Treasury Rules Dt 08.06

Chapter 1: Introduction to Financial and Treasury Rules

Financial rules and treasury rules serve distinct but complementary functions within the government's monetary management system.

• Financial Rules: These provide the specific procedures and regulations governing the handling of money after it has been withdrawn from a government account or prior to its deposit into a government account.

• Treasury Rules: These provide the procedural framework for the actual deposit of money into and the withdrawal of money from government accounts. They define the operational relationship between departmental entities and the treasury.

Funds Covered Under Treasury Rules

Treasury rules explicitly govern transactions and procedures related to three primary state funds:

1. The Consolidated Fund of the State

2. The Contingency Fund of the State

3. The Public Accounts of the State

Chapter 2: Organization of Treasuries and Basic ? Mm 8ikk mm mm

Mkm mm of Receipts

Every district within the state maintains its own District Treasury. In larger districts, the administrative structure includes Sub-Treasuries at the sub-divisional level. Examples of such sub-treasuries include:

• Amharan Sub-Treasury

• Dengue Sub-Treasury

The Fundamental Principle of Government Finance (Rule 7)

A basic tenet of government finance is that all money belonging to the government must be deposited or paid into the government account without any delay. This is formally codified in Rule 7 of the Treasury Rules.

Technical Verbatim Wording of Rule 7: "All money received by or tender to government shall without until the day be paid, deferred to treasury, and shall be included in the accounts of the state government. Money received as aforesaid shall not be appropriated to meet departmental expenditure nor otherwise kept apart from the accounts of the government."

Restrictions on the Utilization of Receipts

Under Rule 7, no authority is permitted to utilize government receipts directly to fulfill government liabilities. For example, a District Transport Officer (DTO) who collects fees for trading or license renewals cannot use that cash on hand to pay office wages or general departmental expenses. All receipts must be deposited in full into the government account unless an explicit exception is granted.

Authorized Exceptions for Direct Utilization of Receipts

Sub-Rule 2 of Rule 7 provides specific cases where departments are allowed to utilize money received before it is deposited into the treasury:

• The Judicial System (Civil, Revenue, and Criminal Courts): Courts realize revenue from case filings, security deposits, fees, and fines. They are permitted to use these funds for:

  • Diet Money: Providing allowances for food and travel to witnesses called to attend court.

  • Refunds (Civil Courts): Utilizing security deposits from one party to make timely refunds to another party of a similar nature (e.g., using a deposit from Plaintiff 1 to pay a refund due to Plaintiff 2).

• Notaries Public: Government servants appointed as Notaries Public (often judicial officers certifying affidavits) may use the fees they realize to cover legal expenses incurred in their duties, such as purchasing stamps or courier/transport costs to court.

• Public Works and Specialized Departments (PWD, PHE, SOIL): These departments may utilize cash receipts temporarily for current work expenditures or, in rare and exceptional cases, for the disbursement of pay and Traveling Allowances (TA). However, this requires specific authorization from the Accountant General (AG) to prevent abnormalities. It is noted that while this exists in theory, it is rarely used in practice.

• Jails: Personal cash found on a prisoner at the time of admission is confiscated and recorded. Jail superintendents may use this money to repay other prisoners upon their release, ensuring the accounts are balanced via a dedicated register.

• State and District Libraries: These institutions may use the security deposits of members to replace library books that were borrowed but not returned.

• Veterinary Department (Shillong Town Dairy Milk Supply Scheme): For customers who pay monthly subscriptions in advance, the department can refund the cost of milk not drawn out of the monthly quota using the deposited funds.

• Veterinary Department (Poultry Farms): Refunds for the cost of chicks and eggs may be issued from advance deposits if the actual amount supplied is less than what was paid for.

• Pasteur Institute of Shillam: The institute can use the proceeds from the sale of vaccines and serum to refund excess amounts received from intenders in cases where the full order could not be supplied (e.g., if $100$ vials were ordered but only $50$ were supplied).

Other than these specific cases, internal departmental utilization of deposits is strictly prohibited without written government orders.

