Rule 42 of the General Financial Rules 2017 Financial Year

Rule 42 of the General Financial Rules 2017 Financial Year

Visual Summary

Executive Summary

This rule establishes the official financial year for the Government of India. It clearly states that the financial year starts on April 1st and ends on March 31st of the following year. This 12-month period is the basis for all government budgeting, accounting, and financial reporting.

In-Depth Analysis of the Rule

Introduction
Rule 42 of the General Financial Rules, 2017, provides a simple but fundamental definition: the Government’s financial year. This rule is the cornerstone of the entire financial management system of the country, as it sets the official time frame for all fiscal activities, from budget creation to the final accounting of public money.

Breakdown of the Rule
The rule has two key components:
1. Commencement Date: The financial year ‘shall commence on the 1st day of April of each year’. This means that every new financial cycle for the government begins on April 1st. This is different from the standard calendar year, which starts on January 1st.
2. End Date: The financial year ‘shall end on the 31st day of March of the following year’. This completes the 12-month cycle. The use of ‘following year’ is crucial; it clarifies that the financial year spans across two calendar years.

Practical Example
Let’s consider the financial year 2024-2025. According to Rule 42:
– It begins on April 1, 2024.
– It ends on March 31, 2025.
All government revenue collected, and all expenditure incurred between these two dates will be accounted for under the financial year 2024-2025. The annual budget presented in Parliament before this period would outline the financial plans for this specific timeframe.

Conclusion
Rule 42 provides the essential temporal framework for India’s public finances. By defining a consistent and uniform financial year, it ensures that all government departments and agencies operate on the same fiscal calendar, allowing for standardized budgeting, transparent accounting, and effective financial oversight.

Related Provisions

Understanding the financial year is crucial as it connects to several other rules concerning budgeting and accounting. Key related provisions include:

• Rule 43: Presentation of Budget to Parliament – This rule is a direct consequence of Rule 42, as the Annual Financial Statement (Budget) is prepared for the specific financial year defined here.
• Rule 75: Period of Accounts – This rule reinforces Rule 42 by stating that the annual accounts of the Central Government record transactions that take place during the financial year running from 1st April to 31st March.
• Rule 2(xiv): Definition – This sub-rule provides the formal definition of ‘Financial Year’ within the GFR, mirroring the text of Rule 42.

Learning Aids

Mnemonics

• Remember the rhyme: “April’s start, March’s end, is the government’s financial trend.” This helps recall the start and end months of the financial year.

Mindmap

Multiple Choice Questions (MCQs)

Frequently Asked Questions

Key Takeaways

• The Government of India’s financial year always starts on April 1st.
• It always ends on March 31st of the next calendar year.
• This 12-month period is the foundation for all government budgeting and accounting.