Classification of Expenditure - Recent changes - PPT prepared on 07.01.2021

 PPT on Classification of Expenditure - Recent Changes 

Classification of expenditure recent changes 07.01.2021 from Nageswara Rao M

Finance Accounts and Capital & Revenue Accounts

 

Finance Accounts and Capital & Revenue Accounts

·         Indian Railways is a Departmental Commercial Organization.  So not only secure essential requirements of Commercial Accounts, but also conforms to the Government Accounts. So it prepares Capital & Revenue Accounts and Finance Accounts to comply the Commercial Accounts and Government Accounts respectively

Commercial Accounts:

·         Also called as Capital and Revenue Accounts.

 

·         Recorded in such a way;

1.       How its Capital has been utilised (Balance Sheet)

2.       How it (IR) stands in relation to its Debtors and Creditors (Balance Sheet)

3.       Whether it (IR) is gaining or losing (Profit & Loss A/c)

4.       Whether the sources of its gains or losses

5.       Whether it is solvent or insolvent+

 

·         So, the Accounts of Railway presented in such a form as to facilitate a review of Railways as a Commercial undertaking.

 

·         To be included in Annual Report of IR

 

·         Sources :

1.       Revenue  - Revenue Allocation Register (RAR)

2.       Register of Earnings/Revenue 

3.       Registers of Capital, DRF, DF etc  - Works

 

·         Due date : 15th September or any other date prescribed by the Railway Board from year to year

·         Financial Results cannot be gauged correctly unless transactions recorded separately for Revenue and Capital

 

·         Loan A/c  - Assets created out of Capital only

 

·         Block A/c - Assets created out of all sources of finance (Capital + DRF + DF + RRSK + RSF)

 

·         Consists of : Statements of

1.       Authorised Capital

2.       Stock

3.       Loans, Debentures

4.       Receipts & Expenditure of Capital A/c

5.       Capital expenditure details for the year

6.       Capital A/c

7.       Revenue A/c

8.       Distribution of Earnings/Revenue and working expenses of worked lines

9.       GWE - Gross Working Expenses - Summary

10.   GWE - Gross Working Expenses - Details

11.   Earnings/Revenue

12.   Outstanding Earnings/Revenue (Traffic Suspense & DR)

13.   Net Revenue A/c

14.   DRF A/c

15.   Erstwhile Demands 1 & 2 / Major Head 3001

16.   Development Fund A/c (DF)

Government Accounts:

Government Accounts are kept in 3 Parts - Flow Chart

Government Accounts

 

 

  ·         Also known as Finance A/cs

·         Duly classified as per prescribed rules of Government

·         Object: Systematic record of all Receipts & Expenditure classified under certain appropriated headings.

·         Railway Fund:

 

1.       Though the Railway transactions form the part of Consolidated Fund, Contingency Fund & Public Account, they are accounted in the pro forma "Railway Fund"

2.       In the books of CAS - Central Accounting Section, RBI/Nagpur

 

·         Extra Railway Transactions:  Railway Audit expenditure  - booked in Railway Accounts for convenience purpose, though they do not pertain to Railway Revenue & Expenditure.

 

Structure of Booking of expenditure / earnings in Indian Railways

Hierarchy		Example:  HRA of PFA		Description
Major Head		3002		Indian Railways Commercial Lines -  Working Expenses
SMH - Sub Major Head		01		General Superintendence & Services
MH -Minor Head		200		Financial Management
Sub Head ( Subordinate Head)		210		Accounts
Detailed Head		211		Officers
Object Head ( PU -Primary Unit)		04		HRA - House Rent  Allowance

 

·         Final Allocation / classification of HRA of PFA - 03-0211-04

 

·         Note:  Still, allocation structure aligns with erstwhile Demand No. 03 - for Sub Major Head 01 -" General Superintendence & Services"

 

·         Monthly Account Current /Annual Account Current - complies the Finance A/cs

 

·         Railway Accounts further classified into 1. Commercial Lines  2. Strategic Lines

 

·         Strategic lines exists in 4 Zonal Railways.   They are NR, NFR, NWR & WR

 

·         Recoveries (of overpayments in last year) - shown as Earnings/Revenue in Current year.

 

·         However, recoveries due to difference in attendance of previous year - should be shown as reduction in the expenditure only in current year.

