Chapter — I

(INTRODUCTION)
Rule 1:
• These rules may be called General Financial Rules, 2017 and they shall come into force at
once.
• These rules shall be applicable to all Central Government Ministries/Departments, attached
and subordinate bodies.
• The provisions contained in GFRs are deemed to be applicable to Autonomous Bodies except
to the extent the bye-laws Of an Autonomous Body provides for separate Financial Rules
which have been approved by the Government.
Rule 2:
• It deals with Definitions.
• The definitions are relevant under these rules, unless the context otherwise requires.
1) 'Accounts Officer" means the Head of an Office of Accounts or the Head of a Pay and
Accounts Office set up under the scheme of departmentalization of accounts.
2) "Administrator" means Administrator of a Union Territory, by whatever name
designated.
3) "Audit Officer" means the Head of an Office of Audit;
4) "Competent Authority" means, in respect of the power to be exercised under any of
these Rules, the President or such other authority to which the power is delegated by or
under these Rules, Delegation of Financial Power Rules or any other general or special
orders issued by the Government of India.
5) "Comptroller and Auditor General" means the Comptroller and Auditor General of
India.
Girish Chandra Murmu is the current CAG of India. He assumed office on 8 August
2020. He is the 14th CAG of India.
6) "Constitution" means the Constitution of India.
7) "Controlling Officer" means an officer entrusted by a Department of the Central
Government with the responsibility of controlling the incurring of expenditure and/or
the collection of revenue. The term shall include a Head of Department and also an
Administrator.
8) "President" means the President of India.
9) "Government" means the Central Government.
10) "Public Works" means civil/ electrical works including public buildings, public
services, transport, infrastructure etc., both original and repair works and any other
project, including infrastructure which is for the use of general public.
11) "Drawing and Disbursing Officer" means a Head of Office and also any other
Gazetted Officer so designated by a Department of the Central Government, a Head of
Department or an Administrator, to draw bills and make payments on behalf of the
Central Government. The term shall also include a Head of Department or an
Administrator where he himself discharges such function.
12) "Ministry of Finance" means the Ministry of Finance of the Central Government.
13) "Financial Year" means the year beginning on the 1st of April and ending on the 31st
of March following.
The Current financial year started on 01-04-2021 and will end up on 31-03-2022.
Note: Calendar Year begin on 1st January and ends on 31st December of the same year.
14) "Head of the Department" means an authority or person (not below the rank of a
Deputy Secretary to the Government of India), declared by the concerned Department
in the Government of India as a Head of Department in relation to an identifiable
establishment or establishments to exercise the delegated financial powers under these
Rules.
15) "Head of Office" means
(a) a Gazetted Officer declared as such in the Delegation of Financial Powers Rules and
(b) any other authority declared as such under any general or special orders of the
competent authority.
16) "Department of the Government of India" means any of the Ministries, Departments,
Secretariats and Offices as notified from time to time and listed in the First Schedule to
the Government of India (Allocation of Business Rules).
17) "Reserve Bank" means the Reserve Bank of India or any office or agency of the
Reserve Bank of India and includes any Bank acting as the agent of the Reserve Bank
of India in accordance with the provisions of the Reserve Bank of India Act, 1934 (Act
II of 1934).
18) "Subordinate authority" means a Department of the Central Government or any
authority subordinate to the President.
19) "Treasury Rules" means the Treasury Rules of the Central Government.
20) "Appropriation" means the assignment (to meet specified expenditure) of funds
included in a primary unit of appropriation;
Explanation:
 Appropriation means allotment of funds to DDO under a specific head(s) for making
expenditure.
 It can be better defined as the amount authorized for expenditure under a specific unit of
Appropriation (i.e, Head) or part of that account, placed at the disposal of a DDO by a
competent authority from the funds placed at his disposal.
 It can also be defined as allotment of funds in the Budget under various Units of
Appropriation (Account Heads) which are to be placed at the disposal of Spending
authority in full or a part thereof, like TA, Salary etc.
"Unit Of Appropriation" means the lowest Account Head under which a specific
appropriation (amount) is kept at the disposal of a DDO/spending authority for making
expenditure. Eg. Salary, TA, OE.
Unit of Appropriation can be Pry Unit of Appropriation or Secondary Unit of Appropriation
21) "Primary unit of appropriation" means a primary unit of appropriation referred to in
Rule 8 Of the Delegation of Financial Powers Rules:
PRIMARY UNIT APPROPRIATION
Rule 8
• Sub-head or standard object against which the provision of expenditure is made.
• Grant or Appropriation for charged expenditure is distributed by sub-heads or standard
Objects.
• May include both voted and chargead expenditure amount of each shown separately.
"Secondary Unit of Appropriation"
Sometimes we divide a detailed Head of Account into smaller units. For example, the detailed
Head Contingency is divided into office expenses, Telephone charges, Postage etc. In such
cases, detailed head is treated as Pry Unit of Appropriation while as its sub divisions (OE,
Telephone etc) are called Sec Unit of Appropriation.
22) "Re-appropriation" means the transfer of funds from one primary unit of
appropriation to another such unit.
Explanation: Re-appropriation means transfer of funds from one head to another head within
the same grant, when it is felt that expenditure under the former head shall be less during the
year than kept under the head and that expenditure under the later head will be more than the
amount available.
 Once appropriation is approved by Legislature, it sets limits for meeting expenditure on
various Units of appropriation.
 During the currency of financial year, the limits so set are hardly restricted.
 There are surpluses observed under some Accounts of appropriation and demand under
other Accounts of appropriation.
 The utilization of surpluses, so observed, for the demands so arisen, is called Re-
appropriation. Example: OE to POL
 Re-appropriation is allowed only when it anticipated or known that appropriation under a
Unit will not be utilized in full for that item.
 Adm.Deptt/HoD/Controlling officers are authorized to make re-appropriation after
observing codal provisions.
Cases where Re-appropriation is not permissible
1. From one grant to another grant, except with the consent of Finance Deptt.
2. From Capital Account to Revenue Account & vice-versa, except with the consent of
Finance Deptt.
3. From Plan to Non-Plan & vice-versa, except with the consent of Finance Deptt.
4. From charged to Voted & vice-versa, except with the consent of Finance Deptt.
5. From recurring to non-recurring & vice-versa, except with the consent Of Finance Deptt.
6. For meeting expenditure on new item, not included in the Budget.
7. At the closure of financial year.
8. From Salary to other Units of appropriation & vice-versa.
9. Secret Service Expenditures.
10. All other such cases, where the provision (reappropriation) has been omitted by the
Legislature, from time to time.
23) "Consolidated Fund" means the Consolidated Fund of India referred to in Article 266
(l) of the Constitution;
Explanation:
 Consolidated Fund of India is that Fund which is formed by all revenues received by the
Government by way of taxes like Income Tax, Central Excise, Customs and other receipts
flowing to the Government in connection with the conduct of Government business i.e.,
Non-Tax Revenues.
 Similarly, all loans raised by the Government by issue of Public notifications, treasury bills
(internal debt) and loans obtained from foreign governments and international institutions
(external debt) are credited into this fund.
 All expenditure of the government is incurred from this fund and no amount can be
withdrawn from the Fund without authorization from the Parliament.
24) "Contingency Fund" means the Contingency Fund of India established under the
Contingency Fund of India Act, 1950, in terms of Article 267 (1) of the Constitution;
Explanation: -
 Art 267(1) of the constitution provides that "Parliament may by law establish a
Contingency Fund in the nature of an imprest to be entitled the Contingency Fund of India
into which shall be paid from time to time such sums as may be determined by such law,
and the said Fund shall be placed at the disposal of the President to enable advances to be
made by him out of such Fund for the purposes of meeting unforeseen expenditure pending
authorisation of such expenditure by Parliament by law under Article 115 or Article 116".
• Thus, it is a fund which provides advances for meeting the unforeseen expenditure arising
during the year.
• Unforeseen expenditures include expenditures during natural calamity like famine, drought
earthquakes or other disasters.
• It is earmarked annually as some fixed amount, and if more than that earmarked amount
makes requirement, then legislature can release more amount under this head to meet the
expenses.
• Presently contingency fund of India has been earmarked Rs.500 crores, however through
Finance Bill 2021 it has been proposed to raise the same to Rs.30,000 crores.
• Contingency fund of UT of JK has been earmarked at Rs. 25 Crore vide S.O. No. 271 dated
29-08-2020.
• It is created out of Consolidated fund after the authorization of legislature.
25) "Public Account" means the Public Account of India referred to in Article 266 (2) of
the Constitution;
Explanation: -
 Public Account, constituted under Article 266 (2) of the Constitution, involve the
transactions related to debt other than those included in the Consolidated Fund of India.
 The transactions under Debt, Deposits and Advances in this part are those in respect of
which Government incurs a liability to repay the money received or has a claim to recover
the amounts paid.
 The receipts under Public Account do not constitute normal receipts of Government.
 Parliamentary authorization for payments from the Public Account is therefore not
required.
 Thus, all public money, other than those falling under Consolidate Fund, shall be credited
in Public Account.
 It can be summarized underfollowing sub-divisions:
a. Unfunded Debts: It accommodates receipts on account of GPF, CPF, SLI.
b. Deposits: it includes Revenue, judicial deposits, Cash remittance etc.
c. Recovery of Loans and advances: It involves recovery of the loans and advances which
Govt. had provided to employees etc, as recovery of the same incurs interest which is a
source of revenue.
26) "Government Account" means the account relating to the Consolidated Fund, the
Contingency Fund and the Public Account; as defined in these rules;
Explanation: -
The Government Account is the account of Government which is kept in three parts: -
1. Consolidated Fund of India
2. Contingency Fund of India and
3. Public Account
27) "Local Body" means an authority legally entitled or specially empowered by
Government to administer a local fund;
Example: Panchayati Raj Institutions, Municipal Corporation, Municipality, Nagar Panchayat
(Notified Area Council or Town Panchayat)
28) "Local Fund" means a local fund as defined in Rule 652 of the Treasury Rules;
Explanation: - The expression "Local Fund" in Rule 652 of the Treasury Rules denotes-
(i) revenue administered by bodies, which by law or rule having the force of law, come under
the control of the Government, whether in regard to the proceedings generally, or to specific
matters such as the sanctioning of their budgets, sanction to the creation or filling up of
particular appointments, the enactment of leave, pension or similar rules.
(ii) the revenues of any body which may be specially notified by the Government as such.
In other words, Local Fund means fund over whose expenditure the Government retains
complete and direct control.
Local fund involves revenue received from any locally imposed gross receipts tax, property
tax, municipal gasoline tax, franchise fee, user fees or any other locally imposed fees or taxes,
and enterprise activities, but excluding state grants and loans and federal grants.
29) "Non-recurring expenditure" means expenditure other than recurring expenditure.
Explanation: - Expenditure sanctioned as lumpsum charges whether the money be paid as a
lumpsum or by installment i.e., purchase of furniture, furnishing items, stationery etc.
30) "Recurring expenditure" means the expenditure which is incurred at periodical
intervals for the same purpose. Expenditures other than recurring expenditure are
nonrecurring expenditure.
Explanation: - Expenditure which is not non-recurring i.e., Salary, payment of House rent,
sweeping charges, payment of telephone charges etc.
31) CAPEX model: In the CAPEX Model, Capital expenditures is used by the buyer to
straightway purchase goods followed by procurement of consumables, arranging
comprehensive maintenance contact after warranty period and finally disposing the
product after useful life.
Explanation: -
• CapEx, or Capital Expenditure, refers to one-time upfront costs incurred for assets that will
be used in the future.
• Capital expenditures are typically for fixed assets like property, plant. and equipment
(PP&E) and as such are listed on the balance sheet under the property, plant, and equipment
section.
• For example, if an oil company buys a new drilling rig, the transaction would be a capital
expenditure.
• Thus, Capital expenditure is incurred when a business/organization acquires assets that
could be beneficial beyond the current tax year.
• For instance, it might buy brand new equipment or buildings, machinery, vehicles,
Manufacturing plants, Computers or undergo Building improvements, as well as expanding
the useful life of an existing fixed asset.
• Each industry might have different types of capital expenditures.
• CAPEX is also listed in the investing activities section of the cash flow statement.

