Rule 54 — GAR
Original Rule Text
54. As between different departments of the same Government, the recoveries shall be classified as deduction from the gross expenditure except that such recoveries as are made by: a commercial department e.g. Railways, Department of Posts and Department of Telecommunications or a departmental commercial undertaking (e.g. A.I.R.) should be treated as receipts of that department.
Exception: Recoveries of fees for purchase, Inspection etc., effected by the Central Purchase Organisations of Government of India (e.g. DGS&D Army Purchase Organisations of the Ministry of Defence) are treated as receipts of the Department concerned.
NOTE 1: - Such recoveries realised by: a non-commercial department (other than the Central Purchase Organisations of the: Government of India) from another Department of the same Government shall be shown in the relevant Demand for Grant as "below the line" recovery under the: appropriate major head of account. Recovery actually effected, irrespective of the year to which it relates, shall be adjusted in accounts in reduction of expenditure and exhibited in the: schedule of recovery to be attached to the Appropriation Accounts of the year in which the recovery is effected.
NOTE 2:-The term "recoveries" by: a commercial department (viz. Posts, Telecommunications and Railways) or by a Departmental commercial undertaking (e.9. A.I.R.) for the purpose of this rule: shall apply to recoveries in respect of: services rendered to other departments in pursuance of the proper functions for which the department is constituted, that is to say, in the case of Department of Posts and Department of Telecommunications, recoveries: shall be classified as receipts only when they are: made in respect of Postal, Telegraphs or Telephone services rendered to the other departments. Where, a commercial department or. a departmental commercial undertaking acts as an agent of another department for the: discharge of functions not germane to the essential
Classification of recoveries of expenditure on works in progress and transactions of stock and other suspense account
What This Means
Rule 54 governs how recoveries between different departments of the same Government are classified in accounts. The general rule is the opposite of Rule 53: recoveries between departments of the same Government are classified as deductions from gross expenditure — not as receipts. So if Department A recovers money from Department B (both departments of the Central Government), the recovery reduces Department A's gross expenditure rather than appearing as a separate receipt.
There is a significant exception: commercial departments — Railways, Department of Posts, Department of Telecommunications — and departmental commercial undertakings like AIR (All India Radio) must treat their recoveries as receipts of their respective departments. Similarly, Central Purchase Organisations like DGS&D and Army Purchase Organisations also treat their fees for purchase and inspection as receipts, not as deductions from expenditure.
For non-commercial departments, the note to Rule 54 specifies the mechanics: recoveries from other departments are shown 'below the line' in the relevant Demand for Grant under the appropriate major head, and are exhibited in the Schedule of Recovery attached to the Appropriation Accounts of the year in which the recovery is actually effected.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Recoveries between departments of the same Government: shown as deductions from gross expenditure (not as receipts).
- 2This is opposite to Rule 53, which requires receipts when recovering from non-government parties.
- 3Exception: Commercial departments (Railways, Posts, Telecom, AIR) and Central Purchase Organisations treat their recoveries as receipts.
- 4For commercial departments, only recoveries for their 'proper functions' qualify for receipt treatment — acting as agent for a non-core function does not.
- 5Non-commercial departments show recoveries 'below the line' in the Demand for Grant and in the Schedule of Recovery in Appropriation Accounts.
- 6The year of accounting is the year the recovery is actually effected, regardless of the year to which the service relates.
Practical Example
The Defence Ministry's Pay and Accounts Office processes the pay for a scientist deputed to DRDO from the Department of Science and Technology (DST). The salary of Rs. 95,000 per month is debited to DRDO's budget. Under the deputation terms, DST is to reimburse DRDO for this salary. When DST reimburses Rs. 11.4 lakhs (12 months' salary) to DRDO at year-end, this inter-departmental recovery is shown as a deduction from DRDO's gross expenditure under the relevant salary head — not as a receipt of DRDO. In the Demand for Grants for DRDO, this Rs. 11.4 lakh appears 'below the line' as a recovery against the salary head, reducing the net charge on the budget. It also appears in the Schedule of Recovery in DRDO's Appropriation Accounts for the year in which the amount is actually received.
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.