General Financial Rules 2017

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 Chapter 1: Introduction
• Rule l: GFR came into force w.e.f 11 Feb-2017
applicable to all Central Government Ministries/Departments and subordinate
bodies. And deemed to be applicable to Autonomous Bodies which don't have their
own financial rules.
• Rule 2 : Definitions
• Government Account: means the account relating to the Consolidated Fund, the
Contingency Fund and the Public Account.

"Consolidated Fund" referred to in Article 266 (1) of the Constitution

"Contingency Fund" established under the Contingency Fund of lndia Act, 1950, as
per Article 267 (1) of the Constitution
"Public Account" referred to in Article 266 (2) of the Constitution

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 Cont….
• Head of the Department: Person not below the rank of a Deputy Secretary to the GOI
• Financial Year: Year from 1st of April to 31st of March
• Drawing and Disbursing Officer(DDO) : Head of Office or any other Gazetted Officer having power to
draw bills and make payments on behalf of the Central Government
• Local fund: Defined in Rule 652 of the Treasury Rules
•  Appropriation: means the assignment, to meet specified expenditure, of funds included in a
primary unit of appropriation
• Re-appropriation : means the transfer of funds from one primary unit of appropriation to another
such unit.
"primary unit of appropriation" given in Rule 8 of DFPR 1978
 
"Re-appropriation of fund" given in Rule 10 of DFPR 1978

• Subordinate authority: means a Department of the Central Government or any authority

subordinate to the President 3
 Cont….
CAPEX model (Capital expenditure) OPEX model (Operating Expenditure)
Buyer purchases goods
Seller provides the goods, maintains
Procures consumables, Arranges its
maintenance and finally dispose of product it also provides the consumables as
after useful life required and finally takes back the
goods after useful life.
Payment is made in a staggered manner
(as per-T&C of contract)

Rule 3: if a case concerns more than one Department, no order shall be issued. until all such
Departments have concurred, or, failing such concurrence, a decision has been taken by or under
the authority of the Cabinet.

Rule 4: All Departmental regulations of financial character are made by, or with the
approval of the Ministry of finance.
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Cont….
• Rule 5 : Any doubt related to GFR will be referred to Ministry of Finance.

• Rule 6 :The systems and procedures established by these Rules may be modified
by any other authority only with the express approval of the Ministry of Finance.

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 Chapter 2: General System of Financial Management
• All money received by or on behalf of the Governmenf either as dues of Government or for deposit,
remittance or otherwise, shaft be brought into Government Account without delay, as per Article 150
and 283 (1) of Constitution.

• Article 284: All moneys (other than revenues or public moneys received by govt.) deposited
with any officer shall be paid info the Public Account.
• All moneys received by or deposited with Supreme Court or with any other Court (except High
Court) shall be paid into the Public Account of lndia
[high court -> paid to Public Account of State]
• The Head of Account to which such moneys shall be credited and the withdrawal of moneys
therefrom shall be governed by
-Government Accounting Rules 1990
-Central Government Account (Receipts and Payments) Rules, I983 or such other general or special orders

• When amounts due to Govt appear to be irrecoverable, the orders of the competent authority
Shall be obtained for their adjustment. 6
Cont….
• HOD/Admin shall keep Finance Ministry fully informed of the progress of collection of revenue
and Variations in Such collections as compared with the budget estimates.
•  When the maintenance of any rentable building is entrusted to a civil department, other than
the CPWD, then HOD concerned shall be responsible for the due recovery of the rent thereof.
• Assessment and recovery of rent of any building hired out will be regulated by the rules of
CPWD.
• Rules/procedure related to rent of Govt. buildings/lands, are contained in the departmental
regulations of the departments in charge of those buildings.
Remission of Revenue:
• A claim to revenue can be remitted only with the sanction of the competent authority
• Annual statements showing remission of revenue and abandonment of claims is prepared by
H0Ds and submitted to concerned Account officers and Audit officers on 1st June.
Exception:
Dept of Posts not required to submit these settlement
Individual remissions below Rs. 1000 need not be included in this statement
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Cont….
• Rules defining remissions and abandonment of rerenue may be made by Dept of Central Govt
and Administrators.
Prior consent of Ministry of Finance is must in matters-
Involving relinquishment of revenue in any way
Involving grant of land, lease/license of mineral, concession etc.

Rule 21– Standards of Financial Propriety

• Financial powers of govt have been delegated to various subordinate authorities vide DFPR but
Financial powers of govt which have not been delegated rests with Finance Ministry.

• Responsibility of Controlling Officer: He has to ensure that expenditure

i. do not exceed budget allocation
ii. incurred in public interest
iii. incurred for the purpose for which funds are provided
iv.  adequate control mechanism is functioning to guard waste and loss of public money 8
 Cont….
• All financial sanctions/orders issued by a competent authority shall be communicated to Audit Officer
and Accounts Officer.
• Following sanctions need not be endorsed to the Audit Officer
1. Sanctions related to creation/abolition/continuation of posts
2. Appointment/Promotion/transfer of Gazetted or Non-Gazetted officers
3. Contingent expenditure incurred under powers of Head of Office
4. Grant to advances (GPF) to goat employees
Lapse of Sanctions:
• A sanction lapses after 12 months from the date of its issue if no payment in whole or in part is made during
the 12 months.
Exception:
1. If period of currency of the sanction is specified in the sanction itself.
2. If specified that expenditure will be met from Budget provision of specific FY
3. In case of purchases of stores if tenders have been accepted or the indent has been placed on CPO within 1
year of the date of sanction issue.
4. Sanction regarding an addition to a permanent establishment made from year-to-year under general scheme
5. Sanction regarding an allowance for a post even if it is not drawn by concerned officer. 9
 Cont….
Reporting of Losses:
Any loss of public moneys, revenue or receipts, stamps, opium, stores or other Govt property, even if it
has been made good by the party responsible, has to be reported bf be concerned authority to-
Next higher authority
Statutory Audit Officer
Concerned Principal Accounts Officer
Exception:
Petty losses upto Rs. 10000
due to mistakes in assessment discovered too late
Loss of revenue under assessment due to interpretation of law
refund of time-barred claims
Cases involving serious irregularities must be reported to the Financial adviser or Chief Accounting
Authority (CAA) and Controller General of Accounts (CGA).