32) OPEX model: In the OPEX model, the Seller provides the goods, maintains it and also
provides the consumables as required and finally takes back the goods after useful /
contracted life. The expenditure is made by the Buyer in a staggered manner as per the
terms and conditions of the contract.
Explanation: -
• OPEX or Operational Expenses, refers to the day-to-day operational expenses that support
the business. These typically include general and administrative expenses, employee
wages, research and development, cost of goods sold (COGS), maintenance, repair costs,
leases, etc.
• Operational expenses are included in the income statement of the company for the period
during which they are incurred. For tax purposes, OpEx purchases made in a single tax year
can be fully deducted.
• There will be no amortization of these expenses since these items are fully consumed in
the tax year.
• Examples Of OpEx include employee salaries, rent, utilities, property taxes, cost of goods
sold (COGS), Accounting and legal fees, Overhead costs such as selling. general. and
administrative expenses (SG&A), Business travel.
Key Difference b/w the two Models
• CAPEX are major purchases that will be used beyond the current accounting period in
which they're purchased.
• OPEX represent the day-to-day expenses designed to keep a company running. Because of
their different attributes, each is handled in a separate manner.
• CAPEX costs are paid upfront all at once. The returns on CAPEX take a longer time to
realize, for example, machinery for a new project, whereas the returns of OPEX are much
shorter, such as the work that an employee does on a daily basis to earn their wages.
• OPEX are short-term expenses and are typically used up in the accounting period in which
they were purchased. This means that they are paid weekly, monthly, or annually.
Rule 3— Interdepartmental consultations:
Possible Questions:
1. Explain/describe/what are Interdepartmental consultations?
2. How are they sought?
3. Why & When are they sought?
4. How are Interdepartmental consultations helpful?
5. Give some examples?
Definition in Rule-3 of GFR 2017
• When the subject of a case concerns more than one Department, no order shall be issued
until all such Departments have concurred, or, failing such concurrence, a decision has been
taken by or under the authority of the Cabinet.
• On this regard it is clarified that every case in which a decision, if taken in one Department,
is likely to affect the transaction of business allotted to another Department, shall also be
deemed to be a case which concerns more than one Department.
Explanation /Answers:
• Interdepartmental consultations (or IC) are sought when a matter pertains to more than one
Department or decision issued on a particular subject is likely to effect other departments.
• Generally, IC are employed for obtaining the advice, views, concurrence or comments of
other Departments on a proposal or in seeking clarification of the existing rules, instructions
etc
• It may also be used by a department when consulting it's attached and subordinate offices
and vice versa.
• At the time of inter-departmental consultations, either draft note is circulated or
communications are issued.
• The inter-Departmental communication note may either be recorded on a file or e-file
(where two departments have connectivity) referred to another Department or may take the
form of an independent self-contained note.
• Inter Departmental Consultation Confers A Good Quality Control Practice And A Problem
Solving Activity.
• Inter Departmental Consultations helps to avoid disagreements between Departments
which may arise after the parent Department makes a decision effective or public.
• It also helps to avoid surpluses or demands.
• It helps to strengthen the project or decision to be implemented.
• It helps to bring all the aspects of subject matter under consideration.
• Examples: Interdepartmental Consultations are sought at the time Of Policy making,
Framing of Rulings, Scheme formulations, Pre-Budget consultations, Creations,
Abolitions, Proposal regarding new or existing Projects, upgradations etc.

Rule 4: Departmental Regulations of financial character

All Departmental regulations, in so far as they embody orders or instructions of a financial
character or have important financial bearing, must invariably be made by, or with the
approval Of the Ministry of Finance.
Explanation:
• Department regulations means any rule or regulation implemented by the Department.
• When a Department is to pass some regulations which involve financial implications, the
same must be made by or with the approval of the Ministry of Finance.
• Thus, Departmental regulation of Financial character means to obtain approval or
concurrence of Ministry of Finance while passing or framing those rules /laws which
involve financial implications or monetary effect.
• It aims to maintain the stability and integrity of the financial system as well as smooth
government business.

Rule 5— Removal of Doubts:

Where a doubt arises as to the interpretation of any of the provisions of these Rules, the
matter shall be referred to the Ministry of Finance for decision.

Explanation: - It means if some doubts or confusions arise with regard to interpretation of

Rules contained in General Financial Rules 2017, the issue shall be taken up with Ministry
of Finance for clarification as well as decision.

DDO
↓
Controlling Officer
↓
Head of the Department
↓
Administrative Department Concerned
↓
General Administration Department
↓
Finance Department (Ministry of Finance)

Rule 6— Modifications:
(1) The systems and procedures established by these Rules are subject to general or special
instructions/ orders, which the Ministry of Finance may issue from time to time.
(2) The systems and procedures established by these Rules may be modified by any other
authority only with the express approval of the Ministry of Finance.
 Chapter- 2
(GENERAL SYSTEM OF FINANCIAL MANAGEMENT)
Rule- 7 to Rule 41
Rule 7 to 14 deal with management of Revenue /Money received on behalf of Govt.
Q: Discuss the management of Revenue/Money received on behalf of Govt
Or
Q: What are the rules to be followed by Deptt while dealing with financial management?
Rule 7
All moneys received by or on behalf of the Government either as dues of Government or for
deposit, remittance or otherwise, shall be brought into Government Account without delay, in
accordance with such general or special rules as may be issued under Articles 150 and 283 (1)
of the Constitution.
• Govt Accounts are managed via three divisions: Consolidate Fund, Contingency Fund and
Public Account.
• Article 150 of indian Constitution deals with Form of accounts of the Union and of the
States, and states that the accounts of the Union and of the States shall be kept in such form
as the President may, on the advice of the Comptroller and Auditor General of India,
prescribe.
• Simply, Form in which Accounts are to be managed is prescribed by President.
• 283. Custody, etc of Consolidated Funds, Contingency Funds and moneys credited to the
public accounts.
• Article 283(1) in The Constitution of India:
The custody of the Consolidated Fund of India and the Contingency Fund of India, the
payment of moneys into such Funds, the withdrawal of moneys therefrom, the custody of
public moneys other than those credited to such Funds received by or on behalf of the
Government of India, their payment into the public account of India and the withdrawal of
moneys from such account and all other matters connected with or ancillary to matters
aforesaid shall be regulated by law made by Parliament, and, until provision in that behalf
is so made, shall be regulated by rules made by the President.
Simply, Payment & Withdrawal from the Accounts are managed by the rules made
by President in this regard.
Possible Questions:
Q: What are Govt Accounts. How are they managed and where is the Money received on
behalf of Govt. is deposited?
Q: What are the Divisions of Govt Accounts?
Q: Describe Article 150 & 283 (1) of Indian Constitution with regard to management of Govt
Accounts.
Rule 8 (1)
(i) Under Article 284 of the Constitution all moneys received by or deposited with any
officer employed in connection with the affairs of the Union in his capacity as such, other
than revenues or public moneys raised or received by Government, shall be paid into
the Public Account.
 (ii) All moneys received by or deposited with the Supreme Court of India or with any
other Court, other than a High Court, within a Union Territory, shall also be paid into
the Public Account (of India)
Note: High Court → paid to public Account of State/UT
Rule 8 (2) The Head of Account to which such moneys shall be credited and the withdrawal
of moneys there from shall be governed by the relevant provisions of
i. Government Accounting Rules 1990 and
ii. the Central Government Account (Receipts and Payments) Rules, 1983 or
iii. such other general or special orders as may be issued in this behalf.
Possible Questions:
Q: Money other than revenues or public moneys raised or received by Government are credited
into which Govt. Account?
Q: Money received by or deposited with the Supreme Court of India or with any other Court,
other than a High Court, is deposited into which Account?
Q: What are the rules governing the Credit and withdrawal of money from Head of Accounts?

Rule 9 It is the duty of the Department of the Central Government concerned to ensure that
the receipts and dues of the Government are correctly and promptly assessed, collected and
duly credited to the Consolidated Fund or Public Account as the case may be.
Rule 10 The Controlling Officer shall arrange to obtain from his subordinate officers
monthly accounts and returns in suitable form claiming credit for the amounts paid into
the treasury or bank as the case may be, or otherwise accounted for, and compare them with
the statements of credits furnished by the Accounts Officer to see that the amounts reported as
collected have been duly credited. Accordingly, each Accounts Officer will send an extract
from his accounts showing the amounts brought to credit in the accounts in each month to the
Controlling Officer concerned.

