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Government of India

Ministry of Urban Development

Government of India

Ministry of Urban Development

Supported by

Office of The Comptroller & Auditor General of India

National Institute of Urban Affairs (NIUA) and Indo - USAID FIRE-D Project

Committee to Oversee the Development of the Manual

Shri S. Satyamoorthy - Chairman

Deputy Comptroller & Auditor General (Local Bodies)

Shri M. Rajamani - Member

Joint Secretary, Ministry of Urban Development, Government of India

Shri R.N. Ghosh - Member

Principal. Director (Local Bodies), Office of C & A. G of India

Mrs. C.K. Gariyali-Member

Secretary, Municipal Administration & Water Supply, Government of Tamil Nadu

Shri Sunil Soni - Member

Director, Municipal Administration Government of Maharashtra

Shri Rajesh Singh - Member & Convener of the Committee

Director (Local Bodies), Office of the C & A.G of India

Shri Subhash Chandra - Member

Under Secretary, Ministry of Urban Development

Prof Vinod Tewari – Member

National Institute of Urban Affairs, Ministry of Urban Development, GOI

Shri N. Bhattacharjee-Member

Programme Manager & Regional Training Advisor, USAID

Shri Lee Baker – Member

Chief of Party, Indo-USAID FIRE-D Project

Shri Alok Shiromany – Member

Senior Financial Management Specialist, Indo-USAID FIRE-D Project

Consultant

A.F. Ferguson & Co.

Mr. C.K. Mohan

Ms. Sasikala

Foreword

With the 74th Constitutional Amendment Act, the Urban Local Bodies in India

have a constitutional status and are empowered to function as local self-governments to

provide good urban governance.

In terms of the XIth Finance Commission recommendations and the Guidelines

issued by the Ministry of Finance, Government of India, Comptroller and Auditor

General of India (CAG) constituted a Task Force to recommend budget and accounting

formats for Urban Local Bodies (ULBs) in India. The CAG Task Force issued a ‘Report

on Accounting and Budget Formats for ULBs’ suggesting accrual basis of accounting and

Budget and Accounting Formats, Significant Accounting Policies, Cost of important

utilities and services and MIS reports.

Some State Governments have taken initiatives in the past to reform Urban

Accounting. However, over the years it has been felt that to align the National Level

perspectives of reforms in municipal finance and financial management with that of the

State Governments, a generic framework of National Municipal Accounting was

essential.

With this objective the Ministry of Urban Development, Government of India

launched the formulation of this National Municipal Accounts Manual, based on the

TASK Force Report. The Comptroller & Auditor General of India has facilitated and

overseen the development of this manual. The Indo-USAID FIRE-D project and National

Institute of Urban Affairs have supported the initiative.

The National Municipal Accounts Manual is comprehensively details the

accounting policies, procedures, guidelines designed to ensure correct, complete and

timely recording of municipal transactions and produce accurate and relevant financial

reports. The manual is to be adopted and followed by the various State Governments

while drafting their state specific municipal accounts manuals.

It is hoped that this manual would provide a beacon to various State

Governments, municipal administrators and accountants and other stakeholders to

provide good urban governance.

S. Satyamoorthy

Deputy Comptroller & Auditor General of India

NIUA and USAID-Fire project would like to acknowledge with thanks the help

and support received from the following institutions and officials in carrying out this

study:

¾Office of Comptroller & Auditor General of India (CAG)

¾Ministry of Urban Development & Poverty Alleviation

¾Committee to oversee the Development of Municipal Manual

¾Municipal Commissioners / Officers of the seven local bodies

¾All team members of AFF

¾Associates of AFF and

¾Several other experts who contributed to the preparation of this manual.

National Municipal Accounts Manual

Chapter Contents Page No.

Part I – General

1Introduction 1.1

2Definitions, Accounting Concepts & Accounting

Conventions 2.1

3Significant Accounting Principles 3.1

4Codification Structure & Chart of Accounts 4.1

5General Accounting Procedures 5.1

Part II - Accounting for Transactions

6Property & Other Taxes 6.1

7Octroi 7.1

8Cess 8.1

9Water Supply 9.1

10 Assigned Revenues 10.1

11 Rentals, Fees & Other Incomes 11.1

12 Public Works 12.1

13 Stores 13.1

14 Employee Related Transactions 14.1

15 Health & Sanitation 15.1

16 Other Revenue Expenditures 16.1

17 Grants 17.1

18 Borrowings (Loans Received) 18.1

19 Special Funds 19.1

20 Investments 20.1

21 Fixed Assets 21.1

22 Lease & Hire Purchase 22.1

23 Loans & Advances 23.1

24 Special Transactions 24.1

25 Addition/Merger of Local Bodies 25.1

National Municipal Accounts Manual

Chapter Contents Page No.

26 Inter-Unit transactions 26.1

27 Transactions relating to Municipal School Board 27.1

28 Transactions relating to Transport Undertaking 28.1

Part III – Period-end Requirements

29 Period-end Procedures 29.1

30 Reconciliation Procedures 30.1

31 Financial Statements 31.1

32 Audit Report 32.1

Part IV – Others

33 Budgeting & MIS reports 33.1

34 Guidelines for preparation of Opening Balance Sheet 34.1

Annexure I List of Forms and Registers

National Municipal Accounts Manual

vii

Table Contents Page No.

5.1 Other General Registers and Forms 5.4

5.2 Functionwise Income - Subsidiary Ledger 5.10

5.3 Summary of Major Headwise Income- Subsidiary Ledger 5.10

5.4 Functionwise Expense - Subsidiary Ledger 5.16

5.5 Summary of Major Headwise Expense- Subsidiary Ledger 5.17

6.1 Computation of Additional Provision at the Period end 6.12

6.2 Excess Provision at the period end 6.13

13.1 Entries in Stores Ledger for the financial year 20XX -

20XX 13.8

21.1 Computation of Depreciation at Year-end on an asset class 21.7

21.2 & 3 Computation of Profit or Loss on Disposal of Fixed Asset 21.10&

21.13

27.1 Income and Expenditure Statement 27.7

27.2 Balance Sheet 27.8

27.3 Statement of Cash Flow 27.9

27.4 Receipts and Payments Account 27.11

28.1 Income and Expenditure Statement 28.10

28.2 Balance Sheet 28.11

28.3 Statement of Cash Flow 28.12

28.4 Receipts and Payments Account 28.15

30.1 Factors necessitating Bank Reconciliation 30.3

30.2 Bank Reconciliation Statement 30.5

30.3 Inter AU Reconciliation Statement 30.6

30.4 Reconciliation Statement of Deposits Outstanding with

the ULB 30.7

30.5 Reconciliation Statement of Receivables and Collection 30.8

30.6 Reconciliation Statement of Advance Outstanding

provided to Contractor/Supplier 30.10

30.7 Reconciliation Statement of Permanent Advance 30.11

National Municipal Accounts Manual

viii

Table Contents Page No.

30.8 Reconciliation Statement of Personal Advance 30.11

30.9 Reconciliation Statement of Miscellaneous Advance 30.12

30.10 Confirmation Statement of Loan borrowed 30.12

30.11 Reconciliation Statement of Payables 30.13

30.12 Confirmation Statement of balances receivable 30.15

30.13 Confirmation Statement of balances payable 30.15

31.1 Trial Balance 31.3

31.2 Trial Balance (accounting units) 31.6

31.3 Income and Expenditure Statement 31.8

31.4 Balance Sheet 31.9

31.5 Statement of Cash Flow 31.34

31.6 Receipts and Payments Account 31.38

31.7 Subsidy Report 31.45

31.8 Financial Ratios 31.47

31.9 Financial Ratio Analysis 31.49

National Municipal Accounts Manual

Exhibit Contents Page No.

4.1 Mandatory Structure 4.3

4.2 Overall Structure 4.3

4.3 Sample Flow of Accounting Information 4.4

5.1 Cash Book 5.2

5.2 Journal Book 5.2

5.3 Ledger 5.3

Appendix Contents Page No.

Appendix 1 List of Codes of ULB’s functions 4.14

Appendix 2 Chart of Accounts Listing 4.17

LIST OF ABBREVIATIONS

AFF A.F.Ferguson & Co.

ATC Advice Transfer Credit

ATD Advice Transfer Debit

BPV

BRV

BRS

Accounting Unit

Bank Payment Voucher

Bank Receipt Voucher

Bank Reconciliation Statement

CAG Comptroller and Auditor General of India CAG)

CoA

CWIP

Chart of Accounts

Capital Work In Progress

DDO Drawing and Disbursing Officer

EMD Earnest Money Deposit

FIFO First In First Out

GoM Government of Maharashtra

GPF General Provident Fund

HP Hire Purchase

ICAI Institute of Chartered Accountants of India

IUT Inter Unit Transaction

JV Journal Voucher

MAM Maharashtra Accounting Manual

MCA Municipal Chief Auditor

MIS Management Information System

MOUD&PA Ministry of Urban Development & Poverty Alleviation

MOU Memorandum of Understanding

MRN Material Receipt Note

MRIN Material Receipt cum Issue Note

NAM National Accounts Manual

NAV Net Assets Value

NIUA National Institute of Urban Affairs

P&OT Property & Other Taxes

PO Payment Order

PPO Pension Payment Order

PPP Public Private Partnerships

RIUTDC Register of Inter Unit Transfer Advice

TDS Tax Deducted at Source

SLM Straight Line Method

ULBs Urban Local Bodies

WDV Written Down Value

WIP Work-In-Progress

National Municipal Accounts Manual Introduction

1.1

CHAPTER 1

,1752'8&7,21

Project Background

1.1 A Task Force was constituted by Comptroller and Auditor General of India (CAG) to

recommend budget and accounting formats for Urban Local Bodies (ULBs) in India. The

CAG Task Force had issued a ‘Report on Accounting and Budget Formats for ULBs’. The

Task Force report covered Budget and Accounting Formats and Significant Accounting

Principles, Cost of important utilities and services and MIS reports. Following

recommendations were made by the Task Force:

a. The ULBs should uniformly follow the suggested formats for presentation of

annual financial statements.

b. Budget formats with codification needs to be adopted uniformly by all ULBs.

c. Suggested formats for determining the cost of important utilities and services like

Water Supply, Primary Schools & Hospitals, etc be adopted by all the ULBs and

presented as supplementary information.

d. Significant accounting principles to be followed by the ULBs shall be given as a

separate schedule forming part of the accounts.

1.2 Government of India had accepted the Task Force Report and forwarded the same to

the State Governments for implementation in April 2003. During the review of the progress

made by MOUD, in September 2003, it was agreed that CAG with USAID - FIRE (D)

support, should prepare a model National Accounting Manual which will be provided to the

state governments by MOUD. Based on this, states will be expected to develop state

municipal accounting manual according to their specific requirements. In order to oversee the

development of the National Accounting Manual, a committee was formed consisting of the

following members:

National Municipal Accounts Manual Introduction

1.2

1. Shri S. Satyamoorthy - Chairman

Deputy Comptroller & Auditor General (Local Bodies)

2. Shri M. Rajamani - Member

Joint Secretary, Ministry of Urban Development, Government of India

3. Shri R.N. Ghosh - Member

Principal Director (Local Bodies), Office of C & A. G of India

5. Late Shri R.S. Prasad - Member

Joint Secretary & Financial Advisor, Ministry of Urban Development, GOI

6. Mrs. C.K. Gariyali- Member

Secretary Municipal Administration & Water Supply, Government of Tamil

Nadu

7. Shri Sunil Soni - Member

Director Municipal Administration Government of Maharashtra

8. Shri Rajesh Singh - Member & Convener of the Committee

Director (Local Bodies), Office of the C & A.G of India

9. Shri Subhash Chandra - Member

Under Secretary, Ministry of Urban Development

10. Prof Vinod Tewari – Member

National Institute of Urban Affairs, Ministry of Urban Development, GOI

11. Shri N. Bhattacharjee - Member Programme Manager, USAID

12. Shri Lee Baker -Member Chief of Party USAID – FIRE Project

13. Shri Alok Shiromany – Member, USAID FIRE Project

1.3 The Government of Maharashtra (GoM) has developed accrual based municipal

accounting manual for the state. This has been revised in accordance with the

recommendations of CAG’s Task Force Report for state’s ULBs. Hence, Maharashtra

Accounting Manual (MAM) was taken as a starting point for preparation of National

Municipal Accounting Manual. Further the experience gained out of implementation of

computerised accounting system in Municipal Corporation of Hyderabad has also been

considered.

1.4 A.F.Ferguson & Co (AFF) was awarded an assignment by the National Institute of

Urban Affairs (NIUA) under the Ministry of Urban Development & Poverty Alleviation

(MOUD&PA) for providing consultancy services to develop a National Municipal Accounts

Manual.

National Municipal Accounts Manual Introduction

1.3

Brief Description of the Assignment

1.5 The assignment was carried out in two phases, as follows:

¾Phase I Review of existing Maharastra Accounting Manual and assessment of

changes required in Maharstra Accounts Manual.

¾Phase II- Preparation of Accounts Manual, involving

Development of the National Accounts Manual (NAM)

Guidelines for Preparation of Opening Balance Sheet

Design of Chart of Accounts

1.6 For the Phase I of the assignment, NIUA, CAG and USAID FIRE (D) have selected

seven urban local bodies across India for assessment of adequacy and appropriateness of

MAM. The seven local bodies visited by AFF team were:

¾Ahmedabad Muncipal Corporation (AMC)

¾Bangalore Mahanagara Palike (BMP)

¾Dehradun Municipal Corporation (DMC)

¾Guwahati Municipal Corporation (Guwahati)

¾Gwalior Municipal Corporation (GMC)

¾Ludhiana Municipal Corporation (LMC)

¾Trichy Municipal Corporation (TMC)

1.7 AFF submitted the assessment report based on the review and analysis highlighting

the suggestions/ recommendations to the National Manual on the grounds mentioned below:

a. Adherence to the CAG Task Force Report

b. Generally accepted accounting practices with limitations of practicality of

situation/ circumstances of ULB operation and the level of expertise available

in the ULBs.

c. Knowledge and understanding developed by AFF from the vast/ varied

experience of local body functions and activities and the operating

environment.

1.8 AFF submitted a Draft National Accounts Manual. Discussions were held with office

of CAG and the committee. Based on the feedback received, the Draft Accounts Manual was

revised and final manual prepared.

National Municipal Accounts Manual Introduction

1.4

Applicability

1.9 The manual is applicable to all urban local bodies. Accounting principles placed in the

manual are primarily focussed on the concept of accrual basis of accounting. The accounting

principles adopted for preparation of the financial statements of the ULBs shall be followed

uniformly unless stated otherwise in the manual. States can develop state level manual based

on this to suit their requirements. However, the principles laid down in this manual should be

complied with. Similarly, the manual provides for integrating the budgeting and accounting

systems to enable better control.

Accounting for Funds

1.10 Funds are instituted for achieving certain objectives. For e.g. in some States there may

be dedicated Water and Sewerage Fund and income from these services (taxes and charges) is

kept in this fund and expenditure are also met out of the fund. The concept of funds brings

accountability and better transparency. Such types of funds are normally treated as a separate

accounting entity and separate books are maintained for the same. Hence, separate financial

statements are prepared for each fund. In such a case each fund shall follow the principles

and procedures given in this manual. In addition ULBs may have special funds to meet

specific objectives. The treatment for these is provided in the Chapter 24 of this manual.

1.11 Irrespective of the method chosen for disclosure, the Accounting principles

recommended in this manual shall be applicable uniformly across all Funds.

1.12 Urban Local Bodies may also set up separate undertaking like School Board,

Transport undertaking etc to undertake certain functions of the ULB. The recommendations

made herein and in all the other Chapters will also be applicable to such undertakings, if

constituted by the ULB.

1.13 The codification structure and input forms recommended are amenable to

computerisation also. However, the registers are designed keeping in mind that ULBs will be

implementing the recommended system mostly in a manual environment to begin with.

Changes to the formats may be required for IT enablement.

National Accounts Manual

1.14 The National Accounts Manual contains the required forms, formats, procedures,

accounting entries, periodical statements, reconciliation procedures, etc. The recommended

principles for accounting have also been included. The manual also contains a section on

“Chart of Accounts”.

