Rule 127 - Inter-Departmental Payments | KartavyaDesk
Original Rule Text
Rule 127 payments. For purposes of interDepartmental payments, the Departments of a Government shall be divided into service Departments and commercial departments according to the following principles: - (i) Service Departments-These are constituted for the discharge of those functions which either - (a) Are inseparable from and form part of the idea of Government e.g. Departments of Administration of Justice, Jails, Police, Education, Medical, Public Health, Forest, Defence; or (b) Are necessary to, and form part of, the general conduct of the business of Government e.g. Departments of Survey, Government Printing, Stationery, Public Works (Building and Roads Branch), Central Purchase Organisation (DirectorGeneral of Supplies and Disposals, New Delhi). (ii) Commercial Departments or Undertakings.- These are established mainly for the purposes of rendering services or providing supplies, of certain special kinds, on payment for the services rendered or for the articles supplied. They perform functions, which are not necessarily governmental functions. They are required to work to a financial result determined through accounts maintained on commercial principles. Period for preferment of claims. All claims shall ordinarily be preferred between Departments, both commercial and non-commercial of the Central Government, within the same financial year and not beyond three years from the date of transaction. This limitation, however, may be waived in specific cases by mutual agreement between the departments concerned. Procedure for settlement of interdepartmental adjustments. The settlement of inter- departmental adjustments shall be regulated by the directions contained in Chapter 4 of Government Accounting Rules, 1990.
What This Means
The rule also sets a time limit for claiming payments between departments. Generally, claims should be made within the same financial year the transaction occurred and no later than three years from the transaction date. However, departments can mutually agree to waive this limitation in specific cases. Finally, the rule refers to Chapter 4 of the Government Accounting Rules, 1990, for the detailed procedure on settling these inter-departmental adjustments. This ensures that all financial transactions between government entities are properly accounted for and follow established accounting principles.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- •Divides government departments into 'Service' and 'Commercial' categories.
- •Service departments perform core or supporting government functions.
- •Commercial departments operate like businesses, providing services/goods for payment.
- •Claims between departments should be made within the same financial year and no later than three years from the transaction date.
- •Inter-departmental adjustments are governed by Chapter 4 of the Government Accounting Rules, 1990.
Practical Example
The Department of Education (a service department) needs 5,000 textbooks printed by the Government Printing Press (a commercial department). The Printing Press charges the Education Department ₹5,00,000 for the printing services. According to Rule 127, the Education Department should ideally process the payment to the Printing Press within the same financial year. If, due to unforeseen circumstances, the payment is delayed, the claim must be made within three years of the printing service being provided. If the Education Department fails to make the claim within three years, the Printing Press can only receive payment if both departments mutually agree to waive the limitation period. The actual accounting entries for this transaction would then follow the procedures outlined in Chapter 4 of the Government Accounting Rules, 1990.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What is the difference between a service department and a commercial department?▼
What happens if a department fails to claim payment within the three-year limit?▼
Where can I find the detailed procedure for settling inter-departmental adjustments?▼
Does Rule 127 apply to all government departments?▼
What is the purpose of classifying departments into service and commercial categories under Rule 127?▼
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
According to Rule 127 of the General Financial Rules, 2017, which of the following departments would be classified as a 'Service Department'?
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