Accounts Code, Volume-I

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GENERAL PRINCIPLES AND METHODS OF ACCOUNTS

Definitions

In this volume, unless the context otherwise required, the following expressions have the meanings hereby respectively assigned to them‐that is to say‐

‘Accountant General’, means the Head of an Office of Accounts subordinate to the Comptroller and Auditor General of India.

‘Bank’ means any branch of the State Bank of India acting as the agent of the Reserve Bank of India in accordance with the provisions of the Reserve Bank of India Act, 1934 (2 of 1934), any branch of a subsidiary bank as defined in Section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959) which is authorized to transact Government business as agent of the State Bank of India, or any branch of a bank as may be appointed by the Reserve Bank of India as its agent under the provisions of sub‐section(1) of Section 45 of the Reserve Bank of India Act, 1934 (2 of 1934);

“Chief Accounting Authority” means the Secretary of a Ministry or Department of the Government of India in which the Departmentalized System of Accounting has been introduced and in the case of a Union Territory with separated accounts, it’s Chief Secretary/Chief Commissioner.

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

‘Comptroller and Auditor General’ means the Comptroller and Auditor General of India appointed under Article 148 of the Constitution of India.

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

“Consolidated Fund” means the Consolidated Fund of India or of a State, referred to in clause(1) of Article 266 of the Constitution, or of a Union Territory Government, referred to in Section 47 of the Union Territories Act, 1963, or all the three, as the context may imply (Appendix 3).

‘Contingency Fund”, means the contingency Fund of India established in pursuance of clause (1) of Article 267 of the Constitution or the Contingency Fund of a State established in pursuance of clause (2) of Article 267 of the Constitution, or the Contingency Fund of a Union Territory Government established in pursuance of Section 48 of the Union Territories Act, 1963, or all the three, as the context may imply (Appendix‐3).

‘Defence Department’ means that Department of the Central Government, whose expenditure is met from the Demands for Grants relating to Defence Services.

‘Government’ means the Central (Union) Government or State Government, or Union Territory Government, or all the three, as the context may imply.

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

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

’State’, except where it appears otherwise from the context, refers to a State included in the First schedule to the Constitution.

‘The Constitution’, means the Constitution of India.

‘Treasury’, includes a Sub‐Treasury, Pay and Accounts Officer and Assistant Pay and Accounts Officer. It also includes Pay and Accounts Officer (Works and Accounts).

CHAPTER 1 : FUNCTIONS OF THE COMPTROLLER AND AUDITOR‐GENERAL IN RELATION TO ACCOUNTS

Comptroller and Auditor‐General’s (Duties, Powers and Conditions of Service) Act, 1971

Article 1. 

The functions of the Comptroller and Auditor‐General are derived mainly from the provisions of Articles 149 to 151 of the Constitution of India. Article 149 envisages an Act of Parliament to regulate the duties and powers of the Comptroller and Auditor‐ General. Parliament has enacted the Comptroller and Auditor‐General’s (Duties, Powers and Conditions of Service) Act, 1971 (herein after called the Act) which came into force from 15th December 1971.

The Act prescribes inter alia duties and powers of the Comptroller and Auditor‐ General in relation to the Accounts of the Union, the States, Union Territories and other authorities and bodies.

Till the Act came into force, Comptroller and Auditor‐General, under the transitional provisions in Article 149 of the Constitution, continued to perform the duties and exercise powers in relation to the accounts of the Union and of the States as provided in the Audit and Accounts Order, 1939 as adopted. The Act has superseded the provisions of the said Order.

The relevant provisions of the Comptroller and Auditor‐General’s (Duties, Powers and Conditions of Service) Act, 1971 (duly incorporating the amendments made in 1976 and 1984) defining the duties and powers of the Comptroller and Auditor‐General in relation to accounts are reproduced below. References there to the ‘Act’ should be construed as references to the Comptroller and Auditor‐General’s (Duties, Powers and Conditions of Service) Act, 1971:‐

Section 10. (1) The Comptroller and Auditor‐General shall be responsible:‐

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

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

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

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

the accounts of any particular services or departments of the Union;

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

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

the accounts of any particular services or Departments of the State:

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

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

for compiling the accounts of any particular service or department of the Union or of State, or

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

Section 11. The Comptroller and Auditor‐General shall, from the accounts compiled by him or by the Government or any other person responsible in that behalf prepare in each year accounts (including in the case of accounts compiled by him, Appropriation Accounts) showing under the respective heads the annual receipts and disbursements for the purpose of the Union, of each State and of each Union Territory having a Legislative Assembly, and shall submit those accounts to the President or the Governor of a State or Administrator of the Union Territory having a Legislative Assembly, as the case may be, on or before such dates as he may, with the concurrence of the Government concerned, determine;

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

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

Section 12. The Comptroller and Auditor‐General shall, in so far as the accounts, for the compilation or keeping of which he is responsible, enable him so to do, give to the Union Government, to the State Governments or to the Governments of Union Territories having Legislative Assemblies, as the case may be, such information as they may, from time to time, require, and render such assistance in the preparation of their annual financial statements as they may reasonably ask for.

Section18. (1) The Comptroller and Auditor‐General shall, in connection with the performance of his duties under this Act have authority:‐

to inspect any office of accounts under the control of the Union or of a State, including Treasuries and such offices responsible for the keeping of initial or subsidiary accounts as submit accounts to him;

to require that any accounts, books, papers, and other documents which deal with or form the basis of or are otherwise relevant to the transactions to which his duties in respect of audit extend, shall be sent to such place as he may appoint for his inspection.

To put such questions or make such observations as he may consider necessary, to the person in charge of the office and to call for such information as he may require for the preparation of any account or report which it is his duty to prepare.

(2) The person in charge of any office or Department, the accounts of which have to be inspected and audited by the Comptroller and Auditor‐General, shall afford all facilities for such inspection and comply with requests for information in as complete a form as possible and with reasonable expedition.

Section 21. Any power exercisable by the Comptroller and Auditor‐General under the provisions of this Act, or any other law may be exercised by such officer of his Department as may be authorized by him in this behalf by general or special order:

Provided that except during the absence of the Comptroller and Auditor‐General on leave or otherwise no officer shall be authorized to submit on behalf of the Comptroller and Auditor‐General any report which the Comptroller and Auditor‐General is required by the Constitution or the Government of Union Territories Act, 1963 (Act 20 of 1963) to submit to the President or the Governor of a State or the Administrator of a Union Territory having a Legislative Assembly, as the case may be.

Section 22. (1) The Central Government may, after consulting with the Comptroller and Auditor‐General, by notification in the Official Gazette, make rules for carrying out the provisions of this Act in so far as they relate to the maintenance of accounts.

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

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

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

The manner in which the accounts of stores and stock shall be kept in any office or Department of the Union or of a State, as the case may be;

Any other matter which is required to be, or may be, prescribed by rules.

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

Article 2. Deleted

Articles of the Constitution to be kept in view in devising the form of Accounts

Article 3. 

According to Article 150 of the Constitution, the form in which the accounts of the Union and of States shall be kept is to be prescribed by the President on the advice of Comptroller and Auditor General of India. This function is exercised by the Controller General of Accounts, Ministry of Finance (Department of Expenditure) on behalf of the President of India.

Subsidiary instructions that would be necessary for carrying into effect the provisions of these rules and in particular, instructions for opening new heads of accounts or modifications of the existing ones or instructions relating to the content and manner of maintenance of accounts will be issued by the Controller General of Accounts in the Ministry of Finance on the advice of the Comptroller and Auditor‐General could be assumed to have been obtained.

Special Provisions Relating to Railways, Posts, Telecommunications and Defence Department

Article 4. 

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

Note:‐ With effect from 1982‐83, the Ministry of Railways, Controller General of Defence Accounts and Director General, Posts have been delegated functions of the Central Government under Article 150 of the Constitution in so far as such functions relate to the opening of sub‐heads and detail heads of accounts under various major and minor heads of accounts pertaining to the their Departments subject to the following conditions.

Powers as above shall be exercised in consultation with the accredited Audit Officer namely ADAI, Railways, Director of Audit, Defence Services or Director of Audit, Posts.

Orders so issued should be consistent with the instructions that are issued as envisaged in Article 3 above.

Appropriation Accounts

Article 5. 

The form of Appropriation Accounts which the Comptroller Auditor‐General is required to prepare under Section 11 of Comptroller & Auditor Generals (DPC) Act, 1971, is not dealt with in this code. The instructions relating to the preparation of such Accounts by the Accountants General are included in the Manual of Standing Orders (Accounts and Entitlements) issued by the authority of the Comptroller and Auditor‐General. The object of these Accounts is to relate expenditure brought into account during a financial year to the several items specified in the Schedules to the Appropriation Accounts passed under Articles 114‐116 or Articles 204‐206 of the Constitution. As no special process of Accounting is involved in the preparation of Appropriation Accounts, they should be regarded as complimentary to the Accounts of Annual Receipts and Disbursements referred in Section 11 of Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971.

CHAPTER 2: GENRAL OUTLINES OF THE SYSTEM OF ACCOUNTS

Consolidated Funds, Contingency Funds and Public Accounts of India and of the States

Article 7. 

The Central Government and the State Governments have separate Consolidated Funds of their own, entitled ‘the Consolidated Fund of India’ and ‘the Consolidated Fund of the State’, respectively, into which the revenues received by the Central (including Union Territories)/ State Governments, loans raised by Government through market borrowings by way of issuing bonds/securities, loans or ways and means advances, and moneys received by that Government in repayment of loans are credited, and from which the expenditure of that Government when so authorized by the appropriate Legislature is met. The Central Government and the State Governments have also separate Public Account entitled ‘the Public Account of India’ and ‘the Public Account of the State’, respectively, into which all other public moneys received by or on behalf of the Central (including Union Territories)/ State Governments are credited and from which disbursements are made in accordance with the prescribed rules.

The procedure to be followed for the payment into and the withdrawal, transfer or disbursement of moneys from, the Consolidated Fund and the Public Account and for the custody of moneys standing in that Fund and account is regulated by law made by the appropriate Legislature and, pending such legislation, by the rules made by the President or the Governor of the State, as the case may be, under Article 283 of the Constitution. The President and the Governor of the States have authorized under this Article the continuance of the rules in force before the commencement of the relevant provisions of the Constitution. These rules include provisions to secure that all public moneys received on account of the Central Government or of the State shall, with such exceptions as may be specified in them, be paid into the Consolidate Fund or the Public Account of India or of the State concerned, as the case may be.

Note:‐Though the transactions of the Railway Department form part of the Consolidated Fund, the Contingency fund and the Public Account of India, they are nevertheless taken against the Railway Fund which has been created pro forma in the books of the Reserve Bank of India.

Article 7‐A. 

The Central Government and each State Government have or may have a separate Contingency Fund, entitled ‘the Contingency Fund of India’ and ‘the Contingency fund of the State’, respectively. The Fund will be at the disposal of the President or the Governor of the State to enable advances to be made by him for meeting unforeseen expenditure, pending authorization of such expenditure by Parliament or the State Legislature under Appropriations made by law. The procedure to be followed for the custody of, payment of moneys into and the withdrawal of moneys from such Fund is regulated by law made by the appropriate Legislature and pending such legislation by the rules made by the President or the Governor of the State.

Article 8. 

Save as may be specifically provided in any case, cash balances in the separate ‘Consolidated Funds or Contingency Funds and Public Accounts of India and of States’ are kept with the Bank.

Account of the Central and State Government with the Bank

Article 9. 

The Central Government and each of the State Government have made separate agreements with the Reserve Bank of India by virtue of which the general banking business of these Governments (in which business is included the receipt, collection, payment and remittance of moneys on behalf of Government) is carried on and transacted by the Bank in accordance with and subject to the provisions of the agreement and of the Reserve Bank of India Act, 1934, and in accordance with and subject to such orders as may from time to time be given to the Bank by the Central Government or the State Government, as the case may be. Central or State Government business is transacted at any of the offices, branches or agencies of the Bank for the time being in existence as may from time to time be so directed. The Central Government, as a general rule, operates on every office and branch of the Reserve Bank of India and on every branch of the State Bank of India throughout India acting as the agent of the Reserve Bank. The operations of each State are confined to the offices and branches of the two Banks which have been designated as falling within the area of that particular State. The receipt and payment of moneys on behalf of a State outside its jurisdiction are ordinarily arranged through the Accountant‐General of the State in which the transactions take place.

Note:‐ The Government of Sikkim State have not so far entered into agreement with the Reserve Bank of India for the conduct of their general banking business by the Bank.

[The Agreement between the Governor of the State of Andhra Pradesh and the Reserve Bank of India is printed as Appendix I to the Andhra Pradesh Treasury Code, Volume. II]

Article 10. 

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

Note‐1:‐ The transactions of Railways at offices and branches of the Reserve bank are distinguished from other Central transactions in the initial accounts and are classified by each Railway separately. These transactions are taken against the Railway Fund in the books of the Reserve Bank direct and do not therefore pass through the Treasury Accounts or consequently through the accounts of the Civil Accountant‐General. Each Office and branch of the Bank furnishes the Accounts Officer of each Railway separately every day with a copy of the daily scroll relating to the transactions of that Railway together with the requisite vouchers.

Note‐2:‐ With effect from 1st February 1978 transactions on account of discharge value of, and periodical interest on securities of State Governments, as well as receipts on account of subscriptions against market loans floated by State Governments are taken by cash balance of the State Government concerned with the Central Accounts Section of the Reserve Bank of India, Nagpur.

Article 11. 

Each branch Of the State Bank of India transacting Government business as agent of the Reserve Bank classifies the daily receipts and disbursements on behalf of Government in two groups, Central and State, the latter embracing transactions not only on behalf of the State in which the Bank is situated but also on behalf of other States in which the Bank is situated but also on behalf of other States. Separate statements of transactions of the Central Government and of those taken against the provincial account are forwarded by each branch daily with supporting vouchers to the local Treasury Officer or to the Accountant‐General, as the case may be. The total of such transactions are also reported by the bank through the Central Accounts Office of the State Bank.

Note:‐ The procedure prescribed in the note‐1 under Article 10 is followed in respect of Railway transactions taking place at each branch of the State Bank of India.

Article 12. 

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

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

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

Railway Fund Balance,

Postal Account balance,

Telecommunication Account Balance,

Defence Account balance.

Departmentalized Ministries Account Balance,

Total

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

Note:‐ In respect of Accountant General having separate Central Section of Accounts in their books and of Accountant General Accredited with Union Territory Government/Administrations, the Central Accounts Section of the Reserve Bank of India, Nagpur shall send a statement of closing balance of each such account to the concerned Accountant General, Principal Accounts Officer of the Ministry/Department and the Accountant General of Union Territory Government/Administration, at the close of each month’s account with such supporting details as may be prescribed by the Reserve Bank of India, in consultation with the Controller General of Accounts.

Transactions of other Governments in State Treasuries

Article 13. 

Cash balance held in a State Treasury form part of the Consolidated Fund, the Contingency Fund (if one has been established) and the Public Account of the State to which the Treasury belongs. The Treasury Rules of each State Government issued under Article 283 of the Constitution, however, provide that moneys may be received and payments made on behalf of other State Governments, by a State Treasury, similarly, moneys may be received and payments made by such treasuries on behalf of the Central Government in the case of certain specified transactions. All such receipts and payments on behalf of other State Governments and the Central Government other than transactions of Central (Civil) pensions vide (b) infra shall be taken in the first instance against the cash balance of the State concerned. On receipt of intimation of such transactions through the Monthly Treasury Account or otherwise the Accountant General shall take the following action:‐

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

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

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

in the case of such transactions of the Central Government at bank treasuries, as are required, to be brought to account in the Central Section or accounts of the Accountant General (such as those of Central Civil Pension) these will be taken directly against the balance of the Central Government by the bank in which the transaction arises and the Central Accounts Section of the Reserve Bank, with reference to the consolidated statement of daily transactions of this nature reported to it by the link branch of the Bank accredited to the Treasuries. If such transactions take place in Non‐bank treasuries, the necessary adjustments against the balances of the Central and State Governments, shall be made through the Central Accounts Section of the Bank by the State Accountant General. [But See Note (ii) below (a) above].

In the case such transactions of the Central Government as are authorized to be transacted at State Treasuries, but which are finally required to be brought to account in the Central Accounts kept by the Accounts Officers of the Ministries/Departments of the Central Government or of the Railways/Postal/Defence Departments, the necessary adjustments between the balances of the State and the Central (including Railways/Postal/Defence) shall be made by the Accountant General by Settlement in cash by exchange for cheques/bank drafts, taking the transactions initially in the State Section of accounts under the major head “8658‐ Suspense Accounts”.

State transactions in Central Treasuries.

Article 14. 

Cash balances held in the Treasuries of the Central Government form part of the Consolidated Fund, Contingency Fund and the Public Account of India. Such Treasuries exist in those Union Territories whose accounts have not been separated from Audit and continue to be compiled by the Comptroller and Auditor General of India. Transactions on behalf of State Governments arising in that Treasuries shall be classified in the Treasury Accounts under the Head “8658‐Suspense Accounts (Civil) – Accounts with Accountant General and settled in cash by exchange of cheques/ Demand Drafts as the case may be”.

Note:‐ At present the settlement of the transactions by exchange of cheques/demand draft is resorted to in cases where the transactions taking place in a Union Territory accredited to an Accountant General are adjustable against the cash balances of a State, whose accounts are maintained by another Accountant General. These transactions are initially taken in the Central Section of accounts under the head ‘8685 Suspense Accounts‐Cash Settlement Suspense Account.

