Government Accounting Rules, 1990

• 🤝The Central Government has entered into an agreement with the RBI under which the general banking business — receipt, collection, payment, and remittance of moneys — is carried on by the RBI.
• 📋Conducted subject to the agreement and to the Reserve Bank of India Act 1934, plus orders given by the Centre from time to time.
• 🏛️RBI may engage State Bank of India and other agency banks for receipts & payments on the Government's behalf.

1. Ministries operate on designated branches. Each Ministry / Dept operates on the offices & branches of RBI or the bank nominated for its receipt and payment transactions.
2. Separate accounts per Ministry. Each office or branch maintains separate accounts for each Ministry banking with it and sends accounts of transactions to the concerned PAO at prescribed intervals, with all supporting challans and paid cheques.
3. Routed via RBI-CAS Nagpur. Transactions are routed through the banking channel prescribed by RBI to enable incorporation into the books of the RBI Central Accounts Section, Nagpur — which keeps a complete account of receipts & payments, including inter-Government adjustments and inter-se adjustments of Defence, Railways & Posts.
4. Railways, Posts, Telecom, Defence segregated. Their transactions at RBI & SBI offices are distinguished from other Central transactions in initial accounts & classified separately for each Railway, each Postal circle, each Telecom AO, each CDA. These go against the Railway Fund / Postal Account / Telecom Account / Defence Account in RBI books.

Rule 14 traces the full chain from a bank receipt or payment all the way to the CGA's monthly consolidated account.

The parallel chain for States runs from treasuries and Civil Departmental Officers up to the AG. Each AG receives monthly treasury accounts (supported by schedules & vouchers). State / Central treasuries rendering accounts to a State AG submit a double set of accounts — one for State transactions, one for Central.

1. Departmental Classified Abstracts — Compiled per department, showing monthly receipts & payments classified under all four hierarchy levels.
2. Departmental Consolidated Abstracts — Progressive totals month-by-month — receipts & service payments.
3. Detail Book — For Debt, Deposit, Remittance heads — collected for the whole account circle each month.
4. Consolidated Abstract of Debt etc. — Progressive monthly totals under Public Debt, Loans & Advances, and Public Account heads.
5. Abstract of Major Head Totals — The final stage. From this the monthly & annual accounts are built.
6. Cash balance reconciliation — State Govt's cash balance in AG's books reconciled monthly with treasury Cash Accounts and CAS RBI's statements.

Transactions in the books of an AO of one Ministry (incl. Railways, Defence, Posts, Telecom) that are adjustable in another are passed on for adjustment and settled by cheque or bank draft.

• 🏭Rule 18 — Proforma Accounts: Where a department functions commercially or quasi-commercially (a factory, a store), it must keep commercial-form accounts — Capital, Manufacturing, Trading, P&L — outside the regular cash-basis Government books. The cash transactions still find a place in the regular accounts; the proforma is additional and separate.
• 📕Civil Account Offices prepare certain proforma accounts — for Irrigation, Navigation, Embankment and Drainage Projects, and Government residential buildings — in the form Government prescribes.
• 📓Rule 19 — Journal & Ledger: Civil Account Offices maintain a Journal and Ledger for closing the accounts of each year, in the form the C&AG prescribes.

Foreign-country transactions of the Central & State Governments are passed on monthly by the Indian Embassies / Missions to India and brought to account finally in Indian books after conversion into rupees.

• 🗂️Within Consolidated Fund: Transactions grouped into Sectors — General Services, Social Services, Economic Services — each distinguished by a letter of the alphabet. Sectors may have sub-sectors; both are further sub-divided into Major Heads.
• 📌Part II (Contingency): Single Major Head — all Contingency transactions there.
• 🏷️Part III (Public Account): Same grouping into Sectors / Sub-Sectors, distinguished by letters of the alphabet, sub-divided into Major Heads.