Stage of Reporting:
Initial report- indicates only that a loss has taken place.
Final report- indicates nature and extent of loss, cause of loss and prospect of recovery.
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 Cont….
• Report on losses which ministry/department (HED) can not finally dispose off their own are
submitted to Ministry of Finance.

• Loss due to culpability of govt servants will be borne by the Centre/State govt department
concerned with the transaction. If any recovery is from that person in cash, then will be credited
to dept who sustained the loss.

• Loss of Govt. money due to erroneous/irregular issue of cheques or irregular accounting receipts
be report to CGA.

• Loss of Govt. property due to fire, theft, fraud (above 50,000)--- reported to Police (FIR)

• Loss of immovable property due to fire, flood (above 50,000)--- reported at once by the
concerned authority to the Govt. through proper channel.

• Rule 40 of GFR: A subordinate authority shall not withhold any information, books or other
documents required by the Audit Officer or Accounts Officer.

• If the contents of any file categorized as “Secret” or “Top Secret” then it is sent personally to the
Head of the Audit Office. 11
 Chapter 3: Budget formulation and Implementation
Budget Contains:
• Estimates of all revenues expected to be raised during the financial year
• Estimates of all expenditure
• Estimates of all interest and debts servicing charges and any repayments on loans
• Any other information as may be prescribed
• Article 112(1)- Finance Minister shall arrange to lay budget before both the houses of Parliament
(*president shall cause to laid it)
• Railway budget was separated from general budget in 1924 on the recommendation of Acworth
committee but it got merged again w.e.f. 2017-18
• Ministry of finance, budget division issues guidelines for preparation of budget estimates
Budget
Receipt Expenditure
Revenue Capital Charged Voted

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 Cont….
Revenue:-
Tax- Direct, Indirect
Non-Tax- Fees, User charges, Dividends/profits, Transfer of surplus from RBI
Capital:-
Debt- Internal, External
Non-Debt- loan recovered, disinvestment
Charged:- Non-votable Article-112(3) (only discussed)
Voted:- voted by Lok Sabha Article-113(2) (prepared in the form of Demand for Grants)

• Tax revenue and non-debt capital receipts- managed by Ministry of Finance

• Non-Tax revenue- managed by all Ministry/department

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 Cont….
User Charges:
• A non-tax revenue
• Rate of user charges should be linked with appropriate price indices and reviewed at least every 3
year
• To ensure ease of revision of user charges, they are fixed through rules/executive orders and not
through a statute.

Demand for Grants (DFG):

• Generally, there is 1 demand for grant in respect of each ministry/dept
• But in case of large ministry/dept, more than 1 demand may be presented
• A demand usually includes provisions required for a service (i.e. exp-cap/rev/loan etc)
Demand for Grants presented to Parliament at 2 levels
1. Main demand: by Budget Division (M/o Finance) along with Budget
2. Detailed Demand: by concerned ministry/dept after considering by the DRSC
(Departmentally Related Standing Committee)

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 Cont….
• Receipt Estimates: detailed estimates of receipts are prepared upto the detailed head along with
revenue realized in past 3 years.
• Expenditure Estimates: prepared upto the final until of appropriation (i.e. Object Head). It also
includes provision for those liabilities of the past year that are to be charged in the present year.

Outcome Budget:-
• prepared by Department of Expenditure in consultation with NITI Aayog and the concerned
Ministry.
• Prepared after finalisation of budgetary estimates
• Outlays against each scheme/projects is linked with the outputs/deliverables
• Outputs/deliverables are given in measureable terms based upon data in Medium Term
Expenditure Framework (MTEF) Statement.
• Performance of the scheme determine its continuation and the quantum of budget allocation.

Appropriation: means setting aside money for a particular purpose or expenditure. (Article- 114)

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 Cont….
Re-appropriation of Funds:-
As per Rule 10 of DFPR, 1978; transfer of funds from 1 primary unit to of appropriation to another
unit within a grant/appropriation may be sanctioned before the close of FY.
• Primary unit for this purpose will be the final unit (i.e. object head) ,
• Excess in 1 primary unit can be met from saving in any other primary unit within the same
grant/appropriation.
• Voted & charged, revenue & capital are separate portions of a grant/appropriation. Hence,
re-appropriation inter se is not allowed.
GFR 1: Application for re-appropriation
For amounts of Rs. 1 lakh or above specific reasons for saving/excess are to be stated .
Expenditure incurred against a grant/appropriation shall not exceed as authorized by parliament.
If there is no saving available within the grant/appropriation (re-appropriation is not possible)
then Supplementary grant/appropriation is obtained (voting in parliament required).
If due to emergency situation there is no time for voting then Advance from Contingency Fund
is obtained.
The procedure of obtaining Advance from Contingency Fund and recoupment of fund is given
in Contingency Fund of India Rules 1952. 16
 Cont….
Note: Supplementary grant/appropriation & Advance from Contingency Fund—also used for
incurring Expenditure on a New-Service not contemplated in the annual budget.