General Outlines of the System of Accounts.

Article 15. 

The General Outlines of the system of accounts of the Central and State Governments, briefly stated, are as follows:‐

All receipts in India, on behalf of the Central and State Governments are paid into a Treasury or the Bank. Except as provided in clause (b) below, the initial accounts of such receipts are maintained at the Treasury.

Receipts realized in the Railway, Defence, Posts and Telecommunications, Public Works, Forest and any other Departments which may be authorized in this behalf are paid into a Treasury or the Bank in lump and are accounted for at the Treasury merely as receipts on behalf of such Departments. The detailed accounts of such receipts are kept by the Departmental Officers concerned.

Payments in India on behalf of the Central and State Governments are ordinarily made either at a Treasury or the Bank. Some Departmental Officers are, however authorized to withdraw sums in lump from a Treasury or the Bank for payments. In the former case, the initial accounts of payments are kept at the Treasury. In the latter case, such accounts are maintained by the Departmental Officer concerned.

The accounts referred to in this clause do not relate to the accounts maintained by Government servants in respect of expenditure incurred from Permanent Advances.

At the beginning of each month each Accountant‐General receive from the Treasuries under his jurisdiction Monthly Accounts* supported by the requisite schedules, vouchers, etc., in respect of the transactions which took place in the Treasury during the previous month.

Officers of the Civil Departments, who pay their receipts into the Consolidated Fund or the Public Account or withdraw moneys for expenditure there from or from the Contingency Fund in lump, submit detailed accounts of their transactions to the respective Accounts Officers. Some Departmental Officers are required to render to the Accounts Officer compiled accounts with suitable abstracts of their transactions classified under prescribed heads of accounts.

[*In the State of Andhra Pradesh the Monthly Accounts sent by Treasuries to the Accountant General are Classified Accounts].

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

The Departmental Classified Abstracts and the Department Consolidated Abstracts for the Central Departments are compiled separately from those for Departments of the State Government.

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

The final stage of compilation will be the preparation of the Abstract of Major head totals showing the receipts and disbursements by major heads during and to end of the month from the Departmental Consolidated Abstracts and the Consolidated Abstracts of Debt and Remittance transactions. From the Consolidated Abstracts for State and Central respectively will also be compiled the Monthly and the Annual Accounts of the State Governments and of Union Territory Governments with Legislature and material for the annual accounts of the Central Government and of Union Territory Administrations.

The cash balance of the State Government in the books of the Accountant General at the close of each month will then be reconciled with the balances shown in the Cash Accounts rendered by Treasury Officers and with the statements of closing balance received from the Central Accounts Section of the Reserve Bank. Reconciliation of figures under the head “8685‐Deposits with Reserve Bank” in respect of transactions of the Central Government/Union Territory Governments and Administrations arising in their books will be effected by the Accountants General.

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

A copy of the monthly accounts of each State Government is submitted to it by Accountant‐General concerned. [The Accountant‐General, Central Revenues, received from each Civil Account Office and Abstract of the Account of the transactions of the Central Government compiled by it for each month and these accounts together with the accounts for the month prepared in his office are consolidated into a single monthly account for submission to the Central Government]. A copy of the Monthly account (Civil) shall be submitted to the Central Government in the Ministry of Finance (Department of Economic Affairs) by the Controller General of Accounts. Postal Board, Telecommunication Board, Railway Board and Controller General of Defence Accounts will submit the Consolidated monthly accounts of their respective departments separately to the Central Government.

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

Principal Accounts Offices of the Ministries/Departments, separated accounts organizations of Union Territory Governments/Administrations and State Accountant General shall work out during the year the progressive figures of Central transactions in their books. On closing the account for March Supplementary, a progressive account for Central transactions will be furnished by them to the Controller General of Accounts. The Consolidated Annual Accounts of the Posts, Telecommunications, Railways and Defence Departments, shall also be prepared and submitted by the Postal Board, Telecommunication Board, Railway Board and the Controller General of Defence Accounts to the Controller General of Accounts, to enable him to prepare accounts relating to the annual receipts and disbursements for the purpose of the Central Government.

Accounts between different Account Circles

Article 16. 

(1) The General Outlines of the procedure connected with the Settlement of transactions between a State Government and the Central Government (including those of Railways, Posts, and Telecommunications and Defence) and between one State Government and another is set forth in this Chapter. There are two procedures which are adopted in dealing with such settlement, as indicated below:‐

By sending advices to the Central Accounts Section of the Reserve Bank of India, Nagpur by the Accounts Officers concerned to the increase/decrease the balance of the Government concerned per contra decrease/increase of the other Government, with reference to the vouchers, Schedules or other particulars of Inter‐Government transactions. These are initially treated generally as “Remittance transactions” by the Civil Accountants General.

By actual cash settlement through cheques/demand draft being exchanged between the Accounts officers concerned, keeping initially the amounts under ‘Suspense’ pending clearance of the same on realization of proceeds of such cheques/drafts.

The first procedure is adopted in the following cases in Civil Accountants General offices:‐

Accounts of ‘Inter State Suspense’ (i.e.) transactions between State Inter se;

Repayments of loans taken by States from the Central Government and of the payments of interest thereon by the State Government to the Central Government, Ministries/departments.

The special case of pensions (including commuted value) in respect of retired High Court Judges paid through State Treasuries or Public Sector Banks, which are, under certain constitutional provisions, required to be ‘changed’ on the Consolidated Fund of India, pending recovery of equivalent amounts from the States concerned.

Transactions connected with ‘Reserve Bank of India Remittances’ occurring in State Non‐banking treasuries/Sub‐treasuries; and

Such other cases as may be specifically prescribed by the President on the advice of the Comptroller and Auditor General of India.

The Second procedure of Cash settlement by exchange of cheques/drafts by the Accounts Officers concerned is adopted in all other cases of inter Government transactions between State and Union Territories, on the one hand and Central Government (including Railways, Posts and Telecommunications and Defence) on the other.

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

Note:‐The under mentioned transactions between Central Civil on the one hand and Defence Department, Posts, Telecommunication and Railway Department on the other hand, will however, continue to be settled through the Central Accounts Section of the Reserve Bank of India, Nagpur:‐

Settlement of payments against supplies arranged by the Directorate General of Supplies and Disposals in the Department of Supply; in the Ministry of Commerce on behalf of Railway, Defence and Posts.

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

Dividend payable in lieu of tax on Railway Passenger Fares by Railways to Central Revenues.

Loans from General Revenue to Railways and recovery of interest on loans and advances to Railways.

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

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

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

Clubbed in 16. (1)

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

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

Annual Finance Accounts of the Central and State Governments

Article 17 

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

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

Appropriation Accounts of Central Ministries (other than Ministry of Railways) and of Central Civil Departments shall be prepared by the respective Ministries and Departments under the guidance and supervision of the Controller General of Accounts, and signed by their Chief Accounting Authority, Union Government Appropriation Accounts (Civil) required to be submitted to Parliament, shall be prepared by the Controller General of Accounts by condensing and consolidating the aforesaid Appropriation Accounts. Appropriation Accounts pertaining to Departments of Ports, Telecommunications, Railways and Defence shall be prepared and signed by the Secretaries to the Department of posts, Department of Telecommunications, Financial Commissioner Railway Board and Secretary Board and Secretary (Defence, Finance) respectively.

Annual Accounts of the Government of India as a whole (including transactions of Departments of Posts, Telecommunications Defence, Railways Union Territory Administration and transactions under public Accounts of India, Accounts of union territory Governments with Legislatures showing under the respective heads the annual receipts and disbursement for the purpose of the Union shall be prepared by the Controller General of Accounts.

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

General Principles and Methods of Accounts

Article 18. 

Besides the Annual Finance Accounts of the Central Government, the Comptroller and Auditor General is also required to submit to the President annually under Paragraph 12 of the Audit and Accounts Order 1936, a Financial statement incorporating a summary of the accounts of the Central Government and of all the States for the last preceding financial year in such form as he, within the concurrence of the President may determine. This General Financial Statement which is called the Combined Finance Revenue Accounts of the Central and State Government in India presents the transactions of all the Governments side by side classified under the several major and minor heads of accounts classification, thus incidentally enabling a comparison to be made for the statistical or other purposes of the receipts and expenditure of the several Governments pertaining to each branch of administration or to activities of a similar nature.

Proforma Accounts

Article 19. 

The operations of some departments of Government sometimes include undertaking of a Commercial or a Quasi‐Commercial character, e.g., an industrial factory of a store. Even though these may be maintained almost entirely for the benefit of the department, it is still necessary that the financial results of the undertaking should be expressed in the normal commercial form so that the cost of the service or undertaking may be accurately known. This implies the maintenance of suitable Capital, Manufacturing, Trading and Profit and Loss accounts and as the Government system of accounts, being on a purely cash basis, is unsuitable for such commercial accounts, these are usually kept on a proforma basis outside the general accounts of Government. The actual transaction entering these proforma accounts except those adjusted on a liability basis find a place primarily in the regular accounts and the commercial accounts are additional as well as separate. These proforma accounts are maintained by the departmental authorities themselves in such form as may be agreed upon between the Comptroller and Auditor General and the Government concerned.

Certain proforma accounts relating to Irrigation Navigation, Embankment and Drainage Projects and Government Residential Buildings are required to be prepared by Civil Accounts Officers. Proforma accounts are also sometimes required to be prepared by transactions which do not relate to Commercial or Quasi‐Commercial Undertakings of Government e.g., transaction of the Famine Relief Fund. The form in which any proforma accounts are prepared in accounts offices is determined by the Comptroller and Auditor General in consultation which the Government concerned.

Local Ruling under article 19.

In the State of Andhra Pradesh pro forma accounts (i.e., manufacturing, trading profit and loss etc., accounts) are maintained outside the regular Government accounts for the following concerns.:‐

Ice‐cum‐Cold Storage Plant Tungabhadra Dam Fishnet making Plant, Tungabhadra Dam.

Fish seed Farms, Tungabhadra Dam.

Andhra Pradesh Government Tex Book Press, Hyderabad.

Andhra Pradesh Government Life Insurance, Hyderabad .

Government Central Press, Hyderabad.

Government Regional press Vijayawada.

Government Regional press Kurnool.

Government Distillers, Narayanaguda, Hyderabad.

Journal and Ledger

Article 20. 

The accounts of Government are based in the main on the single entry system and the double entry system is applied only in regard to the maintenance of a set of technical accounts called the Journal and Ledger. The main purpose of Journal and Ledger is to bring out by a scientific method the balances of accounts in regard to which Government acts as a banker or remitter or borrower or lender. Though such balances are worked out in the regular Government accounts, their accuracy can be guaranteed only by a periodical verification with the balances brought out in the double entry accounts. State Accountants General maintain Journals and Ledgers for State Government transactions.

CHAPTER 3: GENERAL

Period of Accounts

Article 21.

The Annual Accounts of the Central, State and Union Territory Governments which the Comptroller and Auditor General is required is to render shall record transactions which take place during a financial year, the running from 1st April to 31st March. Similarly the Annual General Financial Statement (the Combined Finance and Revenue Accounts of the Central and State Governments in India) which the Comptroller and Auditor General prepares shall record the transactions of the Central, State and Union Territory Governments for the same period.

Note:‐ The Government accounts of a year may be kept open for a certain period in the following year for completion of the various accounting process inter‐alia in respect of the transactions of March, for carrying out of certain interdepartmental adjustments and for the closing of the accounts of several Provident funds and suspense heads. Adjustments may also be made after the close of the year owing to mis‐postings and misclassifications coming to notice after the 31st March. An actual transaction taking place after 31st March should not, however, be treated as pertaining to the previous financial year even though the accounts for that year may be open for the purpose mentioned above.

Coming to notice after the 31st March, an actual transaction taking place after 31st March should not, however, be treated as pertaining to the previous financial year even though the Accounts for that year may be open for the purpose mentioned above.

Cash basis of Accounts

Article 22. 

With the exception of such book adjustments as may be authorized by any rules includes in this Code or by any general or special orders issued by Government after consultation with the Comptroller and Auditor General. The transactions in Government accounts shall represent the actual cash receipts and disbursements during a financial year as distinguished from amounts due to or by Government during the same period.

Currency in which Accounts are kept

Article 23. 

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

Form of Accounts Main Divisions of Accounts

Article 24. 

(1) The Government accounts shall be kept in the following three parts:‐ Part I Consolidated Fund of India or of the State/Union territory concerned. Part II Contingency Fund of India or of the State Union territory concerned.

Part III Public accounts of India or of the State concerned.

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

In Part I, viz., Consolidate Fund of the accounts, there shall be two Main Divisions namely:‐

Revenue consisting of sections for receipts heads (Revenue Accounts) and Expenditure heads (Revenue Accounts).

Capital Public debt, Loans consisting of Sections for Receipts Heads (Capital Account)

Expenditure heads (Capital Account) and Public Debt, Loans and Advances etc.,

The first Division shall comprise the Section Receipts Heads (Revenue Accounts) dealing with the proceeds of taxation and other receipts classed as Revenue and the Section ‘Expenditure Heads’ (Revenue Account) dealing with expenditure met there from.

The second Division shall comprise the following Sections:‐

The section Receipts heads (Capital account) which deals the receipts of a Capital nature which cannot be applied as a set off to Capital Expenditure.

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

The Section “Public Debt” and ‘Loans and Advances’ etc., of the Second Division shall comprise, loans raised and their repayments by Government such as Internal Debt, External debt of the Central Government and Loans and Advances made (and their recoveries) by Governments. The Section also includes certain special types of heads for transactions relating to Transfers from the Consolidated Fund to the Contingency Fund and Inter‐state Settlements.

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

In part III of the account, the transactions relating to Debt (other than those included in Part I) ‘Deposits’ ‘Advances‘, ‘Remittances’, and ‘Suspense’ shall be recorded. The transactions under Debt, Deposit and Advances in this part were such in respect of which Government incurs a liability to repay the money received or has a claim to recover the amounts paid together with the repayments of the former (Debt/Deposits) and the recoveries of the latter (Advances). The transactions related to ”Remittances” and ‘Suspense’ in this Part embrace all merely adjust heads under which shall appear such transactions as remittances of Cash between Treasuries and Currency Chests. Accounts between different Accounting Circles etc., the initial debits or credits to these heads will be cleared eventually by corresponding receipts or payment either within the same circle of account or in another account circle.

Sectors and Sub‐sectors of Account

Article 25. 

(a) Within each of the Divisions and Sections of the Consolidated Fund, the transactions shall be grouped into Sectors such as “General Services”, “Social Services“, “Economic Services” under which specific functions or services shall be grouped. The Sectors shall be sub‐divided into Major heads of account, in some case the Sectors are in addition, sub‐divided in two Sectors before their division into Major heads of accounts. Each Sector in a section shall be distinguished by a letter of the Alphabet.

In the part II, Contingency Fund, there shall be a single Major head and all the transaction met out of the Contingency Fund shall be recorded under it.

In the part III, Public Accounts the transactions shall be grouped into Sectors and Sub‐ sectors, which shall be further sub‐divided into Major heads of account. The Sectors, Sub‐ sectors shall be distinguished by letters of the alphabet.

(b) A Four digit Code has been allotted to the Major heads, the first indicating whether the Major Head is a Receipt Head or Revenue Expenditure head or Capital Expenditure head or Loans and Advances Head or it pertains to Public Account. If the first digit is ‘0’ or ‘1’ the Head of Account will represent Revenue Receipt. ’2’ or ‘3’ will represent Revenue Expenditure;’4’or ‘5’ Capital expenditure; ’6’ or ’7’ Loans and Advances head; (4000 for Capital Receipts) and ‘8’ will represent Contingency Fund and Public Account – 8000 for Contingency Fund.

(c)(I) Adding 2 to the first digit of the Revenue Receipts will give the code numbers allotted to corresponding Revenue Expenditure head: Adding another 2 ‐ the Capital Expenditure head and another 2‐the Loans and Advances head of Accounts” e.g.,

0401‐Represents the receipts head for Crop Husbandry. 2401‐Represents the Revenue Expenditure head for Crop Husbandry. 4401‐Represents the Capital outlay on Crop Husbandry.

6401‐Represents the loans for Crop Husbandry.

Similarly 0210, 2210, 4210, 6210, for Medical & Public Health and 1055, 3055, 5055, 7055 for Road Transport.

(II) The change of code number allotted under the scheme of codification is shown below:

Part‐I

Consolidated fund

Major head code no.

Section‐I

Revenue Heads (Revenue Account)

0020‐1999

Expenditure (Revenue Account)

2011‐3999

Section‐II

Receipt Heads (Capital Account)

4000

Expenditure Heads (Capital Account)

4046‐5999

Section‐III

Public Debt, Loans and Advances

6001‐7999

Part‐II

Contingency Fund

8000

Part‐III

Public Account

8001‐8995

(d) Such a pattern is, however, not relevant for those Departments which are not operating Capital/Loans head of account e.g., Departments supply in a few cases. However, where Receipts and Expenditures are not heavy, certain major heads have been combined under one single number, the major heads themselves forming sub‐major heads under that number.

The various sections/sector/sub‐sectors classified under the different divisions are given in annexure A to this Chapter.

Article 26. 

(a) The main unit of classifications in accounts shall be the major head which shall be divided into minor heads each of which shall have a number of subordinate heads generally known as sub‐heads which are further divided into detailed heads. Sometimes major heads are also divided into (sub‐major heads) before their further divisions into minor heads.

The sectors, major heads, minor heads, sub‐heads and detailed heads together constitute a five‐tier arrangement of the classification structure of Government accounts.