National Municipal Accounts Manual Introduction

1.5

1.15 This Manual has been structured as follows:

Part I - General

¾Chapter 1 - Introduction (this Chapter)

¾Chapter 2 - Definitions, Accounting Concepts & Accounting Conventions

¾Chapter 3 - Significant Accounting Principles

¾Chapter 4 - Codification Structure and Chart of Accounts

¾Chapter 5 - General Accounting Procedures

Part II - Accounting for Transactions

¾Chapter6-Property&OtherTaxes

¾Chapter7-Octroi

¾Chapter8-Cess

¾Chapter 9 - Water Supply

¾Chapter 10 - Assigned Revenues

¾Chapter 11 - Rental, Fees & Other incomes

¾Chapter 12 - Public Works

¾Chapter 13 - Stores

¾Chapter 14 - Employee Related Transactions

¾Chapter 15 - Health & Sanitation

¾Chapter 16 - Other Revenue Expenditures

¾Chapter 17 - Grants

¾Chapter 18 - Borrowings (Loans Received)

¾Chapter 19 - Special Funds

¾Chapter 20 - Investments

¾Chapter21-FixedAssets

¾Chapter 22 - Lease & Hire Purchase

¾Chapter 23 - Loans & Advances

¾Chapter 24 - Special Transactions

¾Chapter 25 Addition/Merger of Local Bodies

¾Chapter 26 - Inter-Unit transactions

¾Chapter 27 - Transactions relating to Municipal School Board

¾Chapter 28 - Transactions relating to Transport Undertaking

National Municipal Accounts Manual Introduction

1.6

Part III - Period-end Requirements

¾Chapter 29 - Period-end Procedures

¾Chapter 30 - Reconciliation Procedures

¾Chapter 31 - Financial Statements

¾Chapter 32 - Audit Report

Part IV – Others

¾Chapter 33 - Budgeting & MIS reports

¾Chapter 34 - Guidelines for prepartion of Opening Balance Sheet

Annexure I : List of Forms and Registers

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.1

CHAPTER 2

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2.1 The various terms used in this Accounting Manual, the Accounting Concepts and

Accounting Conventions under the Accrual System of Accounting are defined in this chapter.

The objective of this chapter is to ensure a common understanding of the terms often used in

the Manual as well as to promote consistency and uniformity in their usage.

DEFINITIONS

2.2 The definitions of the terms used in this manual are those which are commonly

understood and used. These have been taken, if available and appropriate, from:

a. “A Dictionary for Accountants” by Eric L. Kohler; or

b. “Guidance Note on Terms used in Financial Statements” issued by the Institute of

Chartered Accountants of India (ICAI).

c. In other cases, the description/definition used by AFF has been adopted.

2.3 The definitions/descriptions/meanings of the various terms used in this manual are as

follows.

1. Account - A formal record of a particular type of transaction expressed in

money or other unit of measurement and kept in a ledger. (Kohler)

2. Accounting Entry - A record of financial transaction in the books of account

like journal, ledger, cash book, etc. (AFF)

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.2

3. Account Payable - Amount owed by an enterprise on account of goods

purchased or services received or in respect of contractual obligations. Also

termed as trade creditor or sundry creditor. (ICAI)

4. Accounting Period - The period of time for which an operating statement is

customarily prepared. (Kohler)

5. Accounting Principle - The general principles and procedures under which the

accounts of an individual organisation are maintained; any one such principle or

procedure. An accounting principle is an adaptation or special application of a

principle necessary to meet the peculiarities of an organisation or the needs of

its management. Thus, principles are required for the computation of

depreciation, the recognition of capital expenditures, and the disposal of

retirements. (Kohler)

6. Account Receivable - Person from whom amounts are due for goods sold or

services rendered or in respect of contractual obligations. Also termed as debtor,

trade debtor, sundry debtor. (ICAI) The words ‘Receivables’ and ‘Debtors’ are

used interchangeably.

7. Accounting Unit – An accounting unit shall be defined as a Zone, Circle,

Divisional or Ward office identified by the ULB as an unit for maintenance of

accounting records.(AFF)

8. Accounting Year - The “Official Year” or “Year” means a year commencing

on the first day of the Accounting period. (AFF)

9. Accrual - Recognition of revenues and costs as they are earned or incurred (and

not as money is received or paid). It includes recognition of transactions relating

to assets and liabilities as they occur irrespective of the actual receipts or

payments. (ICAI)

10. Accrual Basis of Accounting - The method of accounting whereby revenues

and expenses are identified with specific periods of time, such as a month or

year, and are recorded as incurred, along with acquired assets, without regard to

the date of receipt or payment of cash; distinguished from cash basis. (Kohler)

11. Accrued & Due - In respect to an asset (or a liability) it means a claim which

has become enforceable, which arises from the sale/rendering (purchase) of

goods/services or otherwise and has become receivable (payable).

In respect to an income (or an expense) it means the amount earned (incurred)

in an accounting period, for which a claim has become enforceable, and it arises

from the sale/rendering (purchase) of goods/services or otherwise and has

become receivable (payable). (AFF)

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.3

12. Accrued But Not Due - In respect to an asset (or a liability) it means a claim

which has not yet become enforceable, which accumulates with the passage of

time or arises from the sale/rendering (purchase) of goods/services which, on

the date of period-end, have been partly performed and are not yet receivable

(payable).

In respect to an income (or an expense) it means the amount earned (incurred)

in an accounting period, but for which no enforceable claim has become due in

that period. It accumulates with the passage of time or arises from the

sale/rendering (purchase) of goods/services goods which, at the date of

accounting, have been partly performed and are not yet receivable (payable).

(AFF)

13. Accumulated Depreciation - The total to date of the periodic depreciation

charges on depreciable assets. (ICAI)

14. Advance - Payment made on account of, but before completion of, a contract,

or before acquisition of goods or receipt of services. (ICAI)

15. Amortisation - The gradual and systematic writing off of an asset or an account

over an appropriate period. The amount on which amortisation is provided is

referred to as amortisable amount. Depreciation accounting is a form of

amortisation applied to depreciable assets. Depletion accounting is another form

of amortisation applied to wasting assets. Amortisation also refers to gradual

extinction or provision for extinction of a debt by gradual redemption or sinking

fund payments or the gradual writing off to revenue of miscellaneous

expenditure carried forward. (ICAI)

16. Annual Report - Any report prepared at yearly intervals.

A statement of the financial condition and operating results of an ULB, prepared

yearly for submission to interested parties; summarising its operations for the

preceding year and including a balance sheet, income & expenditure statement,

often a receipts & payment statement, and the auditor' s report, together with

comments by the Head of Council or the Municipal Commissioner of the ULB

on the year' s operations.

(Kohler)

17. Assets - Tangible objects or intangible rights owned by the ULBs and carrying

probable future benefits. (ICAI)

18. Assigned Revenues - Assigned revenues are revenues in the nature of a share in

the revenues of the state government, to compensate for certain losses in

revenue and arrangement of resources of the ULBs. The ratio of the share in

revenues is determined on the basis of the revenues collected by ULBs and the

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.4

recommendations of the State Finance Commissions and devolution of funds to

ULBs.(AFF)

19. Asset Replacement Fund - A fund created for the purpose of replacement of an

asset. The fund shall normally be equal to the amount of depreciation provided

on the Fixed Assets and shall be utilised only for the purpose of replacement of

those Fixed Assets or for any other purpose as resolved by the ULBs. (AFF)

20. Bad Debts - Debts owed to the ULBs, which are considered to be irrecoverable,

e.g., arrears of taxes, fees and other revenue left uncollected and considered to

be irrecoverable. (ICAI)

21. Balancing - In order to balance an account, the two sides, namely Debit and

Credit are totalled up separately and the difference is ascertained. This

difference is put on the side that is lower to balance the two sides of an account.

(AFF)

22. Balance Sheet - A statement of the financial position of an ULB as at a given

date, which exhibits its assets, liabilities, capital, reserve and other account

balances at their respective book values. (ICAI)

23. Bank Reconciliation Statement - A statement, which reflects the nature and

amount of transaction not responded either by the ULB or the Bank as on a

particular date. Such statement may also reflect errors/omission in the recording

of transaction inter-se between the ULB and the Bank. (ICAI)

24. Books of Original Entry - A record book, recognised by law or custom, in

which transactions are successively recorded, and which is the source of

postings to ledgers; a journal. Books of original entry include general and

special journals, such as cash books. (Kohler)

25. Budget - It means quantitative plan of activities and programs expressed in

terms of money in respect of assets, liabilities, revenues and expenses. The

budget expresses the ULB goals in terms of specific financial and operating

objectives. (ICAI)

26. Capitalisation - An expenditure for a fixed asset or addition thereto that has the

effect of enlarging physical dimensions, increasing productivity, lengthening

future life, or lowering future costs. (Kohler)

27. Capital Expenditure - An expenditure intended to benefit future period in

contrast to a revenue expenditure, which benefits a current period. The term is

generally restricted to expenditure that adds fixed asset units or that has the

effect of improving the capacity, efficiency, life span or economy of operations

of an existing asset. (Kohler)

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.5

28. Capital Work in Progress - Expenditure on capital assets which are in the

process of construction or completion. (ICAI)

29. Cash Book - A book of original entry for cash receipts, disbursements, or both.

(Kohler)

30. Cash flow Statement - A financial statement prepared for an accounting period

to depict the inflows and outflows of cash and cash equivalents of an enterprise.

The cash flow statement reports cash flows classified by operating, investing

and financing activities.(ICAI)

31. Casting - It means totalling of the amounts in the books of account. (AFF)

32. Chart of Accounts - A systematically arranged list of accounts applicable to a

specific concern, giving account names and numbers, if any. (Kohler)

33. Code of Account - A unique numeric or alphanumeric identification given to

each Account to facilitate classification and ease of recording. (AFF)

34. Contingent Liability - An obligation relating to an existing condition or

situation which may arise in future depending on the occurrence or non-

occurrence of one or more uncertain future events. (ICAI)

35. Contra Entry - An item on one side of an account which offsets fully or in part

one or more items on the opposite side of the same account. (Kohler)

36. Control Account - Control account is an account in the general ledger that consists

of related sub-accounts. The total of the related sub-accounts should total the balance

in the related control account. (AFF.)

37. Cost - The amount of expenditure incurred on or attributable to a specified

article, product or activity. (ICAI)

38. Cost of Acquisition - The cost of acquisition of a Fixed Asset comprises its

purchase price and includes import duties and other non-refundable taxes or

levies and any directly attributable cost of bringing the asset to its working

condition for its intended use; any trade discounts and rebates are deducted in

arriving at the purchase price. (ICAI)

39. Cost of Investment - The amount of expenditure incurred on or attributable to

the purchase/acquisition of an investment. The cost of an investment amongst

others includes acquisition charges such as brokerage, fees and duties. (AFF)

40. Credit - A book-keeping entry recording the reduction or elimination of an asset

or an expense, or the creation of or addition to a liability or item of net worth or

revenue; an entry on the right side of an account; the amount so recorded.

(Kohler)

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.6

41. Current Assets - Cash and other assets that are expected to be converted into

cash or consumed in rendering of services in the normal course of operations of

the ULBs. (ICAI)

42. Current Liability - Liability including loans, deposits and bank overdrafts

which fall due for payment in a relatively short period, normally not more than

twelve months. (ICAI)

43. Debenture - A formal document constituting acknowledgement of a debt by an

ULB, usually given under its common seal and normally containing provisions

regarding payment of interest, repayment of principal and security, if any. It is

transferable in the appropriate manner. (ICAI)

44. Debit - The goods or benefit received from a transaction; a book-keeping entry

recording the creation of or addition to an asset or an expense, or the reduction

or elimination of a liability, or item of net worth or revenue; an entry on the left

side of an account; the amount so recorded. (Kohler)

45. Deferred Revenue Expenditure - Expenditure for which payment has been

made or a liability incurred but which is carried forward on the presumption that

it will be of benefit over a subsequent period or periods. This is also referred to

as Deferred Expenditure. (ICAI)

46. Deficit - The excess of expenditure over income of the ULB for an Accounting

Period under consideration. (AFF)

47. Depreciable Amount - The historical cost, or other amount substituted for

historical cost of a depreciable asset in the financial statements, less the

estimated residual value. (ICAI)

48. Depreciable Asset – An asset which is expected to be used during more than

one accounting year, has a limited useful life, and is held by the ULBs for use in

the supply of goods and services, for rental to others, or for administrative

purposes and not for the purpose of sale in the ordinary course of operations of

the ULB. (ICAI)

49. Depreciation - A measure of the wearing out, consumption or other loss of

value of a depreciable asset arising from use, effluxion of time or obsolescence

through technology and market changes. It is allocated so as to charge a fair

proportion in each accounting period during the useful life of the asset. It

includes amortisation of assets whose useful life is predetermined and depletion

of wasting assets. (ICAI)

50. Depreciation Method - The arithmetic procedure followed in determining a

provision for depreciation (an expense) and maintaining the accumulated

balance. (Kohler)

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2.7

51. Depreciation Rate - A percentage which when applied to the depreciable

amount will yield depreciation expense for a year. (Kohler)

52. Dividend Income. An income received from investments by a ULB in

shares/units. (AFF)

53. Earmarked Funds – Funds representing Special Funds to be utilised for

specific purposes. (AFF)

54. Expenses - A cost relating to the operations of an accounting period or to the

revenue earned during the period or the benefits of which do not extend beyond

that period. (ICAI)

55. Financial Statement - A balance sheet, income statement (income and

expenditure), receipts & payment statement or any other supporting statement or

other presentation of financial data derived from accounting records. (ICAI)

56. Finished Goods - Goods held for sale in the ordinary course of business. (ICAI)

57. Fixed Asset - Asset held for the purpose of providing services and that is not

held for resale in the normal course of operations of the ULB. (ICAI)

58. Fixed Deposit - Deposit for a specified period and at specified rate of interest.

(ICAI)

59. Fund - The term fund refers to amount set aside for a general or specific

purpose, whether represented by specifically earmarked assets or not. (ICAI)

60. Folio reference - A page number or voucher or other number in a book or

document of original or final entry, which refers to the disposition or source of

an entry or posting. (Kohler)

61. Grants - Grants are assistance by government in cash or kind to an enterprise

for past or future compliance with certain conditions. They exclude those forms

of government assistance which cannot reasonably have a value placed upon

them and transactions with government which cannot be distinguished from the

normal trading transactions of the enterprise. (ICAI)

62. Gross Block - The total cost of acquisition/purchase of all the Fixed Assets of

the ULB. (AFF)

63. HirePurchase-Hire purchase agreement is a contract (more fully called

contract of hire with an option of purchase) in which a person hires goods for a

specified period and at a fixed rent, with the added condition that if he shall

retain the goods for the full period and pay all the installments of rent as they

become due the contract shall determine and the title vest absolutely in him.

(AFF)

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.8

64. Income - Money or money equivalent earned or accrued during an accounting

period, increasing the total of previously existing net assets, and arising from

provision of any type of services and rentals. (Kohler)

65. Income and Expenditure Statement - A financial statement, often prepared by

non-profit making entities like clubs, associations, ULBs, etc., to present their

revenues and expenses for an accounting period and to show the excess of

revenues over expenses (or vice-versa) for that period. It is similar to profit and

loss statement and is also called revenue and expense statement. (ICAI)

66. Interest - The service charge for the use of money or capital, paid at agreed

intervals by the user, and commonly expressed as an annual percentage of

outstanding principal. (Kohler)

67. Investments - Assets held not for operational purposes or for rendering

services, i.e., assets other than fixed assets or current assets (e.g. securities,

shares, debentures, immovable properties). (ICAI)

68. Inter unit transactions - Transactions between one or more accounting units

of the Urban Local bodies.(AFF)

69. Infrastructure Assets – Those assets with the characteristics of being, a part of

a system or network, specialised in nature and do not have alternative uses,

immovable, and subject to constraints on disposal. (AFF)

70. Journal Book - The book of original entry in which are recorded transactions

not provided for in specialised journals. (Kohler)

71. Joint Venture - Joint Venture is a contractual arrangement whereby two or

more parties undertake an economic activity to share expertise in a single

defined project, which is subject to joint control. (AFF)

72. Lapsed Deposits - Deposits unclaimed for more than such period or periods as

defined in the act or provisions governing the ULBs. (AFF)

73. Ledger - A compilation of all accounts used for accounting purposes. (AFF)

74. Lease - A lease is an agreement whereby the lessor conveys to the lessee in

return for a payment or series of payments the right to use an asset for an agreed

period. A lease agreement also includes a Hire Purchase agreement. A lease is

classified as a finance lease if it transfers substantially the entire risks and

rewards incident to ownership. All other leases are classified as operating leases.

(ICAI)

75. Liability - An amount owing by one person to another, payable in money, or in

goods or services: the consequence of an asset or service received or a loss

incurred or accrued; particularly, any debt (a) due or past due (current liability),

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.9

(b) due at a specified time in the future (e.g. funded debt, accrued liability), or

76. Long term investments - Any investment falling outside the ambit of current

investments are treated as long-term investments.(ICAI)

77. Mortgage - A lien on land, buildings, machinery, equipment, and other

property, fixed or movable, given by a borrower to the lender as security for his

loan; sometimes called a deed of trust. (Kohler)

78. Municipal fund - The municipal or general fund is the general operating fund

of an ULB. It is used to account for all financial resources except those related

to any special or trust funds.(AFF)

79. Narration - A brief description written below an Accounting Entry. It is

normally written in brackets and starts with the word Being . It explains as to

why the entry has been recorded and other related aspects of the entry. (AFF)

80. Net Assets - The excess of the book value of the assets of an accounting unit

over its liabilities to outsiders. (Kohler)

81. Net Block - Gross Block less Accumulated Depreciation of all the Fixed Assets

of the ULB. (AFF)

82. Period End - the last day of any Accounting Period, e.g., quarter, half-year,

year-end. (AFF)

83. Pooling of interest method - Pooling of interests is a method of accounting for

amalgamations the object of which is to account for the amalgamation as if the

separate operations of the amalgamating entities were intended to be continued

by the transferee entity. Accordingly, only minimal changes are made in

aggregating the individual financial statements of the amalgamating

entities.(ICAI)

84. Posting - An act of entering separately the debit and credit aspect of

transactions from the books of original entry in respective accounts maintained

in the ledger. (ICAI)

85. Prepaid Expense - Payment for expense in an accounting period, the benefit for

which will accrue in the subsequent accounting period(s). (ICAI)

86. Provision for Expense - An amount written off or retained by way of providing

for depreciation or diminution in value of assets or retained by way of providing

for any known liability the amount of which cannot be determined with

substantial accuracy. (ICAI)

87. Provision for Unrealised Revenue - A provision made for revenue considered

doubtful of recovery. (ICAI)

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.10

88. Qualifying Fixed Asset – A Qualifying Fixed Asset is an asset that necessarily

takes a substantial period of time to get ready for its intended use or sale.