Article 116- Vote on Account (Funds available under this are not utilized for expenditure on a new
service)

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 Part-II
Communication and distrubtion of grants and appropriation: After the Appropriation Bill is
passed, the Ministry of Finance communicate the same to the Ministry/dept. It is also intimated to
the respective Pay and Accounts Officers (PAOs) to keep a check.
Control of expenditure against budget:
•The Department are responsible for the control of expenditure against the sanctioned grants/app
placed at their disposal.
•The control shall be exercised through the HOD and other Controlling Officers (Cos), if any, and
Disbursing Officers (DDOs) subordinate to them.

DDO maintains On 3rd of every month send to CO maintains GFR6 to monitor

head-wise exp in HOD/CO GFR5, any adjustments the receipt of statement from
GFR 5 sent to him by PAO various DDOs

HOD prepares After satisfying himself he prepares CO examine the statements and
consolidated A/c in GFR7 i.e. Total of figures given by checks whether or not they are
GFR8 showing DDOs, total of his own GFR5, any in order
complete expenditure adjustment sent by PAO
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 Cont…..
Reconcilation of figures b/w DDO & PAO
PAO sends monthly DDO will tallies figures with his DDO furnishes a monthly
statement showing GFR 5 & note down book certificate to PAO of agreement
Head-wise exp to DDO adjustment if any of figures as per his books and
PAO’s book

Due Date- Last day of the following month (i.e. 31st May for exp of April month)

Reconciliation of Expenditure b/w HOD & PAO

PAO sends monthly HOD will tallies figures with his HOD furnishes a quarterly
statement showing GFR 8 & reports any difference certificate to PAO regarding
Head-wise exp to to PAO for rectification correctness of figures
HODs

Due Date- 15th of the 2nd following month (i.e. 15th Aug for quarters April to June)

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 Cont…..
•Department receive expenditure statement in GFR 8 from their HODs
(Due Date: 15th of next month)
•Figures from account offices are also received by the departments
•In case there is any difference between figures of account office and that of HODs, then
the former are assumed as correct figures, as appropriation account are prepared on the
basis of the figures booked in the accounts.
•Departments also receive statement showing physical progress of the scheme from HODs
•GFR 9 is kept by dept to watch prompt receipt of these statements

Liability register for effecting proper control over expenditure

Spending authorities Liability Statement GFR-3A
(monthly)
Controlling Officer Liability Register GFR 3 (year wise)

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 Cont…..
• Chief Accounting Authority (i.e. Secretary of ministry/dept)
• Responsible and accountable for financial management
• Appear before the committee on public accounts and any other parliamentary committee for examine
• Expenditure in excess of budget provision is not allowed by AO. Approval of CAA is required if
expenditure in excess of budget is to be incurred.
• In such matters, CAA shall ensure availability of funds through re-appropriation or
supplementary grant.
• The financial adviser of the Ministry/Departments shall ensure adherence to the stipulated
Quarterly Expenditure Plan and the guidelines issued by M/o Finance.

• Article 114(3)- Money indisputably payable by Govt. shall not ordinarily be left unpaid.

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 Chapter 4: Government Account
Principles of Govt Account are mentioned in 
GAR, 1990 (come into force w.e.f 1st April 1990) 
Accounting Rules for Treasury, 1992 
Account Code Volume-III
• Govt Accounts are maintained in Indian currency i.e. Rupees 
• Govt Accounts are prepared on cash basis (from 1st April to 31st March)
• The annual accounts duly certified by the CAG along with CAG’s reports, shall be
submitted to the President within six month of the close of FY.
• The numerical digits that a government transaction consists of 15 (Major Head-4,
Sub-Major-2, Minor-3, Sub-Minor, Detailed and Object-2 each)
• CGA is authorised to open a new head of account on the advice of the CAG Article
150
• Sub-Heads and Detailed Heads as required may be opened by Ministry/Departments
concerned in consultation with the Budget Division of M/o Finance.
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 Cont…..
• Sub/Detailed Heads required under the Minor Heads falling within the Public Accounts may be opened by
Pr. A.O in consultation with Budget Division of the Ministry of Finance
• The power to open/ amend/modify these Object heads CGA in consultation with CAG
• Public Financial Management System functions under CGA
• DBT under various Government Scheme and Programmes have been implemented using ICT, where ICT
means Information and Communication Technology
• Transfers of benefits under DBT scheme include Both cash and in kind transfers
• The applicable transaction charges for the financial intermediaries facilitating DBT payments shall be
borne by M/o Finance
• The annual accounts that is prepared showing the annual receipts and disbursements and statement of
balances under the respective Heads is called Finance Accounts
• Proforma accounts: subsidiary Accounts of Government Departments undertaking commercial activities
(in accrual system)
• Form in which proforma account will be kept determined by Govt. In consultation with CAG
• Proforma accounts relating to Public Works, Irrigation, navigation shall be prepared by Accounts Officer in
accordance with Account code for AG
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 Cont…..
• A device intended to facilitate the Designated Officer there of to credit receipts into and
effect withdrawals directly from the account, subject to an overall check being exercised
by the bank is called Personal Deposit Account
• No withdrawal from Public Deposit Accounts resulting in a minus balance therein will be
ensured by the Designated Officer with the help of Bank
• The Personal Deposit Account shall be authorised to be opened by A special order by the
concerned Ministry/Department in consultation with the CGA
• The Government Account within which a Personal Deposit Account is located is Public
Accounts
• In relation to Civil and Criminal Courts’ deposits, a PDA may be opened in favour of the
Chief Judicial Authority concerned
• Loans outstanding against PSU may be converted into equity investments in or as grants-
in-aid to the PSU may be made with the approval of the Parliament.

