2.19.10 The figures of e-payment advices/cheques issued during a month need to be reconciled with the figures booked under MH-8670 in the accounts. The reconciliation process of outstanding cheques has already been explained in para 2.19.3 above. A monthly summary of amount of total e-payment advice issued through PFMS should also be recorded separately in the Register of Cheques delivered. Total amount reflected under Major Head 8670-Electronic Advices in the monthly account should be analysed and reconciled with this summary.
2.19.11 PFMS report: PC-04 indicates the details of e-payment advice issued through PFMS. This PFMS report should be checked and action should be initiated in respect of failure or failure after success cases for its further processing in consultation with DDO without any delay. The amount appearing under MH-8658-uncredited items (credit) should be reconciled with the amount of failure after success. CMP-07 PFMS Report: Cancellation/re-issue register indicates the status of action taken in respect of failure after success cases. AAO/Pay and Accounts Officer should regularly monitor this report and any discrepancy if any, noticed should be taken up with Helpdesk of PFMS.
2.19.12 DDO would furnish a reconciliation certificate in the format prescribed in CAM-90 to PAO every month. DDO would submit certificate after verification of PAO-01 and CMP-03 classified
abstract reports of PFMS with the figures appearing in the ECR and other records and Bill Register being maintained by DDO.
TYPES OF TRANSACTIONS TREATED AS CHARGED EXPENDITURE:
1. A question was raised whether, in a case in which an appeal has been filed against the decree of a lower court, a deposit of the decretal amount made in the court, should be treated as a Deposit in the Public Account or as a payment charged on the CFI under article 112(3)
(f) of the Constitution of India.
It has been decided that, in the absence of a stay of execution of the decree, the Deposit should be deemed to be in satisfaction of the decree. If, however, deposit of the decretal amount has been madeby way of security for staying the execution of the decree, or as a condition precedent to the grant of a stay order under orders of the Appellate Court, the payment made in pursuance of the said order is only a deposit and cannot be said to have been made in satisfaction of the decree passed by the lower court. The fact that the Court may allow the decree-holder to withdraw the amount so deposited by theGovernment does not alter this position. Consequently, the provisions of article 112(3)
(f) of the Constitution would not be attracted in such cases. The amount, being in the nature of a deposit in the court, would not constitute 'expenditure' of the Government and should be classified under the head "8674-Security Deposit made by Government" in Section "L-Suspense and Miscellaneous" in the Public Account of India - the debit under this head being cleared after the amount is recovered if and when the appeal is decided in favour of Government. Where, however, the appeal is dismissed and the decree becomes final, the amount deposited in the Court would thereupon constitute payment made to satisfy the decree and, consequently, the debit under this head should then be cleared by transfer to the final head, as Charged' expenditure, and covered by appropriate provision of funds or, in anticipation thereof, by an Advance from the Contingency Fund of India, as may be necessary.
What This Means
The figures of e-payment advices and cheques issued during a month must be reconciled with the amounts booked under Major Head 8670 (Cheques and Bills) in the accounts. PFMS provides specific reports for this reconciliation: PC-04 shows details of e-payment advices including timestamps, amounts, beneficiary details, and success/failure status. A monthly summary of total e-payments through PFMS is recorded in the Register of Cheques Delivered. This systematic reconciliation ensures that every payment recorded in government accounts matches what was actually paid through the banking system.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
1Monthly reconciliation of e-payment advices/cheques with MH-8670 (Cheques and Bills) is mandatory
2PFMS report PC-04 provides details of all e-payment advices: timestamps, amounts, status
3Total e-payments must be separately summarized in the Register of Cheques Delivered
4Outstanding cheques must be tracked and reconciled with bank records
5Any discrepancy between accounts and actual bank transactions must be investigated immediately
Practical Example
At month-end, the PAO runs PFMS report PC-04 and finds that Rs.5.2 crore was issued via e-payment advices during the month. The PAO also issued Rs.30 lakh in physical cheques. The total of Rs.5.5 crore must match the amount booked under MH-8670 in the monthly accounts. The PAO finds a Rs.50,000 discrepancy, investigates, and discovers one e-payment advice failed at the bank but was still booked in accounts. A correction entry is passed to adjust the figure.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is Major Head 8670?▼
Major Head 8670 (Cheques and Bills / Electronic Advices) is the suspense head under which all cheques and e-payment advices issued by the PAO are initially booked, pending their encashment or settlement at the bank.
