Rule 56 — GAR
Original Rule Text
56. Notwithstanding anything to the contrary provided by or under the rules in this Chapter, receipts and recoveries on capital Accounts insofar as they represent recoveries of expenditure previously debited to a Capital Major head shall be taken in reduction of expenditure under the major head concerned except where under the rules of allocation applicable to a particular department such receipts have to be taken to revenue.
# CHAPTER 6 Rules relating to classification of losses in Government Accounts
What This Means
Rule 56 deals with receipts and recoveries on Capital Accounts — specifically those that represent recoveries of expenditure previously debited to a Capital Major Head. The general principle is that such recoveries should be taken as reductions of expenditure under the same major head that was originally debited, rather than being credited to a receipt head.
For example, if the Government had invested capital in constructing a building and that capital cost was debited to a Capital Major Head (e.g., '4216-Capital Outlay on Housing'), and later sells that building and recovers Rs. 40 lakhs, that Rs. 40 lakh recovery should reduce the capital expenditure under '4216' rather than being credited to a revenue receipt head.
The exception is significant: if the rules of allocation applicable to a particular department require such receipts to be taken to revenue, then they should be so taken. This recognises that some departments (particularly those with separate Capital and Revenue accounts) have specific allocation rules that may treat capital recovery proceeds differently. Rule 56 must be read alongside the relevant departmental rules and Schedule I/II to Rule 71 (which deals with classification of sale proceeds of government land and buildings in detail).
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Receipts and recoveries on Capital Accounts that represent recovery of previously debited capital expenditure are taken in reduction of expenditure under the original capital major head.
- 2The 'notwithstanding' language makes this an override — applies even if other provisions in Chapter 5 would suggest different treatment.
- 3Exception: Where departmental allocation rules require such receipts to be taken to revenue, the revenue treatment prevails.
- 4Reduces the apparent net capital expenditure rather than generating a separate revenue receipt.
- 5Read alongside Rule 71 (which contains detailed schedules for classification of sale proceeds of government land and buildings).
- 6Relevant to Public Works, Capital Projects, and any department with significant capital assets.
Practical Example
The Ministry of Health had constructed a district hospital building fifteen years ago at a capital cost of Rs. 3.2 crores, debited to '4210-Capital Outlay on Medical and Public Health.' A portion of the hospital premises (an old staff quarters block) is now demolished and the usable materials are sold for Rs. 12 lakhs. Under Rule 56, these Rs. 12 lakhs are treated as a reduction of expenditure under the same capital major head '4210.' They do not go to a revenue receipt head. The net capital outlay on Medical and Public Health infrastructure is thus reduced by Rs. 12 lakhs. However, if the Ministry of Health's specific departmental allocation rules require such proceeds to be credited to revenue receipts under '0210-Medical and Public Health,' then the revenue treatment prescribed by those rules would prevail over Rule 56.
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.