Rule 11 (1)
Detailed rules and procedure regarding assessment, collection, allocation, remission and
abandonment of revenue and other receipts shall be laid down in the regulations of the
Department responsible for the same.
Rule 11 (2) In Departments in which officers are required to receive moneys on behalf of
Government and issue receipts therefor in Form GAR-6 the departmental regulations
should provide for the maintenance of a proper account of the receipt and issue of the
receipt books, the number of receipt books to be issued at a time to each officer and a check
with the officer's accounts of the used books when returned.
Rule 12 Amounts due to Government Shall not be left outstanding without sufficient reasons.
Where such amounts appear to be irrecoverable, the orders of the competent authority shall be
obtained for their adjustment.
Rule 13 Unless specially authorized by any rule or order made by competent authority, no
sums shall be credited as revenue by debit to a suspense head. The credit must follow and
not precede actual realization.
Rule 14 Subject to any general or special orders issued by a Department of the Central
Government, an Administrator or a Head of a Department responsible for the collection of
revenue shall keep the Finance Ministry fully informed of the progress of collection of
revenue under his control and of all important variations in such collections as compared
with the Budget Estimates.
Rule 15--- Rents of buildings and lands
Rule 15 (1). When the maintenance of any rentable building is entrusted to a civil department,
other than the Central Public Works Department, the Administrator or the Head of the
Department concerned shall be responsible for the due recovery of the rent thereof.
Rule 15 (2) The procedure for the assessment and recovery of rent of any building hired out
will be regulated generally by the rules applicable to buildings under the direct charge of the
Central Public Works Department.
Rule 15 (3) The detailed rules and procedure, regarding the demand and recovery of rent of
Government buildings and lands, are contained in the departmental regulations of the
departments in charge of those buildings.
Rule 16 (1) - Fines
Every authority having the power to impose and/ or realize a fine shall ensure that the money
is realized, duly checked and deposited into a treasury or bank as the case may be.
Rule 16 (2)
Every authority having the power to refund fines shall ensure that the refunds are checked and
no double refunds of amounts of fines collected or refunds of fines not actually paid into a
treasury or bank as the case may be, are made.
Rule 17 Miscellaneous Demands:
Accounts Officers shall watch the realization of miscellaneous demands of Government, not
falling under the ordinary revenue administration, such as contributions from State
Governments, Local Funds, contractors and others towards establishment charges.
Remission of Revenue.
Rule 18 - A Claim to revenue Shall not be remitted or abandoned, without the sanction of the
competent authority.
Rule 19 (I) - Subject to any general or special orders issued by the Government Departments
of the Central Government, Administrators and Heads of Departments, other than those in
the Department of Posts, shall submit annually on the 1st of June to the Audit Officer and
the Accounts Officer concerned, statements showing the remissions of revenue and
abandonment of claims to revenue sanctioned during the preceding year by competent
authorities in exercise of the discretionary powers vested in them otherwise than by law or rule
having the force of law, provided that individual remissions below Rupees one thousand need
not be included in the statements.
Rule 19 (2) -- For inclusion in the statements referred to in Rule 19 (l) above, remissions and
abandonments should be classified broadly with reference to the grounds on which they
were sanctioned and a total figure should be given for each class. A brief explanation of
the circumstances leading to the remission should be added in the case of each class.
Rule 20 -- Departments of the Central Government and Administrators may make rules
defining remissions and abandonments of revenue for the purpose of Rule 19 above.
In other words, rules defining remissions and abandonments of revenue are made by
Department of the Central Government and Administrators.
Possible Question:
Q: What do you mean by statement of remission of revenue & abandonment of claims?
Ans: Statement of remission of revenue means a statement showing/decrease fall in the
revenue alongwith reasons whileas abandonment of claims mean surrendering a claim i.e,
payment.
Q: What are the exceptions in submission of statement of remission of revenue &
abandonment of claims?
Ans: Department of Posts is not required to submit statement of remission of revenue &
abandonment of claims
Remissions below Rupees one thousand are not included in the statements
Q: HOW are remissions and abandonments classified and Who can make rules regarding the
same?
Rule 21-29 GENERAL PRINCIPLES RELATING TO EXPENDITURE AND
PAYMENT OF MONEY
Rule 21: Standards of financial propriety.
Q: What are the canons or standards or principles of financial propriety to be observed while
spending Govt. money?
Every officer incurring or authorizing expenditure from public moneys should be guided by
high standards of financial propriety. Every officer should also enforce financial order and
strict economy and see that all relevant financial rules and regulations are observed, by his
own office and by subordinate disbursing officers. Among the principles on which emphasis
is generally laid are the following:
(i) Every officer is expected to exercise the same vigilance in respect of expenditure
incurred from public moneys as a person of ordinary prudence would exercise in respect
of expenditure of his own money.
(ii) The expenditure should not be prima facie more than what the occasion demands, i.e.,
actual need.
(iii) No authority should exercise its powers of sanctioning expenditure to pass an order
which will be directly or indirectly to its own advantage.
(iv) Expenditure from public moneys should not be incurred for the benefit of a particular
person or a section of the people, unless —
(a) a claim for the amount could be enforced in a Court of Law, or
(b) the expenditure is in pursuance of a recognized policy or custom.
(v) there must be Budget allocations
(vi) TA (Travelling Allowances) & HRA should not be made as source of income.
Rule 22: Expenditure from Public Funds.
No authority may incur any expenditure or enter into any liability involving expenditure or
transfer of moneys for investment or deposit from public funds (Consolidated Fund /
Contingency Fund and the Public Accounts) unless the same has been sanctioned by a
competent authority.
Rule 23: Delegation of Financial Powers.
The financial powers of the Government have been delegated to various subordinate
authorities vide Delegation of Financial Powers Rules as amended from
time to time.
The financial powers of the Government, which have not been delegated to a subordinate
authority, shall vest in the Finance Ministry.
Rule 24 Consultation with Financial Advisors.
All draft memoranda for Expenditure Finance Committee or Public Investment Bureau or
Committee on Establishment Expenditure and Cabinet Committee for Economic Affairs or
Cabinet shall be circulated by the Ministry or Department concerned after consultation with
the concerned Financial Adviser of the Ministry or Department. A confirmation to this effect
shall be included in the draft memorandum at the circulation Stage.
Rule 25:
Q: What are the provisions of Funds for Sanction?
Rule 25, deals with the Provision of funds for sanction as under:
Rule 25 (I) All sanctions to the expenditure shall indicate the details of the provisions in the
relevant grant or appropriation wherefrom such expenditure is to be met.
Rule 25 (2) All proposals for sanction to expenditure, shall indicate whether such expenditure
can be met by valid appropriation or re-appropriation.
Rule 25 (3) In cases where it becomes necessary to issue a sanction to expenditure before
funds are communicated, the sanction should specify that such expenditure is subjected to
funds being communicated in the budget of the year.
Rule 26:
Q: What are the Responsibilities of Controlling Officer in respect of Budget allocation?
The duties and responsibilities of a controlling officer in respect of funds placed at his disposal
are to ensure:
(i) that the expenditure does not exceed the budget allocation.
(ii) that the expenditure is incurred for the purpose for which funds have been provided.
(iii) that the expenditure is incurred in public interest.
(iv) that adequate control mechanism is functioning in his Department for prevention,
detection of errors and irregularities in the financial proceedings of his subordinate
offices and to guard against waste and loss of public money.
(v) A controllingofficer is responsible for all the expenditures which has been
countersigned by him.
(vi) A controlling officer can call details of any item of expenditure which stands incurred
by DDO so as to check its genuineness.
(vii) A CO has to check that the rates of different items purchased by DDO (s) are reasonable
and the sanction, wherever required, has been obtained under rules.
(viii) A CO is required to conduct administrative inspection of sub-oridinate DDOs , probably
in the month of April every year to inspect the Account books as well as drawal of
money from the treasury or otherwise .
Rule 27 (1) Date of effect of sanction.
Subject to fulfilment of the provisions as contained in the Delegation of Financial Powers
Rules, all rules, sanctions or orders shall come into force from the date of issue unless any
other date from which they shall come into force is specified therein.
Rule 27 (2) Date of creation to be indicated in sanctions for temporary posts. Orders
sanctioning the creation of a temporary post should, in addition to the sanctioned duration,
invariably specify the date from which it is to be created.
Rule 28 Powers in regard to certain special matters of sanctions:
Except in pursuance of the general delegation made by, or with the approval of the President,
a subordinate authority shall not, without the previous consent of the Finance Ministry, issue
an order which -
(i) involves any grant of land, or assignment of revenue, or concession, grant, lease or
licence of mineral or forest rights, or rights to water, power or any easement or privilege
of such concessions, or
(ii) involves relinquishmentof revenue in any way.
Q How are sanctions Communicated?
Rule 29: Procedure for communication of sanctions.
All financial sanctions and orders issued by a competent authority shall be communicated to
the Audit Officer and the Accounts Officer. The procedure to be followed for communication
of financial sanctions and orders will be as under: -
(i) All financial sanctions issued by a Department of the Central Government which relate
to a matter concerning the Department proper and on the basis of which payment is to
be made or authorized by the Accounts Officer, should be addressed to him.
(ii) All other sanctions should be accorded in the form of an Order, which need not be
addressed to any authority, but a copy thereof should be endorsed to the Accounts
Officer concerned.
(iii) In the case of non-recurring contingent and miscellaneous expenditure, the sanctioning
authority may, where required, accord sanction by signing or countersigning the bill or
voucher, whether before or after the money is drawn, instead of by a separate sanction.
(iv) All financial sanctions and orders issued by a Department of the Central Government
with the concurrence of the Internal Finance Wing or Finance Ministry, as applicable,
should be communicated to the Accounts Officer in accordance with the procedure laid
down in the Delegation of Financial Powers Rules, and orders issued thereunder from
time to time.
(v) All financial sanctions and orders issued by a Department with the concurrence of the
Ministry of Home Affairs or Comptroller and Auditor General of India or Department
of Personnel should specify that the sanction or orders are issued with the concurrence
of that Department along with the number and date of relevant communication of that
Department wherein the concurrence was conveyed.
(vi) All orders conveying sanctions to expenditure of a definite amount or upto a specific
limit should express both in words and figures the amount of expenditure sanctioned.
(vii) Sanctions accorded by a Head of Department may be communicated to the Accounts
Officer by an authorized Gazetted Officer of his Office duly signed by him for the Head
of Department or conveyed in the name of the Head of the Department.
(viii) All orders conveying sanctions to the grant of additions to pay such as Special
Allowance, Personal Pay, etc., should contain a brief summary of the reasons for the
grant of such additions to pay so as to enable the Accounts Officer to see that it is
correctly termed as Special Allowance, Personal Pay, etc., as the case may be.
(ix) Orders issued by a Department of a Union Territory Government where Audit and
Accounts
(a) have not been separated shall be communicated direct to the Audit authority.
(b) have been separated, copies shall be endorsed to the Audit authorities.
(x) Copies of all General Financial Orders issued by a Department of the Central
Government with the concurrence of the Comptroller and Auditor General of India shall
be supplied to the Comptroller and Auditor General of India
(xi) Copies of all sanctions or orders other than the following types should be endorsed to
the Audit Officers: -
(a) Sanctions relating to grant to advances to Central Government employees.
(b) Sanctions relating to appointment or promotion or transfer of Gazetted and non-Gazetted
Officers.
(c) All sanctions relating to creation or continuation or abolition of posts.
(d) Sanctions for handing over charge and taking over charge, etc
(e) Sanctions relating to payment or withdrawal of General Provident Fund advances to
Government servants.
(f) Sanctions of contingent expenditure incurred under the powers of Head of Offices.
(g) Other sanctions of routine nature issued by Heads of Subordinate Officers (other than those
issued by Ministries or Departments proper and under powers of a Head of Department).
(xii) Sanctions accorded by competent authority to grants of land and alienation of land
revenue, Other than those in which assignments Of land revenue are treated as cash
payment, shall be communicated to the Audit and/ or the Accounts Officer, as the case
may be, in a consolidated monthly return giving the necessary details.