What PFMS report is used for e-payment reconciliation?▼
PFMS report PC-04 provides detailed information about e-payment advices including the date, time, amount, beneficiary details, and success or failure status of each transaction.
What happens if an e-payment fails at the bank?▼
If an e-payment fails (bounces or is returned), the PAO must reverse the entry in accounts and investigate the cause. The amount remains booked under MH-8670 until the correction is made.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
[ Ministry of Finance No. F1(44)-B/56 dated 16.5.56, F.1(66)-B/57 dated 21.11.57 and F.1(52)- B/68 dated 31.1.69]
2. In cases of arbitral awards/decrees against State Governments in disputes arising out of the acquisition of land, buildings and property for Union purposes, since the award/decree is against the State Government and the liability for the initial payment in satisfaction of the award/decree devolves on the State Government, the expenditure should be charged on the Consolidated Fund of the State under article 202(3)
(e) of Constitution. The subsequent reimbursement by the Central Government would be merely an inter-governmental adjustment which does not attract the provisions of article 112(3)
(f) of the Constitution, since such an award/decree is not enforceable against the Central Government. [Ministry of Finance No. F.2(43)-B/59 dated 12.9.59]
3. There are cases in which security deposits of contractors are appropriated by Governmenttowards liquidated damages. In such cases, if recovery made from the contractor on this account has to be refunded as a result of the levy of compensation in terms of the agreement having been held by the arbitrator as not justified, the refund should be treated as expenditure charged on the Consolidated Fund under article 112(3)
(f) of the Constitution. [C & AG letter No. 1267-AC/178-63 dated 24.9.63]
4. Where a Court award is for a composite amount which is not capable of being split up as "Refunds of Revenue" and "Other Expenditure", the entire amount of award should be treated as "Charged" expenditure.
Where an award is exclusively for the refund of security deposit or other revenue, the refund should not be treated as "charged" expenditure but accounted for a refund of deposit or revenue, as the case may be, under "Deduct-Refunds".
Where an award is specific about the components of the award (e.g. refund of security deposit plus cost) or is for a composite amount which is capable of being split up as "Refunds' and "Other expenditure", the components are to be accounted for individually as "Refund" of deposit or revenue andas "Charged" expenditure respectively.
[C & A G's letter no. 437-AC/131-65 dated 18.5.66]
5. The Ministry of Law have advised that, for the purposes of article 112(3)
(f) of the Constitution, a tribunal must be constituted by the State (and not merely by an agreement of parties) and must be invested with the States' inherent judicial (as distinguished from purely administrative or executive) powers and the trappings of a court. Accordingly, an arbitrator appointed under Section 10A of the Industrial Disputes Act, 1947 or a private arbitrator to whom a dispute is referred under an arbitration agreement under the Arbitration Act, 1940 is not a tribunal within the meaning of article 136 of the constitution. Consequently, payment in satisfaction of the award of such an arbitrator cannot be treated as expenditure "Charged" on the Consolidated Fund. However, in cases where such an award by aprivate arbitrator is filed in a court and a decree is obtained in terms of the award, the expenditure required to satisfy the court decree will be expenditure charged on the Consolidated Fund.
[Ministry of Finance No. F. 1(124)-B/64 dated 13th November, 1964].
6. The award of a collector under the Land Acquisition Act is not an award of court nor can it be considered as an award of arbitral tribunal. While making an award under Section 11 of the Act, the collector merely acts as an office of the Government making enquiries in order to determine the compensation payable. Payment of such awards should, therefore, be treated as voted item of expenditure.
[Ministry of Finance No. F.1(4)-B/66 dated 19th April,1966]
7. A case arose in which an award was decreed against the Government for payment of rent in respect of certain requisitioned property. It has been held that where an award imposes an obligation to make a recurring payment, every recurring payment including those beyond the date of the award would be expenditure "Charged" on the Consolidated Fund under article 112(3)
(f) of the constitution.