Authorities and Hierarchical Structure

Banking Agencies

The Reserve Bank of India (RBI) appoints agency banks to handle government transactions. In this state, the appointed banks are:

• State Bank of India (SBI)

• Punjab National Bank (PNB) (In specific districts)

With technological advancements, cyber treasuries now interact with various banks for online payments, but the primary interactions remain with these agency branches for offline modes.

Key Administrative Roles

1. Treasury Officer (TO): Performs executive control and day-to-day administration of the treasury. The TO is answerable to the Deputy Commissioner and interacts directly with the Accountant General to furnish monthly reports and schedules. No money can be paid out of the government account without the TO's authorization (signature).

2. Deputy Commissioner (DC) or Collector: Holds general charge of the treasury. The DC is responsible for ensuring rules and procedures are followed.

   • Verification: Statutorily required to verify cash personally at least once every $6$ months (now mostly redundant as cash is held in banks).

   • Emergency Powers: Authorized to make emergency withdrawals for calamities or urgent expenditures, though this is rarely exercised due to audit implications.

3. Accountant General (AG): The chief accounting authority for the state. The AG consolidates records from all treasuries. The AG also has the power to authorize specific withdrawals without a government sanction, including:

   • Pension Payment Orders

   • Gratuity Payment Orders

   • Leave Encashment for gazetted officers

   • Debt repayment orders for state loans

   • Periodical inspection and audit of all state treasuries.

The Legal Basis of Banking

The relationship between the government and the RBI as an agent is governed by the RBI Act 1934.

Part 1 and Part 3: Procedures for Receipts and Withdrawals

Rules for Payments (Part 1)

• Rule 14: The Treasury Officer is authorized to process payments for pay, allowances, grants, and loans.

• Rule 19 (Personal Claims): To prevent double salary payments, a government servant on transfer cannot be paid at a new establishment without furnishing a Last Pay Certificate (LPC). Although digitization has rendered double payment nearly impossible, the rule remains as a safeguard.

Procedures for Receipts (Part 3)

Money can be tendered unto the government via cash, bank draft, and postal money orders.

2021 Amendments for Technology: Rules amended in 2021 now accommodate:

• Debit Cards

• Credit Cards

• Net Banking

• Cyber Treasury Facilities

Chalan Forms (The prescribed instrument for deposits):

• TR 4: Manual chalans used for cash/check deposits.

• TR 4a: Electronic chalans for the Online Government Receipts Accounting System.

• TR 4b: Transfer chalans for deductions where no actual cash transaction occurs (e.g., salary deductions).

Chalan Copies: Typically, three or four copies are prepared:

1. Treasury copy (mandatory)

2. Bank copy (mandatory)

3. Departmental copy

4. Depositor copy (if required)

Authorization/Signature Thresholds

Before a manual chalan is processed, it must be authenticated by a departmental officer (often the DTO) to certify the correctness of the depositor details, the amount in words and figures, and the head of account. The following limits apply for treasury signatures:

• Under $40,000$ Rupees: Can be signed by the Assistant Treasury Officer or the Treasury Accountant.

• $40,000$ Rupees and Above: Must be signed by the Treasury Officer.

• Note: Prior to the 2021 amendment, this ceiling was only $2,500$ rupees.

Gross vs. Net Accounting

In cases where departments are allowed to utilize receipts (as per Rule 7), all transactions must be recorded in Gross Amount.

Example Scenario:

• If a department receives $10,000$ rupees but immediately uses $4,000$ for an authorized expenditure, the records must reflect a receipt of $10,000$ and a payment of $4,000$.

• Recording only the Net Balance ($6,000$) is improper because it hides the actual transaction volume, obscures the audit trail, and could potentially facilitate the misappropriation of funds.

Questions & Discussion

Q: Does anyone have a membership in the State Central Library?Response: No. (The speaker notes the importance of reading and explains the security deposit used for unreturned books).

Q: Is anyone taking milk from veterinary on a subscription basis?Response: (Contextual explanation of the Shillong Town dairy milk supply scheme and how refunds for un-drawn milk are handled via advance deposits).

Q: Anyone have the experience of bargaining/barging into the treasury and bank to get a chalan signed?Response: (Speaker notes the difficulty of the manual era before digitization, where applicants for MPSC had to stand in multiple queues at various stages, contrasting it with the modern convenience of sitting at home to make payments).