Every Major Head has a four-digit code. The first digit tells you the character of the head:

Code ranges at a glance

The classification is a five-tier ladder. Each tier answers a different question:

1. Major Head — the Function. e.g. Crop Husbandry, Defence, Education.
2. Sub-Major Head — optional intermediate split before Minor Heads. Used selectively.
3. Minor Head — the Programme undertaken to achieve the function's objective.
4. Sub-Head — the Scheme / Activity / Organisation. For non-developmental or administrative expenditure, may denote 'Organisations' or 'Wings of Administration'.
5. Detailed Head — the Object classification: Salaries, Office Expenses, Grants-in-aid, Loans, Investments, etc. — i.e. what the money was spent on.

Allocation between Capital & Revenue on a Capital Scheme (Rule 31) — main principles

1. Capital bears first construction: Capital account bears all charges for the first construction and equipment of a project, including all incidental charges.
2. New assets — Capital: Subsequent additions / extensions that constitute new assets are charged to Capital.
3. Maintenance & depreciation — Revenue: Charges for ordinary maintenance, operation, repairs, and depreciation that do not enlarge the asset go to Revenue.
4. Replacement: A replacement that merely restores the worn-out asset is Revenue; one that increases its capacity or life is Capital.

Rule 38 is the legal foundation for clearing untraceable balances from Debt, Deposit, Suspense, and Remittance heads that close to balance. Three movements:

1. Irrecoverable Govt dues: Amounts due to Government found irrecoverable are written off from the Debt head to an expenditure head as a loss to Government.
2. Unclaimed Govt liabilities: Any balance due BY Government remaining unclaimed for such time as may be prescribed is credited as revenue of the Government concerned, by debit to the Debt / Deposit head.
3. Book-keeping errors: Amounts outstanding due to book-keeping errors under heads which close to balance are written off to 8680 — Miscellaneous Government Account — Write off from heads of account closing to balance.

• 📋Rule 39 prescribes the conditions under which a department of a Government may make charges for services rendered or articles supplied — and the procedure for recording such charges in accounts.
• 🔗For the Central Government, related criteria are laid down in Part III of Chapter 16 (Rules 294–298) of the General Financial Rules 1963.

Transactions between two Governments require adjustment when required by or under the Constitution; otherwise, in such manner and to such extent as mutually agreed by the Governments concerned.

Settlement procedure for claims above ₹1,000

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

For inter-departmental payments within a Government, all departments fall into one of two categories:

The default rule (Rules 43–45)

A Service Department does not charge another Service Department for services rendered or supplies made within the same Government. There are exceptions for special officers acquiring land for specific departments, where pay and contingencies are debited to the department for which the land is acquired.

Notwithstanding Rule 43, Defence Services SHALL charge and BE charged for services rendered and supplies made to or by other Departments — unless Government decides otherwise in a particular case.

In this chapter, "recovery" means repayment to a Govt department by another department of the same Government, or by another Government, or by a non-Government party — in respect of a charge that the receiving department initially incurred and classified as final expenditure (by debit to a revenue or capital head).

• 🏛️Same-Govt depts: e.g. Railways recovering electricity charges from Posts.
• 🌐Another Govt: State A recovering joint-project costs from State B.
• 🏢Non-Govt party: Recovery of inspection / procurement fees from a private supplier (e.g. PSU, autonomous body).

Common examples: recoveries towards establishment charges, tools & plants, fees for procurement / inspection of stores — at percentage rates or otherwise.

Default rule: Recoveries between departments of the same Government are classified as deduction from the gross expenditure.

Notes under Rule 54 — fine print

1. Below-the-line recoveries: Recoveries by a non-commercial department from another department of the same Government are shown in the Demand for Grant as "below the line" recoveries under the appropriate Major head. The actual recovery (whichever year it relates to) reduces expenditure and appears in the schedule of recovery to the Appropriation Accounts of the year of recovery.
2. "Recoveries" for commercial depts applies only to services rendered in pursuance of their proper functions: postal services from Posts, telephony from Telecom, transport from Railways. When a commercial dept acts as agent for another dept in functions not germane to its essential purpose, recoveries reduce expenditure.