Q: What are the rules regarding Lapse of Sanctions? Specify exception, if any.
Rule 30 deals with Lapse of Sanctions.
A sanction for any fresh charge shall, unless it is specifically renewed, lapse if no payment in
whole or in part has been made during a period of twelve months from the date of issue of
such sanction. Provided that -
(i) when the period of currency of the sanction is prescribed in the departmental
regulations or is specified in the sanction itself, it shall lapse on the expiry of such
periods; or
(ii) when there is a specific provision in a sanction that the expenditure would be met from
the Budget provision of a specified financial year, it shall lapse at the close of that
financial year; or
(iii) in the case of purchase of stores. a sanction shall not lapse, if tenders have been
accepted (in the case of local or direct purchase of stores) or the indent has been
placed (in the case of Central Purchases) on the Central Purchase Organization within
the period of one year of the date of issue of that sanction, even if the actual payment
in whole or in part has not been made during the said period.
Rule 31 -- Exception: Notwithstanding anything contained in Rule 30, a sanction in respect
of an addition to a permanent establishment, made from year to year under a general scheme
by a competent authority, or in respect of an allowance sanctioned for a post or for a class of
Government servants, but not drawn by the officer(s) concerned, shall not lapse
Rule 32 Remission of disallowances by Audit and writing off of overpayment made to
Government servants. The remission of disallowances by Audit and writing off of
overpayments made to Government servants by competentauthorities shall be in accordance
with the provisions of the Delegation of Financial Powers Rules, and instructions issued
thereunder.
DEFALCATION AND LOSSES (Rule 33 to 38)
Q: What are the instructions laid down in GFR regarding Defalcation & Losses?
Q: How are Losses to Govt reported? Which losses need to be reported and which ones are to
be reported?
Q: How is the loss of Govt property due to fire, theft & fraud dealt? What are the instructions
given regarding loss to immovable property?
Q: What are the Stages in enquiry of losses?
Q: How is responsibility with regard to any loss fixed upon?
Rule 33-38 deals with Report of Loss to Govt and instructs as under:
Rule 33 (1) (a) Any loss or shortage of public moneys, departmental revenue or receipts,
stamps, opium, stores or other property held by, or on behalf Of, Government irrespective of
the cause of loss and manner of detection, shall be immediately reported by the subordinate
authority concerned to the next higher authority as well as to the Statutory Audit Officer and
to the concerned Principal Accounts Officer, even when such loss has been made good by the
party responsible for it. However, the following losses need not be reported:
(i) Cases involving losses of revenue due to
(a) mistakes in assessments which are discovered too late to permit a supplementary claim
being made,
(b) under assessments which are due to interpretation of the law by the local authority being
overruled by higher authority after the expiry of the time-limit prescribed under the law,
and
(c) refunds allowed on the ground that the claims were time-barred:
(ii) Petty losses of value not exceeding Rupees ten thousand.
Rule 33 (2) Cases involving serious irregularities shall be brought to the notice of Financial
Adviser or Chief Accounting Authority of the Ministry or Department concerned and the
Controller General of Accounts, Ministry of Finance.
Rule 33 (3) Report of loss contemplated in sub-rule (1) and (2) shall be made at two stages: -
(i) An initial report should be made as soon as a suspicion arises that a loss has taken place.
(ii) The final report should be sent to authorities indicated in sub rule (1) & (2) after
investigation indicating nature and extent of loss, errors or neglect of rules by which the loss
has been caused and the prospects of recovery.
Rule 33 (4) The complete report contemplated in sub-rule 3, shall reach through proper
channels to the Head of the Department, who shall finally dispose of the same under the powers
delegated to him under the Delegation of Financial Power Rules. The reports, which he cannot
finally dispose of under the delegated powers, shall be submitted to the Finance Ministry.
Rule 33 (5) An amount lost through misappropriation, defalcation, embezzlement, etc., may
be redrawn on a simple receipt pending investigation, recovery or write-off with the approval
of the authority competent to write-off the loss in question.
Rule 33 (6) In cases of loss to Government on account of culpability of Government servants,
the loss should be borne by the Central Government Department or State Government
concerned with the transaction.
Similarly, if any recoveries are made from the erring Government officials in cash, the receipt
will be credited to the Central Government Department or the State Government who sustained
the loss.
Rule 33 (7) All cases involving loss Of Government money arising from erroneous or irregular
issue of cheques or irregular accounting of receipts will be reported to the Controller General
of Accounts along with the circumstances leading to the loss, so that he can take steps to
remedy defects in rules or procedures, if any, connected therewith.
Rule 34: Loss Of Government Property due to fire, theft, fraud.
All losses above the value of Rupees Fifty thousand due to suspected fire, theft, fraud, etc.,
shall be invariably reported to the Police for investigation as early as possible.
Once the matter is reported to the Police Authorities, all concerned should assist the Police in
their investigation. A formal investigation report should be obtained from the Police
Authorities in all cases, which are referred to them.
Rule 35: Loss Of immovable property by fire, flood etc.
All loss of immovable property exceeding Rupees fifty thousand, such as buildings,
communications, or other works, caused by fire, flood, cyclone, earthquake or any other
natural cause, shall be reported at once by the subordinate authority concerned to Government
through the usual channel. All other losses should be immediately brought to the notice of the
next higher authority.
Rule 36: Report to Audit and Accounts officers.
After a full enquiry as to the cause and the extent of the loss has been made, the detailed report
should be sent by the subordinate authority concerned to Government through the proper
channel; a copy of the report or an abstract thereof being simultaneously forwarded to the
Audit officer and Pay & Accounts Officer.
Rule 37: Responsibility of losses.
An officer shall be held personally responsible for any loss sustained by the Government
through fraud or negligence on his part. He will also be held personally responsible for any
loss arising from fraud or negligence of any other officer to the extent to which it may be
shown that he contributed to the loss by his own action or negligence.
The departmental proceedings for assessment of responsibility for the loss shall be conducted
according to the instructions contained in GFR and those issued by the Ministry of Personnel
from time to time.
Rule 38: Prompt disposal of cases of loss.
Action at each stage of detection, reporting, write off, final disposal, in cases of losses
including action against delinquents and remedial measures should be completed promptly
with special attention to action against delinquents and remedial measures, taken to action
against strengthen the control system.
SUBMISSION OF RECORDS AND INFORMATION (Rule 39 to 41)
Rule 39: Demand for information by Audit or Accounts officer.
A subordinate authority shall afford all reasonable facilities to the Audit Officer and Pay &
Accounts Officer for the discharge of his functions, and furnish fullest possible information
required by him for the preparation of any official account or report, payments and internal
audit.
Rule 40: A subordinate authority shall not withhold any information, books or other
documents required by the Audit Officer or Accounts Officer.
Rule 41: If the contents of any file are categorized as 'Secret' or 'Top Secret' the file maybe
sent personally to the Head of the Audit Office specifying this fact, who will then deal with it
in accordance with the standing instructions for handling and custody of such classified
documents.
 Ch. -6 - PROCUREMENT OF GOODS AND SERVICES
PROCUREMENT OF GOODS
Rule 142 This chapter contains the general rules applicable to all Ministries or Departments,
regarding procurement of goods required for use in the public service. Detailed
instructions relating to procurement of goods may be issued by the procuring
departments broadly in conformity with the general rules contained in this Chapter.
Rule 143 Definition of Goods. The term 'goods' used in this chapter includes all articles,
material, commodity, livestock, furniture, fixtures, raw material, spares,
instruments, machinery, equipment, industrial plant, vehicles, aircraft, ships,
medicines, railway rolling stock, assemblies, subassemblies, accessories, a group
of machineries comprising of an integrated production process or such other
category of goods or intangible products like software, technology transfer, licenses,
patents or other intellectual properties purchased or otherwise acquired for the use
of Government but excludes books, publications, periodicals, etc. for a library.
The term 'goods' also includes works and services which are incidental or
consequential to the supply of such goods, such as, transportation, insurance,
installation, commissioning, training and maintenance.
Rule 144 Fundamental principles of public buying (for all procurements including
procurement of works). Every authority delegated with the financial powers of
procuring goods in public interest shall have the responsibility and accountability to
bring efficiency, economy, and transparency in matters relating to public
procurement and for fair and equitable treatment of suppliers and promotion of
competition in public procurement.
The procedure to be followed in making public procurement must conform to the
following yardsticks: -
(i) The description of the subject matter of procurement to the extent practicable should -
a. be objective, functional, generic and measurable and specify technical, qualitative and
performance characteristics.
b. not indicate a requirement for a particular trade mark, trade name or brand.
(ii) the specifications in terms of quality, type etc., as also quantity of goods to be procured,
should be clearly spelt out keeping in view the specific needs of the procuring
organisations. The specifications so worked out should meet the basic needs of
the organisation without including superfluous and non- essential features, which may
result in unwarranted expenditure.
(iii) Where applicable, the technical specifications shall, to the extent practicable, be based
on the national technical regulations or recognized national standards or building codes,
wherever such standards exist, and in their absence, be based on the relevant international
standards. In case of Government of India funded projects abroad, the technical
specifications may be framed based on requirements and standards of the host
beneficiary Government, where such standards exist.
Provided that a procuring entity may, for reasons to be recorded in writing, adopt any
other technical specification.
(iv) Care should also be taken to avoid purchasing quantities in excess of requirement to
avoid inventory carrying costs.
 (v) offers should be invited following a fair, transparent and reasonable procedure.
(vi) the procuring authority should be satisfied that the selected offer adequately meets the
requirement in all respects.
(vii) the procuring authority should satisfy itself that the price of the selected offer is
reasonable and consistent with the quality required.
(viii) At each stage of procurement, the concerned procurring authority must place on record,
in precise terms, the considerations which weighed with it while taking the procurement
decission.
(ix) a complete schedule of procurement cycle from date of issuing the tender to date of
issuing the contract should be published when the tender is issued.
(x) All Ministries/Departments shall prepare Annual Procurement Plan before the
commencement of the year and the same should also be placed on their website.
(xi) [Notwithstanding anything contained in these Rules, Department of Expenditure may,
by order in writing, impose restrictions, including prior registration and/ or screening,
on procurement from bidders from, or bidders having commercial arrangements with an
entity from, a country or countries, or a class of countries, on grounds of defence of
India, or matters directly or indirectly related thereto including national security; no
procurement shall be made in violation of such restrictions.]9

Rule 145 Authorities competent to purchase goods. An authority which is competent to

incur expenditure may sanction the purchase of goods required for use in public
service in accordance with provisions in the Delegation of Financial Powers Rules,
following the general procedure contained in the following rules.
Rule 146 Procurement of goods required on mobilisation Procurement of goods required
on mobilisation and/ or during the continuance of Military operations shall be
regulated by special rules and orders issued by the Government on this behalf from
time to time.
Rule 147 Powers for procurement of goods. [The Ministries or Departments have
been delegated full powers to make their own arrangements for procurement of
goods and services, that are not available on GeM. Common use Goods and
Services available on GeM are required to be procured mandatorily through GeM
as per Rule 149.]10
Rule 148 Deleted11

9
Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.7/10/2021-PPD
dated 23.02.2023.
10
Amended vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.
11
Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.
12
Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024.
13 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024.
14 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024.
15 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024.
Rule 149. Government e-Market place (GeM). Government of India has established the
Government e-Marketplace (GeM) for common use Goods and Services. GeM SPV will
ensure adequate publicity including periodic advertisement of the items to be procured
through GeM for the prospective suppliers. The Procurement of Goods and Services by
Ministries or Departments will be mandatory for Goods or Services available on GeM. The
credentials of suppliers on GeM shall be certified by GeM SPV. The procuring authorities
will certify the reasonability of rates. The GeM portal shall be utilized by the Government
buyers for direct on- line purchases as under:
(i) Up to [Rs.50,000/-]12 through any of the available suppliers on the GeM, meeting the
requisite quality, specification and delivery period.
Note: In case of automobiles, procurement under this sub-rule is permitted without
any ceiling limit.
(ii) Above [Rs.50,000/- and up to Rs.10,00,000/-]13 through the GeM Seller having
lowest price amongst the available sellers of at least three different manufacturers, on
GeM, meeting the requisite quality, specification and delivery period. The tools for
online bidding and online reverse auction available on GeM can be used by the Buyer
even for procurements less than [Rs 10,00,000]14.
(iii) Above [Rs.10,00,000/-]15 through the supplier having lowest price meeting the
requisite quality, specification and delivery period after mandatorily obtaining bids,
using online bidding or reverse auction tool provided on GeM.
(iv) The i n v i t a t i o n f o r t h e o n l i n e e -bidding/reverse auction will be available to
all the existing Sellers or other Sellers registered on the portal and who have offered
their goods/services under the particular product/service category, as per terms and
conditions of GeM.
(v) The above-mentioned monetary ceiling is applicable only for purchases made through
GeM. For purchases, if any, outside GeM, relevant GFR Rules shall apply.
(vi) The Ministries/Departments shall work out their procurement requirements of Goods
and Services on either "OPEX" model or "CAPEX" model as per their requirement/
suitability at the time of preparation of Budget Estimates (BE) and shall project their
Annual Procurement Plan of goods and services on GeM portal within 30 days of
Budget approval.
(vii) The Government Buyers may ascertain the reasonableness of prices before
placement of order using the Business Analytics (BA) tools available on GeM
including the Last Purchase Price on GeM, Department's own Last Purchase Price etc.
(viii) A demand for goods shall not be divided into small quantities to make piecemeal
purchases to avoid procurement through L-1 Buying / bidding / reverse auction on
GeM or the necessity of obtaining the sanction of higher authorities required with
reference to the estimated value of the total demand.
Rule 150 Registration of Suppliers