Ordinarily a period of twelve months is considered as substantial period unless a

shorter or longer period can be justified on the basis of facts and circumstances

of the case. In estimating the period, the time which an asset takes,

technologically and commercially, to get it ready for its intended use or sale

should be considered. (ICAI)

89. Receipt - A written acknowledgement of something acquired; hence, an

accounting document recording the physical receipt of cash/cheques. (Kohler)

90. Receipts & Payments Statement - A financial statement prepared for an

accounting period to depict the changes in the financial position and to present

the cash received in and paid out in whatever form (cash, cheques, etc.) under

certain headings. All non-cash related transactions are ignored while preparing

this Statement.(AFF)

91. Reconciliation - It means adjusting the difference between two items (i.e.

amounts, balances, accounts or statements) so that the figures agree. (ICAI)

92. Report of the Municipal Chief Auditor - The formal expression of opinion by

the Municipal Chief Auditor on the Financial Statements, books of accounts and

transactions of the ULB. (AFF)

93. Revenue Expenditure - It means outlay benefiting only the current year. It is

treated as an expense to be matched against revenue. (ICAI)

94. Sinking Fund - A fund created for the repayment of a liability or for the

replacement of an asset. (ICAI)

95. Special Fund - An amount set aside for a specific purpose represented by

specifically earmarked assets. (ICAI)

96. Straight Line Method (SLM) - The method under which the periodic charge

for depreciation is computed by dividing the depreciable amount of a

depreciable asset by the estimated number of years of its useful life. (ICAI)

97. Sub-Account: One or more accounts that make up the Control Account. These sub-

accounts are related to the control account and provide more detail of the Control

Account. The total of the related sub-accounts will equal the related Control Account.

(AFF)

98. Surplus - The excess of income over expenditure of the ULB for an Accounting

Period under consideration. (AFF)

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.11

99. Short term investments - Those investments which are readily realisable, and

are intended to be held for not more than twelve months from the date of

investment (ICAI)

100. Trial Balance - A list or abstract of the balances or of total debits and total

credits of the accounts in a ledger, the purpose being to determine the equality

of posted debits and credits and to establish a basic summary for financial

statements. (Kohler)

101. Useful Life - The period over which a depreciable asset is expected to be used

by the enterprise; or (ii) the number of production or similar units expected to be

obtained from the use of the asset by the enterprise.(ICAI)

102. Voucher - A document which serves as an authorisation for any financial

transaction and forms the basis for recording the accounting entry for the

transaction in the books of original entry, e.g., Cash Receipt Voucher, Bank

Receipt Voucher, Journal Voucher, Payment Voucher, etc. (AFF)

103. Work in progress - Goods in the process of production for their sales or usage.

(ICAI)

104. Written Down Value (WDV) - In respect of a fixed asset means its cost of

acquisition or substituted value less accumulated depreciation. (ICAI)

105. Written Down Value (WDV) Method - A method under which the periodic

charge for depreciation of an asset is computed by applying a fixed percentage

to its historical cost or substituted amount less accumulated depreciation (net

book value). This is also referred to as Diminishing Balance Method . (ICAI)

ACCOUNTING CONCEPTS & ACCOUNTING CONVENTIONS

2.4 The Accounting Concepts and Accounting Conventions have been developed over the

years from experience, reason, usage and necessity and are generally accepted for accounting

of transactions and preparation of Financial Statements.

2.5 Accounting Concepts are the necessary assumptions, conditions or postulates upon

which the accounting is based. They are developed to facilitate communication of the

accounting and financial information to all the readers of the Financial Statements, so that all

readers interpret the statements in the same meaning and context.

2.6 The Accounting Concepts are as follows:

a. Entity Concept;

b. Dual Aspect or Accounting Equivalence Concept;

c. Going Concern Concept;

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.12

d. Money Measurement Concept;

e. Cost Concept;

f. Accounting Period Concept;

g. Accrual Concept;

h. Periodic Matching of Cost and Revenue Concept; and

i. Realisation Concept.

2.7 Accounting conventions are the customs or traditions guiding the preparation of

accounts. They are adopted to make financial statements clear and meaningful. The

Accounting Conventions are as follows:

a. Convention of Disclosure;

b. Convention of Materiality;

c. Convention of Consistency; and

d. Convention of Conservatism.

ACCOUNTING CONCEPTS

2.8 Each of the Accounting Concepts is discussed below:

Entity Concept

2.9 For accounting purposes, an organisation is treated as a separate entity from the

owners or stakeholders . This concept helps in keeping private affairs of the owners and

stakeholders separate from the business affairs. For example, a ULB is a separate,

independent and autonomous entity and is governed by a separate legislation and the

regulations formed by it. The various stakeholders of the ULBs, including citizens, State

Government, environmentalists, etc., do not own the ULBs. Thus, a separate Balance Sheet

and Income & Expenditure Statement is prepared in respect of the operations of the ULB.

This concept is applicable to all forms of organisations.

Dual Aspect or Accounting Equivalence Concept

2.10 This concept follows from the Entity Concept. All entities own certain assets. Such

assets are acquired through contributions of those who have provided the funds for the

purpose. Funds are made available either through the surpluses of the entity or loans or

payables. In a sense, such providers of funds are claimants to the assets. At any point in time,

the assets will be equal to the claims. Since the claims on the assets could be those of

outsiders (i.e. liabilities) or owners (i.e. capital, reserves, etc.), it results in the accounting

equation:

Assets = Own Funds + Liabilities

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.13

Going Concern Concept

2.11 It is assumed that the organisation will continue for a long time, unless and until it has

entered into a state of liquidation. It is as per this concept, that the accountant does not take

into consideration the market value of the assets while valuing them, irrespective of whether

the market value is higher or lower than the book value. Similarly, depreciation on fixed

assets is provided on the basis of expected lives of the assets rather than on their market

values. Also, the financial statements are prepared at defined period-end to measure the

performance of the entity during that period and not only on the closure or liquidation of the

entity.

Money Measurement Concept

2.12 In accounting, every transaction is recorded in terms of money. Events or

transactions that cannot be expressed in terms of money are not recorded in the books of

accounts. Receipt of income, payment of expenses, purchase and sale of assets, etc., are

monetary transactions that are recorded in the books of accounts. For example, the event of a

machinery breakdown is not recorded as it does not have a monetary value. However, the

expenditure incurred for the repair of the machinery can be measured in monetary value and

hence is recorded.

Cost Concept

2.13 As per this concept, an asset is ordinarily recorded at the price paid to acquire it, i.e.,

at its cost and this cost is the basis for all subsequent accounting for the asset. The cost

concept does not mean that the asset will always be shown at cost. This basically signifies

that each time the financial statements are prepared, the fixed assets need not be revised and

recorded at its realisable or replacement or market value. The assets recorded at cost at the

time of purchase may systematically be reduced through depreciation.

Accounting Period Concept

2.14 An accounting period is the interval of time at the end of which the financial

statements are prepared to ascertain the financial performance of the organisation. Although

the going concern concept stresses the continuing nature of the entity, it is necessary for an

organisation (e.g. ULB) to review how it is performing. The preparation of financial

statements at periodic intervals helps in taking timely corrective action and developing

appropriate strategies. The accounting period is normally considered to be of twelve months.

Accrual Concept

2.15 Under the cash system of accounting, the revenues and expenses are recorded only if

they are actually received or paid in cash, irrespective of the accounting period to which they

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.14

belong. But under the accrual concept, occurrence of claims and obligations in respect of

incomes or expenditures, assets or liabilities based on happening of any event, passage of

time, rendering of services, fulfillment (partially or fully) of contracts, diminution in values,

etc., are recorded even though actual receipts or payments of money may not have taken

place. In respect of an accounting period, the outstanding expenses and the prepaid expenses

and similarly the income receivable and the income received in advance are shown separately

in the books of accounts under the accrual method.

Periodic Matching of Cost and Revenue Concept

2.16 To ascertain the surplus or deficit made by the entity during an accounting period, it is

necessary that the costs incurred are matched with the revenue earned by the entity during that

accounting period. The matching concept is a corollary drawn from the accrual concept. To

ascertain the correct surplus or deficit, it is necessary to make adjustments for all outstanding

expenses, prepaid expenses, income receivable and income received in advance to correctly

depict and match the income and expenditure relating to that accounting period.

Realisation Concept

2.17 According to this concept, revenue should be accounted for only when it is actually

realised or it has become certain that the revenue will be realised. This signifies that revenue

should be recognised only when the services are rendered or the sale is effected. However, in

order to recognise revenue, actual receipt of cash is not necessary. What is important is that

the organisation should be legally entitled to receive the amount for the services rendered or

the sale effected.

ACCOUNTING CONVENTIONS

2.18 Each of the accounting conventions are discussed below.

Convention of Disclosure

2.19 The term disclosure implies that there must be a sufficient revelation of information

which is of material interest to owners, creditors, lenders, investors, citizen and other

stakeholders. The accounts and the financial statements of an entity should disclose full and

fair information to the beneficiaries in order to enable them to form a correct opinion on the

performance of such entity, which in turn would allow them to take correct decisions. For

example, the Accounting Principles that have been followed for preparation of the Financial

Statements should be disclosed along with the Financial Statements for proper understanding

and interpretation of the same.

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.15

Convention of Materiality

2.20 An item should be regarded as material, if there is a sufficient reason to believe that

knowledge of it would influence the decision of informed creditors, lenders, investors, citizen

and other stakeholders. The accounts and the financial statements should impart importance

to all material information so that true and fair view of the state of affairs of the entity is

given to its beneficiaries. Hence, keeping the convention of materiality in view, unimportant

items are not disclosed separately and are merged with other items. For example, the

expenditure incurred on repairs and maintenance of a certain asset of the ULBs, which are

small, may not be disclosed separately in respect of each such small item but may be grouped

together and shown as a single item of expenditure.

Convention of Consistency

2.21 The convention of consistency facilitates comparison of financial performance of an

entity from one accounting period to another. This means that the accounting principles

followed by an entity should be consistently applied by it over the years. For example, an

organisation should not change its method of depreciation every year, i.e., from Straight Line

Method to Written Down Value Method or vice-versa. Similarly, the method adopted for

valuation of stocks, viz., First In First Out (FIFO) or Weighted Average should be

consistently followed. In case a change is made, it should be disclosed.

Convention of Conservatism

2.22 As per this convention, the anticipated profits should be ignored but all anticipated

losses should be provided for in the books of accounts of an entity. This means that all

prospective losses are taken into consideration, however, no doubtful income is taken into

consideration in recording of transactions by an entity. For example, while provision for

doubtful debts and discount is made on debtors or Accounts Receivable, no provision is made

for likely discount receivable from creditors or Accounts Payable. Similarly, provision is

made for diminution in value of investments, however, no provision is made for any

appreciation in value of investments.

ACCRUAL SYSTEM OF ACCOUNTING

2.23 Accrual system of accounting means a method of recording financial transactions

based on accrual, i.e., on occurrence of claims and obligations in respect of incomes or

expenditures, assets or liabilities based on happening of any event, passage of time, rendering

of services, fulfillment (partially or fully) of contracts, diminution in values, etc., even though

actual receipts or payments of money may not have taken place.

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2.16

2.24 In this system, there is a change in accounting for transactions and reporting the

financial results so as to provide the ULBs and the Government with the Financial Reports, in

the form of two important financial statements for the purposes noted against each:

Statement Purpose

Income & Expenditure Statement To determine the financial performance

of the ULBs

Balance Sheet To assess the financial status of the ULBs

BENEFITS OF ACCRUAL SYSTEM OF ACCOUNTING

2.25 The accrual basis of accounting helps in determination of correct income and

expenditure of the municipal bodies. The main benefits of accrual based accounting system

are enumerated below:

¾Revenue is recognised as it is earned and thus “Income” constitutes both revenue

received and receivable. The accrual basis not only records the actual income but

also highlights the level and efficacy of revenue collection, thereby assisting

decision makers in taking financial decisions.

¾Expenditure is recognised as and when the liability for payment arises and thus it

constitutes both amount paid and payable. In accrual basis of accounting,

expenditure incurred on repairs and maintenance shall be recognised as expense of

the period in which they are incurred and, if not paid for during the year, shall be

treated as a liability (payable) and be disclosed as such in the Balance Sheet.

¾Expenses are matched with the income earned in that year. Thus, it provides a very

effective basis to understand the true performance of the organisation for the

operations that is conducted in that year.

¾A distinct difference is maintained between items of revenue nature and capital

nature. This helps in correct presentation of financial statements, viz., the Income

and Expenditure Statement and the Balance Sheet.

¾Costs which are not charged to Income & Expenditure Account are carried

forward and kept under continuous review. Any cost that appears to have lost its

utility or its power to generate future revenue is written-off.

¾The surplus or deficit as shown at the year-end represents the correct financial

position of the organisation arising out of the various transactions during that year.

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.17

¾It facilitates proper financial analysis and reporting.

¾It captures “full” cost of servicing and helps in identifying financial viability of

rendering services.

¾It helps in providing timely, right quality and nature of information for planning,

decision-making and control at each level of management.

¾It assists in effective follow-up of receivables by the municipal body and proper

ascertainment of payables by the municipal body.

¾One of the distinct advantages of adopting accrual accounting system is ease in

financial appraisals by the financial institutions. It also facilitates credit rating

through approved Credit Rating Agencies, which is a pre-requisite for mobilising

funds in the financial markets through debt instruments.

¾It presents a true picture of the financial position of an organisation and helps in

better financial management.

2.26 Thus, accrual basis of accounting results in recording of transactions and events on the

basis of their substance, rather than merely when cash is received or disbursed, and thus,

enhances their relevance, neutrality, timeliness, completeness and comparability.

RULES OF ACCOUNTING

2.27 The basic rules of accounting flow from the accounting equation:

Assets = Own Funds + Liabilities

2.28 An increase in the asset, e.g., Vehicle can be brought about by:

a. Decrease in another asset, e.g., Bank Account, or

b. Increase in liability, e.g., Loans or Payables.

2.29 An decrease in the asset, e.g., Cash may result in:

a. Increase in another asset, e.g., Medical Equipment

b. Decrease in liability, e.g., Payment of Loans or payment of suppliers

outstanding

c. Decrease in own funds through expenditure.

2.30 It is customary to use the term “Debit” a n d “ Credit” to communicate the above

phenomenon. The rules of debits and credits are as follows:

National Municipal Accounts Manual Definitions, Accounting Concepts & Conventions

2.18

Type of Account Debit Signifies Credit Signifies

Asset Accounts Increases Decreases

Liability Accounts Decreases Increases

Own Funds Decreases Increases

2.31 An Accounting Entry would be a combination of a single debit and a single credit or a

set of debits and a set of credits, as may be appropriate. Following the accounting equation of

Assets = Claims, the debits will always equal credits.

2.32 If we were to expand on the above, the following will be the rules applicable to

incomes, expenditures, grants, etc.

Type of Account Debit Signifies Credit Signifies

Income (which will increase

Own Funds)

Decreases Increases

Expenditure (which will

decrease Own Funds)

Increases Decreases

Grants Received Decreases Increases

National Municipal Accounts Manual Significant Accounting Principles

3.1

CHAPTER 3

SIGNIFICANT ACCOUNTING

PRINCIPLES

3.1 This chapter contains a compilation of the Significant Accounting Principles to be

followed in preparation of the accounts of the Urban Local Body.

3.2 The Financial Statements of the Local Body shall contain a Statement of Significant

Accounting Principles as notes to accounts in respect of important Accounting Principles

adopted in preparing and presenting such information. The Significant Accounting Principles

as mentioned in this chapter shall be followed consistently each year.

3.3 Where any of the Accounting Principles adopted by the local body while preparing its

Financial Statements is not in conformity with the principles prescribed in this chapter and

the effect of deviation from the Accounting Principles is material, the particulars of the

deviation shall be disclosed, together with the reasons and the financial effect thereof, except

where such effect is not ascertainable. In case the financial effect thereof is not ascertainable,

either wholly or in part, the fact that it is not so ascertainable shall be indicated.

3.4 Likewise, any change in the Accounting Principles which has no material effect on

the Financial Statements for the current period but which is reasonably expected to have a

material effect in later periods, the fact of such change should be appropriately disclosed in

the Financial Statements of the period in which the change is adopted.

