Rule 47 - Dividend Payments
Original Rule Text
Rule 47 item wise break-up of all major items of tax and non-tax revenues are clearly identified and depicted in the receipt estimates. This is required to highlight all individual items of significance. Any major variation in estimates with reference to past actuals or/and Budget Estimates shall be supported by cogent reasons. The accounting heads under which major tax and non-tax revenues are collected shall be prescribed by the administrative Ministry in consultation with the Budget Division in the Finance Ministry. Non-Tax Revenues. While the tax revenues, non- debt capital receipts including disinvestments and borrowings are managed by the various Departments of the Ministry of Finance, the non-tax revenues are collected through all Ministries/Departments and other autonomous bodies and implementing agencies and comprise an important source of revenue for the Government. User Charges. ‘User Charges’ is an important component of the non-tax revenues. Each Ministry/Department may undertake an exercise to identify the ‘user charges’ levied by it and publish the same on its website.
(i) While fixing the rates of user charges, the Ministries/Departments must ensure that the user charges recover the current cost of providing services with reasonable return on capital investment.
(ii) Any deviation from these principles shall be specifically recorded with reasons justifying the setting of user charges lower than the cost recovery norms, if any.
(iii) The rates of user charges should be linked with appropriate price indices and reviewed at least every three years.
(iv) In order to enable ease of revision of user charges, the rate of user charges shall be fixed, wherever possible through Rules or executive orders and not through a statute.
What This Means
Rule 47 of the General Financial Rules (GFR) 2017 focuses on the timely payment of dividends and profits by government-owned or controlled entities. Essentially, it states that once a decision to distribute dividends is made at the Annual General Meeting (AGM), the payment should not be delayed and must be made promptly. This rule applies to all Ministries and Departments that oversee Public Sector Undertakings (PSUs) or other entities generating profits that are to be shared with the government. The Department of Investment and Public Asset Management (DIPAM) provides specific guidelines on how these dividend payments should be handled.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Dividends must be paid promptly after the AGM decision.
- 2Ministries/Departments are responsible for monitoring timely dividend payments.
- 3Dividend payments must adhere to DIPAM guidelines.
- 4The rule aims to ensure efficient transfer of profits to the government.
- 5Applies to all Ministries/Departments overseeing profit-generating government entities.
Practical Example
The Ministry of Steel oversees SteelCorp, a PSU that had a profitable year. At SteelCorp's AGM in June 2024, a dividend of ₹500 crore was approved to be paid to the government. According to Rule 47, the Ministry of Steel must ensure that SteelCorp transfers this ₹500 crore dividend to the government account without undue delay. The Ministry's Finance Division will monitor SteelCorp's payment schedule and ensure it aligns with DIPAM guidelines, preventing any unnecessary delays and ensuring the funds are promptly credited to the 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 PSU delays dividend payment?▼
Where can I find the specific DIPAM guidelines mentioned in Rule 47?▼
Does Rule 47 apply to all government-owned companies?▼
What is the role of the Financial Advisor in the Ministry/Department regarding Rule 47?▼
What is the consequence of not following Rule 47?▼
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 47 of the General Financial Rules, 2017, what is the required timeframe for paying dividends after the decision is taken in the Annual General Meeting (AGM)?