(i) [For goods and services not available on GeM, Head of Ministry/ Department may also
register suppliers of goods and services which are specifically required by that
Department or Office, periodically. Registration of the supplier should be done
following a fair, transparent and reasonable procedure and after giving due publicity.
Such registered suppliers should be boarded on GeM as and when the item or service
 gets listed on GeM.]16
(ii) Credentials, manufacturing capability, quality control systems, past performance,
after-sales service, financial background etc. of the supplier(s) should be carefully
verified before registration.
(iii) The supplier(s) will be registered for a fixed period (between 1 to 3 years) depending
on the nature of the goods. At the end of this period, the registered supplier(s) willing
to continue with registration are to apply afresh for renewal of registration. New
supplier(s) may also be considered for registration at anytime, provided they fulfill all
the required conditions.
(iv) Performance and conduct of every registered supplier is to be watched by the
concerned Ministry or Department. The registered supplier(s) are liable to be removed
from the list of approved suppliers if they fail to abide by the terms and conditions of
the registration or fail to supply the goods on time or supply substandard goods or
make any false declaration to any Government agency or for any ground which, in the
opinion of the Government, is not in public interest.
(v) [The list of registered suppliers for the subject matter of procurement be exhibited on
websites of the Procuring Entity/ their e-Procurement portals.]17
Rule 151 Debarment from bidding.
(i) A bidder shall be debarred if he has been convicted of an offence—
(a) under the Prevention of Corruption Act, 1988; or
(b) the Indian Penal Code or any other law for the time being in force, for causing any
loss of life or property or causing a threat to public health as part of execution of a
public procurement contract.
(ii) A bidder debarred under sub-section
(i) or any successor of the bidder shall not be eligible to participate in a procurement
process of any procuring entity for a period not exceeding three years commencing
from the date of debarment. Department of Expenditure (DoE) will maintain such
list which will also be displayed on the Central Public Procurement Portal.18
(iii) A procuring entity may debar a bidder or any of its successors, from participating in
any procurement process undertaken by it, for a period not exceeding two years,
if it determines that the bidder has breached the code of integrity. The
Ministry/Department will maintain such list which will also be displayed on their
website.
(iv) The bidder shall not be debarred unless such bidder has been given a reasonable
opportunity to represent against such debarment

Rule 152 Enlistment of Indian Agents: [Ministries / Departments if they so require, may
enlist Indian agents, who desire to quote directly on behalf of their foreign
principals.]19

16
Amended vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.
17
Amended vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.
18
Amended vide DoE OM No. F.1/20/2018-PPD dated 02.11.2021.
19
Amended vide DoE OM No. F.26/2/2016-PPD dated 25.07.2017.
20
Amended vide DoE OM No. F.10/2/2019-PPD(Pt.) dated 17.02.2020.
 Ru1e 153 Reserved Items and other Purchase/ Price Preference Policy.
(i) [The Central Government, through administrative instructions, has reserved all
items of hand spun and hand- woven textiles (khadi goods) for exclusive purchase from
Khadi Village Industries commission (KVIC). Of all items of textiles required by
Central Government departments, it shall be mandatory to make procurement of at least
20% from amongst items of handloom origin, for exclusive purchase from KVIC and/
or Handloom Clusters such as Co- Operative Societies, Self Help Group (SHG)
Federations, Joint Liability Group (JLG), Producer Companies (PC), Corporations etc.
including Weavers having Pehchan Cards.]20
(ii) Ministry of Micro, Small and Medium Enterprises (MSME) have notified
procurement policy under section 11 of the Micro, Small and Medium Enterprises
Development Ad, 2006.
(iii) The Central Government may, by notification, provide for mandatory
procurement of any goods or services from any category of bidders, or provide for
preference to bidders on the grounds of promotion of locally manufactured goods or
locally provided services.

Rule 154 Purchase of goods without quotation

Purchase of goods upto the value of [Rs. 50,000 (Rupees fifty thousand) only]21 on each
occasion may be made without inviting quotations or bids on the basis of a certificate
to be recorded by the competent authority in the following format.
"I„ am personally satisfied that these goods purchased are of the requisite quality and
specification and have been purchased from a reliable supplier at a reasonable price."

Rule 155 Purchase of goods by Purchase Committee. [In case a certain item is not available
on the GeM portal,]22 Purchase of goods costing above [Rs.50,000 (Rupees Fifty
thousand only) and upto Rs.5,00,000/- (Rupees Five lakh only)]23 on each occasion may
be made on the recommendations of a duly constituted Local Purchase Committee
consisting of three members of an appropriate level as decided by the Head of the
Department. The committee will survey the market to ascertain the reasonableness of
21
Replace with purchase of goods upto the value of Rs. 1,00,000/- (Rupees one lakh) only on each occasion in case of
Scientific Ministries/ Departments/ Organization of Government of India which are Department of Science and
Technology, Department of Bio-technology, Department of Scientific & Industrial Research, Department of Atomic
Energy, Department of Space, Ministry of Earth Sciences, Defence Research and Development Organisation, Indian
Council of Agricultural Research (ICAR), including its affiliated institutions and Universities, Department of Health
Research (DHR), including Indian Council of Medical Research, Educational and Research Institutes conducting post-
graduate/ doctoral level courses or research, under any Ministry/ Department, notified vide Department of Expenditure
OM No. F.20/42/2021-PPD dated 20.05.2024. Note: These powers can be used for procurement of any item. Further,
these powers are to be used only when the required goods are not available on Government e- Marketplace (GeM) as
stipulated in this Department OM No. 6/1/2018-PPD dated 19.01.2018.
22
Inserted vide DoE OM No. F.1.26/2018-PPD dated 02.04.2019.
23
Replace with purchase of goods costing above Rs. 1,00,000/- (Rupees one lakh) and upto Rs. 10,00,000/- (Rupees
ten lakh) in case of Scientific Ministries/ Departments/ Organization of Government of India which are Department
of Science and Technology, Department of Bio-technology, Department of Scientific & Industrial Research,
Department of Atomic Energy, Department of Space, Ministry of Earth Sciences, Defence Research and Development
Organisation, Indian Council of Agricultural Research (ICAR), including its affiliated institutions and Universities,
Department of Health Research (DHR), including Indian Council of Medical Research, Educational and Research
Institutes conducting post-graduate/ doctoral level courses or research, under any Ministry/ Department, notified vide
Department of Expenditure OM No. F.20/42/2021-PPD dated 20.05.2024. Note: These powers are to be used only
when the required goods are not available on Government e-Marketplace (GeM) as stipulated in this Department OM
No. 6/1/2018-PPD dated 19.01.2018.
 rate, quality and specifications and identify the appropriate supplier. Before
recommending placement of the purchase order, the members of the committee will
jointly record a certificate as under:
"Certified that we, members of the purchase committee are jointly and individually
satisfied that the goods recommended for purchase are of the requisite specification and
quality, priced at the prevailing market rate and the supplier recommended is reliable
and competent to supply the goods in question, and it is not debarred by Department of
Expenditure24 or Ministry/ Department concerned."
Rule 156 Deleted25
Rule 157 A demand for goods should not be divided into small quantities to make piecemeal
purchases to avoid the necessity of obtaining the sanction of higher authority required
with reference to the estimated value of the total demand.
Rule 158 Purchase of goods by obtaining bids. Except in cases covered under Rule 154
and 155, Ministries or Departments shall procure goods under the powers referred to
in Rule 140 above by following the standard method of obtaining bids in:
(i) Advertised Tender Enquiry
(ii) Limited Tender Enquiry
(iii) Two-Stage Bidding
(iv) Single Tender Enquiry
(v) Electronic Reverse Auctions
Rule 159 E-Publishing
(i) It is mandatory for all Ministries/ Departments of the Central Government, their attached
and Subordinate Offices and Autonomous /Statutory Bodies to publish their tender
enquiries, corrigenda thereon and details of bid awards on the Central Public
Procurement Portal (CPPP).
(ii) Individual cases where confidentiality is required, for reasons of national security,
would be exempted from the mandatory e-publishing requirement. The decision to
exempt any case on the said grounds should be approved by the Secretary of the
Ministry/ Department with the concurrence of the concerned Financial Advisor. In the
case of Autonomous Bodies and Statutory Bodies' approval of the Head of the Body
with the concurrence of the Head of the Finance should be obtained in each such case.
Statistical information on the number of cases in which exemption was granted and
the value of the concerned contract should be intimated on a Quarterly basis to the
Ministry of Finance, Department of Expenditure.
(iii) The above instructions apply to all Tender Enquiries, Requests for Proposals,
Requests for Expressions of Interest, Notice for pre-Qualification/ Registration or
any other notice inviting bids or proposals in any form whether they are advertised,
issued to limited number of parties or to a single party.
(iv) Deleted.26
(v) These instructions would not apply to procurements made in terms of provisions of
Rules 154 (Purchase of goods without quotations) or 155 (Purchase of goods by
purchase committee) of General Financial Rules
24 Amended vide DoE OM No. F.1/20/2018-PPD dated 02.11.2021.
25
Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.
26
Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.
Rule 160 E -Procurement
(i) It is mandatory for Ministries/ Departments to receive all bids through e-procurement
portals in respect of all procurements.
(ii) Ministries/ Departments which do not have a large volume of procurement or carry
out procurements required only for day-to-day running of offices and also have not
initiated e- procurement through any other solution provided so far, may use e-
procurement solution developed by NIC. Other Ministries/ Departments may either
use e-procurement solution developed by NIC or engage any other service provider
following due process.
(iii) Deleted.27
(iv) In individual case where national security and strategic considerations demands
confidentiality, Ministries/ Departments may exempt such cases from e-procurement
after seeking approval of concerned Secretary and with concurrence of Financial
Advisers.
(v) In case of tenders floated by Indian Missions Abroad, Competent Authority to decide
the tender, may exempt such case from e-procurement.

