Rule 53 — GAR
Original Rule Text
53. Recoveries of expenditure for services or: supplies made: to non-Government parties or other Governments (including local funds and Governments outside India) shall, in all cases be classified as receipts of the Government rendering such services or supplies.
Exceptions - ( When a Government undertakes a: service merely: as an agent of a private body, so that the entire cost of the: service is recovered from that body, the net cost to Government being nil, the recoveries may be taken in reduction of expenditure.
NOTE:- In the case of projects, jointly executed by: several Governments, where the: expenditure is to be shared by: the participating Governments in agreed proportions, but the: expenditure is ab. initio incurred by one Government and shares of another participating Governments recovered subsequently, such recoveries from other Governments should be exhibited as abatement of charges under the relevant expenditure head of account in the books of the: Governeett incurring the expenditure initially.
Classification of recoveries made by one department from another department of the same Government.
What This Means
Rule 53 establishes the general rule for how recoveries from non-government parties and other governments are classified in accounts. The rule is straightforward: when a government department provides a service or supply to a non-government party (a private firm, a PSU, a local body) or to another government (including a state government or a foreign government), any recovery of the cost of that service or supply must be classified as a receipt of the rendering department — not as a reduction of expenditure.
However, there are two important exceptions. First, when the Government acts merely as an agent for a private body and the entire cost is recovered from that body (leaving the net cost to Government at zero), the recovery may be taken in reduction of expenditure rather than as a receipt. Second, in the case of jointly executed projects where multiple governments share costs — but one government incurs all expenditure upfront and recovers the shares of the others — those recoveries from other participating governments are shown as abatement of charges (a reduction of expenditure) under the relevant expenditure head.
The general rule (receipts) versus the exception (abatement/reduction of expenditure) has significant implications for how budget utilisation appears in accounts and in the Appropriation Accounts.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Recoveries from non-government parties and other governments are classified as receipts of the supplying department.
- 2This is the general rule — the money appears on the receipt side of government accounts.
- 3Exception 1: If Government acts purely as an agent (zero net cost), recovery may reduce expenditure rather than be shown as a receipt.
- 4Exception 2: In jointly executed projects where one government advances costs for others, the shares recovered from other governments are shown as abatement of charges (reduction of expenditure) under the relevant head.
- 5Classification as receipts vs. reduction of expenditure has material impact on the appearance of budget utilisation in Appropriation Accounts.
- 6Rule 53 applies only to recoveries from outside the same Government — recoveries within the same Government are governed by Rule 54.
Practical Example
The Central Water Commission (CWC), under the Ministry of Jal Shakti, conducts a detailed hydrological survey for a private infrastructure company bidding on a dam project. The actual cost of the survey is Rs. 12 lakhs, which was debited to '2711-Flood Control and Drainage.' The private company pays Rs. 12 lakhs as the agreed recovery. Under Rule 53, this Rs. 12 lakh recovery is classified as a receipt of the department under an appropriate minor head below '0711-Receipts from Flood Control Projects' or the relevant receipt head. It does not reduce the Rs. 12 lakh expenditure already debited — instead, it shows as a new credit on the receipt side. This reflects the true gross expenditure and gross receipts positions transparently.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
▼
▼
▼
▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.