3.5 The following Accounting Principles shall govern the recording, accounting and

treatment of transactions relating to various activities as given below:

National Municipal Accounts Manual Significant Accounting Principles

3.2

3.6 Property and Other Taxes

a. Revenue in respect of Property and Other Taxes shall be recognised in the period

in which they become due and demands are ascertainable.

b. In case of new or changes in assessments, it can be accrued in the month in which

the demand is served.

c. Interest element and Penalties, if any, in demand shall be reckoned only on receipt.

d. Revenue in respect of Notice Fee, Warrant Fee and Other Fees charged shall be

recognised when the bills for the same are raised.

e. Revenue in respect of Property Transfer Charges shall be recognised on actual

receipt.

f. Collections to be made on behalf of state Government i.e., State Education Cess,

Employment Guarantee Cess and Library Cess and included in the Property tax

demand shall be reckoned together with Property tax demand and credited to a

control account called “State Government Levies in Taxes- Control Account.”

g. The liability towards dues to the State Government for collections on its behalf

shall be recognised as and when they are collected.

h. Revenue in respect of Rebate from State Government for collection made on their

behalf shall be recognised at the rates prescribed by the State Government at the

time of creating the liability to the State Government.

i. In respect of the demand outstanding beyond two (2) years, provision shall be

made to the extent of income of the ULB in the demand, based on the following

provisioning norms:

¾Outstanding for more than 2 year but not exceeding 3 years: 25%

¾Outstanding for more than 3 years but not exceeding 4 years: 50% (additional

25%)

¾Outstanding for more than 4 years but not exceeding 5 years: 75% (additional

25%)

Outstanding for more than 5 years: 100% (additional 25%)

j. While making provision for receivables as stated above, the relevant proportion

‘State Govt. Cesses/ levies in Property Taxes - Control account’ shall also be

provided by debiting to a separate account.

k. Any additional provision for demand outstanding (net on overall basis) required to

be made during the year shall be recognised as expenditure and any excess

provision written back during the year shall be recognised as income of the ULB.

National Municipal Accounts Manual Significant Accounting Principles

3.3

l. Refunds, remissions of taxes for the current year shall be adjusted against the

income and if pertain to previous years then it shall be treated as prior period item

m. Write-offs of taxes shall be adjusted against the provisions made and to that extent

recoverable gets reduced.

n. Any subsequent collection or recovery of ‘Receivables for Property & Other

Taxes,” which were already written off shall be recognised as a ‘Prior Period

Income’.

o. Demands raised with retrospective effect will be treated as prior period income to

the extent it pertains to earlier years.

p. Part-payments received in respect of Property and Other Tax levies shall be

adjusted as per applicable Act of the state.

q. Wherever self-assessment of taxes are prevalent, income can be accrued based on

records available with the local body when it becomes due as per the provisions of

the respective municipal Acts. Further, changes arising out of self-assessment will

be treated as ‘Change in Demand’ and will be accounted accordingly

3.7 Octroi

a. Revenue in respect of octroi payable on spot assessment for non-current account

importers shall be recognised on actual receipt.

b. Revenue in respect of penalties, transit fees, etc., shall be recognised on actual

receipt.

c. In case of Account Current facility holders, revenue in respect of octroi shall be

recognised on a valuation/assessment being done at the time of the entry of the

goods within the municipal limits.

d. In cases where a provisional assessment is made, revenue shall be recognised in

respect of the entire amount received provisionally or by way of deposit. At the

time of final assessment, the additional amount recovered, if any shall be

recognised as revenue when recovered.

e. Refunds shall be recognised as expenditure as and when the amounts are

determined.

f. Transit Deposits and/or any other deposits collected, including Security Deposit

collected from account current importers, shall be recognised as a liability when

received and such liability shall be settled on its refund.

g. The Transit Deposit and/or any other deposit received if forfeited shall be

recognised as income in the year in which the right for claiming refund of deposit

has expired.

National Municipal Accounts Manual Significant Accounting Principles

3.4

h. Octroi on Consumption of electricity shall be recognised as income on actual

receipt during the year. However, at year-end alone, it shall be accrued if sanction

order (or proceedings) is passed and the amount is ascertained.

3.8 Cess

a. Revenue in respect of collection of Cess Income with Returns (on filing of returns

by the dealers) shall be recognised on actual receipt.

b. Revenue in respect of Cess Income on Assessment shall be recognised in the

period in which they become due, i.e., when the demand is raised.

c. Revenue in respect of Cess Registration Fee, Interest and Penalties levied on

assessment shall be recognised on actual receipt.

d. In respect of the demand outstanding beyond two (2) years, provision shall be

made to the extent of income of the ULB in the demand, based on the following

provisioning norms:

¾Outstanding for more than 2 year but not exceeding 3 years: 50%

¾Outstanding for more than 3 years: 100% (additional 50%)

e. Any additional provision for demand outstanding (net on overall basis) required to

be made during the year shall be recognised as expenditure and any excess

provision written back during the year shall be recognised as income of the ULB.

f. Refunds, remissions of Cess for the current year shall be adjusted against the

income and if pertain to previous years then it shall be treated as prior period item.

g. Write-offs of Cess shall be adjusted against the provisions made and to that extent

recoverable gets reduced

h. Any subsequent collection or recovery of Receivables of Cess Income which

were already written off shall be recognised as a Prior Period Income .

i. Demands raised with retrospective effect will be treated as prior period income to

the extent it pertains to earlier years

3.9 Water Supply

a. Revenue in respect of Water Tax, Water Benefit Tax, Water Supply Charges,

Water Meter Rent, Sewerage charge, Disposal charges shall be recognised in the

period in which they become due, i.e., when the bills are raised. It is to be noted

that the water tax and the related taxes may also be included in the bill raised for

the property tax.

b. Revenue in respect of Notice Fee, Warrant Fee, Other Fees shall be recognised

when the bills for the same are raised.

National Municipal Accounts Manual Significant Accounting Principles

3.5

c. Revenue in respect of Connection Charges for Water Supply shall be recognised

on actual receipt.

d. Revenue in respect of Water Tanker Charges and Road Damage Recovery

Charges, Penalties shall be recognised on actual receipt.

e. In respect of the demand outstanding beyond two (2) years, provision shall be

made to the extent of income of the ULB in the demand as follows

¾If water tax is collected as a component in Property Tax, provisioning shall be

made in the same way as unrealised Property Tax, which is as follows:

•Outstanding for more than 2 year but not exceeding 3 years: 25%

•Outstanding for more than 3 years but not exceeding 4 years: 50%

(additional 25%)

•Outstanding for more than 4 years but not exceeding 5 years: 75%

(additional 25%)

•Outstanding for more than 5 years: 100% (additional 25%)

¾If water tax demand is raised separately, the taxes and charges shall be

provided as follows:

•Outstanding for more than 2 year but not exceeding 3 years: 50%

•Outstanding for more than 3 years: 100% (additional 50%)

f. Any additional provision for demand outstanding (net on overall basis) required to

be made during the year shall be recognised as expenditure and any excess

provision written back during the year shall be recognised as income of the ULB.

g. Refunds, remissions of taxes for the current year shall be adjusted against the

income and if pertain to previous years then it shall be treated as prior period item.

h. Write-offs of taxes shall be adjusted against the provisions made and to that extent

recoverable gets reduced

i. Any subsequent collection or recovery of Receivables of Water Supply Income

which were already written off shall be recognised as a Prior Period Income .

3.10 Assigned Revenues

a. Assigned revenues like Entertainment Tax, Duty / Surcharge on transfer of

Immovable properties, shall be accounted during the year only upon actual

collection. However, at year-end alone, these shall be accrued if sanction order (or

proceedings) is passed and the amount is ascertained.

b. Based on the review of recoverable position of the Receivables of Assigned

Revenues , the amount of outstanding assigned revenues to be provided or written

National Municipal Accounts Manual Significant Accounting Principles

3.6

off shall be ascertained and accounted accordingly on obtaining the relevant

approval.

3.11 Rentals, Fees and Other Sources of income

a. Revenue in respect of Advertisement rights shall be accrued either based on

Demand or based on the contract.

b. Revenue in respect of Trade License Fees shall be accrued in the year to which it

pertains and where the Demand is raised based on applicable Acts of the state.

c. Revenues in respect of Profession Tax on Organisations / entities shall be accrued

in the year to which it pertains where the demand is raised based on applicable

Acts of the state.

d. Revenues in respect of rents from properties shall be accrued based on terms of

agreement.

e. Other income, in respect of which demand is ascertainable and can be raised in

regular course of operations of the ULB, shall be recognised in the period in

which they become due, i.e., when the bills are raised.

f. The Other Incomes, which are of an uncertain nature or for which the amount is

not ascertainable or where demand is not raised in regular course of operations of

the ULB, shall be recognised on actual receipt.

g. Revenue in respect of Notice Fee, Warrant Fee, Other Fees shall be recognised

when the bills for the same are raised.

h. Interest element and Penalties, if any, in demand shall be reckoned only on

receipt.

i. In respect of the demand outstanding beyond two (2) years, provision shall be

made to the extent of income of ULB in the demand, based on the following

provisioning norms:

¾Outstanding for more than 2 year but not exceeding 3 years: 50%

¾Outstanding for more than 3 years: 100% (additional 50%)

j. Any additional provision for demand outstanding required to be made during the

year shall be recognised as expenditure and any excess provision written back

during the year shall be recognised as income of the ULB.

k. Refunds, remissions of Other Incomes for the current year shall be adjusted

against the income and if pertain to previous years then it shall be treated as prior

period item.

l. Write-offs of Other Incomes shall be adjusted against the provisions made and to

that, extent recoverable is reduced.

National Municipal Accounts Manual Significant Accounting Principles

3.7

m. Any subsequent collection or recovery of ‘Receivables of Rental, Fees and Other

Incomes’ which were already written off shall be recognised as a ‘Prior Period

Income’.

3.12 Public Works

a. The cost of fixed assets shall include cost incurred/money spent in acquiring or

installing or constructing fixed asset, interest on borrowings attributable to

acquisition or construction of qualifying fixed assets up to the date of

commissioning of the assets and other incidental expenses incurred up to that date.

b. Any addition to or improvement to the fixed asset that results in increasing the

utility or capacity or useful life of the asset shall be capitalised and included in the

cost of asset. Revenue expenditure in the nature of repairs and maintenance

incurred to maintain the asset and sustain its functioning or the benefit of which is

less than for a year, shall be charged off

c. Assets under erection/installation on existing projects and capital expenditures on

new projects (including advances for capital works and project stores) shall be

shown as "Capital Work-in-Progress".

d. The Earnest Money Deposit and Security Deposit received if forfeited shall be

recognised as income when the right for claiming refund of deposit has expired.

e. Deposit received under Deposit works shall be treated as a liability till such time

the projects for which money is received is completed. Upon completion of the

projects, the cost incurred against it shall be reduced from the liability.

f. Revenues (percentage charges) in respect of Deposit works shall be accrued along

with expenditure of Deposit works.

3.13 Stores

a. Expenditure in respect of material, equipment, etc., procured shall be recognised

on accrual basis, i.e., on admission of bill by the ULB in relation to materials,

equipment, etc., delivered.

b. Accounting of ‘goods received & accepted but no bills received’ as at the cut off

date shall be accounted based on purchase orders.

c. The stock lying at the period-end shall be valued at cost in accordance with the

First in – First out Method.

d. Revenue in respect of disposal of material shall be recognised on actual receipt.

e. Finished goods and work- in progress related to production produced for sale will

be valued at cost. Cost of finished and work-in-progress includes all direct costs

National Municipal Accounts Manual Significant Accounting Principles

3.8

and applicable production overheads to bring the goods to the present location and

condition.

3.14 Employee Related Transactions

a. Expenses on Salaries and other allowances shall be recognised as and when they

are due for payment (i.e. at the month end).

b. Statutory deductions from salaries including those for income tax, profession tax,

provident fund contribution, etc., shall be recognised as liability in the same period

in which the corresponding salary is recognised as expense.

c. Formation of Trusts shall be considered for management of Provident Funds.

However it will be the responsibility of the Urban Local Body to form the trusts

and meet the shortfall of the fund if any.

d. Provident Funds money shall be invested as per the guidelines applicable to any

Employee Provident Fund.

e. Separate Funds may also be formed for meeting the pension and other retirement

benefits including Gratuity and Leave encashment. State Governments can decide

on this and can define the modus operandi also. State may form Trusts either at the

state level or at the municipal level.

f. Contribution due towards Pension and other retirement benefit funds shall be

recognised as an expense and a liability. State Government to define the rate of

contribution. One basis for such rate could be at the rate generally prescribed for

state government employees on deputation. Actuarial valuation has not been

considered due to practical limitations of the ULBs. If an ULB wants to make an

actuarial valuation, their applicable state laws can guide this.

g. Interest receivable on loans given to employees shall be recognised as revenue at

the end of the period in which these have accrued.

h. In respect of loans to employees, penal interest leviable on default in repayment of

principal or payment towards interest shall be recognised on accrual basis.

i. Bonus, ex-gratia, overtime allowance, other allowances and reimbursements to the

employees shall be recognised as an expense as and when they are due for

payment.

National Municipal Accounts Manual Significant Accounting Principles

3.9

3.15 Health and Sanitation:

a. Revenue in respect of the following shall be recognised on actual receipt.

i. Hospital fees, maternity homes fees, diagnostic centre fees and dispensaries

fees

ii. Hospital training fees

iii. Rent and/or hire charges in respect of ambulance, hearse, suction unit, meat

van and road roller

iv. Sale of fertilisers and waste, sale of animals and sale of scrap.

b. Revenue in respect of Trade License Fees shall be accrued in the year to which it

pertains and where the Demand is raised based on applicable Acts of the state.

c. Revenue in respect of rent of equipment provided to the contractors, deducted

from their bills, shall be recognised as and when the deductions are made.

d. All revenue expenditures incurred shall be recognised on admission of the bills for

payment by the ULB.

e. Provision shall be made at the year-end for all bills received upto a cut off date

(30th April of next financial year). However state governments depending on

practicality and materiality involved can decide on this.

3.16 Other Revenue Expenditures

a. Other Revenue Expenditures shall be treated as expenditures in the period in

which they are incurred.

b. Provisions shall be made at the year-end for all bills received upto a cut off date

(30th April of next financial year). However state governments depending on

practicality and materiality involved can decide on this.

c. Any expenditure for which the payment has been made in the current period but

the benefit and/or service is likely to arise in a future period shall be treated as an

expenditure for the period in which its benefit arises and/or services are received.

d. The expenditure for the current period shall include the proportionate value of the

benefits and/or services arising in the current period even if the payment therefor

has been made in the previous period.

3.17 Grants

a. General Grants, which are of a revenue nature, shall be recognised as incomes on

actual receipt.

National Municipal Accounts Manual Significant Accounting Principles

3.10

b. Grants towards revenue expenditure, received prior to the incurrence of the

expenditure, shall be treated as a liability till such time that the expenditure is

incurred.

c. Grants received or receivable in respect of specific revenue expenditure shall be

recognised as income in the accounting period in which the corresponding revenue

expenditure is charged to the Income and Expenditure Account.

d. Grants received towards capital expenditure shall be treated as a liability till such

time that the fixed asset is constructed or acquired. On construction/acquisition of

a fixed asset out of the grants so received, the extent of liability corresponding to

the value of the asset so constructed/acquired shall stand reduced and the amount

shall be treated as a capital receipt and shall be transferred from the respective

Specific Grant Account to the Capital Contribution.

e. Capital Grants received as a nodal agency or as implementing agency for an

intended purpose, which does not, result in creation of assets with ownership

rights for the ULB shall be treated as a liability till such time it is used for the

intended purpose. Upon utilisation for the intended purpose, the extent of liability

shall stand reduced with the value of such utilisation and no further treatment, as a

capital receipt shall be required.

f. Grants in the form of non-monetary assets (such as fixed assets given at a

concessional rate) shall be accounted for on the basis of the acquisition cost. In

case a non-monetary asset is received free of cost, it shall be recorded at a nominal

value (e.g. Rupee One).

g. Income on investments made from Specific Grants received in advance shall be

recognised and credited to the Specific Grant, whenever accrued. Profit/loss, if

any, arising on disposal of investments made from the Specific Grant received in

advance shall also be recognised and credited/debited to the Specific Grant.

3.18 Borrowings or Loans received

a. Interest expenditure on loan shall be recognised on accrual basis.

b. Interest on borrowings directly attributable to acquisition or construction of

qualifying fixed assets up to the date of commissioning of the assets shall be

capitalised.

c. A provision shall be made for the interest accrued between the date of last

payment of interest and the date of financial statements and shall be charged to the

current period s Income and Expenditure Statement.

d. The expenses incurred while issuing debentures or Bonds (Issue Expenses) shall

be deferred and amortised in equal installments over a period of 5 years or the

National Municipal Accounts Manual Significant Accounting Principles

3.11

tenure of the loan whichever is earlier. In case, the debentures and bonds are

prematurely redeemed, the amount of issue expenses outstanding during the year

shall be written-off and charged to the Income and Expenditure Statement as

expense of the year when this happens. However, all other expenses in respect of

raising loans other than those considered, as issue expenses shall be expensed off

in the year in which they are incurred.