[Ministry of Finance No. F.1(124)-B/64 dated 20th April, 1965]
Article of the constitution
(a) Judges of the Supreme Court/ Federal Court/High Courts 112(3)
(d)
(b) Comptroller & Auditor General of India 112(3)
(e)
(c) Officers and servants of the Supreme Court 146(3)
(d) Persons serving in the Comptroller and Auditor General's Office 148(6)
(e) Officers and servants of High Courts 229(3)
(f) Members and staff of U.P.S.C. and State PSCs 322
8. Pension payments in the under-mentioned cases are required to be treated as "Charged" expenditure in terms of the various provisions of the Constitution shown against each;
The pensions payable to or in respect of the Judges of Supreme Court, Federal Court and High Court, the Comptroller and Auditor General of India and members of the Public Service Commissions (both Union and States) do not present any problem and they are required to be "Charged" on the CFI or the States, as the case may be. In the case of officers and staff of the Courts, Public Service Commissions and comptroller and Auditor General of India, however, it is not possible to follow a uniform procedure in all cases in view of the difference in the wording of the relevant articles of the Constitution. Having regard to the Constitutional provisions, the entire pension of theofficers and staff of the High Court, Supreme Court, UPSC and State Public Service Commissions should be treated as "Charged" expenditure only in cases in which the employees hold a lien on a post in these organisations, or in the case of temporary employees, if they do not hold a lien on a post in any other organisation.
In the case of the office of the C.&A.G., however, in view of the working of article 148(6) of the Constitution, pension of all officers and staff serving in that office immediately before retirement or proceeding on leave preparatory to retirement from that office should be treated as "Charged" expenditure irrespective of the office or service to which they belong. A Pension will either be wholly charged or wholly voted and the fact the same is allocable between different Governments or Departments, service under one or more of which does not by itself qualify for a "Charged" pension, should not make any difference.
[Ministry of Finance No. F. 1(79)-B/64 dated 1-10-1965]
9. Under article 112(3)
(a) of the Constitution of India, the emoluments and allowances of the President of India and "other expenditure relating to his Office" shall be expenditure charged on the CFI. It has been held by the Ministry of Law that it would not be proper to exclude pension, gratuity etc. payable to retired employees or their families from being a charged expenditure on the CFI, only because those particular items were not specifically referred to in theabove clause of the Constitution. It has, therefore, been held that the expression "other expenditure relating to his office" referred to in this clause includes also pension, gratuity etc. It has been further held that pensions, gratuity etc. in respect of persons who have served the President's Secretariat before retirement, or who retire while serving the President's Secretariat, should be treated as 'Charged' expenditure, only if the employees hold a lien on a post in the President's Secretariat or, in the case of temporary, employees, if they do not hold a lien on a post in any other organisation.
[Ministry of Finance U.O. No.F.7(14)-B(D)/77-KW dated 10.5.78 and F.3(102)-B(AC)/78 dated 27.8.79;the Ministry of Law, Justice & Company Affairs U.O. No. 23037/78 dated 19.5.78; and the CAG's U.O.
Note No.1514-AC/142-78 dated 13.8.79]
No.F.1 (22)-B (AC)/2022 Government of India Ministry of Finance Department of Economic Affairs (Budget Division)
OFFICE MEMORANDUM
New Delhi, the 23rd February, 2024
Subject: Revised Guidelines on Financial Limits to be observed in determining cases relating to ‘New Service’/ ‘New instrument of Service’.
In pursuance to the approval by the Public Accounts Committee, vide its One hundred third Report (Seventeenth Lok Sabha) (2023-24), on the proposal for revision of financial limits for determining the cases relating to ‘New Service’ (NS)/’New Instrument of Service’ (NIS) for reappropriation of funds, the revised limits and guidelines are hereby conveyed in supersession of this Ministry’s Office Memorandum No. F.1(23)-B(AC)/2005 dated 25th May 2006. The extant guidelines are being revised to ensure systemic uniformity, consistency, administrative efficiency and financial discipline by the Ministries/Departments.
2. Definition of ‘New Service’(NS)/’New Instrument of Service’ (NIS):
(i) ‘New Service’: As in Article 115(1)
(a) of the Constitution of India, it refers to expenditure arising out of a new policy decision, not brought to the notice of Parliament earlier, including a new activity or a new form of investment.
(ii) ‘New Instrument of Service’: It refers to relatively large expenditure arising out of important expansion of an existing activity.
3. Applicability of ‘New service’/ ‘New Instrument of Service’:
(i) The revised financial limits are attached as Annexure ‘A’.
(ii) The limits shall be applicable to all ministries including Ministry of Railways, Ministry of Defence and Department of Post.
(iii) The nature of transactions under consideration for applicability of the financial limits have been aligned strictly with the ‘object head of account’. It is treated as Primary Unit of Appropriation.