The detailed classification of accounts heads in Government Accounts up to the stage of the minor heads (the third tier) shall be such as given in the ‘List of Major and Minor Heads of Accounts’ of Central and States Receipts and Disbursement – as Appendix ‐2 to Andhra Pradesh Budget Manual. In all accounts records, the major and minor heads shall be arranged in the exact order shown in the ‘List of Major and Minor Heads of Account’. The classification prescribed (including the code number assigned up to the major heads) should strictly be followed. Complete uniformity including nomenclature is essential in classification up to the stage of the minor heads.

The Major heads of Account falling within the ‘sectors’ and sections ‘Revenue Receipts”, “Revenue Expenditure, Capital Expenditure and Public Debt’, ‘Loans and Advances’ etc., in the Consolidated Fund generally correspond to functions such as the different services like Crop Husbandry, ‘Defence’ etc., provided by Government while the minor heads subordinate to them identify the programmes undertaken to achieve the objectives of the function represented by the Major head. A program may consist of a number of ‘schemes’ or ‘activities’ and these generally correspond to ‘sub‐head’ (the fourth tier of classification) below the minor head represented by the programs. In certain cases especially in regard to non‐developmental expenditure or expenditure of an administrative nature, the sub‐heads denote the components of a program such as ‘organizations’ or the different ’wings’ of administration. As schemes, activities or organizations under various programmes differ from State to State and the Centre. A uniform classification by ‘sub‐ head’ for all the Governments has been prescribed. The Central and State Governments, and the Accountants‐General may determine the Sub‐heads below the minor heads to meet the local or special requirements of each Government. In determining the sub‐heads, the following Guiding Principles should be observed. Homogenous schemes under a programme especially those involving small outlay should be grouped into suitable sub‐ heads.

A ‘detailed head’ which constitutes the fifth and the last tier of classification in Government accounts, is termed as an object classifications. On the expenditure side of the accounts, particularly in respect of heads of account within the Consolidated fund, the detailed heads are primarily met for itemized control over the expenditure and indicate the nature of expenditure on a scheme or activity or organization in terms of input such as ‘salaries’, ‘office expenses ‘grant–in aid’, ’Loans’, ‘Investments’ etc. They also constitute the primary units of appropriation for the purpose of the Demands for Grants of Government. A list of ‘Standard Detailed Heads’ comprising the common items of expenditure in the activities of Government which can be uniformly adopted by all the Governments, Central, State or Union Territories is given in Annexure ‘B’ to this Chapter. The detailed heads shown in this list may be adopted by all the Governments, and such additional detailed heads as may be found necessary to cover the specific types of expenditure in certain Departments, may also be opened. Care should however be taken to ensure that detailed heads are not proliferated unnecessarily.

Major, Minor and Detailed Heads

Article 27. 

The introduction of Major, minor and Detailed Heads, any new major head or minor head, as well as the abolition or change of nomenclature of any of the existing heads shall require the approval of the comptroller and Auditor General who will obtain the approval of the president where necessary. The Accountants General shall have discretion to open all the prescribed detailed heads and open any new detailed heads were absolutely necessary bearing in mind the principles enunciated in article (26) (c) above. In addition, the following principles should also be observed:

A sub‐head or a detailed head which is placed under a particular minor head by the Comptroller and Auditor General either through directions in the List of Major and minor heads or elsewhere should not be placed under another minor head.

The sub‐head subordinate to a minor head of expenditure should be so arranged in accounts as to exhibit separately the expenditure under each unit of appropriation as prescribed from time to time by Government.

Classification of Expenditure as ‘Charged or as ‘Voted’

Article 28. 

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

Classification of transactions in Accounts General Limitations

Article 29. 

Under Article 150 of the Constitution, the Accounts of the Union and of the States shall be kept in such form as the Comptroller and Auditor General may with the approval of the President prescribe. The word “Form” used in Article 150 has a comprehensive meaning so as to include the prescription not only of the broad form in which the accounts are to be kept but also the appropriate heads under which certain transactions or classes of transactions have to be entered. Accordingly the Comptroller and Auditor General with the approval of the President is the authority to determine the classification of any transactions or class of transactions in Government Accounts.

Provision made in the Estimates of Receipts and Expenditure framed by Government or in any order of Appropriation should ordinarily conform to the rules of classification prescribed in this Code. Where there is divergence, the corresponding receipt or expenditure shall be brought to account under the appropriate Major or Minor Head or other unit of classification as determined by the Comptroller and Auditor General with the approval of the President.

Principles and Rules regulating adjustments between Governments of certain category of charges and receipts, which have been accepted by all Governments, are given in Appendix‐3.

General Principles of Classification

Article 30. 

As a general rule, the classification of transactions in Government accounts, shall have closer reference to the function, programme and activity of the Government and the object of the Revenue or Expenditure, rather than the Department in which the Revenue or Expenditure occurs. For example expenditure incurred by the Public Works Department on the construction of a Hospital shall be debited as expenditure under the major head ‘2210 Medical and Public Health’ or “4210 Capital outlay on Medical and Public Health” as the case may be, and not to the major head for Public Works. This principle is however, subject to such exceptions as may be authorized specially in any individual case or a class of cases e.g., receipts representing interest are shown under ‘0049. Interest Receipts and Expenditure on the maintenance and repairs of Non‐residential Buildings under the administrative of the P.W.D. are shown under the major head ‘2059 Public Works’ irrespective of the functions to which they relate.

Important General Orders governing classification of pay and allowances (including travelling allowances) of Government servant’s expenditure on Civil Works, Contributions made by or to Government, Refunds of Revenue, shall be issued by Government from time to time.

General Principles of Expenditure between “Capital and Revenue”

Article 30‐A.

The Guiding Principles of allocation of expenditure between Capital and Revenue are as under:‐

Expenditure of a Capital nature shall broadly be defined as Expenditure incurred with the object of either increasing concrete assets of a material and permanent character or of existinguishing or reducing recurring liabilities.

It is inherent in the definition of Capital Expenditure that the assets produced should belong to the authority incurring the expenditure. Expenditure on a temporary asset or expenditure on Grants‐in‐Aid to Local Bodies or Institutions (for the purpose of creating assets which will belong to these Local Bodies or Institutions) cannot ordinarily be classifiable as Capital Expenditure and shall not, except in cases specifically authorized by the President on the advise of the Comptroller and Auditor General, be debited to a Capital Head of Account.

Expenditure on a temporary asset cannot ordinarily be considered as Expenditure of a Capital nature.

Expenditure of a Capital nature shall be distinguished from Revenue Expenditure both in the Budget Estimates and in Government accounts, subject to the principles laid down in Article 43.

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

Subject to (7) below revenue should bear all subsequent charges for maintenance and all working expenses. These embrace all expenditure on the working and upkeep of the project and also on renewals and replacements and such additions improvements or extensions as under rules made by Government are debitable to the Revenue account.

In the case of works of renewal and replacement which partake both of a Capital and Revenue nature the allocation of expenditure should be regulated by the broad principle that revenue should pay or provide a Fund for the adequate replacement of all wastage or depreciation of property originally provided out of a Capital Grants and that only the cost of genuine improvements, whether determined by prescribed rules or formulae or under special order of Government may be debited to Capital.

Where under special orders of Government, a Depreciation or Renewals Reserve Fund is established for renewing assets of any Commercial Department or Undertaking, the distribution of expenditure on renewals, and replacements between Capital Account and the Fund should be so regulated to guard against over Capitalization on the one hand and excessive withdrawals from the Fund on the other.

Expenditure on account of preparation of damage caused by extraordinary calamities such as Flood, Fire, Earthquake, Enemy Action should be charged to Capital Account or to Revenue Account or divided between them in such a way as may be determined by Government according to the circumstances of each case.

Capital receipts in so far as they relate to expenditure previously debited to Capital heads, accruing during the process of constructions of a project, should be utilized in reduction of Capital Expenditure. Thereafter, treatment in their accounts will depend on circumstances, but except under a special rule or order of Government, they should not be created to the Revenue Account of the Department or Undertaking.

Important General orders governing Classification

Pay and Allowances (other than Travelling Allowances) of Government servants

Article 31.

(1) Following the principles in Article 30, the pay and allowances of Government servants shall be classified in accounts as part of the scheme, activity or organization(sub‐ head) under a programme (Minor Head) below a function (major/sub‐major head) to which the service of the Government servant closely relate. Where, however, it is not possible to classify ab‐initio the pay and allowances of Government servant or servants under a single sub‐head, because of the overlapping nature of the duties of such Government servants which extend to several activities, programmes, functions etc., the charges may be classified initially as part of the scheme or activity or organization to which the major portion of the work of the Government servants relate. A suitable Pro‐rata allocation of such expenditure should, however, be made in all such cases as far as possible.

(2) The Transit Pay and Allowances of a Government servant proceeding to join an office whether on first appointment, or on transfer, either permanently or as a temporary measure or on reversion from one department to another, should, in the absence of special orders to contrary be debited to the office to which he is proceeding.

Note‐1:‐The Transit Pay and Allowances both ways, of Officers of the Defence or Railway Department lent to Civil Departments or vice‐versa, are debitable to the borrowing Department. This principle shall apply even in cases where the Government servant takes leave either before joining the borrowing Department or before re‐joining the lending Department and shall hold good in respect of joining time admissible under the service rules applicable to him. Cases of permanent transfers between the Civil and Defense of Railway department, shall, however, be governed by the substantive rules in clause (2) above.

For purposes of this note, Officers of the Indian Medical Service in Civil employment should be regarded in all cases as lent to the Civil Department.

Note‐2:‐ The Transit pay and allowances, both ways of a Government servant transferred from one Government to another or to foreign service will be adjusted in such manner as may be mutually agreed upon by the Governments concerned or as may be laid down in the appropriate service Rules.(See also Section 1 in appendix 3.

Note‐3:‐ The Transit Pay and Allowances both ways of the forward and return journeys of Government servants transferred to or from mission and offices abroad will be borne by the Ministry which plans the transfer of the official. However, the Transit Pay and Allowances of the Officers belonging to Indian Foreign Service (A) and Indian Foreign Services (B) in respect of their return journey from abroad shall be debited to the budget grant of the Ministry of External Affairs or the Ministry of Commerce and Industry, where the official reports for duty.

Travelling Expenses

Article 32. 

The Travelling Expenses of a Government servants should, on whatever duty he may be employed be debited under the same major/minor/sub‐heads as his pay. However, in the following cases the Travelling Expenses of a Government servant may be debited to a major/minor heads etc., head different from that to which pay is debited:

In cases where a Government servant is required to travel on duty connected with an outside body or fund.

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

In cases covered by the general or special orders of the Government authorizing a deviation from the general rule.

Expenditure on Public Works

Article 33. 

Expenditure on Public Works, where the works are under the administrative control of the PWD shall be classified in accounts, according to the following principles:

Expenditure on the construction of Government Non‐residential buildings for “Administrative and office” purposes and other buildings which exclusively relates to function under “General Services” as distinct from that on the construction of buildings for functional purpose like Schools, Colleges, Hospitals etc., will be accounted for under the Major head “2059 Public Works” or “4059 Capital Outlay on Public Works” as the case may be.

Expenditure on the construction of buildings for purely functional purposes such as those for Schools, Colleges, Hospitals etc., will be accounted for under the relevant Major heads closely connected with the functions, such as “2202 General Education/4202 Capital outlay on General, Education, Sports Art, and Culture” “2210 Medical and Public Health/4210 Capital outlay on Medical and Public Health” etc., as the case may be.

Expenditure on maintenance and repairs of all Governments Non‐residential buildings, whether for administrative, office or functional purposes will however be accounted for under the major head “2059 Public Works”.

Expenditure on Government Residential buildings will be accounted for under the Major head”2216 Housing/4216 Capital Outlay on Housing” in the Revenue or Capital Section as the case may be, in the Sector “Social services”.

(vi) Expenditure on Roads and Bridges, being in the nature of communication services, will be accounted for under the Major head “3054 Roads and Bridges/5054 Capital outlay on Roads and Bridges” in the Revenue or Capital Sections as the case may be, in the sub‐sector “Transport and Communication “ of the Sector “Economic Services”.

Note‐1:‐ Where the buildings etc., are not under the administrative control of the PWD, it is open to Government, to prescribe the expenditure on construction and repairs up to certain monetary limits may be incurred by the Civil Departments (i.e., Departments other than the Public Works Department) concerned. In such cases where the expenditure can be identified with the programme (Minor head) relating to the function (Major head), it should be accounted for under the detailed head “works” below the minor head. Where the Minor Head is not identifiable, it should be classified under the residuary minor head “Other Expenditure” of the relevant major head.

Note2:‐ Expenditure on the Staff quarters(Construction as well as Maintenance) forming part of a Scheme or Project such as those of Doctors or Nurses in a hospital, will normally be accounted for as expenditure of the programme under the relevant Functional Major head (Medical in the example cited above) and not under the major head “Housing”. If, however, Government finds it difficult for administrative reasons, to follow this principle, in the case of maintenance expenditure, the expenditure on maintenance may be debited to “2059 Public Works” as corollary, the rent receipts will go to “0216 Housing” in such cases.

Contribution made by or to Government

Article 34.

(a) Contributions made by the Central or the State Governments to Zilla Parishads, Municipalities, etc., or vice versa shall be debited as expenditure or shown as Receipts (as the case may be) under the head of account most closely connected with the object for which the contributions are made. Thus, a grant for the construction of a school shall be debited to “2202 General Education” grant for construction of drainage system to “2215 Water Supply and Sanitation” and a grant for the construction of a road to “3054 Roads and Bridges” and a grant given for general purposes, such as a grant to make good a deficit or as compensation for revenue resumed, shall be classified under “2217 Urban Development” and “3604” Compensation and Assignments to Local Bodies and Panchayati Raj Institutions” respectively.

Note‐1:‐If the financial assistance given by the Central or State Government to a Local Body does not take the form of a grant of cash, but of expenditure in the Public works Department equivalent to the whole or a part of the cost of a work constructed by that Department on behalf of the Local Body concerned, the contribution thus made should be debited as expenditure under the detailed head “Contributions” below the relevant Minor/Major Head corresponding to the programme/ function closely connected with the object of the assistance.

Note‐2:‐Contribution paid by a Local Body or private party with the express object of meeting the whole or a part of the cost of construction by the Public Works Department of a specific work which is eventually to be the property of Government should be credited as revenue receipts of the Government relevant to the function/programme closely connected with the object for which the contribution is made.

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

Refunds of Revenue

Article 35. 

Refunds of revenue shall, as a general rule, be taken in reduction of receipts. “Deduct‐Refunds” (Code 900) may be opened as a minor head under the major/sub‐major heads falling in the Sector “B” Non‐Tax Revenue, unless it is not practicable to account for such refunds as sub‐heads below the concerned programme minor heads under the relevant major/sub‐major heads. This minor head may also be opened under the major/sub‐major heads of the Sector “C” Grants‐in‐Aid and Contributions. In respect of major/sub‐major head falling under the Sector “A” Tax Revenue, the head “Deduct‐ Refunds” should, however be opened as a distinct sub‐head below the appropriate minor heads so that the net collection of each Tax/Duty is readily ascertainable from the accounts. See, however, note below the major Head “0037 Customs” for the account of “Deduct‐ Refunds” and “Deduct Drawbacks”.

Classification of Transactions under “Civil Advances”

Article 36.

(a) Moneys advanced for miscellaneous purposes under special authorities and recoverable in cash and sums overpaid on vouchers other than those for service payments will be adjusted under the head “8550” Civil Advances”. This head should cover items which are from their inception, debts due to Government recoverable either in cash or by deduction from other claims of the party concerned. (In this connection Foot notes under the Major Head maybe referred to). Payment made on account of Government expenditure should not be held under “Civil Advances” on the ground that further proceedings in audit etc., are necessary for their final admission. Pay and Allowances in respect of an assignable period, paid before they are due shall be debited to same head to which they are debitable had they been paid after they were due.

Advances of Pay and Travelling allowances should be debited to the final head of account and not to “Civil Advances”. Such advances should be finally adjusted as Revenue Expenditure in the books of the Government which makes the advances irrespective of the fact whether the Officer is proceeding to or to reverting back from another Government. Settlement of such advances by way of net payment/net recovery through adjustment bills will be accounted for in the Books of the Government where the adjustment bills are preferred.

Advances for law suits shall be debited to the functional expenditure head concerned, Refunds of amounts remaining unspent out of these advances shall be dealt with as case recoveries and adjusted in accounts as enumerated in Article 48.

Classification of Transactions under “Suspense”

Article 37. 

Items of receipts and payments which cannot at once be taken to a final head of receipt or charge owing to lack of information as to their nature or for any other reason may be held temporarily under the head “8658 Suspense Account” in the Sector “L. Suspense and Miscellaneous” of the accounts. A service receipt of which full particulars are not given must not be taken to the head “Suspense Account” but should be credited to the minor head “Other receipts” under the revenue head to which it appears to belong pending eventual transfer to the credit of a proper head in receipt of detailed particulars. The charges under the head “Suspense Account” will consist not only of items for which full particulars have not been given which will enable the Audit office properly to classify them but also items received through Inward Settlement Account from other Accountant General/Pay and Accounts Officer for which full particulars/vouchers are wanting.

Note:‐ No sums shall ordinarily be credited to Government by debit to a suspense head. Credit must follow and not precede actual realization.Net Gain or loss by Exchange in respect of Government transactions Net Gain or loss by Exchange in respect in foreign currency.

