Rule 30 of the General Financial Rules 2017 Lapse of Sanctions
Original Rule Text
Visual Summary
12-Month Rule
An approval for new spending expires if no payment is made within 12 months.
Specified Period
If the approval letter states a specific duration, it expires then, overriding the 12-month rule.
Financial Year Limit
If an approval is tied to a specific budget year, it expires at the end of that financial year (March 31st).
Purchase Exception
For buying goods, the approval doesn’t expire if a tender is accepted or an order is placed within one year.
Executive Summary
This rule establishes a ‘use it or lose it’ policy for government financial approvals, known as sanctions. Generally, a sanction for any new expenditure expires if no payment, not even a partial one, is made within twelve months from its issue date. However, there are key exceptions: if the sanction specifies a different validity period or is tied to a particular financial year’s budget, it will lapse accordingly. A crucial exception exists for the purchase of goods (stores), where the sanction remains valid if the procurement process (like accepting a tender or placing an order) has started within the one-year period, even if the actual payment happens later.
In-Depth Analysis of the Rule
Introduction
Rule 30 of the General Financial Rules, 2017, is a cornerstone of financial discipline within the government. It sets clear timelines for the validity of a ‘sanction,’ which is the formal approval given by a competent authority to incur expenditure. This rule prevents government departments from holding onto indefinite approvals, which could create financial uncertainty and complicate budget management. It ensures that funds are utilized in a timely manner or are surrendered for other purposes.
Breakdown of the Rule
The rule can be broken down into a general principle and three specific exceptions (provisos):
- The General 12-Month Lapse Rule: The core of Rule 30 states that a sanction for a ‘fresh charge’ (any new expenditure) will automatically become invalid or ‘lapse’ if no payment, either in full or in part, is made within twelve months of its issue date. This means a department cannot sit on an approval for more than a year without acting on it. Even a small initial payment keeps the sanction alive.
- Exception 1: Specified Validity Period: The first proviso clarifies that if the sanction order itself or the department’s internal regulations specify a particular period of validity (e.g., ‘valid for six months’), that period overrides the general 12-month rule. The sanction will lapse at the end of that specified period.
- Exception 2: Financial Year Limitation: The second proviso deals with sanctions linked to a specific budget. If a sanction explicitly states that the expenditure is to be met from the budget of a particular financial year (e.g., 2024-2025), it will lapse at the close of that financial year (i.e., on March 31st), regardless of its issue date. This prevents funds allocated for one year from being used in another.
- Exception 3: The Procurement Lifeline: The third proviso provides a practical exception for the purchase of goods (‘stores’). It recognizes that procurement can be a lengthy process. Therefore, a sanction for purchasing stores will not lapse if, within the one-year period, a tender has been accepted or an official order (indent) has been placed with a central purchasing body. This keeps the financial approval valid to allow for the manufacturing, delivery, and subsequent payment for the goods, which might occur after the initial 12-month period has passed.
Practical Example
Imagine the Department of Education gets a sanction on May 1, 2024, for ₹10 lakhs to buy new laboratory equipment.
- Scenario A (General Rule): If the department takes no action, the sanction will automatically lapse on May 1, 2025. They can no longer use this approval to buy the equipment.
- Scenario B (Exception 2): If the sanction letter explicitly stated, ‘Expenditure to be met from the budget of FY 2024-25’, the sanction would lapse on March 31, 2025, even though 12 months have not passed.
- Scenario C (Exception 3): The department floats a tender and accepts a bid from a supplier on March 1, 2025 (within the one-year window). The equipment is delivered and payment is made on June 15, 2025. The payment is valid because the sanction was kept alive by the acceptance of the tender.
Conclusion
Rule 30 is a critical control mechanism that promotes efficient financial management. By setting clear expiry dates for sanctions, it ensures that public funds are used for their intended purposes in a timely fashion, preventing the accumulation of dormant financial commitments and enhancing budgetary predictability.
