KartavyaDesk

Rule 172 - Advance Payments | KartavyaDesk

GFR 2017

Original Rule Text

Undertaking; or (c) in case of maintenance contract, the amount should not exceed the amount payable for six months under the contract. Ministries or Departments of the Central Government may relax, in consultation with their Financial Advisers concerned, the ceilings (including percentage laid down for advance payment for private firms) mentioned above. While making any advance payment as above, adequate safeguards in the form of bank guarantee etc. should be obtained from the firm.

What This Means

Rule 172 of the General Financial Rules (GFR), 2017, deals with advance payments to suppliers. Essentially, it sets limits on how much money can be given to a supplier *before* they've fully delivered goods or services. This rule is designed to protect government funds and ensure that work is completed as agreed. The rule specifies that advance payments should be limited to certain percentages of the contract value, or in the case of maintenance contracts, to a maximum of six months' worth of payments. These limits apply to all central government ministries and departments.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

  • •Rule 172 governs advance payments to suppliers.
  • •Advance payments are capped based on contract type and value.
  • •Ministries can relax these limits with the Financial Advisor's consultation.
  • •Adequate safeguards like bank guarantees are required for advance payments.
  • •The rule aims to protect government funds and ensure contract performance.

Practical Example

The Ministry of Agriculture wants to procure 100 tractors from 'FarmTech Solutions' for a total cost of ₹50,00,000. According to Rule 172, the ministry can make an advance payment, but it should not exceed the percentage specified in the rulebook (let's assume it's 30%). Therefore, the maximum advance payment without consultation would be ₹15,00,000. To make this advance payment, the ministry must obtain a bank guarantee from FarmTech Solutions for the same amount, ensuring that the government's money is protected if FarmTech fails to deliver the tractors as agreed. If the ministry needs to pay a higher advance, they must consult with their Financial Advisor.

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 purpose of Rule 172?▼
Rule 172 aims to regulate advance payments to suppliers, ensuring government funds are protected and work is completed as per the contract.
Can the limits on advance payments be relaxed?▼
Yes, ministries can relax the limits on advance payments after consulting with their Financial Advisor.
What kind of safeguards are required for advance payments?▼
Adequate safeguards, such as bank guarantees, are required to protect government funds when making advance payments.
Does Rule 172 apply to all types of contracts?▼
Yes, Rule 172 applies to all types of contracts where advance payments are being considered, including maintenance contracts.
What happens if a supplier fails to deliver after receiving an advance payment?▼
The bank guarantee obtained from the supplier can be invoked to recover the advance payment, protecting the government's financial interests.

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 172 of GFR 2017, what is the maximum advance payment permissible for a maintenance contract?

Related Rules

Rule 271General Financial Rules 2017 (amended July 2024) - Rule 271 - Chapter 10Rule 109General Financial Rules 2017 (amended July 2024) - Rule 109Rule 146General Financial Rules 2017 (amended July 2024) - Rule 146 - Chapter 6Rule 169General Financial Rules 2017 (amended July 2024) - Rule 169 - Chapter 6Rule 215General Financial Rules 2017 (amended July 2024) - Rule 215 - Chapter 6

Need help understanding this rule?

Ask Niti — your AI assistant for GFR 2017 and other government rules