Rule 8 of the General Financial Rules 2017 Handling of Moneys Received Other Than Revenues

Rule 8 of the General Financial Rules 2017 Handling of Moneys Received Other Than Revenues

Visual Summary

Executive Summary

This rule clarifies how government officers should handle money they receive that isn’t government revenue, like taxes. It states that such funds, including security deposits or money deposited in certain courts, must be placed in a special account called the ‘Public Account’. The detailed procedures for managing this account—how to deposit money into it and how to withdraw from it—are governed by other specific financial regulations, not this rule itself.

In-Depth Analysis of the Rule

Introduction
Rule 8 of the General Financial Rules, 2017, provides a crucial distinction in how the government handles different types of money. While most rules focus on government income (revenue) and spending, this rule addresses money that the government holds in trust for others. It ensures that such funds are kept separate and are managed with strict accountability.

Breakdown of the Rule
Sub-rule 8(1)(i): This is the core of the rule. It mandates that any money received by a government officer that is not ‘revenue’ or ‘public money’ must be paid into the Public Account. Let’s break this down further:

• ‘Other than revenues or public moneys’: This refers to funds that don’t belong to the government. A common example is a security deposit from a contractor. The government holds this money as a guarantee but must return it when the contract is completed. It’s not government income.
• ‘Public Account’: This is a specific account mentioned in Article 266(2) of the Constitution. Think of it as a trust account where the government acts as a banker or custodian for funds it doesn’t own. This separation is vital for financial transparency.

Sub-rule 8(1)(ii): This clause extends the same principle to money deposited with the judicial system. Specifically, any funds deposited with the Supreme Court of India or any court in a Union Territory (with the exception of High Courts) must also be channeled into the Public Account.

Sub-rule 8(2): This part acts as a signpost. It clarifies that while Rule 8 tells you *where* the money goes (the Public Account), it doesn’t explain *how* to manage it. For the detailed procedures—like which specific accounting head to use for deposits or the process for withdrawals—one must refer to other official documents. The rule explicitly names the Government Accounting Rules, 1990 and the Central Government Account (Receipts and Payments) Rules, 1983 as the governing regulations.

Practical Example
Imagine a company, ‘BuildFast Pvt. Ltd.’, wins a government contract to build a road. The contract requires them to submit a performance security deposit of ₹10 lakhs. The government officer receiving this cheque cannot deposit it into the government’s main income account (the Consolidated Fund). Instead, following Rule 8, the officer must deposit the ₹10 lakhs into the Public Account. This money sits there for the duration of the project. Once the road is built to satisfaction, the government, following the procedures in the Central Government Account (Receipts and Payments) Rules, 1983, withdraws the ₹10 lakhs from the Public Account and returns it to BuildFast Pvt. Ltd.

Conclusion
Rule 8 establishes a fundamental principle of public finance: the clear separation of government’s own money from money it holds on behalf of others. By mandating the use of the Public Account for non-revenue receipts and pointing to specific procedural rulebooks, it ensures that these funds are managed transparently and responsibly, preventing them from being mixed up with government’s day-to-day revenue and expenditure.

Related Provisions

Understanding Rule 8 is enhanced by looking at related provisions that deal with government receipts and accounts. Here are a few key connections:

• Rule 7: Moneys received by Government – This rule deals with all money received as government dues (like taxes and fees). It provides the general principle for handling government revenue, which contrasts with Rule 8’s focus on non-revenue funds.
• Rule 9: Duty of Departments regarding receipts and dues – This rule reinforces the responsibility of government departments to ensure all money is correctly and promptly credited to the appropriate account, whether it’s the Consolidated Fund (for revenue) or the Public Account (as specified in Rule 8).
• Rule 2(xxiv): Definition of Public Account – This sub-rule provides the official definition of the ‘Public Account’, which is the central concept of Rule 8. It refers directly to Article 266(2) of the Constitution.

Learning Aids

Mnemonics

• P.A.C.: Remember that non-revenue money goes into the Public Account for Custody.
• Rule 8 is GREAT: It separates what the government Owns (revenue) from what it Holds (trust money). It’s the ‘Other-people’s-money Held’ rule.

Mindmap

Multiple Choice Questions (MCQs)

Frequently Asked Questions

Key Takeaways

• Money held by the government in trust (not its own revenue) must be kept separate in the Public Account.
• This rule applies to funds like security deposits and money deposited with the Supreme Court and most Union Territory courts.
• The specific accounting procedures for depositing and withdrawing this money are found in other, more detailed rulebooks.
• This separation ensures financial discipline and prevents the misuse of funds that do not belong to the government.