Rule 119 — This rule explains how government departments shou
Original Rule Text
Rule 119 Recoveries of expenditure for services rendered to non-Government parties. Recoveries of expenditure for services rendered or supplies made to non- Government 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.
What This Means
This rule explains how government departments should account for money they receive when they provide services or supplies to external parties. If your government department offers a service or provides goods to anyone who isn't part of your own specific government – this includes private companies, individuals, other state governments, local bodies like municipalities, or even foreign governments – then any money you get back for those services or supplies must be treated as official income for your government.
Essentially, if you spend money to provide a service or supply something to an outside entity and then recover that cost, that recovered money doesn't just go back into a general pool or get netted off against your expenses. Instead, it must be formally recorded as a 'receipt' or income for the government department that provided the service. This ensures proper accounting and transparency for all such transactions, making it clear that these funds are revenue for the government.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Any money recovered by a government department for services or supplies provided to external parties must be classified as official government income.
- 2This rule applies when services or supplies are rendered to private individuals, companies, other state governments, local funds, or even governments outside India.
- 3The recovered funds are not to be offset against expenditure but are to be recorded as distinct receipts for the government.
- 4The primary goal is to ensure clear and transparent accounting of all revenue generated from such activities.
- 5It mandates that the government department rendering the service is the one whose receipts account for the recovery.
Practical Example
Imagine the 'Department of Urban Planning and Infrastructure' in a state government has specialized equipment and expertise for soil testing and structural analysis. A private real estate developer, 'MegaBuild Constructions Pvt. Ltd.', approaches the department to conduct a detailed soil stability test for a new high-rise project. The department agrees to provide this service for a fee of ₹5,00,000, which covers their operational costs, staff time, and equipment usage.
According to Rule 119, when MegaBuild Constructions Pvt. Ltd. pays the ₹5,00,000 for the soil testing service, this amount must not be treated merely as a reimbursement or a reduction in the department's expenses. Instead, the Department of Urban Planning and Infrastructure must formally classify and record this ₹5,00,000 as a 'receipt' or income for the state government. This ensures that the government's financial records accurately reflect the revenue generated from providing services to non-government entities.
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.