Rule 100 — GFR 2017
Original Rule Text
Rule 100
Allocation
between
capital
and
revenue expenditure: The allocation
between capital and revenue expenditure
on a Capital Scheme for which separate
Capital and Revenue Accounts are to be
kept, shall be determined in accordance
with such general or special orders as
may be prescribed by the Government
after consultation with the Comptroller
and Auditor General of India.
Rule101
Capital receipts during construction
mainly to be utilised in reduction of
capital expenditure: Capital receipts in
so
far
they
relate
to
expenditure
previously debited to Capital accruing
during the process of construction of a
project, shall be utilised in reduction of
capital expenditure. Thereafter their
treatment in the accounts will depend on
circumstances, but except under special
rule or order of Government, they shall
not be credited to the revenue account of
the department or undertaking.
What This Means
Rule 100 deals with how government departments should categorize their spending on large projects, known as 'Capital Schemes,' where separate accounts are kept for long-term investments (capital) and daily operational costs (revenue). It states that the government will issue specific guidelines, after consulting with the Comptroller and Auditor General of India, to help officers decide whether an expense should be treated as a capital cost (like building a new facility) or a revenue cost (like paying salaries for project staff). Government officers must strictly follow these official guidelines when classifying expenses for such projects.
Rule 101 explains what to do with any money received during the construction phase of a project, especially if that money is related to expenses that were initially recorded as capital costs. The primary instruction is that this money, called 'capital receipts,' must first be used to reduce the total capital cost of the project. For example, if you sell scrap material from a construction site, that money should reduce the overall cost of the building, not be added to your department's regular income.
Crucially, these capital receipts generally cannot be added to the department's regular income (revenue account) unless there is a specific rule or order from the Government allowing it. This ensures that the true cost of the capital project is accurately reflected by offsetting it with any related income generated during its construction.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Rule 100 governs the classification of expenses as either capital or revenue for major government projects (Capital Schemes) that maintain separate accounts.
- 2The Government, in consultation with the Comptroller and Auditor General of India, prescribes specific orders for this expense allocation.
- 3Government officers are required to adhere to these official orders when categorizing expenditures on Capital Schemes.
- 4Rule 101 mandates that capital receipts generated during a project's construction, linked to previously capitalized expenses, must primarily be used to reduce the project's total capital expenditure.
- 5These capital receipts should generally not be credited to the department's regular revenue account unless a special government order permits it.
Practical Example
Imagine the Ministry of Health is constructing a new multi-specialty hospital, which is a Capital Scheme. According to Rule 100, the Ministry's finance team needs to classify expenses like land acquisition (Rs. 200 crores), construction materials (Rs. 500 crores), and specialized medical equipment (Rs. 150 crores) as capital expenditure. Simultaneously, costs such as the salaries of temporary administrative staff for the project office (Rs. 5 crores) and utility bills during construction (Rs. 2 crores) would be classified as revenue expenditure, following the specific guidelines issued by the Ministry of Finance after consulting with the CAG.
During the construction phase, the project team decides to temporarily lease out a portion of the acquired land, which is not immediately needed, to a private contractor for storing construction materials for a period of one year, generating a rental income of Rs. 1 crore. As per Rule 101, this Rs. 1 crore is a capital receipt during construction. Instead of adding this money to the Ministry's general revenue account for daily operations, the finance team *must* use it to reduce the overall capital cost of the hospital project. So, if the initial estimated capital cost was Rs. 850 crores, it would now effectively be reduced to Rs. 849 crores, ensuring accurate accounting of the project's true investment.
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.