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 Cont…..
• Loans outstanding against PSU may be converted into equity investments in or as grants-
in-aid to the Public Sector Undertakings may be made by including a token provision in
the relevant Demands for Grants or Supplementary Demands for Grants
• For capital outlay met out of specific loans raised by Government, the interest shall be
charged at such rate as may be prescribed by the Government
• For capital outlay provided other than out of specific loan rate of interest shall be
determined each year by the Department of Economic Affairs, MOF.
• The interest on capital outlays shall be calculated on the direct capital outlay at the end
of the previous year plus half the outlay of the year itself
• When charges for interest during the process of construction of a project are temporarily
met from capital, the capitalised interest shall be Written back from the first charge on
any capital receipts or surplus revenue derived when opened for working.
• The period accepted mutually by Central and State Governments for re-audit of past
transactions involving errors in classification is 3 years.
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 Cont…..
• The amount agreed upon between Central and State Government up-to which claimed
shall not be preferred ₹ 10000/- but ₹ 1000 as per GAR
• Departments/Undertakings that fall outside the purview of the proposed reciprocal
arrangements between Central and State Governments Commercial Undertakings,
Railways, Post, State Governments and the Electrical undertakings etc.
• Departments/Undertakings that fall outside the purview of the proposed reciprocal
arrangements between Central and State Governments Commercial Undertakings,
Railways, Post, State Governments and the Electrical undertakings etc.
• Central Government may entrust function to State Government under Article 258
• If the claims of State Government under Article 258 (3) are found to be reasonable and
do not exceed ₹ 50000/p.a for any individual item or connected group of items), a
contract may be entered into for a period of 5 years and shall be reviewed at the end of
each period of five years
• If the agency work involves the employment of a State Commercial Department, the cost
of the such work will be open to that department to charge its normal commercial costs.
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 Cont…..
• If the agency work involves the employment of a State Commercial Department, the
cost of the such work will be open to that department to charge its normal commercial
costs.
• The cost of regular joint establishment incurred under Article 258 shall be shared on the
basis of fixed annual sums settled in agreement with the State Government concerned.
• If the amount agreed upon exceeds ₹ 50000 an annual statement of proposed charges
from the State Government shall be obtained by time at the time of preparation of the
Budget.
• The Ministry/Department that should be consulted on all matters arising under Article
258 (3) of the Constitution is Ministry of Finance
• The expenditure connected with the construction or maintenance of NH etc. entrusted
by Central to the State Governments shall be borne by At first by State Govt. under
Suspense Head 8658-PAO suspense and reimbursable by the Central
• A State function may be entrusted to the Central Government under the provision of
Article 258A
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 Cont…..
• RBI closes its yearly accounts on 15th April of the following year.
• Charges for maintenance of boundaries between india and Foreign country shall be
borne in ratio of 50: 50. If no share from foreign country is recovered then 100% by
Central.
• Charges relating to demarcation of boundaries and boundary disputes will be borne by
the Central Govt.
• The foreign country with which special arrangements worked out in consultation with
charges for maintenance of boundary line is the Nepal Government.
• The share of the Foreign Government for maintenance and demarcation of and disputes
over boundaries that will be borne by the Central Government for the present is the
Bhutan Government
• All claims shall ordinarily be preferred between Departments, both commercial and
non-commercial of the Central Government, within the same financial year and not
beyond 3 years from the date of transaction
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 Cont…..
• Provision for the settlement of inter-departmental adjustments has been made in GAR
1990 (Chapter-4)
• In the case of Commercial department/undertaking adjustment of Pensionary liability
shall be made in the regular accounts by charging the average rates based on the
monthly contribution of pension for 15 years of service

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 Chapter 5: Works
• Classes into which works are divided into are:
(i) Original Work- Site preparation, additions and alterations to existing works, special
repairs to newly purchased or previously abandoned buildings or structures, including
remodeling or replacement are come under the category of Original Work.
(ii) Minor work- Works which add capital value to existing assets but do not create new
assets are called minor work.
(iii) Repair works- Works that include services or goods incidental or q consequential to
the original or repair works are called Repair Works.
• A Ministry or Department at its discretion may directly execute repair works estimated to
cost ₹ 30 lakh.
• A Ministry or Department at its discretion may may assign the repair works to PWO (Public
Works Organisations) where estimated cost exceeds ₹ 30 lakh.
• A Ministry or Department at its discretion may assign the Original works to PWO of any
value.
• Grants for Civil Works are administered by CPWD 30
 Cont…..
• Works that should be included in the Grants for Civil works are those which are not
specifically allotted to any Ministry/Department.
• Estimates for works containing the detailed specifications and quantities of various items
should be prepared on the basis of the Schedule of Rates of CPWD/other Public Works
Organisations.
• Any development of a project considered necessary while a work is in progress, shall
have to be covered by a Supplementary estimate.
• For purpose of approval and sanctions, a group of works which forms one project, shall
be considered as one work.
• Where a Ministry or Department executes works under its own arrangements, the
detailed procedure relating to expenditure on such works shall be prescribed by
departmental regulations framed in consultation with the Accounts Officer.
• Open tenders will be called for works costing ₹ 5 lakh to ₹ 30 lakh
• Limited tenders will be called for works costing Less than ₹ 5 lakh
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 Cont…..
• Where a Ministry or Department executes works under its own arrangements, final
payment for work shall be made only on the Personal Certificate of the Officer-in-charge
of work execution.
• Where a Ministry/Department allots works to PWO/PSU or any organisation for
execution of work, it is desired that A Memorandum of Understanding (MoU) may be
drawn.
• A Review Committee to review the progress of project where the cost of project is ₹ 100
crore and above.
• Review Committee is set up by Administrative Ministry/Department.
• Review Committee consists a member each from Administrative Min/Department,
Internal Finance Wing and Executing Agency.
• The Review Committee shall have the powers to accept variation within 10% of the
approved estimates.
• Where the project cost is less than ₹ 100 crore, the progress of work is monitored
through Mmchanism set-up at discretion of the Administrative Min/Department. 32
 Cont…..
• No works shall be commenced or liability incurred in connection with it until:
(i) administrative approval
(ii) sanction to incur expenditure
(iii) a properly detailed design has been sanctioned while designing the projects etc,
principles of Life Cycle cost may also be considered.
(iv) estimates containing the detailed specifications and quantities of various items have
been prepared on the basis of the Schedule of Rates maintained by CPWD or other PWO
and sanctioned.
(v) funds to cover the charge during the year have been provided by competent
authority.
(vi) tenders invited and processed in accordance with rules.
(vii) a Work Order issued.