(iv) This means that the guidelines shall correspond to the original appropriation as available at the level of 15-digit numeric code in respect of civil ministries and/or final unit of appropriation as available in the Detailed Demand for Grants in respect of non-civil ministries, as the case may be.
(v) Definitions as indicated in Paragraph 2 above will be the guiding factor while making decision on the applicability of limits of New Service/New Instrument of Service.
4. While using these terms and applying the financial limits as indicated in the Annex, it needs to be noted that no expenditure can be incurred from the Consolidated Fund of India on a ‘New Service’/’New Instrument of Service’ without prior approval of Parliament through supplementary demands for grants.
5. Where in an emergent case of ‘New Service’/ ‘New Instrument of Service’ it is not possible to wait for prior approval of Parliament, the Contingency Fund of India can be drawn upon for meeting the expenditure pending its authorization by Parliament. Recourse to this arrangement should normally be taken only when Parliament is not in session. Such advances are required to be recouped to the Fund by obtaining a Supplementary Grant. However, when Parliament is in session, a Supplementary Grant should preferably be obtained before incurring any expenditure on a ‘New Service’/ ‘New Instrument of Service’. That is to say, recourse to Contingency Fund of India should be taken only in cases of extreme urgency. In such cases the following procedure recommended by the Sixth Lok Sabha Committee on Papers Laid on the Table in their 4th Report should be observed:
“As far as possible, before such withdrawal is made, the concerned Minister may make a statement on the floor of the Lok Sabha for information giving details of the amount and the scheme for which the money is needed. In emergent cases, however, where it is not possible to inform the Members in advance, the withdrawal may be made from the Contingency Fund and soon thereafter a statement may be laid on the Table of the Lok Sabha for the information of the Members”.
It has been suggested by the Rajya Sabha Secretariat that the above procedure may also be observed in Rajya Sabha.
6. Checks to be observed by the Ministries/Departments to ensure compliance of the provisions of this Office Memorandum are as under:
(i) By Integrated Finance Division/Budget Unit: A specific certificate should be recorded in each case Involving augmentation of sanctioned provision on receipt of related proposals, to the effect that the proposed augmentation attracts/does not attract financial limits of 'New Service"/ 'New Instrument of Service';
(ii) By PAOs: Each expenditure sanction to be examined by PAOs from the 'New Service'/ 'New Instrument of Service' angle keeping in view the financial limits indicated in the Annex;
(iii) Where any doubt arises about the application of financial limits of 'New Service'/ 'New Instrument of Service’, the PAO would seek decision from Financial Advisor of appropriate jurisdiction.
7. Circumstances for obtaining Supplementary grants for expenditure qualifying as 'New Service'/ 'New Instrument of Service' and the reporting procedure thereof are as follows:
(i) If sufficient savings are available within the same section of the relevant grants for meeting additional expenditure to the extent mentioned in column 2 of the Annex A, reappropriation can be made, subject to report to Parliament;
(ii) Report to Parliament should ordinarily be made through the ensuing batch of Supplementary Demands for Grants, failing which by adding an Annex in the Detailed Demands of the Ministry/ Department for the ensuing year;
(iii) A suitable write-up of such cases where possible, may also be made in the Notes on Demands for Grants of the Ministry/Department;
(iv) Mere depiction of augmented provisions in the Revised Estimates included in the Demands for Grants will not be adequate to meet the requirement to incur expenditure. In cases where the financial limits of 'New Service'/ 'New Instrument of Service' are attracted, approval of Parliament may be obtained for incurring such expenditure through Supplementary Demands for Grants;
(v) The provisions in the Vote on Account' are not intended to be used for expenditure on any 'New Service'. In cases of urgency, expenditure on a 'New Service' during Vote on Account period can, therefore, be incurred only by obtaining an advance from the Contingency Fund. Such advances will be resumed to the Contingency Fund on enactment of Appropriation Act in respect of expenditure for the whole year.
(i) Having regard to the volume and nature of Government transactions, it is not possible to list out all such cases which are not attracted by 'New Service'/ 'New Instrument of Service’ limits. Broadly, expenditure on normal activities of Government (such as normal administrative expenditure including those resulting from re-organization of Ministries/ Departments, holding of conferences, seminars, exhibitions, surveys, feasibility studies, etc., assistance to foreign Governments, contributions to international bodies, and fulfilment of Government guarantee on its invocation) may not attract limits of 'New Service'/’New Instrument of Service';
(ii) Transfers to State and Union Territory Governments are also exempt from these limits provided the scheme is not new;
(iii) Further, these limits are applicable only to expenditure which is subject to Vote of Parliament.
