Rule 117 - State Transactions | KartavyaDesk
Original Rule Text
therefore, be made to settle as far as possible all transactions with State Governments before the close of the year. Rule 118 Adjustments with foreign Governments, outside bodies, etc. Unless exempted by Government by general or special orders, services shall not be rendered to any foreign Government or non-Government body or institution or to a separate fund constituted as such except on payment. Rule 119 Recoveries of expenditure for services rendered to non-Government parties. Recoveries of expenditure for services rendered or supplies made to nonGovernment parties or other Governments (including local funds and Governments outside India), shall in all cases, be classified as receipts of the Government rendering such services. Rule 120 Recoveries of expenditure for services rendered as an agent. When a Government undertakes a service merely as an agent of a private body, the entire cost of the service shall be recovered from that body so that the net cost to Government is nil. The recoveries shall be taken as reduction of expenditure. Explanation: The term ‘recovery’ is used in these rules to denote repayment of, or payment by non-Government parties or other Governments towards charges initially incurred and classified by a Central Government Department in the account, as final expenditure by debit to a Revenue or Capital Head of Account. Recoveries towards establishment charges, tools and plants, fees for procurement of inspection of stores or both etc., effected at percentage rates or otherwise, are some examples. Rule 121 Payments to outside body or fund to be through grant-in-aid. Any relief in respect of payment for services rendered or supplies made to any outside body or fund shall ordinarily be given through a grant-in-aid rather than by remission of dues. Rule 122 Charges relating to the maintenance and demarcations and disputes over boundaries. The incidence of charges relating to the maintenance and demarcations and disputes over boundaries between India and a foreigncountry is regulated by the following principles; (i) Maintenance – Half the maintenance charges will be
What This Means
Rule 117 of the General Financial Rules (GFR) 2017, along with Rules 118-122, deals with financial transactions involving entities outside the central government. Rule 117 specifically mandates that all financial dealings with State Governments should be settled as quickly as possible, ideally before the end of the fiscal year. This ensures accurate accounting and avoids discrepancies between the central and state government books. The subsequent rules then cover adjustments with foreign governments, non-government bodies, and the recovery of expenditure for services rendered to these external parties.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- •Transactions with State Governments should be settled before the close of the financial year.
- •Services to foreign governments or non-government bodies require payment unless specifically exempted.
- •Recoveries for services rendered to non-government parties are classified as government receipts.
- •When acting as an agent for a private body, the entire cost of the service must be recovered.
- •Relief for services to outside bodies is usually given through grants-in-aid, not remission of dues.
Practical Example
The Ministry of Agriculture provides technical assistance to the State Government of Maharashtra for implementing a new irrigation project. According to Rule 117, the Ministry should ensure that all financial transactions related to this assistance, including reimbursement of expenses and payment for expert services, are settled with the Maharashtra government before March 31st of the financial year. Similarly, if the Ministry provides consultancy services to a private agricultural company, 'AgriSolutions Ltd.', Rule 119 dictates that any fees received for these services must be classified as receipts of the Central Government.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What happens if a transaction with a State Government cannot be settled before the end of the financial year?▼
Does Rule 119 apply to services provided to Public Sector Undertakings (PSUs)?▼
What is the difference between 'remission of dues' and 'grant-in-aid' as mentioned in Rule 121?▼
If the Central Government provides training to employees of a foreign NGO, does Rule 118 apply?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Test Your Knowledge
Question 1 of 3
As per Rule 117 of GFR 2017, what is the stipulated timeframe for settling transactions between the Central Government and State Governments?
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