Para 8.15 — This paragraph covers the procedure for Central Go

8.15 PAYMENT OF LOANS, GRANTS-IN-AID etc. TO STATES BY CENTRAL GOVERNMENT AND REPAYMENT OF LOAN, PAYMENT OF INTEREST TO CENTRAL GOVERNMENT BY THE STATES

8.15.1 Ministries/Departments of Central Government will arrange payment of loans and grantsin-aid as well as payment of States' share of Income Tax, Integrated Goods and Service Tax (IGST), etc. through their Principal Accounts Offices.

(i) On receipt of sanction orders from the Ministry/Department, the Principal Accounts Offices will arrange to credit the balance of State Government, (except in the case of Sikkim), by debit to their Ministries/Departments accounts through RBI (C.A.S), Nagpur.

Note: On receipt of sanction for effecting payment of loans/grants etc. to State/UT Governments by the Central Government, the Inter-Governmental Adjustment Advice (IGAA) should be issued to RBI, CAS, Nagpur immediately (in any case within two days at the most) or on the date prescribed for its release in the sanction itself. Principal Accounts Office/Pay and Accounts Offices would issue digitally signed eIGA Advice through PFMS on receipt of digitally signed IGA e-Sanction through sanction module of PFMS.

(ii) The Principal Accounts Office will pass an entry in his books debiting the appropriate final head of account, (e.g. Major Heads 3601, 3602, 7601 etc.) and crediting "8658 -Suspense Accounts Reserve Bank Suspense-Central Accounts Office". A copy of the advice will be sent to the concerned AG or the Chief Accounting Authority of the State also, in cases where the accounts have been separated from audit, to enable necessary adjustment in the accounts of the State Government.

(iii) On receipt of the Clearance Memo from the Central Accounts Section of the RBI, the suspense head mentioned above will be cleared by minus credit and contra credit afforded to "8675-Deposits with Reserve Bank-Central-Civil- Reserve Bank (CAO)".

(iv) The Principal Accounts Office should ensure that the amount shown and debited in the monthly account sent by the RBI tallies with the amount of advice sent by it. For detailed procedure in this connection, refer to APPENDIX 8.1 to this Chapter.

8.15.2 Repayment of loans and payment of interest on it by the State Governments (except Sikkim) for loans received from the Government of India will be arranged by the State AG or the

Chief Accounting Authority of the State. Issue of suitable advice to the RBI (CAS), Nagpur, to credit the account of the Ministry/Department of the Central Government by debiting the State balance, will be resorted to for this purpose.

8.15.3 When State Governments (except Sikkim) have to refund unspent amounts of old loans, the payment for it will be arranged by the State AG by issue of advice to RBI (CAS, Nagpur) to credit the balances of the Central Ministry/Department by debiting the State balances.

8.15.4 State AGs are not authorised to debit the Central Government by sending advices to the RBI However, as an exception, they have been permitted to withdraw erroneously credited amounts to Central Government towards repayment of loans or interest by advice, through sending of another advice to debit the Central Government account, provided such an advice contains the following certificate-

"Certified that this advice represents the withdrawal of an earlier erroneous credit to the Central Government, by debit to State Government and does not represent withdrawal of payments already made which were due to the Central Government by State Government. Necessary details of earlier erroneous advice

(s) now being withdrawn are being furnished to the CCA/CA concerned separately".

8.15.5 The Principal Accounts Offices/PAO Secretariat of the Ministry/Department are responsible for maintenance of detailed accounts of the loans sanctioned by the Central Government to the State Governments and watching the recovery of instalments of principal and interest.

8.15.6 As the banking business of the Government of Sikkim is not conducted by the RBI, the payment of loans/grants to the Government of Sikkim will be regulated by the procedure prescribed hereunder:

(a)The Ministries/Departments of the Government of India will send necessary sanctions for payments of grants and loans to the Government of Sikkim to their Principal Accounts Office, and endorse copy of these to the Finance Department of Government of Sikkim and the AG, (Central), Kolkata.