Exchange in respect of Transactions in England and the Missions Abroad

Article 37.

A Net gain or loss by exchange in respect of Government transactions in foreign currencies shall be uniformly adjusted under the head “0075/2075 – Miscellaneous General Services – Gain/Loss by Exchange”.

Important Special Orders governing classification of certain Individual transitions Cost of acquisition of land

Article 38. 

Cost of land acquired for any specific work or a project shall be recorded as part of the cost of the works or of the project under the relevant functional major/minor head. The expenditure on acquisition of land by the Public Works Department for general purposes shall be recorded under the head “2059 Public Works‐ Other Expenditure /4059. Capital Outlay on Public Works –Acquisition of Lands” as the case may be.

Sale proceeds of Government Land and Buildings.

Article 39. 

The classification of the sale proceeds of Government Land and Buildings should be regulated in accordance with the schedule given below.

Schedule‐I : Sale proceeds of Government land and buildings.

Schedule – II : Sale Proceeds of Buildings (including the actual area occupied by or auxiliary to a Building

Municipal Rates and Taxes

Article 40. 

Municipal rates and taxes on Government buildings should be adjusted as follows:‐

As a general rule, Municipal rates and taxes on a Non‐residential building utilized for functional purpose, such as for schools colleges or hospitals, if paid by the relevant Departments dealing with those functions, should be adjusted in accounts as part of the sub‐heads minor heads concerned relating to the functions, under the detailed head “Rent Rates and Taxes”. Where, however the whole or a part of the taxes is paid by the Public Works Department in administrative control of the buildings, the payments may be debited to the maintenance estimates of the buildings concerned, Viz., “2059‐Public Works – Maintenance and repairs”.

Taxes on Non‐residential buildings occupied by the Departments other than the Defence Department, if paid by a Department nominated by Government in this behalf and not passed on to the occupying Department, should be debited to “2070” Other Administrative Services ‐ Other Expenditure.

Taxes on residential buildings if payable by Government shall be debited to the maintenance estimates of the buildings under the head “2216” Housing ‐ Government Residential Buildings Maintenance and Repairs or “2059”‐Public Works”, in case the Government has decided to debit maintenance expenditure to the latter head.

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

Taxes both on Residential or Non‐residential buildings owned or occupied by the Defence Department shall be debited to the Defence Service Estimates.

Cost of Survey of India and other Scientific Parties accompanying a Military Expedition

Article 41. 

The cost of Survey of India and other Scientific Parties which may accompany a Military Expedition shall be adjusted as follows:‐

All extra expenditure connected with Survey of India unit which would not have been incurred but for field operations shall be borne by the Defence Estimates, provided the Survey of India unit accompanied the expedition at the request of the Defence Department.

The cost of the Pay and allowances and contingents of other Scientific Parties shall be borne by the respective Civil Departments concerned while the expenditure incurred on special transport arrangements made by the Defence Service shall be debited to the Defence Estimates.

These rules shall not, however, apply classification of the cost of units of the Survey of India or of other Scientific Parties mobilized for service with the Army on General Mobilization. The whole cost of these units except (in the case of the Survey of India) that of the initial supply of all technical equipment material and stores shall be debited to the defence estimates under Special Rules.

General Methods of Accounting

Accounting for transactions pertaining to more than one major heads of account.

Article 42. 

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

where the charges for the supply of water from irrigation canals are consolidated with the land revenue, demand, the recoveries at the consolidated rates are, in the first instance, credited to the head ‘0029” ‐ Land Revenue” and an approximate amount calculated as the share due to irrigation is transferred to the relevant irrigation revenue head.

charges for collection of corporation tax are accounted for under the minor head “Collection Charges – Income Tax” below the major head “2020‐Collection of Taxes on the Income and Expenditure in the first instance the amount debitable to the minor head “Collection Charges ‐ Corporation Tax“ being transferred later from the former head to the latter.

Interest paid by Government on loans is taken initially under the head “2049 Interest Payments and necessary transfers from this head are made subsequently in respect of amounts debitable to Commercial Departments by credit to “0049‐Interest Receipts”.

The Establishment and Tools and Plant charges of Public Works Division are in the first place booked under a single Major head subject to final apportionment among the several Major heads concerned.

The charges relating to the audit of the transactions of the Posts Telegraphs Railways and the Salt Organization of the Ministry of Commerce and Industry, are recorded initially under the head “2016” Audit and are transferred subsequently to the accounts of the respective Departments.

Recording of Capital Expenditure in accounts.

Article 43. 

The following principles shall govern the record of capital expenditure in accounts:‐

The Central Government and State Governments should prescribe definite criteria for classifying an item of expenditure as pertaining to “Revenue” or Capital” taking into account the nature and the magnitude of the expenditure involved.

Note:‐Capital expenditure is generally met from Receipts of a Capital, Debt, Deposit or Banking character as distinguished from ordinary revenue derived from Taxes, Duties, Fees, Fines and similar items of Current Income including extra‐ordinary receipts. It is open to the Government to meet Capital Expenditure from ordinary revenues, provided there are sufficient revenue resources to cover this liability.

All items of expenditure to be met from revenue according to the criteria indicated in (i) above should be initially and finally debited to “revenue” and it is not permissible to debit such expenditure temporarily to capital head, pending its write back to revenue over a period of years .

The detailed Rules by which allocation of expenditure between capital and revenue in commercial department and undertaking should be determined shall be such as may be made by Government after consultation with the Comptroller and Auditor General/Controller General of Accounts.

Accounting for transactions relating to Schedule Areas.

Article 44. 

Receipts and expenditure pertaining to scheduled Areas in a State, vide Article 244 (1) of the Constitutions shall be accounted for under the same major and minor heads such which corresponding receipts and expenditure pertaining to other areas of the State are accounted for, but the receipts and expenditure of the former kind may be shown in the accounts separately from the later if Government so desires.

Article 45. Deleted.

Accounting for losses

Article 46. 

Losses of public money stores or other property of Government shall be accounted for in accordance with the rules in chapter 6.

Exhibition of recoveries in Government accounts

Article 47. 

The rules to regulate the exhibition of recoveries in Government accounts are contained in Chapter 5.

Accounting for Recoveries of Overpayments.

Article 48. 

Recoveries of overpayments shall be adjusted in the accounts in accordance with the procedure set out in paragraph 3.10 of General Directions in Budget Manual which reads as follows:‐

Recoveries of over‐payments whether made in cash or by short drawl from a bill during the same financial year in which such over payments were made shall be recorded as Reduction of Expenditure under the concerned service heads. Recoveries of over payment to previous year(s) shall be recorded under distinct minor head “Deduct recoveries of Overpayments (code “911”) below the concerned major /sub major head in the Appropriation Accounts.

Refund of unspent balance of grant/contribution during the same financial year shall be recorded as reduction of expenditure under the concerned Grant‐in‐Aid major or sub‐ major head. However, refund of grant/contribution in subsequent years(s) that are initially charged to the major head “3605‐Technical and Economic Co‐operation with other countries etc., shall be adjusted under a distinct minor head “Deduct‐ Recoveries of unspent balance (“Code912”) below that major head. Similarly refund or unspent Balance of Grant‐in‐aid by State/Union Territory. Government in subsequent year(s) shall be adjusted under a separate minor head ‘Deduct‐Recovery of unspent balance of Grant‐in‐Aid form State/Union Territory Governments (“Code 913”) below the major head. “3601 Grants‐in‐ Aid to State Governments” or “3602 Grants‐in‐Aid to Union Territory Governments” as the case may be.

Note:‐ The investments made by Government of India in Nationalized Banks and subsequently being written down to adjust the losses incurred by banks, may be shown as ‘Deduct Recoveries’ below the line in the capital section.

Accounts of Government Commercial Departments or Undertakings

Article 49. 

Where any Departments or Departmental Undertakings of Government function on Commercial lines, the essential formalities of Commercial Accounts to the extent prescribed by Government should be strictly observed. In such cases, separate Commercial Accounts of the Departments or Undertakings shall be kept outside the regular Government Accounts. Gross receipts and expenditure of Commercial Departments or Undertakings shall be accounted for under the appropriate Major and Minor heads in the same way as ordinary receipts and expenditure of Government. The heads of accounts should, as far as possible, be common to the Government account, and the General Ledger maintained at the Department or Undertaking, and should be selected with due regard to the Principles of Governmental and Commercial Accounting, so that the monthly Classified Account of Income and Expenditure of the Department or Undertakings may be prepared readily form the General Ledger.

Working expenses of Commercial Departments

Article 50. 

As a general rule all expenditure pertaining to any department, including commercial department, should be recorded on the expenditure side of the account only.

Transactions with other Governments and Account Circles

Article 51. 

Subject to any general or special orders issued by Government after consultation with the Comptroller and Auditor General, the methods by which transactions between different Account Circles as well as between different Governments including Governments of other countries are settled, shall be as described in relevant Chapters of Account code for the Accountants General and Government Accounting Rules 1990 (GOI).

Rectification of misclassification

Article 52. 

The procedure to be followed in rectifying misclassification in accounts shall be as prescribed in Chapter 7 of Account Code for Accountants General, the extracts of which are given in Annexure C to this Chapter.

Writes‐off from Balanced heads to ‘Government’

Article 53. 

(1) Ordinarily, all amounts due to Government which are found to be irrecoverable shall be written‐off from the Debt head of account concerned to an expenditure head as a loss to Government. Similarly, any balance due by Government remaining unclaimed for such time as may be prescribed by Government shall be credited as revenue of the Government concerned by debit to the Debt or Deposit head concerned. Amounts outstanding due to book‐keeping errors under heads which close to balance shall be written‐off to “8680‐Miscellaneous Government Account‐ Write off from heads of account closing to balance’, with the specific approval of the Comptroller and Auditor General.

Such un‐reconciled balances or differences between the Ledger Balances and those of as per the relevant Subsidiary Registers or Broad‐sheets, under any detailed/sub‐detailed heads of account relating to any Debt, Deposit, Suspense and Remittance heads in the State Accounts, as per the ‘List of Major and Minor Heads of Account’, not exceeding Rs.1000/‐ in each case in any financial Year, may be written‐off by an Accountant General to the head “8680 Miscellaneous Government Account‐Write‐off from heads, of account closing to balance” subject to the following condition:‐

The amounts of un‐reconciled balances or differences are continuing for a period of over five years, in the year in which it is proposed to be written‐off.

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

The concurrence of the State Government has been obtained for the write‐off.

In the case of ‘Provident Fund Suspense’, the limit of 5 years mentioned at item (i) of sub clause 2 above will not be applicable. Senior Deputy Accountant General may also write‐off the outstanding amount under this head up to Rs.500 in each case subject to his having satisfied himself about the conditions (i) to (iii) of sub‐clause 2 above. A quarterly report on items written‐off by Senior Deputy Accountant General under the powers delegated to him should be submitted to Accountant General for review. The Accountant General should report to Comptroller and Auditor General of India on the write‐off of Suspense half‐yearly on 10th May and 10th November.

Where it is not possible to establish that un‐reconciled balances/differences under heads of account which close to balance are either due to book‐keeping errors or involve loss/receipts, the balance/differences maybe written‐off to “8680 Miscellaneous, Government Account‐ Writes‐off from heads of account closing to balance” with the approval of the Comptroller and Auditor General of India after obtaining concurrence of the Government concerned in all cases where the compilation of account is his responsibility and in cases, where the accounts have been departmentalized or separated from Audit, of the Controller General of Accounts after concurrence of the Chief Accounting Authority concerned is obtained.

Accounts to work from balance to balance

Article 54.

The accounts of each Government shall work from balance to balance. The closing balance shown in the accounts of each month shall work up to the general cash balance of each Government held in its Treasuries (including remittances in transit) and by the Reserve Bank of India at the end of that month.

Annexure – A  (See Article 25) :List of Sections/Sectors/Sub‐Sectors under the Main Divisions of Accounts 

Part I – Consolidated Fund

Revenue:‐

Receipt Heads (Revenue Account)

Tax Revenue:

Taxes on Income and Expenditure

Taxes on Property and Capital Transactions

Taxes on Commodities and Services

Non‐Tax Revenue:

Fiscal Services

Interest Receipts, Dividends and Profits

Other Non‐Tax Revenue

Grants‐in‐Aid and Contributions

Expenditure Heads (Revenue Account)

General Services

Organs of State

Fiscal Services

Interest payments and Servicing of Debt

Administrative Services

Pensions and Miscellaneous General Services

Defence Services

Social and Community Services

Economic Services

General Economic Services

Agriculture and Allied Services

Industry and Minerals

Water and Power Development

Transport and Communications

Railways

Posts and Telecommunications

Grants‐in‐Aid and Contributions

Capital, Public Debt, Loans etc.

Receipts Heads (Capital Account)

Expenditure Heads (Capital Account)

Capital Account of General Services

Capital Account of Social and Community Services

Capital Account of Economic Services

Capital Account of General Economic Services

Capital Account of Agriculture and Allied Services

Capital Account of Water and Power Development

Capital Account Transport and Communications

Capital Account of Railways

Capital Account of Posts and Telecommunications

Grants‐in‐Aid and Contributions

Public Debt – Loans and Advances

Public Debt

Loans and Advances

Inter‐State Settlement

Transfer of Contingency Fund

Part II – Contingency Fund Part III – Public Account

1. Small Savings, Provident Funds, etc.

Small Savings

Provident Funds

Other Accounts

Reserve Funds

Reserve Funds bearing interest

Reserve Funds not bearing Interest.

Deposits bearing Interest

Deposits bearing interest

Deposits not bearing interest

Advances

Suspense and Miscellaneous

Coinage Account

Suspense

Other Accounts

Accounts with Governments of Foreign Countries

Miscellaneous

Remittances

Money Orders, Remittances and Adjustments between Officers rendering accounts to the same Accountant General and other Remittances

Inter‐Government Adjustment Accounts

Exchange Accounts

Cash Balance.

Annexure – B [See Article 26 (c)] : List of Standard Detailed Heads

Salaries

Wages

Travel Expenses

Office Expenses

Payments for Professional and Special Services

Rents, Rates and Taxes/Royalty

Publications

Advertising, Sales and Publicity Expenses

Grants‐in‐Aid/Contributions/Subsidies

Scholarships and Stipends

Hospitality Expenses/Sumptuary Allowances etc.

Secret Service Expenditure

Major Works

Minor Works

Machinery and Equipment/Tools and Plant

Motor Vehicles

Maintenance

Investments/Loans

Materials and Supplies

Interest/Dividend

Pensions/Gratuities

Depreciation

Inter Account Transfers

Writes‐off/Losses

Suspense

Other Charges

Diet Charges

Purchase of Antiquities, Ancient Relics and Contemporary Arts.

Note:‐ Briefly explaining the scope of Standard Detailed Heads:

Salaries:‐ Will include pay, allowances in all forms to Officers and staff, and the expenses on Leave Travel Concession. This object classification will also be utilized for recording expenditure on emoluments and allowances of Heads of States and other High Dignitaries. In cases, where it is decided by some Stage Governments to indicate in accounts, the details of ‘salaries’ such as ‘Pay of Officers’, ‘Pay of Establishments’, ‘Allowances and Honoraria’ etc., for statistical information. Detailed heads may be opened accordingly in lieu of ‘Salaries’.

Wages:‐ Will include wages of labourers and to staff at present paid out of contingencies.

Travel Expenses:‐ Will cover all expenses on account of travel on duty including conveyance and fixed travelling allowances but excluding leave travel concession which falls under ‘Salaries’.

Office Expenses:‐ Will include all contingent expenditure for running an office, such as furniture, postage, purchase and maintenance of office machines and equipment, liveries, hot and cold weather charges (excluding wages of staff paid from contingencies), telephones, electricity and water charges, stationery, printing of forms, purchase and maintenance of staff cars and other vehicles for office use, as distinct from vehicles for functional purposes like Ambulance Vans, etc.

Payments for Professional and Special Services:‐ Will include charges for legal services, consultancy fees, remuneration to examiners, invigilators etc., for conducting examinations, remuneration to casual Artists by the All India Radio and all other types of remuneration for Professional Services. It will also include payment for services rendered, supplies made by other departments such as Railway, Police etc. a distinction being made in respect of supplies made, services rendered for the running on an office in which case the expenditure will be recorded ‘Office Expenses’.

Rents, Rates and Taxes/Royalty:‐ Will include payment of rent for hired buildings, Municipal rates and taxes, etc. It will also include lease charges for land.

Publications:‐ Will include expenditure on printing of office Codes and Manuals and other documents, whether priced or non‐priced but will exclude expenditure on printing of publicity material. This will also include discount to agents on sales. This head is to be operated only where the cost of printing is borne by respective departments.

Advertising, Sales and Publicity Expenses:‐ Will include Commission to Agents and Printing of Publicity material.

Hospitality Expenses/Sumptuary Allowances, etc.:‐ Hospitality expenses will include Entertainment Allowance of High Dignitaries etc. Expenditure on refreshments served in Inter‐Departmental Meetings, Conferences etc., will however, be recorded under ‘Office Expenses’.

Major Works/Minor Works:‐ Will be classified with reference to the classification of Major/Minor Works in CPWD Code. This will also include cost of acquisition of land and structures.

Machinery and Equipment/Tools and Plant:‐ Will include Machinery, Equipment, Apparatus etc., other than those required for the running of an office (vide 4) and special tools and plant acquired for specific works.

Motor Vehicles:‐ Will include purchase and maintenance of Transport Vehicles such as Ambulance Vans which are used for functional activities, as distinct from those used for running an office.