3.19 Special Funds

a. Special Funds shall be treated as a liability on their creation.

b. Income on investments made from Special Fund shall be recognised and credited

to Special Fund, whenever accrued. Profit/loss, if any, arising on disposal of

investments made from the Special Fund shall be recognised and credited/debited

to Special Fund Account.

c. Any expenditure of a revenue nature, which is incurred specifically on

scheme/project for which a Special Fund has been created, shall be charged to that

Special Fund.

d. On completion of the construction of a fixed asset and/or on acquisition of a fixed

asset out of a Special Fund, the amount equivalent to the cost of such fixed asset

shall be transferred from the respective Special Fund to the Special Fund

(Utilised).

3.20 Investments

a. Investment shall be recognised at cost of investment. The cost of investment shall

include cost incurred in acquiring investment and other incidental expenses

incurred for its acquisition.

b. All long-term investments shall be carried / stated in the books of accounts at their

cost. However in the event of any permanent diminution in their value as on the

date of balance sheet, these shall be provided for.

c. Short-term investments shall be carried at their cost or market value (if quoted)

whichever is lower.

d. Interest on investments shall be recognised as and when due. At period-ends,

interest shall be accrued proportionately.

e. Dividend on investments shall be recognised on actual receipt.

f. Profit/loss, if any, arising on disposal of investment (net of selling expense such as

commission, brokerage, etc) from the Municipal Fund shall be recognised in the

year when such disposal takes place.

National Municipal Accounts Manual Significant Accounting Principles

3.12

g. Income on investments made from Special Fund and Grants under specific

Scheme shall be recognised and credited to Special Fund and Grants under

Specific Scheme respectively, whenever accrued. Profit/loss, if any, arising on

disposal of investments (net of selling expense such as commission, brokerage,

etc) made from the Special Fund and Grants under specific Scheme shall be

recognised and credited/debited to Special Fund Account and Grant under specific

scheme Account respectively. However, interest or gains from an investment made

from grants received as reimbursements, shall be credited to Municipal / General

fund of the ULB instead of the Grant account.

3.21 Fixed Assets

a. All Fixed Assets shall be carried at cost less accumulated depreciation. The cost of

fixed assets shall include cost incurred/money spent in acquiring or installing or

constructing fixed asset, interest on borrowings directly attributable to acquisition

or construction of qualifying fixed assets up to the date of commissioning of the

assets and other incidental and indirect expenses incurred up to that month.

b. Any addition to or improvement to the fixed asset that results in increasing the

utility or useful life of the asset shall be capitalised and included in the cost of

fixed asset.

c. Any Fixed Asset, which has been acquired free of cost or in respect of which no

payment has been made, shall be recorded at nominal value of Re. 1/-.

d. All assets costing less than Rs.5,000 (Rupees Five thousands) would be expensed

/ charged to Income & Expenditure Account in the year of purchase

e. An increase in net book value arising on revaluation shall be credited to a reserve

account under the Municipal fund as Revaluation Reserve Account . A decrease

in net book value arising on revaluation of fixed assets is charged to Income and

Expenditure accounts.

f. Revaluation of a class of assets shall not result in the net book value of that class

being greater than the recoverable amount of the assets of that class.

g. Revaluation reserve shall be reduced by transfer of equivalent amount of

depreciation charged on the revalued portion of the cost of the fixed assets.

h. Depreciation shall be provided at the rates prescribed by the state. Depreciation on

all fixed assets is to be provided consistently on either Written down Value or

Straight Line Method. (A task Force is being set up to prescribe life and rates of

Depreciation for different type of assets of ULBs).

National Municipal Accounts Manual Significant Accounting Principles

3.13

i. Depreciation shall be provided at full rates for assets, which are

purchased/constructed before October 1 of an Accounting Year. Depreciation shall

be provided at half the rates for assets, which are purchased/constructed on or

after October 1 of an Accounting Year.

j. Depreciation shall be provided at full rates for assets, which are disposed on or

after October 1 of an Accounting Year. Depreciation shall be provided at half the

rates for assets, which are disposed before October 1 of an Accounting Year.

k. Assets recorded in the register but not physically available shall be written off

after a specified period as defined by the State/Municipal act or rules governing

the ULBs. The authority levels for the respective State/Municipal act or rule shall

also define authorising the write off. However the specified period shall not

exceed five years.

3.22 Lease and Hire Purchase

a. Finance lease in the books of lessee

¾At the commencement of the lease term, finance leases shall be recorded as

an asset and a liability. Such recognition shall be at an amount equal to the

cost.

¾Finance lease payments shall be apportioned between the finance charge

and the reduction of the outstanding liability. The finance charge shall be

allocated as to produce a constant periodic rate of interest on the remaining

balance of the liability for each of the period.

¾Depreciation on such assets shall be provided at the same rates as in case

of owned assets.

b. Operating lease in the books of Lessor

¾Assets given under operating lease shall be accounted as own assets in the

same manner similar to any other fixed assets owned and used by the ULB.

¾Lease income from operating leases shall be recognised as income on a

straight-line basis over the lease term. Lease income shall be accrued on

the respective due dates.

¾Any amount incurred that results in improvement or increase of the useful

life of the assets under operating lease shall be capitalised as like any other

asset used by the ULB for its own operations;

National Municipal Accounts Manual Significant Accounting Principles

3.14

¾Depreciation on such assets shall be provided at the same rates as in case

of owned assets.

c. Hire purchase in the books of buyer

¾The purchase price shall be capitalised as the cost of fixed assets

¾Hire Purchase (HP) installments shall be apportioned between the finance

charge and the reduction of the principal outstanding. The finance charge

shall be allocated so as to produce a constant periodic rate of interest on

the remaining balance of the liability;

¾The total amount of interest portion out of the HP Payable shall be

accounted by debiting to a control account under current assets. This

amount will be adjusted on accounting of finance charges

¾The depreciation principle for assets purchased under HP should be

consistent with that for owned assets.

d. Hire purchase in the books of seller

¾The sale price (including the interest portion) shall be accounted as

receivable from HP agreement;

¾HP installments shall be apportioned between the interest income and the

reduction of the principal amount receivable (the finance income to be

allocated so as to produce a constant periodic rate of interest on the

remaining balance of the receivable);

¾The total amount of interest portion out of the HP Receivable shall be

accounted by crediting to a control account under current assets. This

amount will be adjusted while accounting for finance charges

3.23 Loans

a. Interest/penal interest on loans shall be recognised as and when due. At period-

ends, interest shall be accrued up to the date of the period-end.

b. Interest / penal interest earned on loans given out of specific fund/grant shall be

directly credited to the specific fund/grant account.

c. Provision against bad and doubtful loans shall be made according to the

provisioning principle of the ULB based on norms or guidelines issued by the

state government in this regard.

National Municipal Accounts Manual Significant Accounting Principles

3.15

d. Any additional provision for loans outstanding (net on overall basis) required to

be made during the year shall be recognised as expenditure and any excess

provision written back during the year shall be recognised as income of the ULB.

e. Write-offs of bad and doubtful loans shall be adjusted against the provisions made

and to that extent, loan outstanding get reduced. In case of inadequate provisions,

the write off shall be recognised as expenditure.

3.24 Addition / Merger of Local Bodies for up-gradation

a. The financial statements of the merging local bodies shall be consolidated at the

cut-off dates under the pooling of interest method. The assets,liabilities, reserves

and fund balances of the merging local bodies are recorded at their existing

carrying amounts. However it must be ensured that accounting principles adopted

for preparation of financial statements of merging local bodies should be same.

b. The financial statements prepared on consolidation shall disclose

i. Names of the local bodies merged

ii. Authority under which the merger has taken place

iii. Effective date of merger

iv. Principles adopted for consolidation

3.25 Inter Unit Transactions

a. All Inter Unit Transactions shall be recorded on cost basis and no mark up shall be

included in Inter Unit Transactions.

b. At the year-end, the inter-unit accounts are knocked off / adjusted in the

consolidated accounts of the ULB.

3.26 Municipal School Board

a. Fees and fines received from primary schools shall be recognised on actual

receipt.

b. Contribution receivable from other local bodies/ municipalities shall be

recognised in the period in which they become due.

3.27 Transport Undertaking:

a. Revenue in respect of ticket charges and monthly passes shall be recognised on

actual receipt.

b. The liability towards dues to the State Government for collections on its behalf,

i.e., Child Welfare Surcharge, shall be recognised as and when it is collected.

National Municipal Accounts Manual Significant Accounting Principles

3.16

c. Revenue in respect of Rebate from State Government for collection made on their

behalf, i.e., Child Welfare Surcharge, shall be recognised at the rates prescribed by

the State Government on creating the liability to the State Government.

d. Payments to be made by the Transport Undertaking to the Municipal Fund shall be

accounted on actual payment

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.1

CHAPTER 4

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INTRODUCTION

4.1 This chapter contains the recommendations relating to the Chart of Accounts and the

Codification structure.

4.2 Chart of Accounts (COA) defines the heads under which the income and expenditure

of local bodies are classified and facilitates maintenance of accounts and preparation of

financial statements. A well designed COA shall not only fulfill accounting requirements but

also the Budgeting and MIS requirements and shall be flexible enough to consolidate and

collapse to facilitate generation of various information reports. The structure suggested in this

chapter, have been developed based on the recommendations of Task Force Report with

limited modifications to meet the above said requirements.

4.3 Detailed heads and codes have been provided in this chapter for all mandatory levels

of information.

CODIFICATION STRUCTURE

4.4 The codification structure proposed facilitates capture of all type of financial

information within an ULB, which are essential in a government set-up. Each type of

classification is considered as a group. Considering the capacity and size of local bodies at an

all India level, to which this manual pertains and the minimum requirements of various

stakeholders’ certain mandatory information are prescribed. The mandatory groups for all

local bodies are

¾Functions

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.2

¾Account Heads

4.5 Functions shall represent the various functions or services carried out by the local

body. Account Heads shall represent the nature of the income or expenditure.

4.6 Budgets in ULBs are centered around its functions. Functions are provided through

various responsibilities centres called Departments. Geographical dispersion of these

activities may also be monitored more so in the context of introduction of Ward committees

and decentralisation. Hence, some ULBs identify its income and expenditure budgets at

function, functionary (department) and field level.

4.7 ULBs set up various funds for meeting certain objectives. Income and expenditure

under these funds are to be identified and disclosed separately. However the method of

disclosure may be different. When they adopt the integral concept, separate books of accounts

are not maintained for the funds. Identity is created by providing separate account heads to

capture the income and expenditure for each such fund. In some states, separate books of

accounts and financial statements are maintained considering it as a separate accounting

entity. In such cases, the identity of the fund (entity) is required as an additional classification.

4.8 Thus, in addition there shall be three other optional groups apart from the mandatory

groups of Functions and Account Head.

¾Functionary (Responsibility centre/department)

¾Field (Geographical centre)

¾Funds

4.9 In all, there can be five groups. Funds, Function, Functionary, Field and Account

Heads. Functions, Functionary and Field are called Budgeting centres.

4.10 Each group can have various levels within it to drill down further information. The

levels even in the mandatory groups can be either mandatory or optional based on the

requirements. First level in function and Account Heads are mandatory for all ULBs and other

levels are left to the states to define. This would mean that all ULBs would have to use the

function codes and account codes as defined in this manual only. For other levels each State

can define the codes though some of them may be mandatory at the State level. Similarly for

budgeting the functionary group, would be mandatory though each State can define these

heads based on its internal organisation structure. Similarly, States or cities, which have

decentralised accounting zones/boroughs etc and prepares budgets at these levels, would have

to use the field group as mandatory.

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.3

4.11 An overview of the suggested structure for mandatory information and overall

structure is provided in the exhibits given below as Exhibit 4.1 and 4.2.

Exhibit 4.1

Exhibit 4.2

Mandatory Structure

ULB Overall

Budgeting Centres

Functions

Accounting Subjects

Account Head -

Primary

Mandatory Structure

ULB Overall

Budgeting Centres

Functions

Accounting Subjects

Account Head -

Primary

Overall Structure

ULB Overall

Funds Budgeting Centres

Functions Functionaries Field Primary

Accounts subjects

Secondary

Overall Structure

ULB Overall

Funds Budgeting Centres

Functions Functionaries Field Primary

Accounts subjects

Secondary

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.4

4.12 Each of the two mandatory and the three optional categories can be placed in any

sequence for the sake of MIS reports /Budget reports. These groups are mutually exclusive

and can be operated individually or in a combined way.

4.13 In some local bodies, accounts are maintained in a decentralised set up. Each of the

locations in which accounts are maintained is called Accounting Unit. For example in some

big local bodies, accounts are maintained at Zones. In this case each Zone and the Head

Office are called Accounting units. Each accounting unit will maintain accounts in the same

way. All transactions are identified under the groups mentioned above at the Accounting Unit

level. Then it is consolidated at Head Office level to present the information at the ULB level.

4.14 The overall flow of Financial Information is illustrated with the example of a ULB

visited and is provided as Exhibit 4.3.

Exhibit 4.3

Sample Flow of Accounting Information

4.15 In this case, the lowest Accounting unit is Zones. If the accounting unit is lower than

that say circles, then accounts are prepared Circle wise and can be consolidated Zone wise as

well at the ULB level. The same process can be continued at any lower level. The intention

here is to facilitate decentralisation.

Trichy Corporation

Zone

Srirangam

Zone

Ariyamangalam

Zone

Golden Rock

Zone

Abishekapuram

General

Fund

Water Supply &

Sewerage Fund

Education

Fund

Budgeting Centres

Public Works,

Public Health, ….

Accounting Subject

Salaries, Civil

Works, ….

Trichy Corporation

Zone

Srirangam

Zone

Ariyamangalam

Zone

Golden Rock

Zone

Abishekapuram

General

Fund

Water Supply &

Sewerage Fund

Education

Fund

Budgeting Centres

Public Works,

Public Health, ….

Accounting Subject

Salaries, Civil

Works, ….

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.5

CODING LOGIC AND PROCEDURE

4.16 The codification logic for each of these groups is explained below.

Functions

4.17 Functions of the ULB can have three levels within it. First level under this group can

represent various functions both obligatory and discretionary. Second Level in function could

represent the particular type of service under a function and third level can represent a

particular cost center, which provides the service. The first level of Functions/codes is

mandatory for all ULBs. All functions of the ULB are broadly classified under 10 major

groups. Within this long listing of functions has been made. These functions are fitted within

the group with each group having a flexibility to go upto 9 sub functions. The detailed codes

for each of the functions as referred above is defined and given as Appendix 1 enclosed with

this manual. New codes or additions to this list of functions shall be made only at the national

level. A committee is likely to be set up under Ministry of Urban Affairs to which C& AG

will also be a member who shall act as the authority to add new functions in the list. This can

be triggered by a request from states. States can introduce two sub –levels of 2 digits each to

suit their requirements.

Accounting subjects

4.18 Accounting subjects can be divided into two levels: Primary and Secondary. Primary

account code represents the subject of the income and expenditure.

4.19 Primary Account Codes: The Code of an Account head shall be numeric and shall be

7 digits. A 7 digit code is suggested to give flexibility to add new codes and for each State to

define certain of its unique requirements. The code is structured into:

¾Major Head Code;

¾Minor Head Code; and

¾Detailed Head Code.

4.20 The structure of the Code of Accounts is schematically presented below:

Minor Head Code

X X X

or Head Code

12 3

X X

Detailed Head Code

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.6

Major head code

4.21 The first digit of the Major Head Code shall indicate the nature or type of the account.

The first digit shall be assigned one of the following numbers depending on the nature of the

account:

¾'1' shall denote an account relating to ' Revenue Income'

¾'2' shall denote an account relating to ‘Revenue Expenditures’

¾'3' shall denote an account relating to ' Capital Receipts & Liabilities'

¾'4' shall denote an account relating to ' Capital Expenditures & Assets'

4.22 The next 2 digits of the Major Head Code shall denote the group codes for the various

head of accounts. For example,

¾Code 1-10 shall denote ‘Tax Revenue’ related accounts

¾Code 2-10 shall denote ‘Establishment Expenses’ related accounts

¾Code 3-50 shall denote ‘Other Liabilities’ related accounts

¾Code 4-10 shall denote ‘Fixed Assets’ related accounts

4.23 It is to be noted that the financial statements of an ULB are drawn at Major Head

codes of account and hence this is a mandatory level of information. No major code addition

is likely to happen, as this format is the final one. In case the same is required it has to be

approved by the committee only.

Minor head code

4.24 The Minor Head Code shall be of 2 digits. An item covered by a Minor Head Code is

a subset of the Major Head Code. Thus, it shall be necessary to refer the Minor Head Code in

conjunction with the associated Major Head Code.

4.25 The Minor Head Codes provide further details of transactions in respect of the Major

Head Code it is associated with. For example,

¾Under the Major Head Code 110 relating to ‘Tax Revenue’, the Minor Head Code

01 shall denote ‘Property Tax’

¾Under the Major Head Code 210 relating to ‘Establishment Expenses’, the Minor

Head Code 10 shall denote Salries & Allowances

¾Under the Major Head Code 350 relating to ‘Other Liabilities’, the Minor Head

Code 10 shall denote ‘Creditors’

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.7

¾Under the Major Head Code 410 relating to ‘Fixed Assets’, the Minor Head Code

20 shall denote ‘Buildings’.

