Rule 20 — GAR
Original Rule Text
# 20. Period of Accounts
The: annual accounts of the Central, State and Union Territory Governments shall record transactions which take place during a financial: year running from 1st April to 31st March.
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 processes inter alia in respect of the transactions of March, for carrying out certain inter-departmental adjustments, and for closing the accounts of: several Provident Funds and Suspense heads. Adjustments may: also be made after the dose of the year for the rectification of mispostings and misclassifications: coming to notice after the 31st March. An actual cash 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 purposes mentioned above.
What This Means
Rule 20 defines the accounting period for government accounts — the financial year running from 1st April to 31st March. This is fundamental to all government accounting because it determines which year's accounts a transaction belongs to. Every receipt, payment, and adjustment must be assigned to the correct financial year to ensure the accounts accurately reflect the government's financial position for that year.
The rule contains an important note dealing with the practical reality of accounting processes: the accounts of a year may remain open for some time after 31st March to complete various processes — finalizing March transactions, carrying out inter-departmental adjustments, closing Provident Fund accounts, and rectifying mispostings. This 'accounts-open period' (typically lasting until May or June) allows adjustments and corrections to be made in the accounts of the just-ended year even though the calendar has moved to the next year.
Critically, only book adjustments (corrections to already-recorded entries) can be made during this accounts-open period — actual cash transactions that take place after 31st March must always be accounted for in the new financial year, even if the previous year's accounts are still open. This principle prevents officers from 'pushing forward' new expenditure into a year already closed for fresh transactions.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1The financial year for government accounts runs from 1st April to 31st March.
- 2Annual accounts of all governments (Central, State, UT) cover this financial year.
- 3Accounts may remain open after 31st March for completing accounting processes like March reconciliations, inter-departmental adjustments, PF closings.
- 4Adjustments for rectification of mispostings and misclassifications can be made after 31st March while accounts are open.
- 5An actual cash transaction occurring after 31st March must be recorded in the new financial year — it cannot be backdated to the previous year.
- 6The accounts-open period is for corrections and adjustments only, not for fresh cash transactions.
Practical Example
On 28th March 2025, the Ministry of Agriculture makes a payment of Rs. 50 crore to a fertilizer company. This must be recorded in the 2024-25 accounts. The accounts close formally on 31st March but remain open for processing. On 5th April 2025, while reviewing the March accounts, the PAO discovers that the payment was classified under the wrong sub-head. This misclassification can be corrected as a book adjustment even though it is technically April 2025 — because the accounts are still open for 2024-25.
However, if on 2nd April 2025, the Ministry of Agriculture makes a fresh payment of Rs. 10 crore to another vendor (after the financial year has ended), this payment must be recorded in the 2025-26 accounts, even if the 2024-25 accounts are technically still open for processing. The fact that the accounts are open cannot convert this new April transaction into a March transaction.
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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This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.