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 Chapter 6: Procurement of Goods & Services
Goods all tangible articles & also includes intangible products like software,
patents etc, also includes services which are incidental to supply of such
goods e.g. transportation, installation etc.
Exception: books, publication, periodicals etc for a library

Purchase through Gem Portal:

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Value of Goods GeM
Less than or equal to 25000 Through any of the supplier on Gem
Above 25000 and up-to5 lakhs Seller having lowest price among available seller
(3 different manufacturers need to be checked)
Above 5 lakhs Bids must be obtained (seller having lowest
price)

Annual Procurement Plan:

• All ministry/department shall prepare it before the commencement of the year & put it on their
website.
• All min/dept shall project their plan for goods & services on GeM portal within 30 days of budget
approval.
Registration of Suppliers:

• Registered Suppliers are exempted from bid security

• HOD can also register suppliers of goods which are specifically required by the department
• Suppliers are registered for a fix period (1-3 years)
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Debarment from bidding:
• A bidder is debarred if he has been convicted of an offence under Corruption Act, 1988.
Any such bidder or any successor of such bidder is debarred for a period not exceeding
3 years.
• Procuring entity may also debar any bidder or its successor for a period of not more
than 2 years for breach of code of integrity.

Purchase of goods not available on GeM:

Value of goods
Less than 25000 Without inviting quotations/bids
25000 to 2.5 lakh On recommendation of a 3 member Local Purchase
Committee. It will survey the market and obtain quotations.
2.5 lakh and above By obtaining bids. (Advertised, Limited, Single Tender Enquiry
etc.)

• All tender enquiries have to be published online on CPPP (Central Public Procurement
Portal)
36
Advertised Tender Enquiry (more than 25 lakh)
• Minimum time for submission of bids= 3 weeks
• In case of bids from abroad- Minimum time = 4 weeks for both domestic & foreign bidders
Limited Tender Enquiry (below 25 lakh)
• Bidding document is sent directly to a specific list of suppliers
• No. of suppliers should be more than 3
• Unsolicited bids not to be accepted
• May be allowed for above 25 lakh if there are compelling reasons
Two bid system (simultaneous receipt of tecinical and financial bids)
Two Stage Bidding
• First technical bid is obtained. After its evaluation, financial bids are invited from all those
bidders whose technical were not rejected.
Single Tender Enquiry
• Permissible subject to certain conditions
Proprietary Article Certificate (PAC) provided by the Ministry/Department before procuring the
goods from a single source.
37
• Bid Security/Earnest Money is to be obtained from the all bidders except:
Micro and Small Enterprises (MSEs) as defined in MSE Procurement Policy or those
registered with the CPPO or the concerned Ministry or Department or startup registered
under DIPP.
• Amount of bid security should ordinarily range between 2%-5% of the estimated value of
the goods to be procured.
• The bid security should remain valid for a period of 45 days beyond the final bid validity
period.
• Bid securities of the unsuccessful bidders should be returned to them at the earliest after
expiry of the final bid validity and latest by on or before the 30th day after the award of
the contract.
• Amount of performance security should range between 5%-10% of estimated tender
value
• The performance security should remain valid for a period of 60 days beyond contract
completion.

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• Suppliers to whom advance payment may be made:
Having maintenance contracts for servicing of ACs computers, other costly equipment etc.
Having fabrication contracts, turn-key contracts etc
• Where permissible advance payment to a Private firm may be made up-to 30% of the
contract value.
• Where permissible advance payment to a Central/State Govt./Agency/PSU may be made
up-to 40% of the contract value.
• In case of maintenance contract, the maximum amount of advance should be amount
payable for 6 months under the contract.
• In case a purchase Committee is constituted to purchase or recommend the procurement,
no member of the purchase Committee should be reporting directly to any other member
of such Committee in case estimated value of procurement Exceeds ₹ 25 Lakh.