4.26 It is to be noted that the schedules to financial statements of an ULB are drawn at

minor head codes of account and hence this is a mandatory level of information. Minor codes

provided in the manual are mandatory. Additions to minor codes can be made by the state

governments as per the logic provided in the manual. All additions made shall be intimated to

the committee. Committee may introduce additional minor codes as mandatory at some

periodicity based on the intimations received.

Detailed head code

4.27 The Detailed Head Code shall be of 2 digits. An item covered by a Detailed Head

Code is a subset of the Minor Head Code. Thus it shall be necessary to refer the Detailed

Head Code in conjunction with the associated Minor Head Code.

4.28 The Detailed Head Codes provide further details of transactions in respect of the

Minor Head Code it is associated with. For example,

¾Under the Minor Head Code of Account 110-01 covering Property Tax, the

Detailed Head Code 01 shall denote ‘Property Tax from Residential Properties’.

Thus, under the Minor Head Code of Account 110-01 in respect of ‘Tax Revenues

from Property Tax’, the Detailed Head Code 01 shall represent ‘Property Tax from

Residential Properties’. The Account Code for this will be 110-01-01.

¾Under the Minor Head Code of Account 210-10 covering ‘Establishment

Expenses under Salaries, Wages and Bonus, the Detailed Head Code 10 shall

denote ‘Salaries & Allowances – Officers’

¾Under the Minor Head Code of Account 350-10 covering Creditors, the Detailed

Head Code 01 shall denote ‘Suppliers’

¾Under the Minor Head Code of Account 410-20 covering Buildings, the Detailed

Head Code 01 shall denote ‘Art Gallery Building’

4.29 It is to be noted that the detailed heads are to be identified by the States. States can

also give flexibility to the ULB to add new heads. An illustrative listing of detailed heads

under minor heads are listed in Appendix 2.

4.30 Secondary Account codes: This is optional and would depend on requirements of a

local body. These would typically represent the subsidiary ledgers and other analysis ledgers.

For example, contractors control account can be maintained contractor wise at this level. This

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.8

level is needed only for the internal control of the ULB and has no relevance at the state or

national level. It is therefore not proposed to prescribe any codification structure for the same.

Funds

4.31 Depending on requirements, levels can be introduced. Funds can have sub- level

within it. The codification structure for the funds may consist of the following:

¾Major Fund and

¾Minor Fund

4.32 Major Fund code would represent the broad categorisation of Funds and minor Fund

within it represents a particular Fund.

4.33 The Code of a Fund shall be numeric and can be 4 digits. The structure of the Code

for Fund is schematically presented below:

4.34 For example, Employee Funds can be a major fund and Pension fund can be Minor

Fund within that.

Functionary

4.35 In the government set-up, demands for expenditure are drawn by the department

discharging the functions and become the responsibility center for the assigned functions.

Functionary group represents this. Each sub-level within this group typically can represent the

organisational structure within the ULB. This level is used only for the internal control of the

ULB. It is therefore not proposed to prescribe any codification structure for the same.

Field

4.36 Field represents the way the ULBs are aligned geographically. Sub-levels in this group

will be based on the Territorial hierarchy. Number of digits at each level can range from 1-3

depending on the size of the local body. This is different from Accounting unit as explained

under the overview section of this chapter. Field represents the area to which the expenditure

or payment relates. Location or Accounting unit represents the unit at which it is accounted.

Major Fund Code (2)

Minor Fund Code (2)

1324

X X

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.9

This level is needed only for the internal control of the ULB. It is therefore not proposed to

prescribe any codification structure for the same.

ULB Codes

4.37 In addition to this to facilitate state level or national level aggregation, each ULB can

be assigned a code. This could represent the state to which it is attached and the unique code

assigned by the State. While state code can be assigned at the national level, the state

governments shall prescribe a code for each Municipal body. This can be in the following

format

STATE – DISTRICT – CATEGORY- CODE

4.38 Category can represent the way local bodies are classified within the state. (e.g.

Corporations, Municipality etc.)

GENERAL GUIDELINES AND INSTRUCTIONS FOR USAGE OF CHART OF

ACCOUNTS

4.39 The following guidelines should be followed while using the chart of accounts:

¾Function codes, Major and Minor Head Codes given in the manual would apply

uniformly to all Urban Local Bodies.

¾Any requirement for an addition to Function head shall be requested by the States

to the committee. Only the committee set up in this regard can add new codes

under this head

¾No major code addition is likely to happen as this format is more or less the final

one. In case the same is required it has to be approved by the committee only.

¾States can add minor heads at the state level. All additions made shall be intimated

to the committee. Committee may introduce additional minor codes as mandatory

at some periodicity based on the intimations received.

¾States shall identify the detailed heads.

¾ULBs shall identify the operative Detailed Heads, with the same description and

code number for accounting purposes. These Heads will be commonly used in all

the ULBs within a State. Detailed Heads unique to a particular ULB can also be

added with the approval of the State Government.

¾Some Urban Local Bodies may have further break up in their activities requiring

sub-heads at a level above Detailed Heads. ULBs can induct sub-heads under

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.10

Minor Head and thereafter Detailed Heads may be suitably opened, with the

approval of State Government.

¾The Accounts Department shall maintain a master index of all the Code of

Accounts being utilised by the Municipal Body.

¾Ledger Accounts corresponding to the Account Codes need to be opened by an

ULB only in respect of those transactions which arise at that ULB. Thus all the

Account Codes given in this Report may not be used by every ULB.

CODING APPLICABILITY TO TRANSACTIONS AND ILLUSTARTIONS

4.40 For better appreciation of coding logic in recording transactions, a few illustrations are

provided below. This primarily covers the two mandatory groups and Fund group. The logic

adopted for Function group can be extended to other groups in Budgeting centres like

Functionary or Field.

4.41 Recording of transactions under these codification levels is explained with some

illustrations.

a. Tuition Fee of Rs. 1,000/- collected by the ' Primary school in an ULB where they

maintain separate Fund for Education. Information to be captured under all three

levels of codification structure is given below.

Debit: Cash / Bank

Level 1 Funds: Education Fund is a separate fund under the Municipal Fund

Group. (Code for Municipal Fund – Education: 10-03)

Level 2 Budgeting Centres: Not applicable for cash and Bank Accounts

Level 3 Accounting subjects: Cash account under the Asset head cash and Bank

Balances. (Code for Cash and bank Balances – Cash: 450- 10)

Credit: Income

Level 1 Funds: Education Fund is a separate fund under the Municipal Fund

Group. (Code for Municipal Fund – Education: 10-03)

Level 2 Budgeting Centres: This is an income under the Education function/

service collected by the Primary schools department. (Code for Education –

Primary Schools: 82)

Level 3 Accounting subjects: Tuition Fee is a user Charge under the Income from

Fees and User Charges. (Code for Fees and User Charges – Other Fees: 140-40)

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.11

Accounting Entry to be passed is given below:

Fund

Code *

Budgeting

Centre

Code **

Account

Code

Accounting Entry

(Illustrative Heads)

Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

10-03

10-03 08-82

450-10-(a)

140-40-(a)

Cash account

To Fees & user charges

Other Fees

Dr.

Cr.

1,000

* This is applicable only when an ULB maintain accounts under each Fund. Codes shall be

defined by ULB based on logic provided earlier in the chapter and codes provided here are

illustrative only.

** Except Function code, other code numbers are defined by the ULB depending on its

requirements and codes provided are illustrative.

(a) Insert Detailed Head Codes of Account as applicable

b. ‘Electricity charges for Machinery’ paid amounting to Rs.20,000 for motor

pumps of water where separate Fund for Water Supply and sewerage is maintained

for Rs.50,000/-

Debits: Revenue Expense

Level 1 Funds: Water Supply and Sewerage Fund is a separate fund under the

Municipal Fund Group. (Code for Municipal Fund Water Supply and Sewerage

10-02)

Level 2 Budgeting Centres: This is an expense under the water supply function by

the Public Works department. (Code for Water Supply 51)

Level 3 Accounting subjects: Electricity charges paid are revenue expenditure

under the Operations and Maintenance Expense. (Code for Operations and

Maintenance Power & Fuel: 2-30-10)

Credit: Cash / bank

Level 1 Funds: Water Supply and Sewerage Fund is a separate fund under the

Municipal Fund Group. (Code for Municipal Fund Water Supply and Sewerage

10-02)

Level 2 Budgeting Centres: Not applicable for cash and Bank Accounts

Level 3 Accounting subjects: Cash account under the Asset head cash and Bank

Balances. (Code for Cash and bank Balances Cash: 450- 21)

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.12

Fund

Code *

Budgeting

Centre

Code **

Account

Code

Accounting Entry

(Illustrative Heads)

Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

10-02

51 230-10-(a)

450-21-(a)

Operations & Maintenance

Power & Fuel

To Bank account***

Dr.

Cr.

2,000

* This is applicable only when an ULB maintain accounts under each Fund. Codes shall be

defined by ULB

based on logic provided earlier in the chapter and codes provided here are illustrative only.

** Except Function code, other code numbers are defined by the ULB depending on its

requirements and codes provided are illustrative.

*** Specify name of the Bank and the account number

(a) Insert Detailed Head Codes of Account as applicable

c. Purchase of Ambulance for Hospital run by the ULB for Rs. 2,00,000/.

Debits: Capital Expense

Level 1 Funds: General Fund under the Municipal Fund Group. (Code for

Municipal Fund General Fund 10-01)

Level 2 Budgeting Centres: This is an expense under Hospital Services. (Code for

Hospital Services: 35)

Level 3 Accounting subjects: Ambulance is an asset under the Vehicles. (Code

for Fixed asset Vehicles Ambulance: 410-50)

Credit: Liability

Level 1 Funds: General Fund under the Municipal Fund Group. (Code for

Municipal Fund General Fund 10-01)

Level 2 Budgeting Centres: Not applicable for control/ suspense accounts.

Level 3 Accounting subjects: Suppliers control account under the Liability head

Other Liabilities (Code for Other Liabilities Creditors: 350-10)

Fund

Code *

Budgeting

Centre

Code **

Account

Code

Accounting Entry

(Illustrative Heads)

Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

10-01

35 410-50-(a)

350-10(a)***

Fixed assets-Vehicles-

Ambulances

Other liabilities (Sundry

creditors)***

Dr.

Cr.

200,000

* This is applicable only when an ULB maintain accounts under each Fund. Codes shall be

defined by ULB based on logic provided earlier in the chapter and codes provided here are

illustrative only.

** Except Function code, other code numbers are defined by the ULB depending on its

requirements.

(a) Insert Minor & Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Codification Structure & Chart of Accounts

4.13

d. Payment of Other Liabilities (Sundry Creditors) for purchase of Ambulance

amounting to Rs. 200,000 through Main Bank account.

Debits: Other Liabilities Account

Level 1 Funds: General Fund under the Municipal Fund Group. (Code for

Municipal Fund – General Fund 10-01)

Level 2 Budgeting Centres: Not applicable for control/ suspense accounts.

Level 3 Accounting subjects: Suppliers control account under the Liability head

Other Liabilities (Code for Other Liabilities –Creditors: 350-10)

Credit: Cash/Bank

Level 1 Funds: General Fund under the Municipal Fund Group. (Code for

Municipal Fund – General Fund 10-01)

Level 2 Budgeting Centres: Not applicable for cash and Bank Accounts

Level 3 Accounting subjects: Main Bank account under the Asset head cash and

Bank Balances. (Code for Cash and bank Balances – Cash: 450-21)

Fund

Code *

Budgeting

Centre

Code **

Account

Code

Accounting Entry

(Illustrative Heads)

Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

10-01

350-10-(a)

450-21-(a)

Creditors – Suppliers

Bank Account***

Dr.

Cr.

200,000

* This is applicable only when an ULB maintain accounts under each Fund. Codes shall be

defined by ULB based on logic provided earlier in the chapter and codes provided here are

illustrative only.

** Except Function code, other code numbers are defined by the ULB depending on its

requirements.

***Specify Name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

4.42 It may be noted that two levels that is Fund and Accounting subjects are to be

captured for every debit and credit in an entry, whereas Budgeting centers details are captured

only for the respective budgetary control accounts for example Revenue Expenditure, Income,

Capital Expenditure. Whenever Budgeting centres are not applicable “00” may be used to

denote the field in an IT environment. Once a transaction is identified to a fund all debits and

credits in the transaction is attached to the same Fund and hence common for the entire entry.

4.43 To summarise, Fund code shall be same for all debits and credits in a transaction,

Budget Codes will be applicable only for certain debits and credits in a transaction; Account

codes shall vary for every debit and Credit in a transaction.

National Municipal Accounts Manual Appendix 1 to Codification Structure & Chart of Accounts

4.14

Functions Listing

Function

Group

Code

Function -

Group

Function

Code Function Description

Illustrative List of

Other functions

possible grouping

00 General

Administration

01 Municipal Body General Body, All

Committees, Mayor /

Council Members

office, Secretariat

02 Administration General Admin,

Public Relations, IT,

Legal, Vigilance

03 Finance, Accounts, Audit

04 Election

05 Record Room

06 Estate

07 Stores & Purchase

08 Workshop

09 Census

10 Planning &

Regulations

11 City and Town Planning

12 Building Regulation

13 Economic Planning

14 Encroachment Removal

15 Trade License / Regulations

20 Public Works

21 Roads and Pavement

22 Bridges and Fly overs

23 Subways & Causeways

24 Street Lighting

25 Storm water Drains

26 Traffic Signals

27 Guest Houses

30 Health

31 Public Health Immunisation, Polio,

32 Epidemic / Prevention Control Malaria Control

33 Family Planning

34 Primary Health Care

35 Hospital Services

36 Burial and Cremations

National Municipal Accounts Manual Appendix 1 to Codification Structure & Chart of Accounts

4.15

Function

Group

Code

Function -

Group

Function

Code Function Description

Illustrative List of

Other functions

possible grouping

37 Vital Statistics

38 Prevention of Food

Adulteration

39 Ambulance / Hearse Services

40 Sanitation and

Solid Waste

Management

41 Solid Waste Management

42 Public Convenience

43 Veterinary Services

44 Cattle Pounding

45 Slaughter Houses

50 Civic Amenities

51 Water Supply

52 Sewerage

53 Fire Services

54 Arts & Culture

55 Community / Marriage Centers

56 Amusement

57 Museums

58 Municipal Markets

60 Urban Forestry

61 Parks, Gardens

62 Play Grounds

63 Lakes and Ponds

64 Urban Forestry

65 Environment Conservation

66 Zoos

70 Urban Poverty

Alleviation &

Social Welfare

71 Welfare of Women

72 Welfare of Children

73 Welfare of Aged

74 Welfare of Handicapped

75 Welfare of SC/ST/OBC

76 Slum Improvements

77 Housing

78 Urban Poverty Alleviation

79 Others

National Municipal Accounts Manual Appendix 1 to Codification Structure & Chart of Accounts