• 🏗️Technical estimates of a work take cognizance of all anticipated receipts from sale proceeds of materials, plant etc. salvaged from the old structure.
• 📦Receipts under "stock and suspense" are by their nature inseparable from the expenditure recorded under the main head.
• ➖Both these categories are treated as reduction of gross expenditure — overriding any contrary provision in this Chapter.

Notwithstanding anything to the contrary, receipts and recoveries on Capital Accounts — insofar as they represent recoveries of expenditure previously debited to a Capital Major Head — are taken in reduction of expenditure under the major head concerned.

Following Rule 28, Pay & Allowances of a Government servant must be classified as part of the scheme / activity / organisation (sub-head) under a programme (minor head) below a function (Major Head) to which the servant's services closely relate.

• ➡️General rule: Transit pay & allowances of a Govt servant proceeding to join an office — on first appointment, on transfer (permanent or temporary), on deputation to another dept / Govt, or reverting therefrom — are borne, in absence of special orders, by the Department / Government to which the servant is proceeding.
• 🌐Note 1 — Foreign service: Transit pay both ways for a servant transferred on foreign service is borne by the foreign employer.
• 🛫Note 2 — Missions abroad: Transit pay both ways for a servant transferred to / from Indian Missions abroad is borne by the Ministry that plans the transfer. For IFS(A) and IFS(B) officers returning from abroad: debited to budget of MEA or Ministry of Commerce where the officer reports.

• 💼Leave-salary & pension contributions recovered for a Govt servant in foreign service are credited to the Government (Central or State) under which he was permanently employed at the time of his transfer to foreign service.
• 🚫No contributions among Centre's departments: No leave-salary or pension contributions are recoverable / payable among departments of the Central Government (including Railways, P&T, Defence) and UTs with or without legislature — for Govt servants lent to or borrowed by them. Effective 1 January 1978.

Travelling expenses of a Government servant — whatever duty he is employed on — are debited under the same major / minor / sub-head as his pay. Three exceptions:

1. When the servant is required to travel on duty connected with an outside body or fund.
2. When Government considers it necessary to show separately the cost of a special service in connection with which the tour is undertaken.
3. Cases covered by general or special orders of Government authorising deviation from the general rule.

Indian Army Reserve / IAF / Naval Reserves — when called up for training

1. Direct from civil appointment: Receive pay & allowances they would have drawn in civil appointment but for the training.
2. From leave (in India, Burma, Ceylon, GB, NI): Civil leave pay & allowances they would have drawn but for the training.
3. Returning from leave abroad, before rejoining civil: Joining time civil pay from date of disembarkation in India to the day before training begins; full civil leave pay for the journey to the place of civil appointment.
4. During actual training: Military pay & allowances.

Reservists employed under Civil Govt

• ⚔️Periodical training: Receive military pay & allowances PLUS the excess (if any) of their civil pay over military pay — provided this concession is specifically sanctioned by the Ministry / Head of Office / State Government.
• 💰Unless the civil pay is met from Defence Services Estimates, the extra expenditure is NOT a charge on Defence Estimates.
• 🪖Soldiers under military escort for trial on criminal charge — Defence pays. Soldiers under Police escort — Civil pays.
• 🎖️Outfit allowance for Indian commissioned officers in civil employment (under specified Army Instructions) — debitable to estimates of the Ministry / State under whom the officer is employed at the time the allowance becomes due.

Default rule: Contributions made by the Central or State Government to district boards, municipalities, etc. (or vice versa) are debited as expenditure or shown as receipts under the head most closely connected with the object for which the contributions are made.