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 Procurement of Services
• Two type of services i.e. Consultancy and Non-Consultancy Services
• Consulting Service: Type of service that involves primarily non-physical project-specific,
intellectual and procedural processes where outcomes/deliverables would vary from one
consultant to another.
• Preparation of a long list of potential consultants may be done on the basis of formal or
informal enquiries from other Ministries or Departments or Organisations involved in
similar activities, Chambers of Commerce & Industry, Association of consultancy firms etc.
{where the estimated cost of the consulting service is up-to 25 lakhs}
• Where the estimate cost of the consulting service exceeds ₹ 25 lakh, in addition to
prepare a list of potential consultants an enquiry for seeking ‘Expression of Interest ’ from
consultants should be published on Central Public Procurement Portal (CPPP).
• The number of short listed consultants should not less than 3 (Minimum 3)
• The document that to be used by the Ministry/Department for obtaining offers from the
consultants for the required service is Request for Proposal (RPF).
• Technical bids in respect of procurement of consultancy services should be analysed and
evaluated by Consultancy Evaluation Committee (CEC). 40
• Consultancy Evaluation Committee (CEC) is constituted by ministry/Department
concerned.
• Method of selection of Consultants: (i) QCBS (ii) LCS (iii) Single Source Selection (on lines
of single tender enqury)
• QCBS stands for Quality and Cost Based Selection and used for Procurement of
consultancy services.
• The weight age of the technical parameters i.e. non- financial parameters under QCBS in
no case should exceed 80%.
• Least Cost System: The System under which assignments of a standard or routine nature
where well established methodologies, practices and standards exist.
• Non-consulting service (hiring of vehicle, security, house keeping services etc.): Types of
service that involves physical, measurable deliverables/outcomes , where performance
standards can be clearly identified and consistently applied, other than goods or works.
• The Ministry/Department should prepare a list of likely contractors for non-consulting
services from formal and informal enquiries from other Min/Department/organisation,
scrutiny of ‘Yellow pages’, and trade journals, web site etc.
41
• The Ministry/Department will select the eligible contractor from list of likely contractor
prepared by them by issuing limited tender enquiry when the estimate cost of non-
consulting service is up-to ₹ 10 lakh or less.
• The number of identified contractor for limited tender enquiry in case non-consulting
service should be More than 3.
• The Ministry or Department should issue advertisement on Central Public Procurement
Portal and its own website where the estimate cost of non-consulting service is above 10
lakhs.

42
 Chapter 7: Inventory Management
• Historical cost is the cost at which charges for hiring out the fixed assets to
be recovered from the local bodies, contractors and others should be
calculated.
• A physical verification of all the fixed assets should be undertaken at least
once in a year.
• A physical verification of all the consumable goods and materials should be
undertaken at least once in a year.
• Complete physical verification of books should be done every year in case of
libraries having books not more than 20000.
• Complete physical verification for libraries having more than 20000 volumes
and up-to 50000 volumes shall be conducted at least once in 3 years.
• physical verification for libraries having more than 50000 volumes shall be
conducted sample verification at least once in 3 years. 43
• Reasonable loss in case of a library is 5 books/1000 books issued/consulted in a year.
• Loss of library book shall invariably be investigated and appropriate action taken where
loss of a book of a value exceeding ₹ 1,000/- and rare books irrespective of value.
• A material should generally be considered as surplus if It remains in stock for over a
year.
• While disposing of the surplus goods, value and prices that should be worked out are
Book value, Guiding Price and Reserved Price.
• The original purchase price of the goods in question may be utilised, where it is not
possible to work out the book value,.
• The mode of disposal will be determined by the competent authority for surplus or
obsolete or unserviceable goods with residual value up-to ₹ 2 lakh.
• The mode of disposal will be either through advertised tender or public auction where
the residue value of surplus or obsolete or unserviceable goods is more than ₹ 2 lakh.
• Bid security in case of disposal of surplus or obsolete or unserviceable goods through
advertised tender should be 10% of reserved price.
44
• During disposal of surplus or obsolete or unserviceable goods through public auction, on
acceptance of bid the earnest money should be taken as 25% of bid value.
• If the price offered by highest bidder is not acceptable, negotiation may be held only with
that bidder.
• Where the negotiation with the highest bidder does not provide the desired result, the
reasonable or acceptable price may be counter offered to the next highest responsive
bidder(s).
• In case the total quantity to be disposed of cannot be taken up by the highest acceptable
bidder, the remaining quantity may be offered to the next higher bidder(s) at the price
offered by the highest acceptable bidder.
• Full payment, i.e. the residual amount after adjusting the bid security should be obtained
from the successful bidder before releasing the goods.
• The composition of the auction team decided by the competent authority will include an
officer of the Internal Finance Wing of the department.