Maintenance:‐ Will record expenditure on maintenance of works, machinery and equipment. It will also include repairs incidental to maintenance.

Interest/Dividend:‐ Will include interest on Capital, Discount on Loans.

Pensions/Gratuities:‐ Will include donations to Service Funds and Contributions to Contributory Provident Funds.

Inter Account Transfers:‐ Will include transfer to and from Reserve Funds.

Writes‐off/Losses:‐ Will include Write‐off of Irrecoverable Loans. Losses will include trading losses.

Other Charges:‐ A residuary head. This will also include rewards and prizes.

(G.O.Ms.No.198, F&P (Finance‐Wing A&L) Dept., dated 17‐05‐1976)

Annexure – C (See Article 52) : Account Code for Accountants General

(Chapter 7 – Transfer Entries)

Object of Transfer Entries

Transfer Entries, which are entries intended to transfer an item from one head of account to another, are necessary:‐

in order to correct an error of classification in the original accounts;

in order to adjust, by debit or credit to its proper head, an item outstanding under a debit, deposit or remittance head;

in order to adjust inter‐departmental and other transactions which do not involve the receipt or payment of cash.

Note:‐ Another type of case in which transfer entries are necessary occurs when it is found more convenient to classify items pertaining to more than one head of account under a single head of account in the first instance than to classify them under each head of account from the beginning; for example when a definite proportion of any receipt or charge is taken to a separate head, it is often convenient to make the distribution upon the totals of the Departmental Abstract or the Detail Book,

General Rules

Transfer Entries should be prepared in Form A.C.23. On one side of every Transfer Entry there should be only one Major head to which there may be a debit by credit to sundry heads or vice versa; debit should not be taken against sundry head by credit to sundry heads. A fortiori, the same entry should not contain independent corrections of two major heads; it may not debit A by credit to B, and again C by credit to D.

In a Transfer Entry all particulars explaining both the nature of the adjustment and (if it is a correcting transfer) the grounds of the correction must be clearly stated.

A list of adjustments which have to be made periodically should be maintained in order to ensure that they are regularly made. These adjustments should, as a rule, be made monthly. If this is found inconvenient and if the Accountant General considers that there are sufficient grounds for postponing any adjustments, they may be made quarterly. Unforeseen adjustments should, however, be made as soon as the necessity for them arises.

Save as may be authorized by the Comptroller and Auditor General, or by Government in consultation with the Comptroller and Auditor General, annual and half‐ yearly transfers should, as a rule, be avoided. Cases in which such transfers are authorized will be found in the Manuals of the Account Officers concerned.

Correction of Accounts

(a) If an item which properly belongs to a Revenue or Expenditure head is wrongly classified under another Revenue or Expenditure head in the accounts of the same Government, the error may be corrected at any time before the accounts of the year are closed, in the manner directed in Article 6.15; but after the accounts are closed, no correction is admissible, it being sufficient to make a suitable note of the error against the original entry. If, however, the error affects the receipts and disbursements of another Government, or the transactions of a Commercial Department it should be corrected by transfer in all cases as soon as the error is discovered. The procedure to be observed for the correction of errors in the accounts of works in the Public Works Department shall be as laid down in Articles 149 and 200 (a) of Volume‐III of Account Code.

An error which affects a debt, deposit or remittance head must be corrected by transfer, however old and however small it may be. If the accounts of the year in which the error took place are not closed, the correction should be made by the removal of the item from the head under which it was wrongly taken to that to which it properly belongs. If the accounts of the year in which the error took place are closed, then the following procedure should be followed in the cases referred to –

an item taken to one debt, deposit or remittance head instead of another, ‐ the correction should be made by transfer from the one to the other;

an item credited to a debt, deposit or remittance head instead of to a revenue head, or debited to a debt, deposit or remittance head instead of to an expenditure head, ‐ the correction should be made by transfer to the head under which it should originally have appeared;

an item credited to a revenue head instead of to a debt, deposit or remittance head, ‐ correction should be made by debiting refunds and crediting the proper head.

an item debited to an expenditure head instead of to a debt, deposit or remittance head, ‐ correction should be made by debiting the proper head and crediting the relevant receipt head.

Note‐1:‐ After the accounts of the year are closed, corrections or transfers affecting capital major heads, unless they affect the account of different Governments, should usually be effected without financial adjustment by alteration of progressive figures, without passing the debit and credit entries through the accounts of the year’s financial transactions. This would prevent unnecessary inflation of the current year’s accounts and the voting of grants of doubtful propriety which the inclusion of the correcting entries in the current accounts would otherwise involve.

Note‐2:‐ Errors in the accounts of Divisional Officers of the Public Works Department shall be governed by the rule in Article 200 of Volume‐III of Account Code.

Outline of Procedure

A correction by a transfer entry may be proposed by any section of an Accounts office; it should be accepted by the other section concerned if the entry has been drawn up according to rule and necessary particulars are furnished. Original vouchers and other documents in support of the entry should be recorded in the section which originally dealt with them and not sent to the other section concerned along with the transfer entry.

A Transfer Entry Number Book in Form A.C. 24 should be maintained in each audit or accounts section in which should be entered in brief but clear detail the particulars of each transfer originating in that section, it being sufficient to fill in columns 1 and 2 only in respect of transfer entries received from other Sections. The Transfer Entry Number Book for Central transactions should be kept separate from that for State transactions. The entries proposed by the several sections should be numbered serially by each, a distinctive letter being used by each section and these numbers entered in their respective Number Books. The number to be given to an entry received from another section should be expressed as a fraction, the numerator of which will denote the number as given by the originating section and the denominator will show the number assigned to the entry in the Number Book of the receiving section.

Note:‐The provisions of this Article may be relaxed, at the discretion of the Head of an Accounts Office, when, in view of the large number of transfer entries received from other sections, it is considered more economical only with reference to the entries so received and not those originating in the receiving Section itself, to maintain a simple “Index of Transfer Entries” showing the General Number as allotted by the receiving section and the sectional number of the originating section, in the following form which can be drawn up in manuscript –

Index of Transfer Entries for the month of 20….

General No.

Sectional Number and distinctive letter

General No.

Sectional Number and distinctive letter

(a) The addition or deduction which should be posted in Departmental Abstracts or the Detailed Books on account of the transfer entries should be worked out from the separate transfer entries of all sections in accordance with the procedure described in the succeeding Articles. This procedure shall consist mainly of the preparation of an abstract known as the Combined Transfer Ledger and Abstract (Form A.C. 25) showing the debits and credits to be made under each detailed head affected by the entries of the month, the totals of the debits and credits of the month necessarily being equal. The Combined Transfer Ledger and Abstract for Central transactions should be kept separate from that for State transactions.

(b) In the case of revenue and expenditure heads, it is the net outcome of the transfer entries against each, i.e., the balance of the head, in the Combined Transfer Ledger and Abstract (Form A.C. 25), which should appear as a debit or credit in the Abstract but in the case of debt, deposit or remittance heads, the gross credit and the gross debit should both appear in the Abstract – the former in the receipt part and the latter in the disbursement part, as these heads have corresponding accounts on both sides.

Note:‐ When large transfers are made from one debt, deposit or remittance head to another in order to correct the original classification in account the correction should, wherever possible be made by a deduct entry against the original debit or credit, so as to prevent exaggeration of the transactions in the accounts;

When, however, such a transfer affects a debt, deposit or remittance head for which grants are obtained, if should be adjusted, irrespective of the amount involved, on the following principles:‐

When the correction is in rectification of a misclassification of the same year, ‐ by deduct entry against the original debit or credit, as the case may be;

When the correction is in rectification of a misclassification of the previous year – by plus credit or minus credit under the heads concerned, without affecting the debits for the year; provided that in either case, if the correction involves the transfer of balance from one account circle to another within the accounts of the Central Government, the adjustment in both circles must be made without any reservation within the same official year.

The Transfer Entries, after being noted in the Number Book, should be posted individually into the left hand columns of the Combined Transfer Ledger and Abstract, against the respective heads affected. The column for “Number” of the entry and that for the “District or Department” which provides for the name of the District or Department in whose accounts the original error appeared, should be filled in at the same time.

From the right hand money columns of the Combined Transfer Ledger and Abstract, the figures should be posted under appropriate heads in the Departmental Abstract or the Detail Book, immediately under the total of cash transactions. The debits to a revenue head, and the credits to an expenditure head should appear in the “deduct” line, but all other entries (with the exception of the kind mentioned in Note under Article 7.8) are entries of addition and should appear in the “add” line.

A note of a correction affecting District figures relating to revenue and expenditure heads should be made against the original entry in the Departmental Abstract of the month in which the error occurred. Where the Compilation Book of revenue and service transactions takes the place of the Departmental Abstract, a note should be made similarly in that Book. Transfers affecting a debt, deposit or remittance head should be made by new entries in the month of correction and need not be noted against the original entry. In the case of important transfers, however, a note should be made in red ink, across the original entry in the Detail Book, of the month of its reversal and across the correcting entry of the month of the original one.

Note:‐ When detailed statement or revenue is communicated, month by month, to the revenue controlling authority, particulars of correcting transfers made in the month’s accounts should be given at the foot.

Closing of the Combined Transfer Ledger and Abstract

The Combined Transfer Ledger and Abstract should be closed by totaling, under each head the figures in the columns on the left, and carrying into the columns on the right the balance in the case of revenue and expenditure heads, and the totals (except as stated in Note under Article 7.8) in the case of debt, deposit and remittance heads. The totals of the two money columns on the left need not be carried forward, but amounts in the two money columns on the right hand side should be totaled and agreed. After the Combined Transfer Ledger and Abstract is thus proved by the agreement between the totals of these two columns, an abstract should be drawn up as indicated in Article 4.6. The Departmental Abstracts or the Detailed Book should then be posted from the columns on the right, the poster ticking off each entry, as he posts it. At the end of the year, the monthly volumes of the Combined Transfer Ledger and Abstract should be arranged in order of the months and bound into convenient volumes.

CHAPTER – 4: DIRECTIONS REGULATING INTER DEPARTMENTAL TRANSFERS

Introductory

Article 55. 

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

Adjustments between Governments

Article 56. 

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

Note‐1:‐ In all cases of claims for an amount not exceeding Rs.1,000 in each case, for transactions on account of supplies made or services rendered by one Government to another, no monetary claims will be resorted to. However, in respect of claims relating to Commercial Departments/Undertakings of a Government which are required to work to a financial result, for services rendered or supplies made to or by them monetary settlement should be made irrespective of the amount.

Note‐2:‐ For above transactions, the limit of Rs.1,000 and where the supplies/services are to be paid for irrespective of any monetary limit, the settlement will be made through cheques/Bank drafts by the supplied Government. The procedure to be followed for making the monetary settlements in these cases, (i) between the State Governments inter se and (ii) in respect of supplies/services to a Central Government Department will be as indicated below:

Between the State Governments inter se:

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

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

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

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

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

Note‐4:‐These instructions will not apply to payments to supplies arranged by the Department of Supply in the Ministry of Commerce for purchases made by the State Governments etc. through Directorate General of Supplies and Disposals. In this regard the procedure already laid down by this Ministry will continue to hold good.

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

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

Article 57. Already Deleted.

Adjustments with Foreign Governments, outside bodies etc.

Article 58. 

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

Local Ruling under Article 58

As regards the incidence of charges incurred in connection with remittances from Treasuries having a Currency Chest to branches of the State Bank, Instruction 28 (g) under Treasury Rule 30 should be followed. Charges on account of all telegrams relating to currency matters should be debited to the Reserve Bank. Such charges should, therefore, be incurred in cash and Service Postage stamps should, however, be used on communications regarding currency matters sent by ordinary post, as the expenditure is met by the Government and not debited to the Reserve Bank.

Inter‐Departmental adjustments

Article 59. 

For purposes of inter‐departmental payments, the departments of a Government shall be divided into Service Departments and Commercial Departments according to the following principles.

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

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

Note:‐Government shall specify whether a particular department or particular activities of department shall be regarded as commercial department or undertaking.

Local Ruling under Article 59

A list of departments and undertakings at present recognized by the Government of Andhra Pradesh as Commercial is given in the Annexure to this Chapter.

Article 60. 

Save as expressly provided in this Chapter, a Service Department shall not make charges against another Department for services or supplies which fall within the class of duties for which the former Department is constituted.

The following exceptions to the rule in this article have been authorized:‐

The Forest Department may charge any other Department for vegetable, animal or mineral products extracted from a forest area.

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

The cost of additional Police Guards supplied to an irrigation or other project while under construction, may be debited to the project concerned.

Local Ruling under Article‐60

Prison labour supplied to the Public Works Department should be charged for. The Adjustments should be based on the value of the prison labour at the rates prescribed for the purposes.

When any land or building is transferred from one Service Department to another under the Andhra Pradesh Government, the transfer should be made free of charge.

As an exception to the above rule, transfers of land or buildings of the Governor’s official residences should be charged for. The expenditure should be debited against the grant for the maintenance and improvement of official residences of the Governor.

The Services rendered by the Training and Production centers under the control of the Directorate of Industries to other Government Department shall be charged for at the costs fixed by the Officers‐in‐charge of such training and production centers. (Govt.Memo.No.53473/Accts/59‐1, dated 20.10.1959 and Memo.No.73316/Accts/59‐2, dated 29.12.1959).

The Officers whose expenditure is charged to the project estimates are not entitled to free supplies of goods or services from Government Departments. The cost of all such supplies and services made by Government Departments shall be charged to the project estimates.

(Govt. Memorandum No.65028/1570/Accts./68, dated 12.05.1969).

That supplies made or services rendered by the Institutions of the Animal Husbandry Department mentioned below, either to other Government Departments or to the other institutions of the same department shall be paid for at the prescribed rates:‐

All Government Livestock farms including Breeding and Dairy Farms.

All Sheep and Goat Breeding Farms including Wool Technological Laboratory, Sheep and Wool Extension Centers, Sheep and Demonstration units and Piggery Units.

All Government Poultry Farms, Research Stations including Poultry and Duck Extension Centers and Poultry Units.

Key Village Centers and Units.

Andhra Veterinary College, Tirupathi and Schools of Veterinary Science and Animal Husbandry, Visakhapatnam and Rajendranagar.

Veterinary, Biological and Research Institute including Biological and Ranikhet Disease Vaccine Centers.

Diseases Investigation Schemes.

Live Stock, Sheep, Goats, Pigs, Poultry and Ducks Distribution Schemes.

(Govt.Memo.No.58299/Accts./61‐1, dated 19.09.1961).

Article 61. 

A Commercial Department or Undertaking shall ordinarily charge and be charged for any supplies and services made or rendered to, or by, other Departments of Government.

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

Note‐1:‐ Save as otherwise provided in this Chapter, service rendered by Service Department falling under Clause‐A (a) of Article 59 in the normal discharge of its function shall not be regarded as service rendered for the purpose of this Article.

Note‐2:‐ The supply of residential accommodation by one Department to the employees of another shall not for the purposes of the Directions in this Chapter be held to constitute a service rendered. In all such cases, the rent charged for residential accommodation will be the rent recoverable under the rules for the time being in force from the person actually using such accommodation.

Local Rulings under Article 61.

Expenditure by the Public Works Department on buildings of a Commercial Department should be charged to the grant of the latter Department.

Except when the Government order otherwise in any particular case rents should be charged for office accommodation supplied by the Public Works Department to Commercial Departments, Government Commercial Undertakings and Departments of the Central Government.

When any land or building is transferred from or to a Commercial Department, the full market value should be charged.

When a Government servant of a Commercial Department of the Andhra Pradesh Government is lent to another State Government or the Central Government for short periods or vice versa, the procedure to be followed in the matter of recovering from the borrowing Government, the pay, allowances, etc., of the Government servant should be the same as that indicated in Miscellaneous Local Ruling 3 in Appendix No.3.

Article 62. 

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

Local Rulings under Article‐62.

The monetary limit fixed by the Andhra Pradesh Government for the purpose of this Articles is Rs.500/‐.

The law charges incurred on civil suits in connection with execution of Government works fall under three categories namely:‐

The amount of the claim for which a decree is given.

The amount of the incidental law charges incurred by the executing Department in connection with a work financed from its own Departmental heads of expenditure, e.g., when the Public Works Department carries out a work chargeable to the Public Works heads of expenditure, and

The amount of incidental law charges incurred by the executing Department when acting as an agent in connection with a work financed from a different head of expenditure, for instance, when the Public Works Department executes a work the cost of which is debitable to a head other than the Public Works heads of expenditure e.g. General Administration, Medical etc.

Charges falling under category (1) above, viz. Decretal amounts should in all cases be debited to the work concerned and booked as expenditure charged on the Consolidated Fund of the State. The charges referred to in category (2) should be debited to the sub‐head “Establishment‐Contingencies” of the executing Department. As regards charges mentioned in the category (3), the amount should generally be borne by the Department on whose behalf the work is undertaken. In exceptional cases, however, where it is established that the law suit has been caused by deliberate act of an employee of the agent Department for his personal gain, the charges should be adjusted by recovery from the individual concerned or by debit against the standing charges of that Department according to the merits of each case.

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

Note 2: When special official is employed for acquisition of land for any Department, the expenditure on Pay, Allowances, etc. of the Special Officer and his establishment and any expenditure on contingencies is debitable to that Department as part of the cost of land. When the land is taken up by a Civil Officer not specially employed for the work, only special charges incurred in connection with acquisition of the land on establishment, contingencies etc., shall be borne by the department for which the land is acquired.

Article 63. 

