Para 2.2.14 — MSO (Audit)
Original Rule Text
2.2.14 Under the provisions of Articles 114 to 116 of the Constitution in the case of the Union, Articles 204 to 206 in the case of a State, and Sections 29 to 31 of the
Government of Union Territories Act, 1963, in the case of a Union Territory having a Legislature, no expenditure can be met from the respective Consolidated Fund on or after 1st April of a financial year unless an Annual Budget (Annual Financial Statement of Estimated Receipts and Expenditure) is prepared and an Appropriation Act authorising withdrawal of funds from the Consolidated Fund to the extent of provisions in the Annual Budget is passed in accordance with the provisions of Article 114 or 204 of the Constitution or Section 29 of the said Act, as the case may be. All disbursements from the Consolidated Fund during a financial year, which are not within the sums authorised by an Appropriation Act passed by the appropriate Legislature before the close of the year, will therefore be challenged by Audit as unauthorised expenditure under the provisions of Section 13
(a) of the Comptroller and Auditor General's (Duties, Power and Conditions of Service) Act, 1971, until regularised by an Appropriation Act. Under Article 267 of the Constitution/Section 48 of the Government of Union Territories Act 1963, advances from Contingency Fund of India or of a State or of a Union Territory can be drawn for meeting unforeseen expenditure pending authorisation of such expenditure by the Parliament/Legislature concerned. On such authorisation the advances drawn will be recouped to the Contingency Fund.
Note: If the Annual Budget for the ensuing year is not likely to be passed by the concerned Legislature before 31st March, it becomes necessary for the Central or the State or Union Territory Government, as the case may be, to obtain a ‘Vote on Account’ from the Parliament/Legislature authorising the incurring of expenditure for the initial part of the financial year pending passing of the budget for that year. The ‘Vote on Account’ is intended to enable the Government to carry on its functions and activities till such time as the budget for the whole year is passed. The expenditure incurred on the authority of the ‘Vote on Account’ is subsequently adjusted against the regular budget and the ‘Vote on Account’ becomes non-operational when the budget is passed. This authority cannot, however, be invoked for expenditure on a new service.
What This Means
No government expenditure can be incurred from the Consolidated Fund from April 1 of any financial year unless the Annual Budget has been prepared and an Appropriation Act authorizing withdrawals has been passed. Any spending without such authorization is challenged by audit as unauthorized expenditure under Section 13(a) of the CAG DPC Act until it is later regularized. If the budget is likely to be delayed, the government can obtain a 'Vote on Account' to continue essential functions, or draw advances from the Contingency Fund for unforeseen spending pending legislative authorization.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Annual Budget and Appropriation Act must be passed before spending from April 1
- 2Unauthorized expenditure is challenged by audit under Section 13(a) of the CAG DPC Act
- 3'Vote on Account' allows interim spending when the full budget is delayed
- 4Contingency Fund can be used for unforeseen expenditure pending legislative authorization
- 5Vote on Account cannot be used for expenditure on new services
Practical Example
In a state, elections cause the budget session to be delayed beyond March 31. The state government obtains a Vote on Account from the Legislature authorizing spending for the first two months (April-May) to pay salaries and maintain ongoing schemes. When a cyclone strikes in April, the government draws Rs 100 crore from the Contingency Fund for immediate relief, which will be recouped once the Legislature authorizes the supplementary expenditure.
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 a Vote on Account?▼
What is the Contingency Fund used for?▼
What happens if money is spent without an Appropriation Act?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.