Rule 161 Advertised Tender Enquiry

(i) Subject to exceptions incorporated under Rule 154, 155, 162 and 166, invitation to
tenders by advertisement should be used for procurement of goods of estimated value
of [Rs. 50 lakhs (Rupees Fifty Lakh)28 and above. Advertisement in such cases
should be given on GeM as well as on GeM- Central Public Procurement Portal
(CPPP). An organisation having its own website should also publish all its advertised
tender enquiries on the website.
(ii) The organisation should also post the complete bidding document in its website
and on CPPP to enable prospective bidders to make use of the document by
downloading from the web site.
(iii) The advertisements for invitation of tenders should give the complete web
address from where the bidding documents can be downloaded.
(iv) [Global Tender Enquiry (GTE):
(a)Where the Ministry or Department feels that the goods of the required quality,
specifications etc., may not be available in the country and it is necessary to also
look for suitable competitive offers from abroad, the Ministry or Department
may send copies of the tender notice to the Indian Embassies abroad as well as
to the Foreign Embassies in India. The selection of embassies will depend on the
possibility of availability of the required goods in such countries. In such cases
e- procurement as per Rule 160 may not be insisted.
(b) No Global Tender Enquiry (GTE), however shall be invited for tenders
up to Rs 200 crore or such limit as may be prescribed by the Department of
Expenditure from time to time. Provided that for tenders below such limit, in
exceptional cases, where the Ministry or Department feels that there are special
reasons for GTE, it may record its detailed justification and seek prior approval
for relaxation to the above rule from the Competent Authority specified by the
Department of Expenditure.]29
(v) In order to promote wider participation and ease of bidding, no cost of tender
document may be charged for the tender documents downloaded by the bidders.
(vi) Ordinarily, the minimum time to be allowed for submission of bids should be
 three weeks from the date of publication of the tender notice or availability of the
bidding document for sale, whichever is later. Where the Department also
contemplates obtaining bids from abroad, the minimum period should be kept as
four weeks for both domestic and foreign bidders.
Rule 162 Limited Tender Enquiry
(i) This method may be adopted when estimated value of the goods to be procured is up
to [Rupees Fifty Lakhs]30. Copies of the bidding document should be sent directly by
speed post/registered post/courier/ e- mail to firms which are borne on the list of
registered suppliers for the goods in question as referred under Rule 150 above. The
number of supplier firms in Limited Tender Enquiry should be more than three.
Efforts should be made to identify a higher number of approved suppliers to obtain
more responsive bids on competitive basis.
Further, an organisation should publish its limited tender enquiries on [GeM as
well as on GeM- Central Public Procurement Portal (CPPP). An organisation having
its own website should also publish all its advertised tender enquiries on the
website]31.
(ii) The unsolicited bids should not be accepted. However, Ministries/ Departments
should evolve a system by which interested firms can register and bid in next round
of tendering.
(iii) Purchase through Limited Tender Enquiry may be adopted even where the estimated
value of the procurement is more than [Rupees Fifty Lakhs]32, in the following
circumstances.
(a) The competent authority in the Ministry or Department certifies that the demand is
urgent and any additional expenditure involved by not procuring through
advertised tender enquiry is justified in view of urgency. The Ministry or
Department should also put on record the nature of the urgency and reasons why
the procurement could not be anticipated.
(b) There are sufficient reasons, to be recorded in writing by the competent authority,
indicating that it will not be in public interest to procure the goods through
advertised tender enquiry.
(c) The sources of supply are definitely known and possibility of fresh source(s)
beyond those being tapped is remote.
(iv) Sufficient time should be allowed for submission of bids in Limited Tender Enquiry
cases

27
Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.
28 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024.
29
Amended vide DoE OM No. F.12/17/2019-PPD dated 15.05.2020.
30 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024
31 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024
32 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024
Rule 163 Two bid system (simultaneous receipt of separate technical and financial
bids): For purchasing high value plant, machinery etc. of a complex and technical
nature, bids may be obtained in two parts asunder:
(i) Technical bid consisting of all technical details along with commercial terms
and conditions; and
(ii) Financial bid indicating item- wise price for the items mentioned in the
technical bid.
The technical bid and the financial bid should be sealed by the bidder in separate
covers duly super-scribed and both these sealed covers are to be put in a bigger cover
which should also be sealed and duly super- scribed. The technical bids are to be
opened by the purchasing Ministry or Department at the first instance and evaluated
by a competent committee or authority. At the second stage financial bids of only
these technically acceptable offers should be opened after intimating them the date
and time of opening the financial bid for further evaluation and ranking before
awarding the contract.
Rule 164 Two-Stage Bidding (Obtain bids in two stages with receipt of financial bids after
receipt and evaluation of technical bids)
(i) Ministry/Department may procure the subject matter of procurement by the
method of two-stage bidding, if
(a) it is not feasible to formulate detailed specifications or identify specific
characteristics for the subject matter of procurement, without receiving inputs
regarding its technical aspects from bidders; or
(b) the character of the subject matter of procurement is subject to rapid technological
advances or market fluctuations or both; or
(c) Ministry/Department seeks to enter into a contract for the purpose of research,
experiment, study or development, except where the contract includes the
production of items in quantities sufficient to establish their commercial viability
or to recover research and development costs; or
(d) The bidder is expected to carry out a detailed survey or investigation and undertake
a comprehensive assessment of risks, costs and obligations associated with the
particular procurement.
(ii) The procedure for two stage bidding shall include the following, namely:
(a) in the first stage of the bidding process, the Ministry/Department shall invite bids
through advertised tender containing the technical aspects and contractual
terms and conditions of the proposed procurement without a bid price;
(b) all first stage bids, which are otherwise eligible, shall be evaluated through an
appropriate committee constituted by the Ministry/ Department;
(c) the committee may hold discussions with the bidders and if any such discussion
is held, equal opportunity shall be given to all bidders to participate in the
discussions;
(d) in revising the relevant terms and conditions of the procurement, the procuring
entity shall not modify the fundamental nature of the procurement itself, but may
add, amend or omit any specification of the subject matter of procurement or
criterion for evaluation;
(e) in the second stage of the bidding process, the procuring entity shall invite bids
from all those bidders whose bids at the first stage were not rejected, to present final
 bid with bid prices in response to a revised set of terms and conditions of the
procurement;
(f) any bidder, invited to bid but not in a position to supply the subject matter of
procurement due to modification in the specifications or terms and conditions, may
withdraw from the bidding proceedings without forfeiting any bid security that
he may have been required to provide or being penalised in any way, by declaring
his intention to withdraw from the procurement proceedings with adequate
justification.

Rule 165 Late Bids. In the case of advertised tender enquiry or limited tender enquiry, late
bids (i.e., bids received after the specified date and time for receipt of bids) should not
be considered.

Rule 166 Single Tender Enquiry. Procurement from a single source may be resorted to in
the following circumstances:
(i) It is in the knowledge of the user department that only a particular firm is the
manufacturer of the required goods.
(ii) In a case of emergency, the required goods are necessarily to be purchased from
a particular source and the reason for such decision is to be recorded and
approval of competent authority obtained.
(iii) For standardization of machinery or spare parts to be compatible to the existing
sets of equipment (on the advice of a competent technical expert and approved
by the competent authority), the required item is to be purchased only from a
selected firm
Note: Proprietary Article Certificate in the following form is to be provided by the
Ministry/ Department before procuring the goods from a single source under the provision
of sub-Rule 166 (i) and 166 (iii) as applicable.
(i)The indented goods are manufactured by M/s ………………………..
(ii)No other make or model is acceptable for the following reasons:
………………………………………………
(iii)Concurrence of finance wing to the proposal vide:
………………………………………..
(iv)Approval of the competent authority vide:
(Signature with date and designation of the indenting officer)
Rule 167 Electronic Reverse Auction
(i) Electronic Reverse Auction means an online real-time purchasing technique utilised by
the procuring entity to select the successful bid, which involves presentation by bidders
of successively more favourable bids during a scheduled period of time and automatic
evaluation of bids;
(ii) A procuring entity may choose to procure a subject matter of procurement by the
electronic reverse auction method, if:
(a) It is feasible for the procuring entity to formulate a detailed description of the
subject matter of the procurement;
(b) There is a competitive market of bidders anticipated to be qualified to participate
in the electronic reverse auction, so that effective competition is ensured;
 (c) The criteria to be used by the procuring entity in determining the successful bid
are quantifiable and can be expressed in monetary terms; and
(iii) The procedure for electronic reverse auction shall include the following, namely:
(a) The procuring entity shall solicit bids through an invitation to the electronic
reverse auction to be published or communicated in accordance with the
provisions similar to e- procurement; and
(b) The invitation shall, in addition to the information as specified in e- procurement,
include details relating to access to and registration for the auction, opening and
closing of the auction and Norms for conduct of the auction.

Rule 168 Contents of Bidding Document All the terms, conditions, stipulations and
information to be incorporated in the bidding document are to be shown in the
appropriate chapters as below:
Chapter-1: Instructions to Bidders.
Chapter-2: Conditions of Contract.
Chapter-3: Schedule of Requirements.
Chapter-4: Specifications and allied Technical Details.
Chapter-5: Price Schedule (to be utilised by the bidders for quoting their prices).
Chapter-6: Contract Form.
Chapter-7: Other Standard Forms, if any, to be utilised by the purchaser and the
bidders.

Rule 169 Maintenance Contract. Depending on the cost and nature of the goods to be
purchased, it may also be necessary to enter into maintenance contract(s) of suitable
period either with the supplier of the goods or with any other competent firm, not
necessarily the supplier of the subject goods. Such maintenance contracts are
especially needed for sophisticated and costly equipment and machinery. It may,
however, be kept in mind that the equipment or machinery is maintained free of
charge by the supplier during its warranty period or such other extended periods as
the contract terms may provide and the paid maintenance should commence only
thereafter.
Rule 170 Bid Security
(i) To safeguard against a bidder's withdrawing or altering its bid during the bid validity
period in the case of advertised or limited tender enquiry, Bid Security (also known as
Earnest Money) is to be obtained from the bidders except Micro and Small Enterprises
(MSEs) as defined in MSE Procurement Policy issued by Department of Micro, Small
and Medium Enterprises (MSME) or are registered with the Central Purchase
Organisation or the concerned Ministry or Department [or Startups as recognized by
Department for Promotion of Industry and Internal Trade (DPIIT)]33. The bidders
should be asked to furnish bid security along with their bids. Amount of bid security
should ordinarily range between two percent to five percent of the estimated value of
the goods to be procured. The amount of bid security should be determined
accordingly by the Ministry or Department and indicated in the bidding documents.
The bid security may be accepted in the form of [Insurance Surety Bonds]34 Account
Payee Demand Draft, Fixed Deposit Receipt, Banker's Cheque or Bank Guarantee
33
Inserted vide DoE OM No. F.20/2/2014-PPD(Pt.) dated 25.07.2017.
34
Inserted vide DoE OM No. F.1/1/2022-PPD dated 02.02.2022.
 [including e- Bank Guarantee]35 from any of the Commercial Banks or payment
online in an acceptable form, safeguarding the purchaser's interest in all respects.
The bid security is normally to remain valid for a period of forty-five days beyond the
final bid validity period.
(ii) Bid securities of the unsuccessful bidders should be returned to them at the earliest after
expiry of the final bid validity and latest on or before the 30th day after the award of the
contract.
[However, in case of two packet or two stage bidding, Bid securities of unsuccessful
bidders during first stage i.e. technical evaluation etc. should be returned within 30
days of declaration of result of first stage i.e. technical evaluation etc.]36
(iii) In place of a Bid security, the Ministries/ Departments may require Bidders to sign a
Bid securing declaration accepting that if they withdraw or modify their Bids during the
period of validity, or if they are awarded the contract and they fail to sign the contract,
or to submit a performance security before the deadline defined in the request for bids
document, they will be suspended for the period of time specified in the request for bids
document from being eligible to submit Bids for contracts with the entity that invited
the Bids.
Rule 171 Performance Security
(i) To ensure due performance of the contract, Performance Security is to be obtained
from the successful bidder awarded the contract. Unlike contracts of Works and
Plants, in case of contracts for goods, the need for the Performance Security depends
on the market conditions and commercial practice for the particular kind of goods.
Performance Security, [in respect of procurement only of Goods/ Consultancy
Services/ Non-Consultancy Services, should be for an amount of three to five per cent
(3-5%)]37. of the value of the contract as specified in the bid documents. Performance
Security may be furnished in the form of [Insurance Surety Bond]38 Account Payee
Demand Draft, Fixed Deposit Receipt from a Commercial bank, Bank Guarantee
[including e-Bank Guarantee]39 from a Commercial bank or online payment in
an acceptable form safeguarding the purchaser's interest in all respects.
(ii) Performance Security should remain valid for a period of sixty days beyond the date
of completion of all contractual obligations of the supplier including warranty
obligations.
(iii) Bid security should be refunded to the successful bidder on receipt of Performance
Security.
Rule 172 (1) Advance payment to supplier
Ordinarily, payments for services rendered or supplies made should be released only
after the services have been rendered or supplies made. However, it may become
necessary to make advance payments for example in the following types of cases:
(i) Advance payment demanded by firms holding maintenance contracts for servicing of
Air- conditioners, computers, other costly equipment, etc.
(ii) Advance payment demanded by firms against fabrication contracts, turn-key contracts etc.
35 Inserted vide DoE OM No. F.1/4/2022-PPD dated 05.08.2022.
36 Inserted vide DoE OM No. F.1/2/2022-PPD dated 01.04.2022.
37
Amended vide DoE OM No. F.1/2/2023-PPD dated 01.01.2024 Amount of performance security plus security
deposit/ retention money for procurement of works will continue to be 3% to 10%.
38
Inserted vide DoE OM No. F.1/1/2022-PPD dated 02.02.2022.
39
Inserted vide DoE OM No. F.1/4/2022-PPD dated 05.08.2022.
Such advance payments should not exceed the following limits
(a) Thirty per cent. of the contract value to private firms;
(b) Forty per cent. of the contract value to a State or Central Government agency
or a Public Sector Undertaking; or
(c) In case of maintenance contract, the amount should not exceed the amount payable
for six months under the contract.
Ministries or Departments of the Central Government may relax, in consultation
with their Financial Advisers concerned, the ceilings (including percentage laid
down for advance payment for private firms) mentioned above. While making
any advance payment as above, adequate safeguards in the form of bank guarantee
etc. should be obtained from the firm.