Without prejudice to the general principle contained in Article 60, the Defence services shall, in respect of inter‐departmental transactions, charge and be charged for services rendered and supplies made to or by other Departments, unless in particular cases or classes of cases, Government in consultation with the Comptroller and Auditor General have decided that the inter‐Departmental adjustment would be unsuitable and undesirable.

Note‐1:‐The Defence services shall not be required to pay rent for non‐residential accommodation supplied by the Central Civil Departments nor shall rent be charged for buildings of the Defence Services occupied for non‐residential purposes by the Civil Departments of the Central Government other than those falling under Clause‐B of Article 59.

(Memo. No.65444/Accts/56‐5, Finance dated 22nd January, 1957).

Note‐2:‐The Defence Service also shall not be required to pay for the use of the Government Civil Aerodromes and for other incidental services rendered by the Civil Aviation Department to Indian Air Force Planes, nor shall the Civil Aviation Department be charged, as a reciprocal arrangements, for the use of the aerodromes of the Indian Air Force by the Civil Aircrafts.

Article 64. 

A branch of a service Department performing duties supplementary to the main function of the Department and intended to render particular services on payment, may levy charges in respect of the work for which it has been constituted.

Example:

Jail Manufacture, Survey Map‐Publishing, Printing (Publishing Department), Mint (miscellaneous services other than coinage). The Information and Publicity Department (servicing etc., done for radio sets and TV sets installed in other Government Institutions) General Administration Department.

(Memo.No.19207/Accts./60‐1, dated 03.03.1960)

“Animal Husbandry Department (for supplies made or services rendered either to other Department of Government or to institutions of the same Department)”

(Govt. Memo.No.58299/Accts./61‐1, dated 19.09.1961).

Article 65. 

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

Article 66. 

A regularly organized store branch of a department should ordinarily charge any other department for supplies made. But petty and casual supplies of stores may, if the supplying department consents, be made without payment.

Local Ruling under Article 66.

The procedure for the adjustment of the cost of stores issued from a ‘Stock’ or ‘Materials’ Account in the Public Works Department is prescribed in Article 18 in Volume III.

Article 67. 

Notwithstanding anything contained in the Directions in this Chapter, a Government may for special reasons which shall be recorded and communicated to the Accountant‐General, permit inter‐departmental adjustment in any case where such adjustment may be considered necessary in the interests of economy or of Departmental control of expenditure.

Local Ruling under Article 67

Fees and duties leviable by law should be paid by Government departments in the same way as by private individuals e.g.:‐

Customs duty on imported stores.

Translation charges levied by the High Court under Translation and Printing Rules.

Fees due to the Registration Department for the registration of documents for search fees registration offices.

Charges for copies of judgments and depositions levied under ‘Copyists’ Rules. Charges will be levied only when the records are lengthy and the work has to be done by the Copyist staff of the Courts.

Fees for the inspection of Government boilers.

Fees for testing and inspection of electric installations owned by the Government.

Leases on lands in Reserved Forests leased to hillmen free of assessment for the purpose of securing labour.

Subject to exceptions noted below, the Department of Government should add to the price of all articles sold by them a sum equal to the sales‐tax and enter it separately in their accounts and credit the amount into the treasury every month under the head “0040 Tax on Sales, trade etc., ‐102 Receipts under the State Sales Tax Act” as an advance payment against the assessment.

Exceptions‐(1) (i) Sales of cinchona products and quinine substitutes sold by the Government and their agents.

(ii) Transactions by or on behalf of the Department of Civil Supplies, Andhra Pradesh.

An amount equal to the loss under “Examination Fees (10th Class)” on account of the concession granted to children and dependents of Ex‐Armymen in each year should be credited in the final accounts of that year to the head ‘0202.Education, Sports, Arts and Culture‐01 General Education 102 Secondary Education’ (Sub‐heads: Tuition fees, Examination fees) by debit to the head “2202 General Education 02 Secondary Education 108 Examination.”

Book adjustments may be made for services rendered or supplies made between Sections of the Agriculture Department affecting the accounts of Schemes financed wholly or partly by outside Bodies or Governments. [Memo No.11101/Accts/62‐1, dated 1‐3‐1962]

General.

Article 68. 

Where under the direction in this Chapter, payment is required to be made by one Department of Government to another, such payment may, if the case so requires or if otherwise deemed necessary, include adequate charges for supervision on other indirect expenditure connected with service or supply for which payment is made.

Article 69. 

Payments of amounts due by one Department of Government to another shall ordinarily be made by book transfer except when such transfers do not suit the methods of accounts or of business adopted by the receiving department.

Local Ruling under Article 69.

Fees due by Government Departments to the Registration Department for the registration of documents or for searches in registration offices and fees due to the Boiler Inspection Department for the Inspection of Government boilers should be adjusted by means of contingent bill drawn by the Departmental Officers concerned duly endorsed for payment by transfer credit to the Registration or Boiler Inspection Department, as the case may be.

The Forest Department and the Public Works Department (in regard to fees chargeable to specific works) should follow the same procedure.

Deleted.

Petty supplies costing not more than Rs.50/‐ made to Government Commercial Undertakings should be paid for in cash as opposed to transfer in the accounts. This does not mean that such payments should always be made in coin or currency or Bank notes. When, with the special sanction of the Government, a Government Department or a Government Commercial concern is permitted to settle accounts with other Government Departments by actual payment instead of by book‐transfers, the payment should as far as possible, be made by cheque or Government drafts, which should be crossed and marked “Not Negotiable” so as to ensure credit of the amounts to a Government head of account at the Treasury. If, however, the payment to be made is below the minimum money limit for which a cheque or a Government draft can be issued, the amount may be paid in cash or remitted by money order when necessary

Deleted.

Any receipts including cash recoveries from employees, contractors etc., realized by a Division/PAO of the Public Works Department on behalf of any other Division/PAO Department or Government should be passed on by book transfer, if the recovery occurs within PAO’s jurisdiction and by cash/cheque/DD, if occurs and on different PAOs

Payment of taxes on Government buildings should be made by book adjustment in the case of Zilla Parishads and Municipalities as these have banking account at the treasury. Taxes due to panchayats which have no banking account at the treasury may however be paid in cash.

Foot Note:‐ See instructions 3 chapter 4 part III Volume‐I A.P. Treasury Code.

Payment due by Government Departments under the Motor Vehicles Act and Rules and the Andhra Pradesh Motor Vehicles Taxation Act should be made by presenting separate contingent bill at Pay Accounts Office or at the Treasury or Sub‐Treasury concerned as the case may be where the bill will be passed for ‘nil’ payment and necessary adjustments made in the concerned head of account.

The Forest and Public Works Departments (in regard to taxes and fees chargeable to specific works) should follow the procedure indicated in the second sub‐paragraph in Local Ruling 1.

The special rules applicable to the Public Works Workshops are contained in the Local Ruling under Article 182 of the A.P.A.C. Volume‐III.  (Memo No.8004/E,A/53‐2, Finance dated 4th March 1953)

Article 70. Deleted.

Article 71. 

Any question of doubt or dispute arising in connection with the interpretation of the Directions in this Chapter will be decided by the Comptroller and Auditor‐General with the approval of the President.

ANNEXURE

Commercial Departments recognized by Government of Andhra Pradesh (Vide Article‐59)

Animal Husbandry and Fisheries Department.

Ice‐cum‐Cold Storage Plant, Tungabhadra Dam.

Fishnet Making Plant, Tungabhadra Dam.

Fish Seed Farm, Tungabhadra Dam.

Education Department

Andhra Pradesh Government Text Book Press, Hyderabad.

Finance Department

Andhra Pradesh Government Life Insurance Department, Hyderabad.

Home Department

Government Central Press, Hyderabad.

Government Regional Press, Kurnool.

Government Regional Press, Vijayawada.

Revenue Department

Government Distillery Narayanaguda, Hyderabad

(Reference: Page 142 of Comptroller and Auditor General Report, Civil for the year ended 31st March 2005 – Para 1.8.3)

CHAPTER 5: DIRECTIONS REGULATING THE EXHIBITION OF RECOVERIES OF EXPENDITURE IN GOVERNMENT ACCOUNTS

Introductory

Article 72. 

The Directions contained in this Chapter indicate the manner of classification of ‘recoveries’ of expenditure in Government accounts.

The term ‘recovery’ is used in this Chapter in a limited sense to denote repayment of or payment by another Department of the same Government or by another Government or by a non‐Government party (including Public Sector Undertakings, Autonomous Bodies and Private Persons and Bodies to a Government Department) which initially incur the charge and classified it in the accounts as final expenditure by debit to Revenue or Capital heads of accounts. Recoveries towards Establishment charges, Tools and Plants, Fees for procurement or Inspection of stores or both etc., effected at percentage rates or otherwise are some examples.

Recoveries from Private Persons or Bodies and Governments Outside India

Article 73. 

Recoveries from private persons or bodies (including Local Funds and Governments outside India) should, as a general rule, be treated as Revenue and not as Deduction from expenditure.

Exceptions – (i) When a Government undertakes a service merely as an agent of a private body, so that the entire cost of the service is recovered from that body, the net cost to Government being nil, the recoveries may be taken in reduction of expenditure.

Recoveries of expenditure on works in progress and transactions of stock and other suspense accounts:

The Technical Estimates take cognizance of all anticipated receipts from sale proceeds of materials, plant etc., received from the old structure while the receipts under “Stock and Suspense” are by their very nature inseparable from the expenditure recorded under the main head. The recoveries falling under these two categories should therefore be treated as Reduction of Gross Expenditure.

Recoveries by one Government from another.

Article 74. 

As between two or more Governments the following directions shall regulate the classification of recoveries.

If the recoveries represent debits to another Government of expenditure which was so debitable from the moment it was sanctioned, they should not be treated as revenue of the Government effecting the recoveries, but as deduction from the expenditure.

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

Recoveries of the classes falling under (a), and (b), if not affected within the accounts of the year in which the expenditure was incurred, should be treated as revenue. Exception‐ In cases where the recovery is made on the basis of the calendar year instead of the Financial Year, the whole amount of the recovery may be treated as reduction of expenditure though a portion of it relates to expenditure incurred during the previous Financial Year.

Recoveries on account of commuted value of pensions affected from other Governments should be treated as deductions from expenditure.

All other recoveries should be credited as revenue of the recovering Government, whenever they are received.

Classification of recoveries made by one Department from another Department of the same Government.

Article 75. 

As between different Departments of the same Government, the recoveries shall be classified as deduction from the gross expenditure except that such recoveries as are made by a Commercial Department e.g. Railways, Department of Posts, Department of Telecommunications or a Departmental Commercial Undertaking (e.g. AIR) should be treated as receipts of that Department.

Exception:‐Recoveries of fees for purchase, Inspection etc., effected by the Central Purchase Organizations of Government of India (e.g., DGS&D, Army Purchase Organizations of the Ministry of Defence) are treated as receipts of the Department concerned.

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

Note‐2: The term “recoveries” by Commercial Department (viz. Posts, Telecommunications and Railways) or by a Departmental Commercial Undertaking (e.g. A.I.R) for the purpose of this Article shall apply to recoveries in respect of services rendered to other Departments in pursuance of the proper functions for which the Department is constituted, that is to say, in the case of Department of Posts and Department of Telecommunications, recoveries shall be classified as receipts only when they are made in respect of Postal, Telegraph or Telephone services rendered to the other Departments. Where, a Commercial Department or Departmental Commercial Undertaking acts as an agent of another Department for the discharge of functions not germane to the essential purpose of the Department, the recoveries shall be taken in reduction of expenditure.

Receipts and Recoveries on Capital Account.

Article 76. 

Notwithstanding anything to the contrary that may be provided by or under the Directions in this Chapter, receipts and recoveries on Capital Account in so far as they represent recoveries of expenditure previously debited to a Capital major head shall be taken in reduction of expenditure under the major head concerned, except where under the rules of allocation applicable to particular Department, such receipts have to be taken to revenue.

Settlement of Doubts or Disputes.

Article 77. 

In case of doubt or dispute, the question whether any particular recovery is classifiable as revenue or as deduction from expenditure under the Directions in this Chapter the matter shall be referred to the Ministry of Finance Department of Expenditure, Controller General of Accounts for its decision on the advice of the Comptroller and Auditor General.

Article 78. Already Deleted.

CHAPTER‐6: DIRECTIONS REGULATING THE EXHIBITION OF LOSSES IN GOVERNMENT ACCOUNTS

Introductory

Article 79. 

The Directions in this Chapter shall regulate the exhibition and adjustment of losses in Government Account.

Receipts

Article 80. 

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

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

Note‐1: The term “Government Servant” used in Clause (2) of this Article Includes persons who, though not technically borne on a Regular Government establishment, are duly authorized to receive money on behalf of Government*.

Note‐2: Where losses of Public money are wholly or partially met by non‐issue of pay or pension and the Account Department authorizedly applies the unissued amount to meet the public claim, the resultant balance of the claim alone should be treated as a loss, the emoluments due being debited to the pertinent head of account as if they had been drawn and used by the Government servant concerned in paying the public claim.

Foot Note‐* For a fuller definition of the term “Government servant”, see T.R.2 (b) of the Andhra Pradesh Treasury Rules in Part‐I, Volume‐I of the Andhra Pradesh Treasury Code.

Buildings, Lands, Stores and Equipment.

Article 81. 

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

Cash in Hand, whether in Treasuries or in Departmental Charge.

Article 82. 

All losses or deficiencies should be recorded under separate heads in the accounts.

Note‐1: The acceptance of counterfeit coins or notes shall be regarded as a loss of cash.

Note‐2: Any recovery made in the course of the year in which the losses are brought to account shall be shown by deduction from the head under which the losses is recorded. Any recovery made after the accounts of the year are closed shall be shown as an item of receipt.

Local Ruling under Article‐82.

A loss of cash which is written off under orders of a competent authority should be debited as a contingent charge of the Department concerned. No distinction should be made between a loss affecting a service head and a loss affecting a debt or remittance head, except as regards losses on remittances of coin, which should be debited to “Account with the Reserve Bank of India”, and irrecoverable loans and advances granted under Chapter‐X of the Andhra Pradesh Financial Code, which, when written off under proper authority, should be debited to “M.H.2075‐Miscellaneous General Services –Other Expenditure‐Other items”.

A loss of cash due to acceptance of counterfeit coins or notes and any amount transferred from the treasury balance in order to make good any deficiency found in the currency chest should be debited under the head “Advances‐Repayable” pending recovery or orders to write it off. Any amount which the Government finally order to be written off as irrecoverable on account of any such loss would be adjusted as a Provincial charge under the head “M.H.2075. Miscellaneous General Services – Other Expenditure‐Irrecoverable temporary advances‐written off”.

Irregular or Unusual Payments

Article 83. 

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

Inevitable Losses.

Article 84. 

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

Exhibition of Losses in Appropriation Accounts.

Article 85. 

The rules relating to the exhibition of losses in the Appropriation Accounts are contained in the instructions issued by the Comptroller and Auditor General for the preparation of those accounts.

APPENDIX – 1 Deleted

APPENDIX ‐ 2 Deleted

APPENDIX 3 - (See Article 29): Principles and Rules regulating the Distribution of Certain Charges and Receipts between Governments

(Approved by Government in G.O.Ms.No.53, Finance (Accounts) Department, dated 13‐02‐ 1962 in respect of Central and other State Governments. Memo No.68476‐A/Accts/62‐1, dated 15‐9‐62 and Memo No.38458/Accts/62‐2, dated 4‐6‐1962)

A‐ INTRODUCTORY : B‐PAY, ALLOWANCES, PENSIONS, ETC.

Incidence of Pay and Allowances, other than Leave Salaries.

Incidence of Leave Salaries.

Deleted

Incidence of Pensions.

Deleted.

Deleted.

Deleted.

VII‐A. Incidence of Family Pensions in respect of Armed Forces Officers and of Civil Officers serving with the Armed Forces.

C – OTHER CHARGES

Incidence of expenditure involved in Audit and keeping Accounts.

Incidence of Grants of Land and Alienations.

Incidence of the cost of Police functions on Railways including the cost of protecting Railways Bridges.

Incidence of the cost of (1) Forest Surveys carried out by the Survey of India and (2) Forest maps prepared by that Department.

Incidence of the charges relating to the maintenance and demarcation of and disputes over, boundaries.

D – RECEPTS

Incidence of Leave Salary and Pension contributions recovered in respect of Government servants lent on Foreign Service.

A – INTRODUCTORY

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

B – PAY, ALLOWANCES, PENSIONS, ETC

Incidence of Pay and Allowances, other than Leave Salaries.

Subject to any other arrangements which may be settled mutually between the Governments concerned, the incidence of transit pay and allowances including travelling allowances of a Government servant transferred from one Government to another, will be regulated in accordance with the following principles:‐

When a Government servant is transferred permanently from one Government to another, his transit pay and allowances including travelling allowances shall be borne by the Government to which he is transferred.

When the services of a Government Servant are lent by one Government to another, the transit pay and allowances including travelling allowances while he is joining and leaving the new service shall be debited to the borrowing Government. This principle applies even in cases where the Government servant lent takes leave either before joining the borrowing Government or before re‐joining the lending Government and holds good even in respect of joining time admissible to a Government servant returning from leave out of India of more than 120 days under Revised Leave Rules. For this purpose officers of the Indian Medical Service employed under Provincial Governments should in all cases be regarded as lent to those Governments by the Central Government (Defence Department).

In the case of an officer in joint cadre serving two Governments his transit pay and allowances including travelling allowances on transfer from one office to another shall be debited to the office to which he is proceeding.