(b)The Principal Accounts Office will make payment to the Government of Sikkim based on the sanction issued by the competent authority. The payment will be made through electronic mode to the Secretary, Finance Department, Government of Sikkim, Gangtok. He will send intimation to AG (Central) Kolkata regarding the remittance. A copy of every sanction order for payment of loan/grant issued by the Ministry/Department may be sent to the AG, Kolkata by name. This will be sent with full particulars of payment, letter number and date of remittance of the payment. A check list of all the sanctions issued and acted upon during each quarter ending June, September, December and March of every financial year will also be sent by name to the AG, by the 15th of the following month.

(c)The Principal Accounts Office will account for the transactions under the final head of account.

(d)While making payment to the Government of Sikkim, the Principal Accounts Office should furnish the full particulars relating to the payment to the Sikkim Government and send a copy to the AG (Central), Kolkata.

8.15.7 As RBI does not operate their account, the system of direct payment will be followed by Sikkim Government for repayment of loans and payment of interest. This will be done through authorised mode to the concerned Principal Accounts Office, or where the former does not operate a drawing account, it will be done through the specified Pay and Accounts Officer.

8.18.1 Ministries/Departments of Central Government will arrange payment of loans and grantsin-aid through their Principal Accounts Offices by issue of Inter-Governmental Advice to RBI,CAS,Nagpur similar the procedure laid down for State Governments in para 8.15. The Ministries/Departments of the Government of India will address the sanctions relating to payment of grants/loans to the UT Governments with Legislature, to their Principal Accounts Office. They will also endorse its copy to the concerned Finance Secretary and Pay and Accounts Officer/Director of Accounts of the UT Government. The Principal Accounts Office of the Ministry/Department will make the payment to the UT Governments on the basis of the sanction through IGA to RBI,CAS,Nagpur. The Principal Accounts Office should furnish full particulars relating to the payment and endorse a copy of the forwarding letter to the Finance Secretary of the concerned UT Government. The Principal Accounts Office will account for the payments under the concerned grants-in-aid/loan head of account. On receipt of the payment, the Pay and Accounts Officer of the UT Government will take immediate action to account for the receipt under the concerned head in their books.

8.18.2 The Pay and Accounts Officers of the UT Governments will be responsible for initiating action for repayment of loans and advances and payment of interest. These payments will be made to the Principal Accounts Office of the Ministry/Department that sanctioned the loan.

8.18.3 The Principal Accounts Offices of the Ministry/Department are responsible for maintaining detailed accounts of the loans sanctioned by the Central Government to UT Governments, and watching the recovery of instalments of principal and interest.

8.18.4 Procedure stated in paras 8.16.3 to 8.16.5 above will also be applicable to the Union Territory Governments and Union Territory Administrations, whose accounts have not been separated except that Minor Head "TDS Suspense" below the Major Head "8658-Suspense Accounts" shall be operated in the Central Section of the books of the AG.

8.18.5 Even though the Government of NCT of Delhi(GNCTD) has separate Consolidated Fund of their own, it does not have separate balances with the RBI. As there is no Public Account separately for NCT of Delhi, transactions related to their Public Account (Deposits, Advances, Remittances and Suspense) are merged in the Public Account of the Union Government. The closing balance of the GNCTD is merged with and forms part of the general cash balance of the Union Government and is treated as lying in deposit with the Government.

What This Means

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Key Points

• 1Central loans and grants-in-aid to States are routed through Principal Accounts Offices
• 2Payments are arranged through PFMS/RBI based on Ministry sanction orders
• 3States repay loans and interest by depositing at designated RBI counters
• 4IGST settlement between Centre and States follows a special RBI-mediated procedure
• 5AG of the recipient State is advised of all payments for reconciliation

Practical Example

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

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