Rule 113 — GFR 2017
Original Rule Text
Rule 113
Projects jointly executed by several
State Governments. 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 other
participating
Governments
recovered
subsequently; such recoveries from other
Governments shall be exhibited as
abatement of charges under the relevant
expenditure Head of Account in the
books of the Governments incurring the
expenditure initially
What This Means
This rule explains how to handle money when several State Governments work together on a project and share the costs. Sometimes, one State Government might pay for the entire project upfront, even though other states are supposed to contribute their share. Later, this lead government recovers the money from the other participating states.
When the lead government receives these payments from the other states, it shouldn't treat this money as new income or revenue. Instead, it must record these recoveries as a reduction in its original spending for that specific project. This accounting method is called 'abatement of charges,' meaning the initial expenditure is effectively lowered by the amount recovered.
So, if your government is the one that initially paid for a joint project and then gets reimbursed by other states, you need to ensure these reimbursements are shown as a decrease in the project's cost, not as fresh earnings, in your financial records.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1This rule applies to projects jointly undertaken by multiple State Governments.
- 2Expenditure for such projects is shared among participating governments based on a prior agreement.
- 3One State Government may initially incur the entire project cost.
- 4The shares of other participating governments are recovered by the initial paying government at a later stage.
- 5These recoveries must be treated as a reduction of the original expenditure, known as 'abatement of charges'.
- 6The accounting adjustment is made under the relevant expenditure Head of Account in the books of the government that initially spent the money.
Practical Example
Imagine the States of Karnataka, Andhra Pradesh, and Telangana decide to jointly build a new interstate highway connecting their capitals. They agree to share the project cost in a 40:30:30 ratio, with Karnataka being the lead state responsible for initial payments.
For the first phase of construction, Karnataka incurs an expenditure of Rs. 500 crore. Later, it recovers Rs. 150 crore from Andhra Pradesh and Rs. 150 crore from Telangana, totaling Rs. 300 crore. According to Rule 113, Karnataka's finance department will not show this Rs. 300 crore as new income. Instead, they will reduce their original Rs. 500 crore expenditure for the highway project by Rs. 300 crore. This means Karnataka's net expenditure for that phase of the project will be recorded as Rs. 200 crore (Rs. 500 crore - Rs. 300 crore), reflecting its actual share.
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.