“When a Government servant while on foreign service is transferred to another foreign service without reverting to the Government service, the transit pay and allowances and transfer Travelling Allowances shall be borne by the foreign employer to whom the employee proceeds on transfer”.

(Govt. Memo No.49948/1113/Accts/68, dated 15‐5‐1969)

Note:‐ “In the case of Government servants returning from duty abroad whose services are lent to another Government, the liability of the borrowing Government for the transit pay and allowances Including travelling allowances while joining the new service without reporting to in the original service shall be restricted to the period commencing from the date of arrival of the Government servant in India.” (Govt. Memo No.88795/2581/Accts/63‐3, dated.25‐2‐1964)

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

The following Rules govern the incidence of the cost of troops lent to Civil Departments of the Central Government and to State Governments. The words ‘Military’ and ‘Troops’ are used include Indian Navy and Air Forces as well as the Army.

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

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

(1) the types of duties that Armed forces may be called upon to perform in aid of Civil Authorities are as follows:‐

Maintenance of law and order.

Maintenance of essential services.

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

Assistance required in the execution of development projects.

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

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

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

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

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

For non‐consumable stores and equipment:‐

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

Cost of repairs and maintenance.

Cost of replacement of equipment rendered unserviceable, assessed on its condition before use. In the case of aircraft, normal strike of wastage element will be charged.’

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

Hospitalization and treatment of the service personnel injured whilst employed in rendering aid will be charged.

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

Assistance rendered by Armed Force for extinguishing fire will be governed by the principles laid down in the Ministry of Defence letter No.F.256/51/D(15) dated 18th April,’55 as amplified letter dated 18th May, 1955.

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

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

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

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

(1) Recoveries of hire charges in respect of stores other than ordinance stores will be made as following:‐

Tools & Plant Engineering Stores

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

MT Vehicles.

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

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

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

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

The depreciation charges in case of ordinance stores will be calculated on the basis of price Vocabulary rates plus 50% divided by life of the items in use, expressed in months.

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

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

In terms of Para 1(b) of the Ministry of Defence letter No.Dy/0201/IHQ/SO‐ II/3152/D(N‐I) dated 21‐11‐1959 and 3620/D(N‐I) dated 17th September ’77 as amended from time to time for loan on hire of Naval Yard Craft, equipment tolls etc; and for assistance rendered by India Navy Ship, in terms of Ministry of Defence letter No.Ac/3977/8(2)NHQ/1951/DO III/DLN.II dated 26th December 1980 as amended from time to time.

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

4.(1) Rewards for proficiency in oriental languages paid to a Military Officer from the Defence Services Estimates during the three years preceding his transfer to other Departments of the Central Government or to State Governments will be recovered by the Controller of Defence Accounts (Pensions), Allahabad, from the department or Government concerned on confirmation of the officer in his Civil appointment.

4.(2) Rewards to Military Officers in temporary Civil employ under the Central or State Governments for proficiency in oriental languages are paid by the Controller of Defence Accounts (Pensions), Allahabad from the Defence Services Estimates in the first instance. On confirmation of an officer in the Civil Department, the Controller of Defence Accounts (Pensions), Allahabad, will recover from the department or State Government concerned, the Amount of any language rewards paid to the officer from the Defence Service Estimates.

4.(3) The amount recoverable from the Civil Department of the Central Government or from the State Government in these cases is the civil rate of language reward as published by the Department of Education but in the case of officers of the category referred to in sub‐clause (1) above the difference between the Military and the Civil rates of awards is recoverable from the officers themselves in installments of Rs.50 per mensem.

Note:‐ Rewards for passing the Lower and Higher Standard examinations in Urdu by officers in temporary Civil employ are not refundable to the Defence Services Estimates.

4‐A Indian Commissioned Officers of the Armed Forces in Civil Employ count their Civil service as qualifying for the outfit allowance under item(d) of

A.I.(1) 16 S/48

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

R.I.N.(1) 4/S/48

their pay and allowance are governed by the new pay Code; and

they are required to wear uniform while in civil employ.

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

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

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

When proceeding to carry out their training direct from their civil appointments, the pay and allowances which they would have drawn in their civil appointments but for the training, for the whole period of absence on such training inclusive of the time spent in transit to and fro;

When proceeding to carry out their training while on leave in India, Myanmar, Sri Lanka, United Kingdom or Northern Ireland, the civil leave pay and allowances which they would have drawn but for the training;

When proceeding to carry out their training on the expiry of leave out of India taken from their civil appointments but before re‐joining their civil appointments for duty joining time civil pay from the date of disembarkation in India to the date preceding that on which their training, commenced and full civil pay for the period of actual training and the period spent in journeying to the place of their civil appointments; and

Military pay and allowances for the period of actual training.

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

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

Note:‐ This rule is also applicable in regard to the allocation of the civil pay of a Government servant, who is a member of the Indian Naval Volunteers Reserve or the Indian Naval Reserve, when called up for training.

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

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

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

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

Deleted.

The Military pay and allowances drawn under paragraph 250 of the Regulations for the Auxiliary Force, India, by a Civilian Government servant who is a member of the Auxiliary Force, India, on his being called out or embodied under section 18 of the Auxiliary Force Act, are borne by the Defence Service Estimates. In cases in which the Government servant draws, in such circumstances, civil rate of pay, the amount, if any, by which those rates of pay exceed military pay and allowances is debitable to the ordinary head of expenditure to which the civil pay of the individual concerned is debitable.

Travelling allowance of Telegraph signalers accompanying State Governors and other high officials on tour is debited to the department concerned, although their pay for the period is debited to the Telecommunications Department.

Deleted.

Subject to any separate agreements that have been or may be arrived at between the various Governments, the pay and allowances including travelling allowance of a Government servant summoned to give evidence in his official capacity in a Criminal Court or in a Civil Court in a case in which Government is a party are, during the period of his absence, debited to the Government under which he is employed. Actual expenses under the rules of the Court, if admissible, are, however, payable by the Court, and debited to Court contingencies.

Local ruling under Rule 12

The rules regulating the payment of travelling allowance to officers of certain other Governments including certain Foreign Governments appearing as witnesses on summons before the Criminal Courts in the State of Andhra Pradesh and to officers of the Andhra Pradesh Government appearing as witnesses on summons before the Criminal Courts of other Governments and the incidence of these charges are contained in the publication “Criminal Rules of Practice and Orders” issued by the High Court of Judicature at Hyderabad.

II‐Incidence of Leave Salaries.

The following rules govern the incidence of leave salaries of Government servants who have served under two or more Governments.

1. (a) The existing system of allocation or sharing of the liability on account of leave salary or payment of leave salary contribution by one Department of Central Government to another including Railways, Posts, Telecommunications, Defence Departments dispensed with. The liability for leave salary will be borne in full by the Department from which the Government servant proceeds on leave, whether it be his parent Department or a borrowing Department with whom he is on deputation.

In the case of Government servants who avail of leave on termination of their deputation period, the liability for the leave salary will be borne by the Department which sanctions the leave.

The above Rules will apply to all cases of leave salaries paid on or after 1st January, 1978.

(GOI.,M.F.,O.M.No.F.2(117)/76/SC, dated the 26th December, 1977)

1. (b) The system of allocation of leave salary between Central and State Governments and between State Governments was dispensed with effect from 1.4.1987.

(Lr.No.14(5)/86/TA/1029 dt.9.10.1986 of CGA Ministry of Finance Department GOI, New Delhi);

Service under the “Local Fund” administered by Government and Commercial Department within the same Government should be regarded as service under separate Government;

a lending Government is ordinarily a Government under which a Government servant first obtains permanent employment;

Deleted.

Notes:‐ 1 to 4 deleted

Local Rulings

(1). When a Government servant is transferred from service under a Government to a Government other than that under which he was first employed, leave account should be continuously maintained and no subsidiary leave account need be maintained for the service rendered in borrowing Government.

(2) Deleted.

3. The Government to which a Military Commissioned Officer in Civil employ is transferred should not be regarded as occupying the position of a lending Government unless and until the officer obtains permanent employment under that Government.

Deleted

Deleted

Deleted

2. Deleted

Local Rulings

(1). Furlough taken by Military Officers, should be treated as leave on half average pay and the furlough pay admissible to them under Military Rules while on such furlough in or ex‐India should be viewed as equivalent of leave on average pay for purpose of raising debits, the privilege leave taken by such officers being viewed as equivalent of leave on average pay for this purpose.

Deleted.

Deleted.

Local Rulings under Rule 3

Incidence of leave salary of a Government servant who has been transferred permanently to Local‐Fund not administered by Government:‐ As per FR 129, the transfer of Government servants to service under Local Funds which are not administered by Government will be regulated by FRs in Chapter‐XII i.e. Foreign service terms and conditions. On the contrary leave salary of persons transferred to Government service from Local Fund not administered by Government is regulated as per FR 130.

Incidence of leave salaries of employees of Local Funds administered by Government who are transferred to Service under Government or vice versa:‐ Cases up to 31‐3‐1987 allocation of leave salary should be made between the different Governments as laid down in this section. From 1‐4‐87 onwards, no allocation of leave salary between the Governments. The liability of leave salary should be borne by the Department from which employee proceeds on leave.

Classification of leave salary of a State Government servant holding a post under the Central Government in addition to his own post under the State Government:‐ When a State Government servant is appointed to hold a post under the Central Government in addition to his own post under the former, the Government of India have decided (vide No.F.78 Civil Service Regulations 26, dated 3rd March 1926 of the Government of India, Finance Department) that the whole of the increase in the leave salary due to his holding a Central Government post is debitable to that Government. This principle is equally applicable to the increase in the joining time pay under Fundamental Rules 107(b) (ii) which is practically leave salary in another name.

Already Deleted.

Incidence of Leave Salary of Research Staff employed in connection with the Research Scheme financed by the Indian Council of Agricultural Research:‐The Research staff employed on Schemes of the Indian Council of Agricultural Research falls under two categories‐

those with a lien on substantive posts under Government; and

those without such lien, directly recruited for temporary employment on such schemes. These may further be sub‐divided into‐

Officiating men, who, though deputed to work on a Council’s Scheme would continue in service under Government but for their deputation.

Officiating men who would have been discharged for want of vacancy, but for their deputation to work on a Council’s scheme.

Staff falling under category (1):‐ The entire leave salary is debitable to State revenues whether they are employed on old or new schemes, i.e., schemes sanctioned after 31st March 1938.

Staff falling under category 2(a) and (b):‐The leave salary in respect of personal employed on old schemes is debitable to State revenues where substitutes are employed in the leave vacancy. In cases where no substitutes are entertained, the leave salary is debited to the grant of the scheme concerned. The leave salary of staff employed on new schemes and renewal of old schemes and failing under category 2 (a) is debitable to State Revenues, but that of those falling under category 2 (b) to the funds of the Council and only to the extent of leave admissible under the Central Civil Services (Leave) Rules, 1972 of the Central Government, in respect of the period of employments under the Council’s Scheme.

Deleted.

Deleted.

8. (1,2,3,4) Deleted.

3‐A. When a Government servant is granted an extension of service and the whole of the leave at his credit on the date of compulsory retirement, encashed as per the leave rules under FR 86(a) or any other corresponding leave rule and no leave is carried forward on extension of service, the Government for whose benefit the extension is sanctioned will bear the entire charge for leave‐salary in respect of the leave earned by him during the period of extension. When, however, such a Government servant carries forward any leave on extension of service, such liability continues, but only in respect of the leave actually carried forward.

Deleted.

The Government which sanctions “leave not due” will bear the charges on account of such leave in the first instance in all cases, but in cases where the Government servant on return from such leave is transferred to another Government before the “leave not due” taken by him is completely earned by duty, such readjustment of the charge may be made be as may be agreed upon by the two Governments concerned.

Local Ruling under Rule – 5

The following arrangements have been agreed upon between the Andhra Pradesh Government and the Central Government and the Governments of West Bengal, Assam, Bihar, Odisha, the Punjab and the Uttar Pradesh.

When an officer who has been granted and has availed himself of leave not due transferred to another Government before the leave not due taken by him is completely wiped out by service under the Government which sanctioned the leave, the portion of the leave‐salary which cannot under the rules be adjusted against the Government sanctioning the leave, will be debited to the other Government.

When for any reason the officer so transferred fails to earn sufficient leave to wipe out the leave not due granted to him before transfer, the Government which sanctioned the leave to him will be re‐debited with the leave‐salary for the period of leave not due which is not wiped out by subsequent service in the province to which he has been transferred.

In the case of transfers between the Andhra Pradesh Government and the Government of Maharashtra each case will be dealt with on its merits.

With effect from 1‐4‐1987. Leave‐salary in respect of special Disability Leave granted to a Government servant will be borne by the Government which sanctioned the leave.

The allowances paid to a Government servant during study leave will be borne by the Government under which he was employed when the study leave was granted.

The Government which received or remitted the contribution for leave‐salary of a Government servant in Foreign services should bear the charges for his leave salary in respect of the leave earned by him during such service.

Local Ruling

Where the leave salary is chargeable to another Government, the amount will be debited through account current to the Government concerned and where it relates to a Zilla Parishad, or Foreign employer, the charge should be classified under the same head as pay and the recovery should be effected direct from the Zilla Parishad or Foreign employer and when recovered intimated to Accountant‐General, Andhra Pradesh.

In respect of Government servants subject to the Central Government’s Central Civil Services (Leave) Rules, 1972, or similar rules issued by other Governments which make the calculation of leave in relation to the period of duty impossible, contribution for leave salary is recovered from borrowing Governments. The liability of a borrowing Government to pay contributions to the lending Government ceases when a Government servant is permanently transferred to the former, but the lending Government remains responsible for the leave salary of the Government servant in respect of “earned leave” at credit on the date of his permanent transfer to the borrowing Government. This amount of ‘earned leave” should be exhausted first by the Government servant before any leave in respect of service after permanent transfer to the borrowing Government is taken by him. The leave‐ salary in respect of any other kind of leave which may be taken by the Government servant after his permanent transfer to the borrowing Government under the leave rules of that Government will be borne by that Government.

Note 1:‐ In the case of officers borne on joint cadres, allocation of leave salary will be made in accordance with the arrangements mutually agreed upon by the Government’s concerned.

Note‐2 Deleted.

Deleted.

Deleted.

Section – III is deleted.

IV – Incidence of Pensions

Except in regard to the apportionment of liabilities in respect of pensions of the serving and retired Government servants of the undivided India between India and Pakistan the following rules regulate the adjustment of pensionary charges of Government servants who have served under one or more than one Government. These rules also constitute the agreements relating to the distribution of pensionary charges contemplated by Article 290 of the Constitution of India.

Deleted.

2‐A. A Local Fund administrated by Government should be regarded as a separate Government for the purposes of these rules.

For the purpose of these rules –

”Length of service” means of qualifying service”.

Service under a Government includes period for which a Government servant drew pay or leave salary from that Government.

Deleted.

Deleted.

Foreign Service should be treated as service under the Government which received, or remitted, as the case may be, the contributions for the pension in respect of such service.

Compassionate allowances are treated as pensions.

Simplification of adjustment of allocation of pension between various Departments of Central Government and State Governments.

The liability of pension including gratuity in respect of Government servants serving under various Central Government Departments including Railways, Posts, Telecommunications and Defence Departments will be borne by the Department to which the Government servant permanently belongs at the time of retirement. No recovery of proportionate pension need be made from other Central Departments under whom he had served. These orders take effect from 1.1.1978 and applicable for all pensions sanctioned on or after the date. (G.O.I. Ministry of Finance OM No.F(2)/117/76/SCDL 26.12.77).

The system of allocation of pension between Central and State Governments and between State Governments was dispensed with effect from 1.4.1987 and will apply to all cases of pensions sanctioned on or after that date. In pursuance of these orders, the liability of pension including gratuity will be borne in full by the Government (Central or State) to which the Government servant permanently belongs at the time of retirement. Now recovery of proportionate pension will be made from the Central / State Governments under whom he had served. (Lr.No.14(5)/86/TA/1029, dt.9.10.86 of CGA Min.of Fina. Dept., of Expr., GOI, New Delhi).

It is further clarified by G.O.I. that in the case of retirement/ death before 1.4.1987 where pensionary benefits are sanctioned on or after 1.4.1987 there may be no allocation of pension. As regards the type of cases where a pensioner retired prior to 1.4.1987 and pension was also sanctioned before 1.4.1987 but a revision becomes due after 1.4.1987, it is clarified by G.O.I. that although the pension had been sanctioned prior to 1.4.1987 the recovery of proportionate pension need not be insisted upon after revision as it would be in keeping with the spirit of the orders dt.9.10.1986. (Lr.No.14(50/86/TA/328, dt.23.03.1988 of CGA, Ministry of Finance, G.O.I New Delhi).

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When a deficiency in qualifying service is condoned, the period condoned should be reckoned as service under the Government which condones it.

7(a) The various pensions sanctioned prior to 31.3.1987 such as wound and injury pensions, pensions to dependants of Mutiny Veterans, special additional pensions etc., and allocated between various Governments as per the then existing rules will continue to be allocated as such even after 1.4.1987.

(b) Incidence of pension of Government servants transferred between Burma (Now Myanmar) and India after 31st March, 1937:‐ It has been decided by the Central Government in consultation with the Government of Burma (Now Myanmar) that the liability of the State Government for the payment of pension of officers (including High Court Judges) transferred between Burma (Now Myanmar) and India after 31st March, 1937 should be limited to that earned by service in the State concerned.

