Rule 20 of the General Financial Rules 2017 Rule making for Remissions and Abandonments of Revenue
Original Rule Text
Visual Summary
Rule-Making Authority
Central Govt. Departments and Administrators are empowered to create rules.
Purpose of Rules
To define what qualifies as ‘remission’ or ‘abandonment’ of revenue.
Link to Rule 19
These definitions are created specifically for the reporting requirements of Rule 19.
Executive Summary
Rule 20 of the General Financial Rules, 2017, grants specific powers to Central Government Departments and Administrators. It allows them to create their own rules to clearly define what constitutes a ‘remission’ (forgiving a due amount) or an ‘abandonment’ (deciding not to collect a due amount) of revenue. This authority is provided to ensure that the annual financial statements on such matters, which are required under Rule 19, are consistent and accurate for each department’s specific context.
In-Depth Analysis of the Rule
Introduction
Rule 20 is a short but important procedural rule. It doesn’t deal with the act of forgiving revenue itself, but rather with the administrative process of defining what that forgiveness means for official records. It is a classic example of delegation of power, allowing for tailored financial management across the diverse departments of the government.
Breakdown of the Rule
The rule can be understood by looking at its key components:
- Who is empowered? The rule identifies two authorities: ‘Departments of the Central Government’ and ‘Administrators’. An ‘Administrator’, as defined in Rule 2(ii), is the Administrator of a Union Territory. This means that both central ministries and the leadership of Union Territories have this power.
- What is the power? The authority granted is to ‘make rules’. This allows these bodies to create subsidiary legislation or internal regulations without needing to amend the main General Financial Rules for every specific scenario.
- What are the rules about? The scope is very specific: ‘defining remissions and abandonments of revenue’. In simple terms:
– Remission of Revenue: Formally forgiving an amount of money that is legally due to the government.
– Abandonment of Revenue: A decision to stop pursuing the collection of a due amount, often because it is deemed irrecoverable. - What is the purpose? The rule explicitly states its purpose is ‘for the purpose of Rule 19 above’. Rule 19 requires these departments to submit annual statements showing all the revenue they have remitted or abandoned. Therefore, Rule 20 provides the necessary tool for these departments to create clear, consistent definitions, ensuring that the reports submitted under Rule 19 are accurate and meaningful.
Practical Example
Imagine the Department of Posts has many small, outstanding dues from money orders that were never claimed, and the cost of tracing the recipients is far more than the amounts themselves. The Department could use its power under Rule 20 to create a rule stating that ‘any unclaimed money order amount below Rs. 100 that has been outstanding for over 10 years shall be defined as an abandonment of revenue’. This clear definition allows them to accurately report these amounts in their annual statement required by Rule 19.
Conclusion
Rule 20 serves as a crucial link in the chain of financial accountability. By empowering departments and administrators to define terms relevant to their unique operations, it promotes clarity, consistency, and efficiency in the reporting of forgiven or uncollected government revenue, thereby strengthening the overall financial management system.
Related Provisions
Understanding Rule 20 is enhanced by looking at related provisions within the General Financial Rules, 2017. These rules provide the context and definitions necessary for its proper application.
- Rule 19: Annual Statements of Revenue Remission – This is the most direct link, as Rule 20 exists to serve the purpose of Rule 19. Rule 19 mandates the submission of annual statements detailing all remissions of revenue, and Rule 20 allows departments to define what gets included in these statements.
- Rule 18: Remission of Revenue – This rule establishes the fundamental principle that revenue cannot be remitted or abandoned without the sanction of a competent authority. Rule 20 builds on this by providing the mechanism to classify and report such actions once they are sanctioned.
- Rule 2: Definition – This rule is crucial as it defines key terms used throughout the GFR, including ‘Administrator’. Understanding this definition is essential to know who, besides Central Government Departments, is empowered by Rule 20.
Learning Aids
Mnemonics
- RADAR 20: Rule **20** gives **A**dministrators and **D**epartments **A**uthority for **R**evenue Rules.
- Think of **20/20 vision**: Rule 20 provides the clarity (20/20 vision) needed to define revenue forgiveness for the reports in Rule 19.
Mindmap
Multiple Choice Questions (MCQs)
1. According to Rule 20, which entities are authorized to make rules defining remissions and abandonments of revenue?
- A) Only the Ministry of Finance
- B) Departments of the Central Government and Administrators
- C) State Governments and Local Bodies
- D) The Comptroller and Auditor General of India
Show Answer
Correct Answer: B) Departments of the Central Government and Administrators.
2. What is the specific purpose for which rules are created under Rule 20?
- A) To set new tax rates for the financial year
- B) To authorize all government expenditure
- C) For the purpose of reporting remissions as required by Rule 19
- D) To define the process for auditing government accounts
Show Answer
Correct Answer: C) For the purpose of reporting remissions as required by Rule 19.
3. Rule 20 empowers ‘Administrators’ to make rules. Based on the definitions in the General Financial Rules, 2017, an ‘Administrator’ is primarily the head of which entity?
- A) A Public Sector Undertaking
- B) A Union Territory
- C) An autonomous body funded by the government
- D) A special committee within the Ministry of Finance
Show Answer
Correct Answer: B) A Union Territory. Rule 2(ii) defines ‘Administrator’ as the Administrator of a Union Territory.
Frequently Asked Questions
Does Rule 20 allow a department to forgive any amount of revenue it wants?
No. Rule 20 is not about the power to sanction the forgiveness of revenue. That power is governed by other rules, like Rule 18. Rule 20 is purely administrative; it grants the power to *define* what counts as a remission or abandonment for the purpose of accurate financial reporting under Rule 19.
Why is it necessary for each department to make its own rules? Why not have one central definition?
Different government departments handle very different types of revenue. For example, the Department of Revenue deals with large tax amounts, while the Department of Posts might deal with many small, miscellaneous fees. Allowing each department to create its own definitions provides the flexibility needed for their specific operational contexts, leading to more practical and accurate financial reporting.
Key Takeaways
- Central Government Departments and Administrators of Union Territories are empowered to create specific rules.
- These rules are for the sole purpose of defining what ‘remission’ and ‘abandonment’ of revenue mean.
- This power ensures that the annual financial reports required under Rule 19 are clear, consistent, and relevant to each department’s functions.
- It is a rule about administrative clarity, not about the authority to forgive revenue.