Worked examples

1. Moneys advanced under special authority & recoverable in cash, plus sums overpaid in non-service vouchers, are adjusted under 8550 — Civil Advances. This head covers items which are from their inception debts due to Government — recoverable either in cash or by deduction from other claims.
2. Pay & Allowances paid before due: For an assignable period, debited to the same head as if paid after they were due — NOT Civil Advances.
3. Advances of Pay and TA on transfer debited to the final head of account, NOT Civil Advances. Finally adjusted as revenue expenditure in the books of the Government making the advance — regardless of whether the officer is proceeding to or reverting from another Government.
4. Settlement of such advances by net payment / net recovery through adjustment bills — accounted for in the books of the Government where the adjustment bills are preferred.

Rule 71 lays down two schedules. The rule of thumb: follow the original debit.

1. Functional buildings (schools, colleges, hospitals): If municipal rates & taxes are paid by the department dealing with that function — adjusted as part of the sub-head / minor head relating to the function, under detailed head "Rent, Rates and Taxes".
   However, if PWD (in administrative control of the building) pays the whole / part — debited to 2059 — Public Works — Maintenance and Repairs.
2. Other non-residential buildings (non-Defence): If taxes are paid by a department nominated by Govt and not passed on to the occupying department — debited to 2070 — Other Administrative Services — Other Expenditure.

Reproduces, for ready reference, the relevant provisions in three groups:

Reproduces the Presidential Notification dated 27 September 1980 establishing the CGA in the Department of Expenditure, plus the entry in the Allocation of Business Rules 1961 (Entry 7A).

CGA's responsibilities (Entry 7A as substituted)

1. General principles of Government accounting relating to Union or State Governments and form of accounts; framing / revising rules & manuals.
2. Reconciliation of cash balances of Union Govt with RBI, in general — and in particular, of RBI Deposits pertaining to Civil Ministries / Departments.
3. Overseeing the maintenance of adequate accounting standards by Central Civil Accounts Offices.
4. Consolidation of monthly accounts, review of trends of revenue realisation and significant features of expenditure; preparation of annual accounts (incl. Summary Civil Appropriation Accounts).
5. Administration of Central Treasury Rules.
6. Coordination & assistance in introducing management accounting systems in Civil Ministries / Departments.
7. Cadre management of Group 'A' (Indian Civil Accounts Service) and Group 'B' officers.
8. Organising training & examinations for Group 'C' and 'D' Central Civil Accounts staff.

Reproduces three sections of the C&AG's Act:

Key features

• 📊Major / Sub-Major Heads — Provisions for grants under 3601 / 3602 (Grants-in-aid to State / UT Govts) with sub-categories for Central Plan Schemes / Centrally Sponsored Plan Schemes. Loans go under 7601 / 7602.
• 🧩Nomenclature of Minor Heads — Designed per paras 3.9 and 6.5 of the 'General Directions' in the List of Major and Minor Heads. First portion indicates the function (per sub-major head); second portion indicates the programme minor head.
• 🔗Sanctions to indicate heads — Plan-outlay approvals and sanctions of Central Ministries releasing grants / loans indicate the budget head up to minor head and sub-detailed heads — which automatically gives the clue to corresponding heads in State / UT books.
• ⚙️Goal — Uniform classification so that scheme-wise plan expenditure is comparable across all States.

Codifies the principles regulating the distribution of certain charges & receipts between Governments — based on arrangements agreed between all Governments and therefore binding on all.

Structure of Appendix 5

Key principles from Part C

• 🚉Bridge protection — Normal conditions: Responsibility of the State Government concerned; expenditure borne by it.
• 🪖Bridge protection — by Armed Forces at Railway's request: Expenditure falls on the Railway.
• 🌐Bridge protection — by Defence on policy grounds: Charges debited to Defence Services / Public Service Dept concerned.
• 🧾Medical reimbursement / allowances may be considered in internal check for payment. But pay & allowances of medical staff (Doctors, Nurses) are NOT shared.