Rule 51 — GAR
Original Rule Text
# 51. General
Where under the rules in this Chapter payment is required to be made by one: department of: a Government to another, such payment shall, if the case so requires or if otherwise deemed necessary, include adequate charge for: supervision or other indirect expenditure connected with the service or supply for which payment is made.
# CHAPTER 5 Rules regarding classification of recoveries of Expenditure in Government Accounts
What This Means
Rule 51 establishes an important principle for how inter-departmental payments should be calculated: the payment must cover not just the direct cost of the service or supply, but must also include an adequate charge for supervision and other indirect expenditure connected with that service or supply. This is the full-cost-recovery principle applied to inter-departmental transactions.
When one department provides a service to another and raises a charge, it would be inadequate to charge only for the direct inputs — materials, direct labour, direct power, etc. Running any facility involves overhead: the salary of supervisory staff, depreciation of equipment, administrative costs of the store or workshop, utilities, and so on. Rule 51 ensures these indirect costs are also captured in the inter-departmental charge.
The qualifier 'if the case so requires or if otherwise deemed necessary' gives some flexibility — not every small transaction needs a complex overhead calculation. But for significant or recurring inter-departmental service arrangements, the charge must be fully loaded with indirect costs. This prevents the supplying department from effectively subsidising the receiving department by bearing its own overhead costs.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Inter-departmental payments must include adequate charges for supervision and other indirect expenditure — not just direct costs.
- 2This applies to all payments required under Chapter 4 of GAR 1990 (inter-departmental charges).
- 3The qualifier 'if the case so requires or if otherwise deemed necessary' allows some flexibility for trivial or infrequent transactions.
- 4For significant service arrangements, full cost recovery — including overheads — is mandatory.
- 5Prevents the supplying department from inadvertently subsidising another department by absorbing its own overhead costs.
- 6Rule 51 also contains the chapter heading for Chapter 5, which begins the rules on classification of recoveries.
Practical Example
The National Informatics Centre (NIC) provides IT support and data processing services to the Ministry of Statistics. When calculating the annual charge to be raised on the Ministry of Statistics, NIC's accounts team begins with direct costs: server usage, software licences directly attributable to the Ministry's work, and technician time logged on the Ministry's projects. To this, they add an appropriate overhead loading — 15% of direct costs — representing NIC's supervisory staff time, central IT infrastructure depreciation, utility costs, and administrative expenses of the IT support division. The final invoice of Rs. 28 lakhs (direct costs Rs. 24.3 lakhs + indirect charge Rs. 3.7 lakhs) is thus fully loaded in accordance with Rule 51. The Ministry of Statistics cannot object to the overhead component, as Rule 51 explicitly mandates its inclusion.
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.