 

·         Credits up to Rs. 10 thousands pertaining to closed works - to be post as Earnings/Revenue

 

·         Para 217A -  Allocation of Receipts & Expenditure 

 

A.      The primary responsibility for the allocation of all receipts and payments rests with the concerned departmental officers.

 

B.      Each bill or voucher received from them should show the correct allocation of the receipt/expenditure in the fullest detail.

 

C.      The Accounts Department is responsible for seeing, to the extent it is possible for them to do so, that the allocation shown on the initial document is not prima facie incorrect.

 

·          Correct classification should be followed in recording the expenditure in accounts irrespective of whether provision in the budget has been made under correct budget head.

 

·         In order, however, to avoid undue variation between the budget and accounts figures, changed in accounting classification will not ordinarily be introduced during the course of the year.

 

·         In the case of works, the allocation of which has to be changed during the course of a year from one head of expenditure to another, classification of expenditure in that year should follow the original allocation. The change should be given effect to from the beginning of the next financial year only after making necessary provision in the Budget at the Budget stage or at the Revised Estimate stage to cover not only the estimated expenditure for the budget year but also write back of the expenditure incurred from the commencement of the work to the end of the previous year.

 

Link Heads between Govt Accounts & Commercial Accounts

 

	Demands Payable	Labour	Traffic	Bills Recoverable
Revenue / Capital	Revenue	Capital	Revenue	Revenue
Always having	Credit balance	Credit balance	Debit balance	Debit balance
Operated on	Expenditure side	Expenditure side	Earnings side	Earnings side

 

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Major Heads & Allocation Structure in Indian Railways

Major Heads & Allocation Structure in Indian Railways

Relevant Links

1) Finance Code Volume 2

2) List of Major Heads in Government Accounts

 

·         Nearly 500 Major Heads are existed in Government Accounts

 

Important Major Heads pertaining to Indian Railways

Major Head	Description
0021	Income Tax
0049	Interest Receipts (on HBA, Scooter Advance etc)
1001	Indian Railways-Miscellaneous Receipts
1002	Indian Railways-Commercial Lines- Revenue Receipts
1003	Indian Railways-Strategic Lines-Revenue Receipts
3001	Indian Railways-Policy Formulation,  Direction, Research and other Miscellaneous Organisation
3002	Indian Railways-Commercial Lines-Working Expenses
3003	Indian Railways-Strategic Lines-Working Expenses
3004	Indian Railways-Open Line Works (Revenue)
3005	Payments to General Revenues (Dividends etc)
3006	Appropriation from Railway Surplus
3007	Repayment of Loans taken from General Revenues
5002	Capital Outlay on Indian Railways-Commercial Lines
5003	Capital Outlay on Indian Railways-Strategic Lines
7002	Loans to Railways (to funds like DF, Capital Fund etc)
7610	Loans to Govt Servants (HBA, Motor Cycle, Computer etc)
8009	SRPF - State (Railway) Provident Fund
8011	Insurance and Pension Funds (CGEIS -Central Govt Employees Insurance Scheme)
8115	Depreciation/Renewal Reserve Funds (DRF)
8121	General and other Reserve Funds (SBF)
8337	Deposits of Railways
8445	Railway Deposits (EMD, SD, Unpaid wages etc)
8660	Suspense Accounts -Railways (PAO- Pay & Accounts Office suspense,  RBS- Reserve Bank Suspense, PSB - Public Sector Bank Suspense etc)
8670	Cheques & Bills
8671	Departmental balances
8672	Permanent Cash Imprest (Imprest held with Executive Officers)
8675	Deposits with Reserve Bank
8677	RIB - Remittances Into Bank
8787	Adjusting Account with Railways
8790	Accounts with States etc. (Railways)
8797	Exchange Accounts (Transfer Transactions)

 

Structure of Booking of expenditure / earnings

in Indian Railways

Hierarchy		Example: HRA of PFA		Description
Major Head		3002		Indian Railways Commercial Lines - Working Expenses
SMH - Sub Major Head		01		General Superintendence & Services
MH -Minor Head		200		Financial Management
Sub Head ( Subordinate Head)		210		Accounts
Detailed Head		211		Officers
Object Head ( PU -Primary Unit)		04		HRA - House Rent  Allowance

 

Final Allocation / classification of HRA of PFA - 03-0211-04

Note:  Still, allocation structure aligns with erstwhile Demand No. 03 - for Sub Major Head 01 -" General Superintendence & Services"