Rule 172 (2) Part payment to suppliers: Depending on the terms of delivery incorporated
in a contract, part payment to the supplier may be released after it dispatches the
goods from its premises in terms of the contract.

Rule 173 Transparency, competition, fairness and elimination of arbitrariness in the

procurement process
All government purchases should be made in a transparent, competitive and fair
manner, to secure best value for money. This will also enable the prospective bidders
to formulate and send their competitive bids with confidence. Some of the measures
for ensuring the above are as follows:-
(i) the text of the bidding document should be self- contained and comprehensive
without any ambiguities. All essential information, which a bidder needs for
sending responsive bid, should be clearly spelt out in the bidding document in
simple language. The condition of prior turnover and prior experience may be
relaxed for Startups (as defined by Department of Industrial Policy and
Promotion) subject to meeting of quality & technical specifications and making
suitable provisions in the bidding document. The bidding document should
contain, interalia.
(a) Description and Specifications of goods including the nature, quantity, time
and place or places of delivery.
(b) the criteria for eligibility and qualifications to be met by the bidders such as
minimum level of experience, past performance, technical capability,
manufacturing facilities and financial position etc. or limitation for
participation of the bidders, if any.
(c) eligibility criteria for goods indicating any legal restrictions or conditions
about the origin of goods etc. which may be required to be met by the
successful bidder.
(d) the procedure as well as date, time and place for sending the bids.
(e) date, time and place of opening of the bid.
(f) Criteria for evaluation of bids
(g) special terms affecting performance, if any.
(h) Essential terms of the procurement contract.
(i) Bidding Documents should include a clause that "if a firm quotes NIL
 charges/ consideration, the bid shall be treated as unresponsive and will not
be considered".
(ii) Any other information which the procuring entity considers necessary for the bidders to
submit their bids.
(iii) Modification to bidding document:
(a) In case any modification is made to the bidding document or any clarification is
issued which materially affects the terms contained in the bidding document, the
procuring entity shall publish or communicate such modification or clarification in
the same manner as the publication or communication of the initial bidding
document was made.
(b) In case a clarification or modification is issued to the bidding document, the
procuring entity shall, before the last date for submission of bids, extend such time
limit, if, in its opinion more time is required by bidders to take into account the
clarification or modification, as the case may be, while submitting their bids.
(c) Any bidder who has submitted his bid in response to the original invitation shall
have the opportunity to modify or re- submit it, as the case may be, or withdraw
such bid in case the modification to bidding document materially affect the essential
terms of the procurement, within the period initially allotted or such extended time
as may be allowed for submission of bids, after the modifications are made to the
bidding document by the procuring entity:
Provided that the bid last submitted or the bid as modified by the bidder shall
be considered for evaluation
(iv) Suitable provision should be kept in the bidding document to enable a bidder to question
the bidding conditions, bidding process and/ or rejection of its bid. The reasons for
rejecting a tender or non-issuing a tender document to a prospective bidder must be
disclosed where enquiries are made by the bidder.
(v) Suitable provision for settlement of disputes, if any, emanating from the resultant
contract, should be kept in the bidding document.
(vi) The bidding document should indicate clearly that the resultant c o n t r a c t w i l l b e
interpreted under Indian Laws.
(vii) The bidders should be given reasonable time to prepare and send their bids.
(viii) The bids should be opened in public and authorised representatives of the
bidders should be permitted to attend the bid opening.
(ix) The specifications of the required goods should be clearly stated without any ambiguity
so that the prospective bidders can send meaningful bids. In order to attract sufficient
number of bidders, the specification should be broad based to the extent feasible
(x) Pre-bid conference: In case of turn- key contract(s) or contract(s) of special nature for
procurement of sophisticated and costly equipment or wherever felt necessary, a suitable
provision is to be kept in the bidding documents for one or more rounds of pre-bid
conference for clarifying issues and clearing doubts, if any, about the specifications and
other allied technical details of the plant, equipment and machinery etc. projected in the
bidding document. The date, time and place of pre-bid conference should be indicated
in the bidding document. This date should be sufficiently ahead of bid opening date. The
records of such conference shall be intimated to all bidders and, shall also be exhibited
on the website(s) where tender was published.
(xi) Criteria for determining responsiveness are to be taken into account for evaluating the
bids such as:
 (a) time of delivery.
(b) Performance / efficiency / environmental characteristics.
(c) the terms of payment and of guarantees in respect of the subject matter of
procurement
(d) price.
(e) cost of operating, maintaining and repairing etc.
(xii) Bids received should be evaluated in terms of the conditions already
incorporated in the bidding documents; No new condition which was not incorporated
in the bidding documents should be brought in for evaluation of the bids. Determination
of a bid's responsiveness should be based on the contents of the bid itself without
recourse to extrinsic evidence.
(xiii) Bidders should not be permitted to alter or modify their bids after expiry of the
deadline for receipt of bids.
(xiv) Negotiation with bidders after bid opening must be severely discouraged.
However, in exceptional circumstances where price negotiation against an ad-hoc
procurement is necessary due to some unavoidable circumstances, the same may be
resorted to only with the lowest evaluated responsive bidder.
(xv) Deleted.40 40 Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.

(xvi) Contract should ordinarily be awarded to the lowest evaluated bidder whose bid
has been found to be responsive and who is eligible and qualified to perform the contract
satisfactorily as per the terms and conditions incorporated in the corresponding bidding
document. However, where the lowest acceptable bidder against ad-hoc requirement is
not in a position to supply the full quantity required, the remaining quantity, as far as
possible, be ordered from the next higher responsive bidder at the rates offered by the
lowest responsive bidder.
(xvii) Procurement of Energy Efficient Electrical Appliances: Ministries/
Departments while procuring electrical appliances notified by Department of
Expenditure shall ensure that they carry the notified threshold or higher Star Rating
of Bureau of Energy Efficiency (BEE).
(xviii) The name of the successful bidder awarded the contract should be mentioned in
the CPPP, Ministries or Departments website and their notice board or bulletin.
(xix) Rejection of all Bids is justified when
a. effective competition is lacking.
b. all Bids and Proposals are not substantially
responsive to the requirements of the Procurement Documents.
c. the Bids'/Proposals' prices are substantially higher that the updated cost
estimate or available budget; or
d. none of the technical Proposals meets the minimum technical qualifying
score.
(xx) Lack of competition in rule 173(xix) shall not be determined solely on the basis of the
number of Bidders. Even when only one Bid is submitted, the process may be considered
valid provided following conditions are satisfied:
a. the procurement was satisfactorily advertised and sufficient time was given
for submission of bids.
b. the qualification criteria were not unduly restrictive; and
c. prices are reasonable in comparison to market values
(xxi) When a limited or open tender results in only one effective offer, it shall be
 treated as a single tender contract.
(xxii) In case a purchase Committee is constituted to purchase or recommend the
procurement, no member of the purchase Committee should be reporting directly
to any other member of such Committee in case estimated value of procurement
exceeds [Rs. 50 lakhs]41.
Rule 174 Efficiency, Economy and Accountability in Public Procurement System. Public
procurement procedure should ensure efficiency, economy and accountability in the
system. To achieve the same, the following keys areas should be addressed:
(i) To reduce delay, appropriate time frame for each stage of procurement should be
prescribed by the Ministry or Department.
(ii) To minimise the time needed for decision making and placement of contract, every
Ministry/Department, with the approval of the competent authority, may delegate,
wherever necessary, appropriate purchasing powers to the lower functionaries.
(iii) The Ministries or Departments should ensure placement of contract within the
original validity of the bids. Extension of bid validity must be discouraged and
resorted to only in exceptional circumstances.
(iv) Deleted.42
Rule 175 (1) Code of Integrity
No official of a procuring entity or a bidder shall act in contravention of the codes
which includes
(i) prohibition of
(a) making offer, solicitation or acceptance of bribe, reward or gift or any material
benefit, either directly or indirectly, in exchange for an unfair advantage in the
procurement process or to otherwise influence the procurement process.
(b) any omission, or misrepresentation that may mislead or attempt to mislead so that
financial or other benefit may be obtained or an obligation avoided.
(c) any collusion, bid rigging or anticompetitive behavior that may impair the
transparency, fairness and the progress of the procurement process.
(d) improper use of information provided by the procuring entity to the bidder with an
intent to gain unfair advantage in the procurement process or for personal gain.
(e) any financial or business transactions between the bidder and any official of the
procuring entity related to tender or execution process of contract; which can affect
the decision of the procuring entity directly or indirectly.
(f) any coercion or any threat to impair or harm, directly or indirectly, any party or its
property to influence the procurement process.
(g) obstruction of any investigation or auditing of a procurement process.
(h) making false declaration or providing false information for participation in a tender
process or to secure a contract;
(i) disclosure of conflict of interest.
(ii) Disclosure by the bidder of any previous transgressions made in respect of the
provisions of sub- clause (i) with any entity in any country during the last three years
or of being debarred by any other procuring entity.
41 Amended vide Department of Expenditure (DoE), (MoF) OM No. F.1/3/2024 PPD dated 10.07.2024

42
Deleted vide DoE OM No. F.1/26/2018-PPD dated 02.04.2019.
Rule 175 (2) The procuring entity, after giving a reasonable opportunity of being heard,
comes to the conclusion that a bidder or prospective bidder, as the case may be, has
contravened the code of integrity, may take appropriate measures.
Rule 176 Buy-Back Offer
When it is decided with the approval of the competent authority to replace an
existing old item(s) with a new and better version, thedepartment may trade the
existing old item while purchasing the new one. For this purpose, a suitable clause
is to be incorporated in the bidding document so that the prospective and interested
bidders formulate their bids accordingly. Depending on the value and condition of
the old item to be traded, the time as well as the mode of handing over the old item
to the successful bidder should be decided and relevant details in this regard suitably
incorporated in the bidding document. Further, suitable provision should also be
kept in the bidding document to enable the purchaser either to trade or not to trade
the item while purchasing the new one.

PROCUREMENT OF SERVICES

A. CONSULTING SERVICES
Rule 177 "Consulting Service means any subject matter of procurement (which as
distinguished from 'Non- Consultancy Services' involves primarily non-physical
project- specific, intellectual and procedural processes where outcomes/
deliverables would vary from one consultant to another), other than goods or works,
except those incidental or consequential to the service, and includes professional,
intellectual, training and advisory services or any other service classified or
declared as such by a procuring entity but does not include direct engagement of a
retired Government servant.
Note: These Services typically involve providing expert or strategic advice e.g.,
management consultants, policy consultants, communications consultants,
Advisory and project related Consulting Services which include, feasibility studies,
project management, engineering services, finance, accounting and taxation
services, training and development etc.