4.16

Function

Group

Code

Function -

Group

Function

Code Function Description

Illustrative List of

Other functions

possible grouping

80 Other Services

81 Electricity

82 Education

83 Transportation

84 Facility for pilgrims

90 Revenues

91 Property Taxes

92 Octroi / Entry Cess

93 Advertisement Tax

94 Professional Tax

95 Tax on Animals

96 Tax on Vehicles

97 Toll

99 Other Taxes

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.17

CoA Listing – Income

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

110 Tax Revenue

01 Property Tax Residential,

Commercial, Land,

Service Charges

02 Water Tax

03 Sewerage Tax

04 Conservancy Tax

05 Lighting Tax

06 Education Tax

07 Vehicle Tax

08 Tax on Animals

09 Electricity Tax

10 Professional Tax

11 Advertisement Tax Land hoarding, Bus

Shelters, Traffic signals

12 Pilgrimage Tax

51 Octroi & Toll Octroi, Toll,

Provisional Octroi,

Account current

Importers

52 Cess Gross Cess, Net Cess

80 Others Taxes

90 Tax Remission &

Refund

All Types of Taxes

120 Assigned

Revenues &

Compensations

10 Taxes and Duties

collected by others

Entertainment Tax,

Duty on Transfer of

Properties

20 Compensation in

lieu of Taxes /

duties

Compensation in lieu

of Octroi, Octroi in lieu

of Electricity

30 Compensations in

lieu of Concessions

Property Tax

compensations due to

concessions certain set

of tax payers

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.18

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

130 Rental Income

from Municipal

Properties

10 Rent from Civic

Amenities

Markets, Shopping

complexes,

Auditorium, Art

Galleries, Marriage/

community halls,

Playgrounds, Nurseries

20 Rent from Office

Buildings

Quarters

30 Rent from Guest

Houses

40 Rent from lease of

lands

80 Other rents Lease Rentals

90 Rent remission and

refund

140 Fees & User

Charges

10 Empanelment &

Registration

Charges

Carts, Contractors,

Patients, Professionals,

P W contractors, Cess

Registration,

11 Licensing Fees D &O, Hawking,

Shops, Bazaars, Staff

Quarters, Plumbing

License, Cattle

Pounding,

Slaughtering, Butchers

and Traders of meat,

Poultry,

12 Fees for Grant of

Permit

Transit, Escort, Layout,

sub-division, Plan

13 Fees for Certificate

or Extract

Copying, Birth &

Death certificates,

Occupancy Certificate,

14 Development

Charges

Development,

Betterment,

Demolition, Open

space contribution,

Parking Contribution

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.19

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

15 Regularization Fees Encroachment,

Regularization,

Revalidation,

Conversion fees

20 Penalties and Fines Octroi, Cess

40 Other Fees Advertisement Fees,

Tuition Fees, Sports

Fee, Library Fees,

Survey fees,

Connection,

Disconnection charges,

Notice Fees, Warrant

Fees, Mutation Fees,

Property Transfer

Charges

50 User Charges Medicines,

Examination charges,

Ambulance, Funeral

Van, Garbage

Collection Charges,

Littering and Debris

collection, Septic Tank

clearance, Sewerage

clearance charges,

Crematorium Charges,

Burial Ground Charges,

Pay & use toilets,

Water Supply, Sale of

Electricity, Water

Tanker, Meter charges,

Fire Extinguishing,

Lighting charges,

Ticket charges,

Luggage charges,

parking fees

60 Entry Fees Parks, Playgrounds,

Swimming Pool, Zoo,

Museum, Library,

Parking Lots

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.20

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

70 Service /

Administrative

Charges

Service Charges,

Percentage on Deposit

works, Plan Preparation

charges, Road Damage

Recovery charges,

stacking, Rebate from

state Government

80 Other Charges

90 Fees Remission and

Refund

Water Supply

150 Sale & Hire

Charges

10 Sale of Products Tree-Guards, Garbage,

Manure, Rubbish,

Compost, Nursery

plants, Fruits, Flowers,

Grass, Trees, etc

11 Sale of Forms &

Publications

Tenders, Data, Plans,

Maps

12 Sale of stores &

scrap

Obsolete stores,

Obsolete assets

30 Sale of Others Old newspaper

40 Hire Charges for

Vehicles

Buses

41 Hire Charges on

Equipments

Rollers, Tools &

Equipments, Medical

Equipments

160 Revenue

Grants,

Contribution

and Subsidies

10 Revenue Grant Road Development

grants, Family welfare

Grant, Census Grant

etc

20 Re-imbursement of

expenses

30 Contribution

towards schemes

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.21

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

170 Income from

Investments

10 Interest Fixed Deposits,

Government Securities,

Post office deposits

20 Dividend

30 Income from

projects taken up

on commercial

basis

40 Profit in Sale of

Investments

80 Others

171 Interest Earned

10 Interest from Bank

Accounts

SB accounts

20 Interest on Loans

and advances to

Employees

HBA, Conveyance,

Computer, Festival,

Vehicle

30 Interest on loans to

others

80 Other Interest Interest on HP

180 Other Income

10 Deposits Forfeited

11 Lapsed Deposits Contractors, Suppliers

20 Insurance Claim

Recovery

30 Profit on Disposal

of Fixed asses

40 Recovery from

Employees

50 Unclaimed Refund

Payable/ Liabilities

Written Back

Stale Cheques

60 Excess Provisions

written back

Property Tax, Octroi,

Cess, Water Supply,

Advertisement Tax,

Rent

80 Miscellaneous

Income

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.22

CoA Listing – Expense

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

210 Establishment

Expenses

10 Salaries, Wages

and Bonus

Salaries &

Allowances- Officers,

staff, Wages, Exgratia,

bonus, Octroi

Performance Bonus

20 Benefits and

Allowances

Overtime Allowance,

LTC, Medical Re-

imbursement, Tuition

Fees, Education

Allowance, Uniform to

staff, Compensation to

staff, Honorarium to

Corporators, Officers

and Staff, Training,

staff welfare expenses,

HRD activities,

30 Pension Pension, Family

Pension, Pension

contribution, Pension

Fund Deficit

Contribution,

Contribution to other

funds

40 Other Terminal &

Retirement

Benefits

Leave encashment,

Death cum Retirement

gratuity, Contribution

to PF or other Funds.

Leave Salary

contribution

220 Administrative

Expenses

10 Rent, Rates and

Taxes

11 Office maintenance Electricity, Water,

Security expenses

12 Communication

Expenses

Telephone, Mobile,

Fax

20 Books &

Periodicals

Magazines,

Newspapers, Journals,

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.23

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

21 Printing and

Stationery

Service postage,

Printing, Stationery,

computer consumables

30 Travelling &

Conveyance

Fuel, Travelling ,

Petrol & Diesel

40 Insurance

50 Audit Fees

51 Legal Expenses Legal Fees, Cost of

recoveries of tax

revenue, suit

compromises

52 Professional and

other Fees

Architect, Engineer,

Technical Fees,

Consultancy charges,

60 Advertisement and

Publicity

Hospitality Expenses,

Advertisement,

Organisation of

Festivals

61 Membership &

subscriptions

80 Others

230 Operations &

Maintenance

10 Power & Fuel

20 Bulk Purchases Electricity, Water

30 Consumption of

Stores

40 Hire Charges Machinery Rent

50 Repairs &

maintenance -

Infrastructure

Assets

Roads & Bridges, Fly-

Overs, Water Supply &

sewerage, Street

Lighting, Storm water

Drains, , traffic signals,

51 Repairs &

maintenance -

Civic Amenities

Parks, Gardens, Lakes,

Play Grounds, Arts &

Culture , Parking Lots,

Markets, Houses,

Commercial complex,

Hospitals, Swimming

Pools, Stadium,

Nursery, Play

materials, Public

Toilets,

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.24

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

52 Repairs &

maintenance -

Buildings

Office Buildings,

53 Repairs &

maintenance -

Vehicles

59 Repairs &

maintenance -

Others

Furniture Fixture,

electrical appliances,

Office equipment,

other FA, Survey &

Drawing equipments,

80 Other operating &

maintenance

expenses

Testing & inspection,

Water Purification,

Garbage Clearance,

Patients food, Patients

laundry, Tax for Public

Transport vehicles,

240 Interest &

Finance

Charges

10 Interest on Loans

from Central

Government

20 Interest on Loans

from State

Government

30 Interest on Loans

from Government

Bodies &

associations

40 Interest on Loans

from International

Agencies

50 Interest on Loans

from Banks &

Other Financial

Institutions

60 Other Interest Leases , HP

70 Bank Charges

80 Other Finance

Expenses

Discount on early /

prompt payment,

Commitment charges

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.25

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

250 Programme

Expenses

10 Election

Expenses

20 Own Programme

30 Share in

programme of

others

260 Revenue

Grants,

Contribution

and Subsidies

10 Grants

20 Contributions

30 Subsidies

270 Provisions

and Write off

10 Provisions for

Doubtful

receivables

Property Tax, Cess, Fees

and User Charges, Rent

20 Provision for

other Assets

Stores, Fixed assets,

Investments

30 Revenues

written off

Property Tax, Assigned

Revenues, Grants

40 Assets written

off

Stores, Fixed assets

50 Miscellaneous

Expense written

off

Issue expenses

271 Miscellaneous

Expenses

10 Loss on disposal

of Assets

20 Loss on disposal

of Investments

30 Decline in Value

of Investments

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.26

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

272 Depreciation

20 Buildings

30 Roads & Bridges

31 Sewerage and

Drainage

32 Waterways

33 Public Lighting

40 Plant &

machinery

50 Vehicles

60 Office & Other

Equipments

70 Furniture,

Fixtures, Fittings

and Electrical

Appliances

80 Other Fixed

Assets

280 Prior Period

Item

Income

10 Taxes Taxes, Octroi, Toll, Cess

20 Other -

Revenues

30 Recovery of

revenues written

off

All types of Taxes, Fees &

User Charges

40 Other Income

Expenses

50 Refund of Taxes All types of Taxes

60 Refund of Other

- Revenues

Water Supply, Rent

80 Other Expenses

290 Transfer to

Reserve

Funds

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.27

CoA Listing – Liability

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

310 Municipal

(General)

Fund

10 Municipal Fund Closing Balance,

Adjustments to Opening

balance sheet

90 Excess of

Income and

Expenditure

311 Earmarked

Funds

10- 49 Special Funds

(Specify each

Fund name)

All developmental funds

and special purpose

funds. E.g.. Examples

Road Fund, Water Supply

Fund, City Development

Fund etc)

50 - 69 Sinking Funds

(Specify each

Fund Name)

All Borrowing

repayments funds, Asset

Replacement Funds

70-99 Trust or Agency

Funds (Specify

each Fund

Name)

Examples, all employee

related funds like PF,

Pension etc.

0-Opening

Balance, 1- 9

Additions to

Grants

during the

period, 11 -

29 Revenue

Income

earned, 30-

49 Capital

Income

earned, 50-

69 Revenue

Expenses

payments,

70-89 capital

expenses

payments

312 Reserves

10 Capital

Contribution

11 Capital Reserve

20 Borrowing

Redemption

reserve (if no

sinking fund is

created)

30 Special Funds

(Utilised)

40 Statutory

Reserve

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.28

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

50 General Reserve

60 Revaluation

Reserve

320 Grants ,

Contribution

for specific

purposes

10 Central

Government

Specify Name of each

specified grant

20 State

Government

30 Other

Government

Agencies

40 Financial

Institutions

50 Welfare Bodies

60 International

Organizations

80 Others

0- Opening

Balance, 1- 9

Additions to

Grants

during the

period, 11 -

29 Revenue

Income

earned, 30-

49 Capital

Income

earned, 50-

69 Revenue

Expenses

payments,

70-89 capital

expenses

payments

330 Secured

Loans

10 Loans from

Central

Government

[Use detailed head codes

for different loans]

20 Loans from

State

Government

30 Loans from

Government

Bodies &

Association

40 Loans from

International

Agencies

50 Loans from

Banks & Other

Financial

Institutions

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.29

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

60 Other Term

Loans

70 Bonds &

Debentures

80 Other Loans

331 Unsecured

Loans

10 Loans from

Central

Government

[Use detailed head codes

for different loans]

20 Loans from

State

Government

30 Loans from

Government

Bodies &

Association

40 Loans from

International

Agencies

50 Loans from

Banks & Other

Financial

Institutions

60 Other Term

Loans

70 Bonds &

Debentures

80 Other Loans

340 Deposits

Received

10 From

Contractors /

Suppliers

EMD, Security Deposit

20 Deposits –

Revenues

Octroi, Transit, Water,

Electricity, Rental etc

30 From Staff

80 From Others

341 Deposit works

10 Civil works

20 Electrical works

80 Others

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.30

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

350 Other

Liabilities

10 Creditors Suppliers, Contractors,

Expenses, Payables

against funds, Payables

against grants, Payable

against Specific Scheme,

Contractors Advance

Control account

11 Employee

liabilities

Gross Salary, Net

Salaries, Salaries unpaid,

P.F. payable, Pension,

Gratuity, Welfare Funds,

Leave Salary payable

12 Interest Accrued

and due

Loans, HP

20 Recoveries

payable

P.F deductions, LIC,

Loans, Societies, Service

Tax, Profession Tax,

TDS, Contract Tax, Trade

Tax, Sales Tax, Service

Tax, Works Contract etc

30 Government

Dues payable

Library Cess, Education

Cess, Court Attachment

etc

40 Refunds payable Taxes, Other Revenues,

Grants, Deposit Works,

Attached Properties,

Octroi, Cess, Water

Supply, Rent

41 Advance

Collection of

Revenues

Property Tax, Water

Supply, Cess, License

Fees, Rent,

Advertisement charges

80 Others Compensation payable,

Stale Cheque, HP

Payable, Lease Charges

payable, HP Interest

receivable Control

Account etc.

90 Sale Proceeds Assets, Investments,

Attached properties

Note: This

account will

not have

balance at the

year end

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.31

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

360 Provisions

10 Provisions for

Expenses

20 Provision for

Interest

Interest Accrued but not

due

30 Provision for

Other Assets

Stores, Investments

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.32

CoA Listing - Asset

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

410 Fixed Assets

10 Land Grounds, Open

markets, Parks,

Gardens

20 Buildings

30 Roads & Bridges Concrete , Black

Topped, Others

31 Sewerage and

Drainage

Open, Underground,

32 Waterways Borewells, Open

wells, Reservoirs

33 Public Lighting Lamp posts,

Transformers

40 Plant &

Machinery

50 Vehicles Ambulance, Buses,

Cars, Jeeps, Cranes,

Trucks, Tankers

60 Office & Other

Equipments

Air conditioners,

Computers, Faxes,

Photocopiers,

Refrigerators

70 Furniture,

Fixtures, Fittings

and Electrical

Appliances

Cabinets, Cupboards,

Chairs, Fans,

Electrical Fittings

80 Other Fixed

Assets

90 Assets under

Disposal

Note: This

account will

not have

balance at the

year end

411 Accumulated

Depreciation

20 Buildings

30 Roads & Bridges

31 Sewerage and

Drainage

32 Waterways

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.33

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

33 Public Lighting

40 Plant &

machinery

50 Vehicles

60 Office & Other

Equipments

70 Furniture,

Fixtures, Fittings

and Electrical

Appliances

80 Other Fixed

Assets

412 Capital Work -

in - progress

10 Specific Grants

20 Special funds

30 Specific Schemes

420 Investments -

General Fund

10 Central

Government

Securities

20 State Government

Securities

30 Debentures and

Bonds

40 Preference Shares

50 Equity Shares

60 Units of Mutual

Funds

80 Other Investments

90 Accumulated

Provision

421 Investments -

Other Funds

10 Central

Government

Securities

20 State Government

Securities

30 Debentures and

Bonds

40 Preference Shares

50 Equity Shares

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.34

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

60 Units of Mutual

Funds

80 Other Investments

90 Accumulated

Provision

430 Stock - in-

hand

10 Stores Opening Stock,

Closing stock,

Purchases

Opening

stock and

Purchases to

have nil

balance

20 Loose Tools

80 Others

431 Sundry

Debtors

(Receivables)

Receivables

10 Receivables for

Property Taxes

Year wise

19 Receivable for

Other Taxes

Octroi Account Current

from Importers

20 Receivables for

Cess

30 Receivable for

Fees & User

Charges

License Fees,

Advertisement Fees,

water Supply

40 Receivable from

other sources

Rent, Interest accrued

& due, Interest

accrued & not due,

Undertakings, Interest

due from employees,

50 Receivable from

Government

Grants, Assigned

Revenues

80 Receivables

control accounts

Property Taxes, Cess,

Water Supply

Note: This

account will

not have

balance at

the year end

State Govt Cesses/

levies in Taxes -

Control accounts

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.35

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

91 State Govt Cesses/

levies in Property

Taxes - Control

account

92 State Govt Cesses/

levies in Water

Taxes - Control

account

99 State Govt Cesses/

levies in Other

Taxes - Control

account

432 Accumulated

Provisions

against

Debtors

(Receivables)

10 Provision for

outstanding

Property Taxes

11 Provision for

outstanding

Water Taxes

12 Provision for

outstanding Other

Taxes

20 Provision for

outstanding Cess

30 Provision for

outstanding Fees

&UserCharges

Water Supply

Rent

40 Provision for

outstanding other

receivable

State Govt. Cesses/

levies in Taxes -

Provision accounts

91 State Govt Cesses/

levies in Property

Taxes - Provision

account

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.36

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

92 State Govt Cesses/

levies in Water

Taxes - Provision

account

99 State Govt Cesses/

levies in Other

Taxes - Provision

account

440 Pre-paid

Expenses

10 Establishment

20 Administration

30 Operations &

Maintenance

450 Cash and

Bank balance

10 Cash

Balance with Bank

- Municipal Fund

21 Nationalised

Banks

22 Other Scheduled

Banks

23 Scheduled Co-

operative Banks

24 Post Office

Balance with Bank

- Special Funds

41 Nationalised

Banks

42 Other Scheduled

Banks

43 Scheduled Co-

operative Banks

44 Post Office

Balance with Bank

- Grant Funds

61 Nationalised

Banks

62 Other Scheduled

Banks

63 Scheduled Co-

operative Banks

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.37

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

64 Post Office

460 Loans,

Advances and

Deposits

10 Loans and

advances to

employees

HBA, Conveyance,

Computer advance,

Festival advance,

Vehicle Advance

20 Employee

Provident Fund

Loans

30 Loans to Others

40 Advance to

Suppliers and

contractors

Public Works, Stores,

Materials Issued to

Contractors/Stores,

Lease Rentals, HP

accounts

50 Advance to

others

Permanent Advance,

Advance against

projects, Advance

against scheme,

Grants

60 Deposits with

external Agencies

Electricity,

Telephones, Water,

Petrol Pumps,

80 Other current

assets

HP Instalments

received, Interest

Receivable on Loans

& advances, Scheme

Expenses

461 Accumulated

Provisions

against Loans,

Advances and

Deposits

10 Loans to Others

20 Advances

30 Deposits

470 Other Assets

10 Deposit Works -

Expenditure

Civil, Electrical,

Others

Note: This

account will

not have

balance at

the year end

National Municipal Accounts Manual Appendix 2 to Codification Structure & Chart of Accounts

4.38

Major

Code

Major Head

Description

Minor

Code

Minor Head

Description Detailed Heads Remarks

20 Inter Unit

Accounts

Note: This

account will

not have

balance after

consolidatio

n of all AUs

accounts

30 Interest Control

Payable

Lease, HP

480 Miscellaneous

Expenditure to

be written off

10 Loan Issue

Expenses

20 Discount on Issue

of loans

30 Others

National Municipal Accounts Manual General Accounting Procedures

5.1

CHAPTER 5

GENERAL ACCOUNTING PROCEDURES

INTRODUCTION

5.1 This chapter discusses the Books of Accounts to be maintained and the General

Accounting Procedures to be followed by the ULB under the accrual based accounting system.

