Para 3.17.21 — MSO (Audit)
Original Rule Text
3.17.21 The items, which qualify or do not qualify for reimbursement are as follows:
(i) Amount recovered towards security deposit (SD) is not eligible. However, release of SD to the agencies is claimable.
(ii) Secured advance paid on material is not reimbursable.
(iii) Mobilisation advance paid to the agency is reimbursable.
(iv) Income tax/sales tax recovered from contractor is claimable for civil work but not for supplies.
(v) Foreign exchange freight charges are eligible for reimbursement.
(vi) Local transportation charges are not reimbursable.
(vii) Insurance premiums paid in foreign exchange are eligible for Bank financing; self insurance and premium paid in local currency are ineligible unless explicitly provided in the loan agreement.
(viii) The Bank does not finance custom duties and other taxes imposed by borrowing country.
(ix) All payment to consultants are made in accordance with contract provisions which normally specify currencies and mode of payment.
(x) Income tax and other duties paid to the consultant are not reimbursable unless specifically provided in the contract.
What This Means
This rule provides a detailed list of what can and cannot be reimbursed from World Bank loans. For example, mobilisation advances and foreign exchange freight are reimbursable, but security deposits, secured advances on materials, local transport charges, and customs duties are generally not eligible. Tax treatment differs between civil works and supply contracts.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Security deposit recoveries are not eligible; their release to agencies is claimable
- 2Secured advances on materials are not reimbursable; mobilisation advances are
- 3Income tax/sales tax from contractors: claimable for civil works, not for supplies
- 4Foreign exchange freight is eligible; local transportation is not
- 5Insurance premiums in foreign exchange are eligible; local currency premiums generally are not
- 6Custom duties and local taxes imposed by borrower country are not Bank-financed
- 7Consultant payments follow contract provisions; their income tax is generally not reimbursable
Practical Example
A project implementing agency submits a reimbursement claim to the World Bank that includes Rs. 50 lakh in custom duties paid on imported equipment and Rs. 10 lakh in local transportation charges. The auditor disallows both items from the SOE, as neither customs duties nor local transport are eligible for Bank reimbursement, saving the government from a rejected claim.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Why is mobilisation advance reimbursable but secured advance is not?▼
Can self-insurance costs ever be reimbursed?▼
How are consultant payments handled differently?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.