Rule 102 — GFR 2017
Original Rule Text
Rule 102
Receipts and recoveries representing
recoveries of expenditure previously
debited
to
Capital
Major
Head:
Receipts and recoveries on Capital
Account in so far 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.
What This Means
This rule explains how to handle money that the government gets back after having spent it on a major, long-term project. Think of these as 'capital projects' – things like building new roads, hospitals, or acquiring large pieces of land or machinery. When the government initially spends money on these projects, it's recorded under a specific 'Capital Major Head' in the accounts.
If, for any reason, some of that money spent on a capital project is recovered – for example, if there was an overpayment to a contractor, or surplus land bought for a project is sold off – this rule says you shouldn't treat that recovered money as new income for the government. Instead, you should reduce the original amount that was recorded as spent on that particular capital project. It's like adjusting the initial bill to reflect the true, net cost of the project.
There's an important exception: if a specific government department has its own special rules, which are officially approved, stating that these kinds of recovered funds *must* be treated as regular income (revenue), then those specific departmental rules take precedence over this general rule.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1This rule governs how to account for money recovered from past government spending on major, long-term projects.
- 2Capital expenditures refer to investments in assets like buildings, infrastructure, or significant equipment.
- 3Generally, recovered funds should reduce the original capital expenditure amount, not be recorded as new income.
- 4The purpose is to accurately reflect the net cost incurred for a specific capital project.
- 5An exception applies if a particular department's specific allocation rules mandate treating such recoveries as revenue.
- 6This ensures consistency in financial reporting for government capital projects.
Practical Example
Imagine the Ministry of Housing and Urban Affairs is undertaking a major urban development project, 'Smart City Initiative - Phase III,' with an allocated budget of Rs. 1,500 crore under a Capital Major Head. During the land acquisition phase, the department initially paid Rs. 250 crore to acquire various parcels of land. Later, due to a redesign, a small portion of the acquired land, which cost Rs. 5 crore, is deemed surplus and successfully sold to a private developer.
According to Rule 102, the Rs. 5 crore received from selling the surplus land should not be recorded as new revenue for the Ministry. Instead, it must be taken as a reduction of the original expenditure under the 'Land Acquisition' sub-head of the 'Smart City Initiative - Phase III' Capital Major Head. This means the net expenditure for land acquisition for this project would now be shown as Rs. 245 crore (Rs. 250 crore - Rs. 5 crore), accurately reflecting the actual cost of land retained for the project.
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.