Rule 36 — GAR
Original Rule Text
36. Accounts of Government Commercial Departments or Undertakings
Where any: departments or departmental Undertakings of Government function on commercial lines, the essential formalities of commercial accounts to the extent prescribed by Government should be: strictly observed. In such cases, separate commercial accounts of the departments or Undertakings shall be kept outside the regular Government accounts. Gross receipts and expenditure of commercial departments or undertakings shall be accounted for under the: appropriate major and minor heads in the: same: way: as ordinary receipts and expenditure of Government. The heads of accounts should, as far as possible, be common to the Government: account, and the General Ledger maintained at the department or undertaking. and should be: selected with due regard to the principles of governmental and commercial accounting so; that the monthly classified account ofi income and: expenditure of the department or undertakings may be prepared readily from the General Ledger.
What This Means
Rule 36 governs how government departments or undertakings that operate on commercial lines maintain their accounts. The key recognition in this rule is that commercial departments are different from ordinary government departments: they sell goods or services, they need to know their profit or loss, and they require business-oriented financial reporting — not just an appropriation-based view of receipts and expenditure.
The rule requires such departments to maintain separate commercial accounts outside the regular government accounts, using the essential formalities of commercial accounting to the extent prescribed by Government. This means they keep a General Ledger, prepare income and expenditure statements, and follow double-entry bookkeeping principles — just as a business would. However, this internal commercial accounting does not replace the government accounting requirement: the gross receipts and gross expenditure of commercial departments must still be accounted for under the appropriate major and minor heads in the regular government accounts in the same way as ordinary government receipts and expenditure.
Crucially, the rule requires that the heads of account used in the regular government records should, as far as possible, be common to both systems — the government account and the department's General Ledger. This alignment ensures that a monthly classified account of income and expenditure can be prepared quickly and easily from the General Ledger, with figures that correspond directly to what appears in government accounts. The heads should be chosen with due regard to both governmental and commercial accounting principles, creating a coherent bridge between the two systems.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Government departments operating on commercial lines must maintain separate commercial accounts outside the regular government accounts.
- 2The essential formalities of commercial accounting (General Ledger, income/expenditure accounts) must be strictly observed to the extent prescribed by Government.
- 3Gross receipts and gross expenditure of commercial departments must still be reflected under appropriate major and minor heads in the regular government accounts.
- 4The heads of account should, as far as possible, be common to both the government account and the department's General Ledger — bridging both systems.
- 5This alignment allows a monthly classified income and expenditure account to be prepared readily from the General Ledger.
- 6The heads must be selected with due regard to both governmental and commercial accounting principles.
Practical Example
The Government Printing Press in Faridabad, operating as a commercial department under the Ministry of Finance, manufactures and sells printed materials to other government departments and to the public. It maintains a full General Ledger with accounts for raw materials inventory, work-in-progress, sales, wages, overhead costs, and depreciation.
The Head of the Government Printing Press ensures that the heads used in the General Ledger match the major and minor heads in the regular government accounts. For example, printing paper purchases are recorded in the GL under 'Raw Materials — Paper' and simultaneously booked under Major Head 3451 (Secretariat — Economic Services) in government accounts under the relevant minor head. Monthly, the accounts officer prepares a classified income and expenditure statement directly from the GL, showing total income (from sales of printing services) and total expenditure (by category) in a format that directly reconciles with government accounts. This dual-system approach satisfies both commercial management information needs and the constitutional requirement for government accounting under Article 150.
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.