Provisions of High Court Judges (salaries and conditions of services) Act, 1954 as amended upto 1999 intended to protect the service rights of the Judges do not preclude an arrangement of this nature.

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Section V - Deleted. 

Section  VI - Deleted.

Section VII - Deleted.

VII.A – Incidence of Family Pensions in respect of Armed Forces Officers and of Civil Officers serving with the Armed Forces.

Family Pensions in respect of Armed Forces Officers granted under Defence service Regulations or instructions‐whether at the ordinary or other rates – are debited to the Defence Service Estimates, even though the officers concerned may have served under Civil Departments of the Central or State Governments. Family Pensions in respect of Armed Force Officers in Civil employ granted under the provisions of section III of Chapter XXXVIII of the Civil Service Regulations or the Superior Civil Services (Extraordinary Pensions) Rules, 1936, or the Central Civil Services (Extraordinary Pensions) Rules or under similar rules framed by the State Governments are debited wholly to the Civil Department‐Central or State‐as the case may be.

Family Pensions in respect of Civil Officers serving with the Armed Forces either in a Civil capacity or otherwise, are debitable to the Defence Service Estimates.

C – OTHER CHARGES.

VIII – Incidence of Expenditure Involved in Audit and keeping Accounts:‐

The following rules govern the incidence of expenditure on Audit and Accounts:‐

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

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

Note –1:‐ The expression “any other authority or body” does not include private commercial and quasi‐ commercial undertakings (other than Government companies as defined in Section 617 of the companies Act, 1956) in which Governments in India may be participating.

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

If a State Government requests the Comptroller and Auditor General to arrange for a more detailed or a local audit of expenditure, transactions or accounts etc., which relate to or form part of the accounts of the State, the criterion for deciding the incidence of the expenditure involved in such audit is whether or not the Comptroller and Auditor – General aggress to do the work as part of his legitimate statutory functions. If he does, the cost of the audit should be treated as a charge of the Central Government, since what is involved in an extension of audit for which the Comptroller and Auditor‐General is statutorily responsible. The fact that such audit is undertaken in a single State is not a decisive consideration in the apportionment of cost as the extent of audit to be conducted in any case is determined by the Comptroller and Auditor‐General.

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

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

Note:‐ The recovery of cost of audit of the accounts of local bodies / Institutions that are wholly or largely financed from Grants‐in‐aid or loans by Government shall be regulated as follows:‐

Where the Comptroller and Auditor General is the sole Auditor for a local body/institution, whether under any law made by Parliament under Article 149 of the Constitution or on consent basis under Section 21(1) of CAG’s (DPCs) Act, 1971 charges will be payable in full unless specifically waived by Government.

Where the local body/institution has its own auditors and audit by Comptroller and Auditor‐ General is conducted in addition with a view to safeguarding government interests and ensuring that the grants or loans by Government have been utilized for the purpose for which they are given the Comptroller and auditor‐General will be acting in discharge of the C&AG’s DPC Act, 1971, is a charge of the Central Government.

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

The maintenance of the internal accounts of a department of a State Government

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

IX – Incidence of Grants of Land Alienations

State Governments receive compensation from the revenues of the Central Government for all grants of land and assignments or remissions of land revenue sanctioned on or after the 1st April 1921 in favour of officials and non‐officials in recognition of exceptional services rendered by them to the Central Government.

The value of compensation for grants of land, etc., by the Defence Department should be debited against the Defence Services Estimates.

All special pensions and jagirs in the form of assignments of land revenue sanctioned for Military Officers on a date previous to 1st April 1921 under the Government of India, Special War Rewards Scheme should also be debited to the Defence Service Estimates.

Incidence of the Cost of Police Functions on Railways including the Cost of protecting Railway Bridges.

With effect from 1.4.79, the cost of GRP, (without distinction of ‘Crime’ and Order Police) will be shared between the State Government and Railways on 50 : 50 basis, provided that the strength of GRP is determined with the approval of the Railways.

For the purpose of calculating Railway’s share of cost of GRP the following will be included :‐

Pay and all types of allowances in respect of GRP staff including office supervisory staff up to the level of Superintendent of Police.

Office expenses and contingencies.

Cost of Pensionary charges.

Cost of rent of buildings occupied by GRP Staff.

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

The following rules regulate the incidence of the cost of protecting Railway Bridges :‐

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

In the event of replacement of Police guard by military or other armed Force of the Union :‐

when the service of the Military or other armed force of the Union are placed at the disposal of the Railways at the request to the Railway Administration, the expenditure of the guards will fall upon the Railway.

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

Incidence of the Cost of (1) Forest Surveys carried out by the Survey of India and

(2) Forest Maps prepared by that Department

The rules governing the incidence of the cost (1) Forest Surveys carried out by the Survey of India and (2) Forest maps prepared by that department are given in Chapter IX of the Survey of India Handbook of Topography.

XII – Incidence of the charges relating to the maintenance and demarcation of, and disputes over, boundaries.

The incidence of these charges between a Foreign Country and India is regulated by the following principles:‐

1.(a) Maintenance – half the maintenance charges will be borne by the State concerned

: or for Union Territories by the Centre, the other half being recovered, as far as practicable, from the Foreign Country, failing which, the Foreign Country’s share will be borne by the Central Government.

(b) Demarcation and Disputes – Charges relating to demarcation of boundaries and boundary disputes will be borne by the Central Government under Entry of the Union List, subject to such recoveries as may be made from the Foreign Country.

Note 1:‐ The arrangement in (a) above in its application to Nepal will be subject to special arrangements worked out in consultation with the Nepal Government.

Note 2:‐ The share of the Bhutan Government for maintenance and demarcation of, and disputes over, boundaries will be borne by the Central Government for the present.

2. Where streams or other water courses form the boundary and where the ordinary principle of the median line applies, the Government concerned (i.e., Foreign Country or India) will bear the cost of maintenance of the boundary line on its side. Where a separate set of Survey Marks is maintained by each of the two Governments on its side, the cost of maintenance of the survey marks should be borne by the Government concerned.

Local Ruling under Section C‐XII.

The following arrangements have been agreed upon between the Andhra Pradesh Government and the Governments of Tamil Nadu and Karnataka in regard to the incidence of the expenditure incurred in the joint investigation and settlement of discrepancies in frontier boundaries :‐

The common boundary line is indicted by the survey and demarcation adopted by each of the two Governments on its own side of the common line. Each Government should meet its own expenditure on the joint investigation and settlement of discrepancies between the two surveys, since it is to the interest of each Government that both surveys should indicate an identical line. No claim should be made by one Government against the other for the renewal or repair of old stones or fixing additional stones in order to rectify or complete the former Government’s survey and vice versa, except were it is found necessary to repair or renew a stone or to plant an additional stone in order to indicate a point common to the surveys of both Governments when the cost of such operation should be shared by the two Governments and the share which each Government should be asked to pay should be settled in advance before operations are undertaken.

Miscellaneous Local Rulings on Certain Charges.

The following are some of the mutual adjustments agreed upon between the Central Government and the Andhra Pradesh Government:‐

The Medical Store Department of the Central Government will be charged for any confiscated cocaine hydrochlorate, B.P., supplied to it : the amount paid should be credited to “0039 State Excise” or “0070 Other Administrative Services” according as the sale‐ proceeds are realized by the Excise Department direct or in connection with any judicial proceeding.

The cost of maintenance and repatriation of non‐criminal pauper lunatics belonging to other nationalities than the Indian who are repatriated to the other countries will be borne as indicated below:‐

Maintenance charges in India will be borne by State revenues when the reception order was made in the State.

Repatriation to other countries, in cases where arrangements are made for repatriation direct to the country concerned through the Consul or other representative of the Foreign Government in India, the cost of repatriation should be met by the Foreign Government. In cases where such assistance through an official representative of the Foreign Government is not available, the cost there of will be borne by the Central Government.

Note:‐ The cost of maintenance includes the cost of removing a lunatic to and from a hospital.

Except where otherwise specially ordered all printing, binding etc., work done in the Government Press, Hyderabad, for officers of the Central Government will be paid for by the Central Government. The Director, Government Press, should forward to the Accountant General annually as soon as possible after the close of the financial year a statement showing the adjustment to be made against the Central revenues on the above account.

The provisions of Article 63 will apply also to transactions between the Andhra Pradesh Government and the Defence Department.

It will be a part of the normal duty of the Police to assist the Military authorities in saving Military buildings which are in danger from fire, and no bonus should be claimed from the Defence Department for such services. The Defence Department has agreed that it will similarly be a part of the normal duty of the Military, if within call, to assist in extinguishing fires in Civil buildings and that they will claim no compensation or bonus from the Civil authorities for such services.

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As between the Andhra Pradesh Government and the Civil and Military Station at Bangalore, no claim should be preferred or admitted on account of the cost of maintenance of mental patients.

The procedure laid down in item (vi) under Local Ruling 2 below regarding claims on account of the maintenance of prisoners will also apply in relation to claims against Centrally Administered Areas.

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The following arrangements have been agreed upon between the Andhra Pradesh Government and other State Governments, etc.:‐

Charges relating to prisoners and inmates of Borstal Schools.

Conveyance and other incidental charges of under‐trail prisoners sent from the Andhra Pradesh State to other State/Union Territory and Vice versa should be borne by the State sending such prisoners.

Maintenance charges of prisoners transferred on mutual agreement from the Andhra Pradesh State to the Uttar Pradesh and vice versa should be borne by the State to which the prisoners are transferred.

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No charges will be claimed for the maintenance of prisoners received by transfer from the Andhra Pradesh State to any of the other States, namely, West Bengal, Assom, Bihar, Orissa, Punjab, Madhya Pradesh and Uttar Pradesh and vice versa under the Police Register Transfer system.

No charges will be claimed by one State Government against another for the maintenance of prisoners transferred under section 40 of the Prisoners Act, 1900 (India Act III of 1900), either to give evidence or to answer charges.

No charges will be claimed for the maintenance of prisoners convicted for smuggling opium or cocaine and transferred to the Andhra Pradesh State from Assom vice versa.

Note:‐ As a matter of convention, no claims are made against other State Governments for the charges incurred on account of the escort of prisoners undertaken by the police of this State on behalf of other State Governments. Such claims should, however, be preferred against any State Government who raise a similar claim against the Andhra Pradesh Government.

When prisoners, whether ex‐military or otherwise, convicted by Civil Courts of Criminal Jurisdiction to undergo imprisonment for three months and above are transferred to the State of their origin, the transferring State should bear the cost of transfer and the State of origin should bear the cost of maintenance. This reciprocal arrangement has been accepted by the States of Andhra Pradesh, Tamilnadu, Maharashtra, West Bengal, Punjab, Bihar, Assom and Orissa.

Maintenance charges of adolescents transferred from the State of Maharashtra to the State of Andhra Pradesh and vice versa for detention in Borstal schools should be borne by the State to which the adolescents are transferred.

All claims against other States on account of the maintenance of prisoners should be made by the 15th February of the year following the calendar year to which the claim relates.

A separate statement should be prepared of the claim against each State allowing the appropriate rebate on account of the cash earnings of prisoners. The rates of maintenance charges and cash earnings per prisoner should be worked out once in three years on the average of the figures for the three preceding consecutive years and the rates so calculated should be adopted for each of the next three years following the period to which the calculation relates.

In case where a person is detained at the instance of a State Government, in another State, the liability for expenditure on his maintenance, etc., during the period of his detention in that State, should rest with the State Government, under whose instructions his detention has been effected.

Charges relating to mental patients.

Note:‐The cost of maintenance of mental patients referred to in the under mentioned rulings should be taken to include the cost of their transfer from one place to another.

The cost of maintaining patients domiciled in the Madhya Pradesh, Uttar Pradesh and the Punjab who are admitted into mental hospitals in the Andhra Pradesh, State and vice versa, should be borne by the State into a hospital of which the patient is admitted.

The cost of maintaining the patient should be recovered from or paid to, Maharashtra, West Bengal and Bihar, except the European Mental Hospital, Ranchi, when a patient domiciled in one of them is admitted into a mental hospital of the State of Andhra Pradesh or vice versa subject to the exception indicated below:‐

In the case of a patient domiciled in the State of Andhra Pradesh and admitted into a mental Hospital in West Bengal or Bihar or vice versa, action should be taken at once for his removal to a mental hospital in the State of his domicile; the cost of maintaining him for a short period between his reception and removal should be borne by the State into a hospital of which he is received pending removal.

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As between the Andhra Pradesh Government and the Government of Karnataka, the following procedure will apply; when a British subject from the Andhra Pradesh State has to be admitted to a mental hospital in Karnataka State, the Karnataka Government will at once communicate this information to the Andhra Pradesh Government and ascertain whether he may be so admitted and whether the Andhra Pradesh Government will bear the cost of his maintenance or whether he may be sent back at the cost of the Andhra Pradesh Government. A similar procedure will be adopted by the Andhra Pradesh Government when a subject of Karnataka State has to be admitted to a mental Hospital in the State.

The above procedure should be adopted in regard to the maintenance of mental patients belonging to the Andhra Pradesh State in the Mental Hospital, Bangalore, and the maintenance of patients belonging to the Civil and Military Station, Bangalore, in the mental hospitals of Andhra Pradesh.

Fees for the X‐Ray treatment, X‐Ray examination and radium treatment of mental patients should be claimed from the other States or Foreign Government concerned when no reciprocal arrangement is in force between the Andhra Pradesh Government and the other Governments for the treatment of mental patients domiciled in the other Government’s jurisdiction without preferring any claim.

Other Charges

Lepers belonging to the Andhra Pradesh State and admitted into a leper asylum in Karnataka State or vice versa should be maintained in the asylum in which they have been admitted at the cost of the Government in whose territory they are domiciled unless they are sent back to the State or State of domicile with the consent and at the cost of the Government in whose territory they are domiciled.

When members of the Sansia Tribe (a criminal Tribe known also as ‘Kanjar Bhats “Kanjar”, or ‘Sansias’) are escorted by the authorities of the State of Andhra Pradesh on repatriation to the State of Maharashtra or vice versa, the cost of repatriation within each State should be borne by the Government of that State.

The cost of post‐mortem examinations conducted in the border areas of the States of Andhra Pradesh and Odisha should be borne by the Government at whose instance the examination is conducted and the fee charged should be in accordance with the scale obtaining in the State in which the examination is conducted.

The rules relating to the incidence of charge on account of anti‐rabic treatment accorded to indigent patients belonging to other States are laid down in Appendix 18 to the Andhra Pradesh Financial Code.

The Medical Examination for the following purposes in the case of Government servants serving under the Governments of Maharashtra, Assom, Punjab, Orissa, Bihar, Uttar Pradesh and Madhya Pradesh will be carried out free of charge by the Medical Board and Medical Officers of the Government of Andhra Pradesh and vice versa:‐

Leave including extension of leave;

Physical fitness to resume duty after the expiry of leave on account of illness;

Invaliding from further Government Service; and

Pension commutation only when second medical opinion is required.

The special procedure prescribed in G.O.Ms.No.996, Revenue (Excise II), dated 24th May, 2005 should be followed for payment of duty on Indian‐made ‘foreign’ spirituous preparations and Indian‐made rectified spirits imported from or exported to other States and Administrations. (The Andhra Pradesh Excise Import & Export and Transport of Indian Liquor and Foreign Liquor Permits) Rules, 2005).

The Government of Andhra Pradesh have entered into reciprocal arrangements with the Governments of Madhya Pradesh and Punjab for the waiver of the following charges connected with extradition cases:‐

Subsistence and transit charges, and

Charges connected with the surrender of property.

(The reciprocity in respect of the item will hold good between the Andhra Pradesh Government and Madhya Pradesh Government only).

The following arrangements have been agreed upon between the Andhra Pradesh Government and the Central Government and other State Governments in the matter of claims for the recoveries on account of pay, allowance, etc., of Government servants whose services are lent by the Government to another for short periods:‐

Where the Government servant is required to devote his whole‐time and attention to the duties of the borrowing Government (except in the case of Officers lent to or borrowed from the Government of the Punjab) and the period of deputation is short, not exceeding two weeks and the deputation entails no extra expenditure to the lending Government, no claim should normally be raised against the borrowing Government except in respect of travelling allowance and of such remuneration to the Government servant as may be agreed upon between the two Governments. Where, however, the lending Government is put to extra expenditure in making arrangements for carrying on the work of the Government servant deputed, it may recover from the borrowing Government, a lump‐ sum contribution equal to 1¼ times the pay of the Government servant.

In the case of Government servants lent to or borrowed from the Government of Punjab, the lending Government may, at its discretion, recover from the borrowing Government a sum equal to the pay of the Government servant, if the period of deputation does not exceed 7 days and a sum equal to 1.25 (1¼) times the pay if the period of deputation exceeds 7 days but does not exceed 14 days.

Where the Government servant performs the duties of another Government in addition to his duties under the parent Government, no claim should be made on account of pay, leave and pension, but if the additional duties are sufficiently onerous, the Lending Government may ask for a payment to the Government servant of a suitable remuneration which may be retained by him in full.

D‐RECEIPTS

XIII‐Incidence of leave Salary and pension Contributions recovered in respect of Government Servants lent on Foreign Service.

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

While on Foreign Service, contributions towards the leave‐salary and pensions of Military Officers and others in permanent Military employ, including those in temporary Civil employ, should be adjusted in the Defence Services accounts, while the contributions in respect of such Officers in permanent Civil employ should be credited to Civil Estimates. When a government servant, on whose behalf the contributions are received, belongs to the Posts and Telecommunications Departments or Railways, the credits should be passed on to the Department concerned.