9. For ease of understanding and guidance, ‘Object Head-wise Matrix’ of the financial limits is enclosed at Annexure ‘B’. However, the definitions of NS/NIS and the limits prescribed by PAC shall be borne in mind while applying these limits.
10. Doubtful cases:
In case of disagreement between the Integrated Finance Wing and Pay and Accounts Office, the Ministry/ Department may send a self-contained communication to the Budget Division, Ministry of Finance, bringing out specific point
(s) of doubt incorporating their Financial Adviser's views thereon. The decision taken by the Budget Division in the matter will be final.
11. Conclusion:
While agreeing to the revision of norms for re-appropriation of funds as annexed, the Public Accounts Committee in its One hundred and third Report (Seventeenth Lok Sabha) has concluded by stating as under:
‘The Committee also expect the Financial Advisors of all the Ministries/Departments to ensure that no violation occur in implementation of the revised limits for ‘New Service’/’New Instrument of Service’. It goes without saying that any slackness in complying with the same may be strictly dealt with.’
12. Department of Expenditure, Ministry of Finance, will issue further orders related to the amendments in provisions of Annexure I to Appendix 3 of the General Financial Rules 2017 consequent to the extant revision in the financial limits of ‘New Service’/ ‘New Instrument of Service’.
13. This issues with the approval of the Finance Secretary and Secretary Expenditure.
14. Hindi version will follow.
Sd/- (Vishnukanth P.B.) Director (Budget)
1. All Ministries/Departments of the Government of India. 2. Financial Commissioner (Railways), Financial Advisor (DS), Member Finance (Telecom) and all other Financial Advisors 3. Finance Secretaries of Union Territory Administration (Chandigarh, Andaman and Nicobar Islands, Dadra and Nagar Haveli and Lakshadweep) 4. Controller General of Accounts, Controller General of Defence Accounts and Chief Controller of Accounts of Ministries
Annexure ‘A” to the Ministry of Finance OM No. 1(22)-B(AC)/2022 dated 23.02.2024 Financial limits to be observed in determining the cases relating to ‘NEW SERVICE’/’NEW INSTRUMENT OF SERVICE’
New Service (NS)
1. All new services [except for the new ‘Works’ under Capital section] shall be considered as ‘New Service’ as defined in Article 115 of the Constitution and shall accordingly need prior approval of the Parliament;
2. In case of services falling under the category of new works under Capital section (currently classified as Land/Building/Machine in line with Rule 8 of the Delegation of Financial Powers as amended through Ministry of Finance Gazette Notification dated 16.12.2022), the financial limits for the ‘New Service’ shall be as under:
Object Heads Reporting Limit Prior Approval of Parliament 1 2 3 1. Machinery & Equipment; 2. ICT Equipment; 3. Building and Structure; 4. Infrastructural Assets; 5. Arms and Ammunitions; and 6. Land Above ₹ 50 crore but not exceeding ₹ 100 crore, subject to savings within same section of the Grant Above ₹ 100 crore, subject to savings within same section of the Grant
New Instrument of Service (NIS)
3. The financial limits for the ‘New Instrument of Service’ shall be as under:
Object Heads Reporting Limit Prior Approval of Parliament 1. 2. 3. 1. Investment; 2. Loans and advances; 3. Subsidies; 4. Machinery and equipment; 5. ICT Equipment; 6. Building and Structures; 7. Infrastructure assets; 8. Arms and ammunitions 9. Land; 10. GIA Capex; 11. GIA General; 12. GIA Salary upto 20% of the original appropriation* OR upto ₹ 100 crore whichever is higher [subject to savings within same section of the Grant] Above 20% of the original appropriation (15-digit line item) OR Above ₹ 100 crore, whichever is higher [subject to savings within same section of the Grant] All other Object Heads Each case to be decided on merits (see para 2 & 3 of the OM No. 1(22)-B(AC)/2022 dated 23.02.2024)
Note: Annexure B to the MoF OM No.1(22)-B(AC)/2022 dated 23.02.2024 containing ‘Object Head-wise Matrix’ of the financial limits is not reproduced here. Refer the said OM and Annexure 1 to Appendix 3 of GFR, 2017 as amended from time to time.
* refers to the 15-digit numeric code in respect of civil Ministries or final unit of appropriation available in the Detailed Demand for Grants in respect of non-Civil Ministries