Rule 46 of the General Financial Rules 2017 Non-Tax Revenues
Original Rule Text
Visual Summary
Finance Ministry’s Role
Manages taxes, borrowings, and disinvestments.
All Departments’ Duty
All other ministries and bodies collect non-tax revenues.
Important Revenue
Non-tax revenues are a significant source of income for the government.
Executive Summary
This rule clarifies how the government’s income is collected. It states that while the Ministry of Finance is responsible for managing major financial sources like taxes, borrowings, and disinvestments, all other government ministries, departments, and autonomous bodies are responsible for collecting ‘non-tax revenues’. These non-tax revenues, which include things like fees for services, fines, and profits from public companies, are a very important source of income for the government.
In-Depth Analysis of the Rule
Introduction
Rule 46 of the General Financial Rules, 2017, establishes a clear division of responsibility for collecting the government’s revenue. It distinguishes between revenues managed centrally by the financial experts at the Ministry of Finance and other types of revenue that are collected across the entire spectrum of government operations.
Breakdown of Responsibilities
The rule essentially creates two categories of revenue management:
- Managed by the Ministry of Finance: This category includes the primary sources of government funds that require specialized financial management. These are:
- Tax Revenues (e.g., income tax, GST)
- Non-debt capital receipts (e.g., recovery of loans)
- Disinvestments (selling government shares in public sector companies)
- Borrowings (raising loans from domestic or international markets)
- Collected by All Ministries/Departments: This category is ‘Non-Tax Revenues’. The rule mandates that the collection of this income is a decentralized responsibility, shared by all ministries, departments, autonomous bodies, and implementing agencies. This is because these revenues are often generated as a direct result of the specific services these bodies provide. Examples include:
- Fees for services (e.g., passport fees, license fees)
- Fines and penalties
- Dividends and profits from public sector enterprises
- Charges for government-provided facilities (e.g., user charges for highways)
The rule highlights that this second category is an ‘important source of revenue’, emphasizing that financial contribution to the government’s treasury is a shared duty across the administration, not just the job of the Finance Ministry.
Practical Example
Imagine you need to get a new passport. You apply through the Ministry of External Affairs and pay a fee. That fee is not a tax. According to Rule 46, the Ministry of External Affairs is responsible for collecting this fee. This money is classified as non-tax revenue and contributes to the government’s overall income, which is then used for public services.
Conclusion
Rule 46 provides a simple but crucial framework for revenue collection. It centralizes the management of complex financial instruments like taxes and borrowings with the Ministry of Finance while distributing the responsibility of collecting service-related and other non-tax income to the respective departments that generate it. This ensures efficient collection and acknowledges the vital role that all parts of the government play in funding the nation’s activities.
Related Provisions
Understanding Rule 46 is enhanced by looking at related rules that detail specific aspects of revenue collection and estimation:
- Rule 45: Receipt Estimates – This rule explains how estimates for all government receipts, including both tax and non-tax revenues, are prepared. It provides the procedural backbone for forecasting the income mentioned in Rule 46.
- Rule 47: User Charges – This rule delves into a specific and significant component of non-tax revenue. It provides principles for fixing charges for government services, which are collected by various ministries as per Rule 46.
- Rule 48: Dividends and Profits – This rule details another major source of non-tax revenue, focusing on the income the government receives from its investments in public sector enterprises.
Learning Aids
Mnemonics
- ‘FINANCE for BIG, ALL for SMALL’: Remember that the Ministry of **FINANCE** handles the **B**orrowings, **I**nvestments, and **G**overnment Taxes, while **ALL** other departments collect the ‘smaller’ (but still important) non-tax revenues.
Mindmap
Multiple Choice Questions (MCQs)
1. According to Rule 46, which entity is primarily responsible for managing tax revenues, disinvestments, and borrowings?
- A) All Ministries and Departments collectively
- B) The Reserve Bank of India
- C) The various Departments of the Ministry of Finance
- D) Autonomous bodies and implementing agencies
Show Answer
Correct Answer: C) The various Departments of the Ministry of Finance.
2. Who is responsible for the collection of non-tax revenues as per Rule 46?
- A) Only the Ministry of Finance
- B) Only autonomous bodies
- C) All Ministries, Departments, autonomous bodies, and implementing agencies
- D) Only State Governments
Show Answer
Correct Answer: C) All Ministries, Departments, autonomous bodies, and implementing agencies.
3. What is the key implication of the division of responsibilities outlined in Rule 46?
- A) The Ministry of Finance is the only body that generates revenue for the government.
- B) Non-tax revenues are less important than tax revenues.
- C) Revenue collection is a decentralized and shared responsibility across all government bodies, not just the Finance Ministry.
- D) Autonomous bodies are exempt from collecting any form of government revenue.
Show Answer
Correct Answer: C) Revenue collection is a decentralized and shared responsibility across all government bodies, not just the Finance Ministry.
Frequently Asked Questions
What is ‘non-tax revenue’ in simple terms?
Non-tax revenue is income the government earns from sources other than taxes. This includes fees for services (like passport fees), fines, profits from government-owned companies, and charges for using public facilities.
Why isn’t all revenue collected by the Ministry of Finance?
It’s more efficient for the departments providing a service to collect the related fees. The Ministry of Finance focuses on the complex, large-scale financial activities like managing the national tax system and government borrowings, while other departments handle the revenue they generate directly from their day-to-day operations.
How important is non-tax revenue?
Rule 46 explicitly states that non-tax revenue is an ‘important source of revenue for the Government.’ It complements tax collections and helps fund a wide range of public services and development projects.
Key Takeaways
- The Ministry of Finance is responsible for managing major financial streams like taxes and government loans.
- All other government ministries and bodies are responsible for collecting income from non-tax sources.
- This division of labor ensures efficient revenue collection across the entire government.
- Non-tax revenues are a crucial part of the government’s total income.