45
• If a Ministry/Department is unable to sell any surplus or obsolete or unserviceable item
through permissible means, it may dispose off the same at its scrap value with approval
of Competent authority in consultation with finance division.
• In case the Ministry/Department is unable to sell the disposable items at its scrap value,
it may adopt any other mode of disposal including destruction of the item in an eco-
friendly manner.
• The heads under which losses due to depreciation are recorded are:
normal fluctuation of market prices
normal wear and tear
lack of foresight in regulating purchases
negligence after purchase.
• The heads under which losses not due to depreciation are recorded are:
losses due to theft or fraud
losses due to neglect
obsolescence of stores or purchases in excess of requirements
losses due to damage
losses due to force majeure condition such as flood, fire, enemy action etc.
46
 Chapter 8: Contract Management
• The article of Indian Constitution deals with provision relating to contract is 299 (1)
• The various classes of contracts and assurances of property, which may be
executed by different authorities, are issued by Ministry of Law.
• The powers of various authorities, the conditions and the general procedure
prescribed with regard to various classes of contracts and assurances of property
are laid down in Delegation of Financial Powers Rules (Rule 21)
• The terms of contract must be precise, definite and without any ambiguities.
• The modifications to the standard form of contract should be carried out only after
obtaining financial and legal advice.
• A Ministry or Department may, by issuing purchase orders containing basic terms
and conditions, make purchases up-to 2.5 lakhs.
• The PAO should obtain and examine copies of all contract and agreement for
purchase amounting 50k and above.
47
 Cont…..
• Copies of all contracts and agreements for purchases, should be sent to the Audit Officer
and /or the Accounts officer when the value of contract is 25 lakh and above.
• all rate and running contracts (of any value) entered into by civil departments of the
Government other than the departments like the DGS&D should also sent to audit Officer.
GCC – General condition of contract
SCC – Special condition of contract
• The letter of acceptance will be treated as a contract where tender documents include
(GCC), (SCC) and scope of work in respect of Works Contracts, or Contracts for purchases
valued between 1-10 lakh.
• A formal contract shall be executed where the estimated cost is
Work- ₹ 10 lakh or above
Purchase- above ₹ 10 lakh
• Irrespective of amount involved Contract document should be executed in cases of turn-
key works or agreements for maintenance of equipment, provision of services etc.
• Contract document wherever necessary should be executed within 21 days of the issue48
of
letter of acceptance.
 Cont…..
• Where a contract document is not executed within 21 days of the issue of letter of
acceptance, the earnest money of the accepted bidder may be forfeited.
• Provision for recovery of liquidated damages applies when- Items/services delivered
beyond scheduled delivery date.
• Cost plus contract: A contract in which the price payable for supplies or services under the
contract is determined on the basis of actual cost of production of the supplies or services
concerned plus profit either at a fixed rate per unit or at a fixed percentage on the actual
cost of production.
• Price Variation Clause can be provided only in long-term contracts, where the delivery
period extends beyond 18 months.
• The price variations are calculated by using indices published by the Governments or
Chambers of Commerce.
{No price adjustment under Price Variation Clause will be made in favour of the supplier
where resultant increase is lower than – 2%}
• No claim for the payment from contractor shall be entertained after the lapse of 3 years
of arising of the claim. 49
 Chapter 9: Grants-in-aid and Loans
• Grants-in-aid including scholarships may be sanctioned by an authority competent to do Under
provision of DFPR Rules.
• A new autonomous body should not be created without the approval of Cabinet.
• The Regional Centres/Offices/Sub-Stations of any autonomous body can be created with prior
approval of the Administrative Min/Dept. in consultation with MOF.
• A Corpus Fund out of budgetary allocation for an Autonomous Body may be created only with
prior concurrence of Ministry of Finance.
• A Corpus Fund out of internal resources for an Autonomous Body may be created with the
concurrence of Administrative min/department.
• User charges/ sources of internal revenue generation of an autonomous body should be review by
Governing Body and it should be reviewed at least once A year (before formulation of budget).
• Chief Executive Officer is responsible for overall financial management of the autonomous
bodies.
• Peer review of autonomous organisations whether external or internal shall be made
every 3 or 5 years depending on the size of the autonomous body.
50
 Cont…..
• Autonomous organisations are need to enter into a MOU with the Administrative
Min/Department where the budgetary support is More than ₹ 5 crore
• Findings of the peer review should be put up by the concerned programme division of the
Department for appropriate decision to the Secretary.
• where Grants are given on reimbursement basis the same will be treated as the Central
Financial Assistance (CFA)
• Before releasing any grant to an autonomous organisation, it should be ensured that Cash
balance at a time should preferably not be more than 3 months of requirements
• On finalisation of account of a grantee, all interests or other earnings against Grants in aid
or advances (other than reimbursement) released should be remitted to CFI.
• Non-Govt. or Quasi-Govt. Institutions or Organisations cannot dispose of assets acquired
wholly or substantially out of Government Grants without the approval of Grant
sanctioning authority.
• If assets of a sponsored project/scheme are to be sold, the proceeds there from Credited
to account of sponsoring department/organisations.
51
 Cont…..
• Entities desiring Grants from Govt. shall submit their requirement with supporting details
by end of the month of September in the year preceding year for which the Grants-in-aid
is sought.
• The Admin. Min/Department should inform the result of the requests of entities for grant
by April of the succeeding year.
• Terms and conditions of service of their employee should be formulated by all Grantee
entities, which receive 50% of their recurring expenditure in the form of Grants-in-aid
• Relaxation where required May be made in consultation with MOF
• T&C of grant, to provide for reservation for SC/ST/OBC where the at least 50% of its
recurring expenditure of grantees is met from Grants-in-aid from Central Govt. and
employ more than 20 persons on regular basis.
And
T&C of grant, to provide for reservation for SC/ST/OB where the grantee body is a
registered society or a cooperative institution and is in receipt of a general purpose
annual Grants-in-aid of 20 lakh and above.
52
 Cont…..
• In all cases of buildings constructed with Grants- in-aid, responsibility of maintenance of
such buildings shall rest with the grantee entities.
• Grants-in-aid may be sanctioned to meet the bonafide expenditure incurred not earlier
than 2 years prior to the date of issue of the sanction.
• In respect of a voluntary organisation, the Grants-in-aid should not exceed 25%. of
approved administrative expenditure on pay and allowances of the personnel.
• In case a voluntary organisation fails to comply the T&C of bond executed, the whole or a
part amount of the Grant will liable to be refunded along with penal interest at the rate of
10%.
• Exempted from execution of bond for grant-in-aid are Quasi Govt. institution, Central
Autonomous Organisations and Institutions whose budget is approved by the
Government.
• The cost of stamp duty for the Bond executed between the Government and Voluntary
organisation will be borne by the Government.
• The Centrally Sponsored scheme should be designed in consultation with States and
Union Territories. 53
 Cont…..
• The sanctioning authority shall maintain a Register of Grants in form GFR-21
• Institutions or Organisations receiving Grants should, irrespective of the amount involved,
furnish a set of audited statement of accounts to Accounts Officer after having utilised
the grants.
• Internal audit of the accounts of a grantee institution shall be conducted by the Pr. AO of
the Ministry or Department.
• Where the CAG is the sole auditor for a local Body or Institution, auditing charges will be
borne by the auditee institution
• Approved and authenticated annual accounts to be made available by the Autonomous
Body to the concerned Audit Office by the 30th June.
• Issue of the final SAR in English version with audit certificate to Autonomous Body/
Government concerned by 31st October
• Submission of the Annual Report and Audited Accounts to the Nodal for it to be laid on
the Table of the Parliament by 31st December.
54
 Cont…..
• Grants in aid are required to be utilised within one year after the date of issue of the
sanction, and therefore, the utilization certificate should also ordinarily be due after a
period of 12 months from the date of sanction of the grant.
• Release of Grants-in-aid shall be done only after utilisation certificate and the annual
audited accounts when, in excess of 75% of the total amount sanctioned for the
subsequent FY.
• Utilization certificates need not be furnished in cases where the Grants–in–aid /CFA are
being made as reimbursement of expenditure already incurred on the basis of duly
audited accounts.
• The Grantee Institutions or Organisations should be required to submit performance cum
achievement reports soon after the end of the financial year, and in any case, not later
than 6 months after the close of the FY.
• The sanctioning authority may dispense with the submission of performance cum
achievement reports where the grantee receives the recurring grant-in-aid not exceeding
25 lakhs.
55
 Cont…..
• All the Min or Dept. should include in their Annual Report a statement showing the
quantum of funds provide to Private and Voluntary Organizations grants of ₹ 10 lakh and
up-to ₹ 50 lakh.
• The Annual Reports and accounts of Private and Voluntary Organizations receiving Grants-
in-aid of ₹ 50 lakh and above should be laid on the Table of the House within 9 months of
the close of the succeeding FY.
• Grants-in-aid for provision of amenities or of recreational or welfare facilities to the staff
are regulated under orders of Ministry of Home Affairs.
• The Grant in aid towards amenities or of recreational or welfare facilities to the staff will
be admissible on the basis of the total strength borne on regular establishment.
• The rate of the Grant-in-aid towards amenities or of recreational or welfare facilities to the
eligible staff will be Rupees ₹ 50 per head per annum+ Additional matching grant-in-aid
up to ₹ 25. (Maximum ₹ 75/- per annum)
• Additional grant of ₹ 25 is given to match the subscriptions collected during the previous
FY by the existing staff clubs/till the date of proposal in case of new club.
56
 Cont…..
• The total strength of the eligible staff will be that existing on the 31st March of the
previous financial year or that on the date on which proposal for Grant is mooted in the
case of new staff clubs.
Staff paid from contingencies, workcharged staff, industrial workers etc., will not be
taken into calculation for this purpose.
• For setting up of recreational club, one time Grant may be sanctioned to the tune of
maximum of ₹ 50000/-
• The accounts of recreational clubs duly audited by an Internal Auditor should be obtained
on or before 30th April of succeeding year.
• Powers and Procedure for sanction of loans are given in Delegation of Financial Power
Rules.
• Nodal agency to finalise terms and conditions of loans by the Central Government is
Budget Division, Department of Economics affairs (MoF)
• Maximum period repayment of amount of loan and interest due: 30 years (Specific cases
only)
57
 Cont…..
• The term of repayment is to be calculated from the date on which the loan is completely
drawn or declared by competent authority to be closed.
• Installment fixed for repayment of loan shall ordinarily be Annual installment.
• Any installment paid before its due date may be taken entirely towards the principal,
provided it is accompanied by payment toward interest due up-to-date of actual payment
of installment
• The interest for the full period shall be charged, if the payment of the installment is in
advance of the due date by 14 or less days.
• When the due date of repayment of any instalment of principal or interest falls on a
Sunday or a public holiday, the revised due date will be the next working days. The
previous day where due date is 31st March.
• Where no monetary settlement is involved in loan from Central Govt. to State Govt., the
date of drawl will be the last date of the month of account in which the adjustment is
effected.

