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HomeProcurement/Supply Chain ManagementWhat are General Finance Rules (GFRs) & where they are Used?

What are General Finance Rules (GFRs) & where they are Used?

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General Finance Rules (GFRs) are the general rules set up by the Government of India which are applicable to all ministries and government departments. Now the question arises, where these rules are applicable? These rules are applicable to the matters related to revenue expenditure or you can say public finance. These rules are treated as standing instructions to be followed by all the government departments and organizations dealing with the public finance. Exemptions are provided in the rules.

General Finance Rules (GFRs) were first introduced in 1947 and amended thereafter in 1963, 2005 and 2017. These amendments were introduced by the government time to time due to changing business environment to promote simplicity and transparency in the government financial system. Some of the government reforms like Direct Benefit Schemes (DBS), Introduction of Government e-Marketing Portal, Non-Tax Revenue Portal, etc. have been introduced through these amendments. Introduction of new e-sites like Central Public Procurement Portal, Government e-Marketing (GeM) Portal, Non-Tax Revenue Portal have also necessitated revision of the existing GFRs to keep them in tune with the changing business environment.

The Framework of General Finance Rules

The General Finance Rules (GFRs) have total 324 rules covering 12 topics. There are 12 appendices and 26 forms given in the GFRs. The framework of General Finance Rules is as follows:

S. No.ChapterRules under this chapter
1IntroductionRule 1 to Rule 6
2General System of Financial ManagementRule 7 to Rule 41
3Budget formulation and implementationRule 42 to Rule 70
4Government AccountsRule 71 to Rule 129
5WorksRule 130 to Rule 141
6Procurement of Goods and ServicesRule 142 to Rule 206
7Inventory ManagementRule 205 to Rule 223
8Contract ManagementRule 224 to Rule 227
9Grants-in-aid and LoansRule 228 to Rule 263
10Budgeting and Accounting for Externally Aided ProjectsRule 264 to Rule 274
11Government GuaranteesRule 275 to Rule 283
12Miscellaneous SubjectsRule 276 to Rule 324


There are 12 rules i.e. rule 21 to rule 32 which describe the general principles relating to expenditure and payment of money. These rules are discussed below in brief:

Rule 21: Standards of Financial Propriety- 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.

The main principles on which emphasis is given are as following:

(1) 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.

(2) The expenditure should not be prima facie more than the occasion demands.

(3) No authority should exercise its powers of sanctioning expenditure to pass an order which will be directly or indirectly to its own advantage.

(4) 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.

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 Advisers- 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.

Rule 25: This rule details about provision of funds for sanctions and it has three sub rules i.e. 25(1), 25(2) and 25(3).

Rule 26: Responsibility 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.

Rule 27: This rule has two parts, Rule 27(1), which mentions date of sanction and Rule 27(2) Date of creation to be indicated in sanctions for temporary posts.

Rule 28: This rule is regarding powers in regard to certain special matters.

Rule 29: This rule describes the procedure for communication of sanctions. This rule mentions that all financial sanctions and orders issued by a competent authority shall be communicated to the Audit Officer and the Accounts Officer and describes the procedure to be followed for communication of financial sanctions and orders.

Rule 30: This rule is about lapse of sanctions.

Rule 31: This rule is also about lapse of sanctions and mentions that 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- This rule states that The remission of disallowances by Audit and writing off of overpayments made to Government servants by competent authorities shall be in accordance with the provisions of the Delegation of Financial Powers Rules, and instructions issued thereunder.


General Finance Rules (GFRs) are established by the Government of India which are the set of standing instructions for the government departments and organizations dealing with the public finance. Every procurement professional who is working in the field of public procurement in India should have knowledge about these rules so that he/ she may understand the general principles and procedure of public procurement to be done in Indian context.

Also read: Five Golden Principles of FIDIC Contracts

For more details on ‘General Finance Rules (GFRs)’, refer to General Finance Rules (GFRs).

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Rajesh Pant
Rajesh Pant
My name is Rajesh Pant. I am M. Tech. (Civil Engineering) and M. B. A. (Infrastructure Management). I have gained knowledge of contract management, procurement & project management while I handled various infrastructure projects as Executive Engineer/ Procurement & Contract Management Expert in Govt. Sector. I also have exposure of handling projects financed by multi-lateral organizations like the World Bank Projects. During my MBA studies I developed interest in management concepts.
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