Rule 178 The Ministries or Departments may hire external professionals, consultancy firms
or consultants (referred to as consultant hereinafter) for a specific job, which is well
defined in terms of content and time frame for its completion.
Rule 179 This chapter contains the fundamental principles applicable to all Ministries or
Departments regarding engagement of consultant(s). Detailed instructions to this
effect may be issued by the concerned Ministries or Departments. However, the
Ministries or Departments shall ensure that they do not contravene the basic rules
contained in this chapter.

Rule 180 Identification of Services required to be performed by Consultants:

Engagement of consultants may be resorted to in situations requiring high quality
services for which the concerned Ministry/ Department does not have requisite
expertise. Approval of the competent authority should be obtained before engaging
consultant(s).
Rule 181 Preparation of scope of the required Consultant(s): The Ministries/
Departments should prepare in simple and concise language the requirement,
objectives and the scope of the assignment. The eligibility and prequalification
criteria to be met by the consultants should also be clearly identified at this stage.

Rule 182 Estimating reasonable expenditure: Ministry or Department proposing to engage

consultant(s) should estimate reasonable expenditure for the same by ascertaining
the prevalent market conditions and consulting other organisations engaged in
similar activities.
Rule 183 Identification of likely sources.
(i) Where the estimated cost of the consulting service is up to [Rupees Fifty lakhs]43,
preparation of a long list of potential consultants may be done on the basis of formal
or informal enquiries from other Ministries or Departments or Organisations involved
in similar activities, Chambers of Commerce & Industry, Association of consultancy
firms etc.
(ii) Where the estimated cost of the consulting services is above [Rupees Fifty lakhs]44, in
addition to (i) above, an enquiry for seeking 'Expression of Interest' from consultants
should be published on [GeM as well as on GeM- Central Public Procurement Portal
(CPPP)]45. An organisation having its own website should also publish all its
advertised tender enquiries on the website. Enquiry for seeking Expression of Interest
should include in brief, the broad scope of work or service, inputs to be provided by
the Ministry or Department, eligibility and the pre- qualification criteria to be met by
the consultant(s) and consultant's past experience in similar work or service. The
consultants may also be asked to send their comments on the objectives and scope of
the work or service projected in the enquiry. Adequate time should be allowed for
getting responses from interested consultants.

Rule 184 Short listing of consultants. On the basis of responses received from the interested
parties as per Rule 183 above, consultants meeting the requirements should be short
listed for further consideration. The number of short-listed consultants should not
be less than three.

Rule 185 Preparation of Terms of Reference (TOR).

The TOR should include
(i) Precise statement of objectives.
(ii) Outline of the tasks to be carried out.
(iii) Schedule for completion of tasks.
(iv) The support or inputs to be provided by the Ministry or Department to facilitate
the consultancy.
(v) The final outputs that will be required of the Consultant.
43 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-
PPD dated 10.07.2024.
44 Amended vide Department of Expenditure (DoE), Ministryof Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024
45 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024
Rule 186 Preparation and Issue of Request for Proposal (RFP). RFP is the document to
be used by the Ministry/Department for obtaining offers from the consultants for the
required service. The RFP should be issued to the shortlisted consultants to seek their
technical and financial proposals. The RFP should contain:
(i) A letter of Invitation
(ii) Information to Consultants regarding the procedure for submission of proposal.
(iii) Terms of Reference (TOR).
(iv) Eligibility and pre-qualification criteria in case the same has not been ascertained
through Enquiry for Expression of Interest.
(v) List of key position whose CV and experience would be evaluated.
(vi) Bid evaluation criteria and selection procedure.
(vii) Standard formats for technical and financial proposal.
(viii) Proposed contract terms.
(ix) Procedure proposed to be followed for midterm review of the progress of the
work and review of the final draft report.

Rule 187 Receipt and opening of proposals Proposals should ordinarily be asked for from
consultants in 'Two bid' system with technical and financial bids sealed separately.
The bidder should put these two sealed envelopes in a bigger envelop duly sealed
and submit the same to the Ministry or Department by the specified date and time at
the specified place. On receipt, the technical proposals should be opened first by the
Ministry or Department at the specified date, time and place.

Rule 188 Late Bids. Late bids i.e. bids received after the specified date and time of receipt
should not be considered.

Rule 189 Evaluation of Technical Bids: Technical bids should be analysed and evaluated
by a Consultancy Evaluation Committee (CEC) constituted by the Ministry or
Department. The CEC shall record in detail the reasons for acceptance or rejection
of the technical proposals analysed and evaluated by it.

Rule 190 Evaluation of Financial Bids of the technically qualified bidders: The Ministry
or Department shall open the financial bids of only those bidders who have been
declared technically qualified by the Consultancy Evaluation Committee as per Rule
189 above for further analysis or evaluation and ranking and selecting the successful
bidder for placement of the consultancy contract.

Rule 191 Methods of Selection/ Evaluation of Consultancy Proposals

The basis of selection of the consultant shall follow any of the methods given in
Rule 192 to 194 as appropriate for the circumstances in each case.

Rule 192 Quality and Cost Based Selection (QCBS): QCBS may be used for Procurement
of consultancy services, where quality of consultancy is of prime concern.
(i) In QCBS initially the quality of technical proposals is scored as per criteria
announced in the RFP. Only those responsive proposals that have achieved at
least minimum specified qualifying score in quality of technical proposal are
considered further.
 (ii) After opening and scoring, the Financial proposals of responsive technically
qualified bidders, a final combined score is arrived at by giving predefined
relative weight ages for the score of quality of the technical proposal and the
score of financial proposal.
(iii) The RFP shall specify the minimum qualifying score for the quality of technical
proposal and also the relative weight ages to be given to the quality and cost
(determined for each case depending on the relative importance of quality vis-
a-vis cost aspects in the assignment, e.g. 70:30, 60:40, 50:50 etc). The proposal
with the highest weighted combined score (quality and cost) shall be selected.
(iv) The weight age of the technical parameters i.e. non- financial parameters in no
case should exceed 80 percent.

Rule 193 Least Cost System (LCS). LCS is appropriate for assignments of a standard or
routine nature (such as audits and engineering design of
non-complex works) where well-established methodologies, practices and standards
exist. Unlike QCBS, there is no weight age for Technical score in the final
evaluation and the responsive technically qualified proposal with the lowest
evaluated cost shall be selected.

Rule 194 Single Source Selection/Consultancy by nomination. The

selection by direct negotiation/nomination, on the lines of Single Tender mode of
procurement of goods, is considered appropriate only under exceptional
circumstance such as:
(i) tasks that represent a natural continuation of previous work carried out by the
firm;
(ii) in case of an emergency situation, situations arising after natural disasters,
situations where timely completion of the assignment is of utmost importance;
and
(iii) situations where execution of the assignment may involve use of proprietary
techniques or only one consultant has requisite expertise.
(iv) Under some special circumstances, it may become necessary to select a
particular consultant where adequate justification is available for such single-
source selection in the context of the overall interest of the Ministry or
Department. Full justification for single source selection should be recorded in
the file and approval of the competent authority obtained before resorting to
such single- source selection.
(v) It shall ensure fairness and equity, and shall have a procedure in place to ensure
that the prices are reasonable and consistent with market rates for tasks of a
similar nature; and the required consultancy services are not split into smaller
sized procurement.

Rule 195 Monitoring the Contract. The Ministry/Department should be involved

throughout in the conduct of consultancy, preferably by taking a task force
approach and continuously monitoring the performance of the consultant(s) so that
the output of the consultancy is in line with the Ministry / Department's
objectives.
Rule 196 Public competition for Design of symbols/logos. Design competition should
be conducted in a transparent, fair and objective manner. Wide publicity should be
given to the competition so as to ensure that the information is accessible to all
possible participants in the competition. This should include publication on the
website of Ministry/Department concerned, as also the Central Public Procurement
Portal. If the selection has been by a jury of experts nominated for the purpose, the
composition of the jury may also be notified.

B. OUTSOURCING OF SERVICES
Rule 197 "Non-Consulting Service" means any subject matter of procurement (which as
distinguished from 'Consultancy Services'), involve physical, measurable
deliverables/ outcomes, where performance standards can be clearly identified and
consistently applied, other than goods or works, except those incidental or
consequential to the service, and includes maintenance, hiring of vehicle,
outsourcing of building facilities management, security, photocopier service,
janitor, office errand services, drilling, aerial photography, satellite imagery,
mapping etc.

Rule 198 Procurement of Non-consulting Services.

A Ministry or Department may procure certain non-consulting services in the
interest of economy and efficiency and it may prescribe detailed instructions and
procedures for this purpose without, however, contravening the following basic
guidelines.

Rule 199 Identification of likely contractors.

The Ministry or Department should prepare a list of likely and potential contractors
on the basis of formal or informal enquiries from other Ministries or Departments
and Organisations involved in similar activities, scrutiny of 'Yellow pages', and
trade journals, if available, website etc.
Rule 200 Preparation of Tender enquiry.
Ministry or Department should prepare a tender enquiry containing, inter alia :
(i) The details of the work or service to be performed by the contractor;
(ii) The facilities and the inputs which will be provided to the contractor by the Ministry
or Department;
(iii) Eligibility and qualification criteria to be met by the contractor for performing the
required work/service; and
(iv) The statutory and contractual obligations to be complied with by the contractor.
Rule 201 Invitation of Bids.
(i) For estimated value of the non- consulting service up to [Rupees Fifty lakhs]46 or less:
The Ministry or Department should scrutinise the preliminary list of likely contractors
as identified as per Rule 199 above, decide the prima facie Eligible and capable
contractors and issue limited tender enquiry to them asking for their offers by a
specified date and time etc. as per standard practice. The number of the contractors so
identified for issuing limited tender enquiry should be more than three.
(ii) For estimated value of the non- consulting service above [Rs. 50 lakhs]47: The
Ministry or Department should issue advertisement in such cases on [GeM as well as
on GeM- CPPP]48. An organisation having its own website should also publish all its
 advertised tender enquiries on the website. The advertisements for invitation of
tenders should give the complete web address from where the bidding documents can
be downloaded.
Rule 202 Late Bids. Late bids i.e. bids received after the specified date and time of receipt
should not be considered.
Rule 203 Evaluation of Bids Received.
The Ministry or Department should evaluate, segregate, rank the responsive bids
and select the successful bidder for placement of the contract.

Rule 204 Procurement of Non-consulting services by nomination. Should it become

necessary, in an exceptional situation to procure a non-consulting service from a
specifically chosen contractor, the Competent Authority in the Ministry or
Department may do so in consultation with the Financial Adviser. In such cases the
detailed justification, the circumstances leading to such procurement by choice and
the special interest or purpose it shall serve, shall form an integral part of the
proposal.

Rule 205 Monitoring the Contract. The Ministry or Department should be involved
throughout in the conduct of the contract and continuously monitor the performance
of the contractor.

Rule 206 Any circumstances which are not covered in Rule 198 to Rule 205 for procurement
of non-consulting services, the procuring entity may refer Rule 142 to Rule 176
pertaining to procurement of goods and not to the procurement of consulting
services.

46 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024
47 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No. F.1/3/2024-PPD
dated 10.07.2024 48 Amended vide Department of Expenditure (DoE), Ministry of Finance (MoF) OM No.
F.1/3/2024-PPD dated 10.07.2024