58
 Cont…..
• Before approving the loan, the private applicant shall be asked to furnish the copies of
profit and loss/income and expenditure accounts and balance sheets for the last 3 years.
• Loans to parties other than State Govt., wholly owned Govt Companies and Local
Administration of UTs shall be sanctioned only against adequate security which should be
at least 133.33% of the loan amount. (33.33% more than amount of loan)
• A loan should bear the interest for the period for the day of payment but not for the day
of repayment.
• A suitable period of moratorium may be agreed for payment of principal but not in
respect of interest on loan.
• At the time of sanctioning the loan, a written undertaking in Form GFR 15 shall be
obtained from a wholly Government-owned company.
(In case of other than above- Legel Agreement)
• The detailed accounts of which are maintained in the Audit Offices, the authorities
sanctioning the loan shall furnish the UC in respect of each individual case not later than
eighteen months from the date of sanction of the loan.
59
 Cont…..
• Where the detailed accounts of the loans are maintained by the Departmental authorities,
a consolidated UC shall be furnished to Audit by the Ministries/Departments.
the period of 18 months shall be reckoned from the expiry of the FY in which the loans
are disbursed.
• When a loan of public money is taken out in instalments, each instalment of the loan so
drawn shall be treated as a separate loan.
• Where various installments drawn during a FY are allowed to be consolidated into a single
loan as at the end of that particular financial year, interest will be calculated for each
drawl separately.
• In case of default in repayment of principal and interest, the penal or the higher rate of
interest, should not be less than 2.5% above the normal rate of interest prescribed by
Govt.
• Interest on interest-free loan is chargeable when there is default in repayment.
• In the cases where in addition to interest free loans, subsidy is also provided to meet
running expenses, in the event of any default in repayment, the defaulted dues would be
recovered out of the subsidy payable. 60
 Cont…..
• A monthly report of defaults of principal and interest in the form set out for this purpose
should be sent by ministry/dept. to Budget division (MoF).
• Detailed accounts of loans to Institutions and Organizations, etc., shall be maintained by
the Accounts Officer in such general or specific directions as may be given by C&AG.
• Annual Report on outstanding Central Loans borne on a Ministry/Department’s books as
on 31st March each year shall be submitted by the Pr. AO to concerned
Ministry/Department by 30th September, (GAR 13)
• A copy of Annual Assessment Report on status of all outstanding loans, including timely
and accurate payment of principal and interest due, shall be submitted by the FA to the
MoF by30th June.

61
Thank You

62