for routine/emergency
office expenses.
•
Should be minimal and require consultation with Internal Finance Wing.
•
Rules in para 10.12 of Civil Accounts Manual.
Rule 323(1): Advances for Contingent Expenses
•
Heads of Office can grant advances to employees for buying goods/services if:
o
Expense is higher than the available imprest.
o
Cannot be handled by regular payment system.
o
Amount is within delegated financial powers.
o
Head of Office is responsible for recovery/adjustment.
Rule 323(2): Recovery/Adjustment
•
Adjustment bills + balance must be submitted within 15 days.
•
If not, recovery will be made from next salary(ies).
Rule 324: Advance to Government Pleaders
•
Ministry/Department can grant up to ₹25,000 in advance to Government Pleaders for court
cases.
•
Must be adjusted during Counsel fee settlement.
Like share and subscribe thankyou