Related Provisions
Understanding Rule 30 is enhanced by looking at related provisions that define its scope and exceptions:
- Rule 31: Exceptions to Lapse of Sanctions – This rule provides specific exceptions to Rule 30, detailing certain types of sanctions (like those for permanent staff additions or ongoing allowances) that do not lapse, even if payment is delayed.
- Rule 29: Procedure for communication of sanctions – This rule explains how sanctions are officially communicated to audit and accounts officers. This is important as the ‘date of issue’ mentioned in Rule 30 is established through this formal communication.
- Rule 27: Date of effect of sanction – This rule determines the exact date from which a sanction becomes effective, which is the starting point for the 12-month countdown for its potential lapse under Rule 30.
Learning Aids
Mnemonics
- LAPSE: Limited Approval Period Stops Expenditure. This helps remember that a sanction is not indefinite and has a time limit.
- The 12-Month Clock: Imagine a clock starts ticking the moment a sanction is issued. If no payment is made before the clock completes a full circle (12 months), the sanction expires. Exceptions are like having a different alarm set (e.g., financial year-end) or pausing the clock (by placing a purchase order).
Mindmap
Multiple Choice Questions (MCQs)
1. [Easy] What is the general period after which a sanction for a fresh charge lapses if no payment has been made?
- A) 6 months
- B) 12 months
- C) 18 months
- D) 24 months
Show Answer
Correct Answer: B) 12 months. The rule states that a sanction lapses if no payment is made during a period of twelve months from its date of issue.
2. [Medium] A sanction is issued on August 10, 2023, with a specific provision that the expenditure must be met from the Budget provision of the financial year 2023-24. When will this sanction lapse?
- A) August 10, 2024
- B) December 31, 2023
- C) March 31, 2024
- D) It will not lapse until the payment is made.
Show Answer
Correct Answer: C) March 31, 2024. According to proviso (ii), when a sanction is tied to a specific financial year, it lapses at the close of that financial year, which is March 31st.
3. [Hard] A department receives a sanction on June 1, 2023, to purchase new furniture. They accept a tender from a vendor on May 15, 2024. The furniture is delivered and payment is made on August 1, 2024. Which statement is correct?
- A) The payment is invalid because it was made more than 12 months after the sanction date.
- B) The sanction lapsed on March 31, 2024, as per the financial year rule.
- C) The payment is valid because the tender was accepted within the one-year validity period of the sanction.
- D) The payment is invalid because the sanction should have been specifically renewed after one year.
Show Answer
Correct Answer: C) The payment is valid because the tender was accepted within the one-year validity period of the sanction. Proviso (iii) explicitly states that for the purchase of stores, a sanction does not lapse if tenders have been accepted within the one-year period, even if payment occurs later.
Frequently Asked Questions
What does ‘lapse of sanction’ mean in simple terms?
It means that the official permission to spend money has expired. If a department gets approval to spend money but doesn’t make any payment within a certain timeframe (usually 12 months), they lose that approval and cannot spend the money without getting a new sanction.
If I only pay a small part of the total amount, does the sanction still stay alive?
Yes. The rule states that the sanction lapses if ‘no payment in whole or in part’ has been made. This means that making even a partial payment within the 12-month period is enough to keep the entire sanction valid beyond that period, until the full amount is paid as per the project timeline.
Does this rule apply to recurring expenses like monthly salaries?
Rule 30 applies to a ‘fresh charge,’ meaning new, specific expenditures. Regular, recurring expenses like salaries are typically covered under different, ongoing budgetary provisions and are not considered ‘fresh charges’ in this context. Furthermore, Rule 31 provides specific exemptions for things like allowances and additions to permanent staff, which do not lapse.
Key Takeaways
- A government approval to spend money (a sanction) generally expires in 12 months if it’s not used at all.
- If an approval is tied to a specific budget year, it ends with that financial year on March 31st.
- For purchases, starting the buying process (like accepting a tender) within the year keeps the approval valid for payment later.
- Always check if a sanction letter has a specific, shorter expiry date mentioned in it, as that will be the binding deadline.