BOOKS OF ACCOUNTS

5.2 The books of accounts shall be maintained separately for each financial year as prescribed

in the State Act/Rules.

5.3 The following are the primary Books of Accounts that shall be maintained at the ULB:

a. Cash Book (Form GEN-1) shall be the Book of Original Entry for recording

transactions involving cash and/or bank. The Cash Book may also be referred to

as the Cash and Bank Book. The Cash Book has two sides, viz., “Receipt” and

“Payment”. All collections on behalf of the ULBs shall be recorded on the

“Receipt” side and all payments shall be recorded on the “Payment” side. Separate

Cash Books shall be maintained in respect of each bank account. Designated Bank

Accounts may be operated for deposit of collections pertaining to Property &

Other Taxes, Octroi, Water Supply, Cess, Public Works, Special Funds etc., as has

been provided in the applicable rules and regulations. Exhibit 5.1 provides the

format of the Cash Book.

National Municipal Accounts Manual General Accounting Procedures

5.2

Exhibit 5.1

Cash Book

Receipt Payment

Sr.

No. Date

Rcpt.

Vchr.

No.

Code of

Account

Particulars

of Receipt

Cash

Amount

(Rs.)

No. of

Bank

Challan

Bank

Account

Amount

(Rs.)

Sr.

No Date

Pymt.

Vchr.

No.

Code of

Account

Particulars

Payment

L/F

Cash

Amount

(Rs.)

Bank

Account

Amount

(Rs.)

Balance

B/F

b. Journal Book (Form GEN-2) shall be the book of original entry for recording all transactions other than those involving cash and/or bank.

A non-cash/bank transaction is first recorded in the Journal Book by dividing into its debit and credit aspects, from which a posting is

done in the relevant ledger account. Recording of income in respect of Property & Other Taxes Bills raised, recording of liability on

receipt of supplier’s bills are examples of transactions, which shall be first recorded in the Journal Book. Exhibit 5.2 provides the format

of the Journal Book.

Exhibit 5.2

Journal Book

Sr.

No. Date

Jrnl.

Vchr.

No.

Code of

Account Particulars L/F

Debit

Amount

(Rs.)

Credit

Amount

(Rs.)

National Municipal Accounts Manual General Accounting Procedures

5.3

c. Ledger (Form GEN-3) shall be the book that shall contain all the accounts as

specified in the Chart of Accounts. The Ledger has two sides, viz, “Debit”

(Dr.) and “Credit” (Cr.). The head of account which is “Debited” while

recording the accounting entry in the Journal Book (Form GEN-2) or which is

recorded on the “Payment” side of the Cash Book (Form GEN-1) shall be

posted on the “Debit” side of the Ledger. Similarly the head of account which

is “Credited” while recording the accounting entry in the Journal Book or

which is recorded on the “Receipt” side of the Cash Book shall be posted on

the “Credit” side of the Ledger. Each entry in the Cash Book and the Journal

Book shall have a posting in the Ledger (except transactions relating to deposit

into or withdrawal of cash from bank or transfer of amount from one bank to

another bank account). The Ledger shall provide a listing of all the

transactions in respect of a head of account during an accounting period. The

posting of the entries from the books of original entry to the Ledger has been

explained later in this chapter. Exhibit 5.3 provides the format of the Ledger.

Exhibit 5.3

Ledger

Dr. Cr.

Date Code of

Account Particulars Folio Amount

(Rs.) Date Code of

Account Particulars Folio Amount

(Rs.)

ACCOUNTING DOCUMENTS

5.4 Vouchers prepared at the ULBs shall form the base documents for recording the

transactions in the Books of Original Entry. The vouchers shall be numbered serially. The

accounting documents to be prepared by the ULBs are described below:

a. Cash/Bank Receipt Voucher (Form GEN-4) shall be the document prepared

for recording receipt entries in the Cash Book. The Cash Receipt Voucher

shall be prepared for receipts in cash and the Bank Receipt Voucher for

receipts by cheques, demand drafts, banker' s cheques, etc., which need to be

deposited in the bank for realisation. Separate series of numbers shall be

National Municipal Accounts Manual General Accounting Procedures

5.4

maintained for cash transactions and for each bank account. For example,

the Bank Receipt Vouchers in respect of Bank Account A and B may have the

series BRV-A-1 onwards and BRV-B-1 onwards respectively.

b. Cash/Bank Payment Voucher (Form GEN-5) shall be the document prepared

for recording payment entries in the Cash Book. Separate series of numbers

shall be maintained for cash transactions and for each bank account.For

example, the Bank Payment Vouchers in respect of Bank Account M and N

may have the series BPV-M-1 onwards and BPV-N-1 onwards respectively.

c. Contra Voucher (Form GEN-6) shall be the document prepared for recording

transactions involving deposit of cash into the bank, withdrawal of cash from

bank or transfer of amount from one bank to another.

d. Journal Voucher (Form GEN-7) shall be the document prepared for recording

entries in the Journal Book. These entries would not involve any cash/bank

related transactions.

OTHER REGISTERS/FORMS

5.5 The specific books of accounts, forms and registers to be maintained at the various

departments of the ULB can be defined in the State Manual depending on the rules and

regulations governing them. However inputs required from various departments for recording

the transactions are prescribed in the subsequent chapters. Some of the other general registers

and forms which shall be required to be maintained are provided in Table 5.1 below:

Table 5.1

Other General Registers and Forms

Sr.

No. Name of the Form Form

Number

1 Receipt GEN-8

2 Receipt Register GEN-9

3Statement on Status of Cheques Received GEN-10

4Collection Register GEN-11

5 Summary of Daily Collection GEN-12

6 Register of Bills for Payment GEN-13

7PaymentOrder GEN-14

8 ChequeIssueRegister GEN-15

9 Register of Advance GEN-16

10 Register of Permanent Advance GEN-17

11 Deposit Register GEN-18

12 Summary Statement of Deposits Adjusted GEN-19

13 Demand Register GEN-20

14 Bill for Municipal Dues GEN-21

15 Summary Statement of Bills Raised GEN-22

16 Register of Notice Fee, Warrant Fee, Other Fees GEN-23

17 Summary Statement of Notice Fee, Warrant Fee, Other Fees GEN-24

National Municipal Accounts Manual General Accounting Procedures

5.5

Sr.

No. Name of the Form Form

Number

18 Register of Refunds, Remissions and Write-offs GEN-25

19 Summary Statement of Refunds and Remissions GEN-26

20 Summary Statement of Write-Offs GEN-27

21 Statement of Outstanding Liability for Expenses GEN-28

22 Documents Control Register/Stock Account of Receipt/Cheque Book GEN-29

23 Register of Immovable Property GEN-30

24 Register of Movable Property GEN-31

25 Register of Land GEN-32

26 Function-wise Income Subsidiary Ledger GEN-33

27 Function-wise Expense Subsidiary Ledger GEN-34

28 Asset Replacement Register GEN-35

29 Register of Public Lighting System GEN-36

5.6 The formats of all books, registers, and forms referred in this chapter and those listed

(Form GEN-8 to GEN-36) above are annexed to this chapter.

PROCEDURE TO BE FOLLOWED FOR ACCOUNTING OF COLLECTIONS

5.7 The collections in respect of the receipts of the ULB may be made at Collection

Offices (i.e. at the department, Ward Offices, Single-Window, etc.) or at other Collection

Centres (i.e. branches of Designated Banks and other Collection Centres). The general

procedure for the receipt, deposit and accounting of the collections shall be as follows:

a. Collection at Counters: For receipt of cash or any amount received in the form of

cheques/draft, a Receipt, duly signed and dated shall be issued in Form GEN-8. In

cases where the payer has to submit Bills/Challans, one copy shall be returned to

the payer along with the Receipt. All cheques/drafts received shall be recorded in a

Receipt Register, maintained in Form GEN-9. Receipt Register can be maintained

in perforated sheets, so that the second copy can be used for depositing cheques

with Bank or other Collection Offices of the ULB.

b. Deposit of amount collected: The amount collected (cash, cheques as well as

drafts) shall be deposited into Designated Bank Accounts or with the other

designated Collection Offices of ULBs, by the end of the day. The amount shall be

deposited in the bank on the same day or on the next working day.

c. Remittance of collections to other Collection Offices: The Collection Office

receiving the cash/cheque/demand draft/ banker’s cheque from other collection

centers, shall issue a Receipt (Form GEN-8) to acknowledge the receipt of

cash/cheque/demand draft/banker’s cheque from other collection offices. The

National Municipal Accounts Manual General Accounting Procedures

5.6

receiving Collection Centre shall record the receipt issued for receipt of the

cheques/drafts received from other collection centers in its receipt register

maintained in Form GEN -9.

d. Entry in Collection Register. The Collection Offices and Collection Centres shall

record the particulars of each Receipt issued in the Collection Register, maintained

in Form GEN-11, on a daily basis. The Collection to be maintained in Form GEN-

11 is to be account head wise details of the daily collections. This collection

concerned departments along with one copy of the Bill/Challan collected, if any,

one can be sent to the Accounts and other one will be retained as book copy.

e. Preparation of a Summary of Daily Collection. Based on the details from the

collection register, the collection offices shall prepare a Summary of Daily

Collection in Form GEN-12. The Summary of Daily Collection is a covering sheet

that provides a summary of the total revenues collected by the Collection

Office/Centre.

f. Collections at branches of Designated Banks directly from the payers. The

officers, designated for the purpose of co-ordinating with the branches collecting

the receipt directly from the payers, shall also prepare a Summary of Daily

Collection in Form GEN – 12.

g. Preparation of Bank Receipt Voucher. The Accounts Department shall prepare a

Bank Receipt Voucher (Form GEN-4) and pass the entry for recording the

collections based on the Summary of Daily Collection (Form GEN-12) received.

For example, the following entry shall be passed in respect of receipt of Security

Deposit received by cheque and deposited in Main Bank Account:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21 (a)

340-10-(a)

Bank Account *

To Deposit

Contractors –

Security Deposit

Dr.

Cr.

10,000

Cash Book, Ledger

* Specify name of the Bank and Account number

(a) Insert Minor Head Codes of Account as applicable

h. Entry in Cash Book. In practice, the above entry shall be passed in the Main

Cash Book (Form GEN-1), in the “Bank” column on the “Receipt” side, as

follows:

National Municipal Accounts Manual General Accounting Procedures

5.7

Cash Book of _______ Name of ULB (Main)

Receipt Payment

Sr.

No. Date

Rcpt.

Vchr.

No.

Code of

Account

Particulars of

Receipt

Cash

Amount

(Rs.)

Illustrative

figures

Bank

Amount

(Rs.)

Illustrative

figures

Sr.

No. Date

Pymt.

Vchr.

No.

Code of

Account

Particular

sof

Payment

L/F

Cash

Amount

(Rs.)

Illustrative

figures

Bank

Amount

(Rs.)

Illustrative

figures

1/1/04 340-10-(a) To Deposit from

contractors

Security Deposit

10,000

(Extracted Cash Book)

i. Posting in the Ledger. From the Cash Book, a posting shall be made to the Ledger (Form GEN-3) in the “Deposit from

Contractors - Security Deposit t”Account on the “Credit” side, as shown below:

Deposit from contractors - Security Deposit

Dr. Cr.

Date Code of

Account Particulars Folio

Amount (Rs.)

(Illustrative

figure)

Date Code of

Account Particulars Folio Amount (Rs.)

(Illustrative figure)

1/1/04 450-21-01 By Bank Account 10,000

j. Similarly, collections in respect of Property & Other Taxes shall be accounted as follows:

Code of

Account Accounting Entry Dr./

Cr.

Debit Amount (Rs.)

Illustrative figures

Credit Amount (Rs.)

Illustrative figures Books to be entered into

450-21-(a)

431-80-(a)

Bank Account *

To Receivables control account - Property Tax

Dr.

Cr.

25,000

Cash Book, Ledger

* Specify Name of Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

In practice, the above entry shall be passed in the relevant Cash Book (Form GEN-1), in the “Bank” column on the “Receipt”

side and posted to the Ledger (Form GEN-3), as follows:

National Municipal Accounts Manual General Accounting Procedures

5.8

Cash Book of _______ (Name of Bank)

Receipt Payment

Sr.

No. Date

Vchr.

No.

Code of

Account

Particulars of

Receipt

Bank

Amount

(Rs.)

Illustrative

figures

Bank

Amount

(Rs.)

Illustrative

figures

Sr.

No. Date

mt.

Vchr.

No.

Code of

Account

Particulars

of Payment

Bank

Amount

(Rs.)

Illustrative

figures

Bank

Amount

(Rs.)

Illustrative

figures

1/1/04 431-80-(a) To Recevables

control account

Property Tax

25,000

(Extracted Cash Book)

Receivables Control account

Dr. Cr.

Date Code of

Account Particulars Folio

Amount

(Rs.)

(Illustrative

figure)

Date Code of

Account Particulars Folio

Amount (Rs.)

(Illustrative

figure)

1/1/04 450-21-

(a)

By Bank Account 25,000

National Municipal Accounts Manual General Accounting Procedures

5.9

k. The entries to be passed for recording the collection of revenues have been

provided in the subsequent chapters, e.g., Chapter 6 - Property and Other Taxes,

Chapter 7 Octroi, Chapter 8 - Cess, Chapter 9 - Water Supply, Chapter 10

Assigned revenues, Chapter 11 Rents, Fees and Other Incomes, etc.

l. Updation of Subsidiary Ledgers. The Accounts Department shall maintain

separate Subsidiary Ledger for each of the Major revenues in Form GEN 33. The

Subsidiary Ledgers would provide function-wise break-up of above-mentioned

income earned/received by the ULBs on a daily basis. Separate folios shall be

maintained for each function within the Subsidiary Ledger for recording incomes

in respect of each function. When some income is earned, it will be first recorded

in the Cash Book on the receipt side or in the journal from bills submitted by the

concerned departments. Thereafter the entry will be posted to the credit of the

appropriate income account in the Main Ledger. Simultaneously, the amount will

also be recorded in the folio for the concerned function in the Subsidiary Ledger

under the respective income column.

m. This is illustrated with reference to the Function Health Department which have

received from various type of heads as listed below:

Day 1

License fee: Rs. 1,000

Registration fees from patients: Rs. 500

Sale of Medicines: Rs. 10,000

Day 2

X-ray and Pathology Charges: Rs. 2,000

Sale of Tender Forms: Rs. 500

Receipt of Malaria Control Grant Rs.5,000

n. The folio for the Revenue in the Subsidiary Ledger shall provide for separate

columns for various major heads on Income for which the incomes are received.

The details of income received, after being posted in the general ledger, shall be

posted in the relevant Subsidiary Ledger as follows:

National Municipal Accounts Manual General Accounting Procedures

5.10

Table 5.2

Function wise Income Subsidiary Ledger

Function : Health

Income

Date Ref.

No. Particulars Total

Amount Revenue

Grants

Fees & User

charges

Sale & Hire

Charges …

1 1 License Fees 1,000 1,000

2 Registration Fees from

patients

500 500

3 Birth & Death Fees 10,000 10,000

2 4 X-Ray and Pathology

Charges

2,000 2,000

5 Sale of Forms 500 500

6 Malaria Control grant 5,000 5,000

Total for the month 19,000 5,000 13,500 500

Cum. total at the

beginning of the month

NIL NIL NIL NIL NIL

Cum. Total at the end of

the month

21,000 5,000 13,500 500

o. Each of the above entries will be first posted in the respective ledger accounts in

the Main Ledger. Thus, the Main Ledger will be a complete record from which a

Trial Balance can be prepared. However, for ascertaining function-wise details

the Subsidiary Ledger will need to be referred.

p. Summary of major head wise income for each of the function may be prepared

from the Subsidiary Ledgers in the following format (Table 5.3).

Table 5.3

Summary of major head wise Income

Major Heads of Income

Sl.

Function

code

Functions

Head

Total

Income Revenue

Grants

Fees & User

charges

Sale & Hire

Charges

…

Health 19,000 5,000 13,500 500

Public Works

Civic

Amenities

……

Total for the major Heads of

Income

19,000 5,000 13,500 500

q. Summary total of major heads of Income prepared as stated above must agree with

the major income head wise schedules prepared from Trial Balance.

r. Updation of details regarding cheques/drafts deposited. The realisation/return of

the cheques/drafts shall be followed up with the bank. The details of the

realisation/non-realisation of the cheques/drafts shall be updated in the Receipt

follow-up. The details should be intimated to the Accounts Department by the

National Municipal Accounts Manual General Accounting Procedures

5.11

Collection Office/Centre who have actually deposited the cheques and co-

ordinating with the bank, through a Statement on Status of Cheques Received,

prepared in Form GEN-10.

s. Based on the Statement on Status of Cheques Received (Form GEN-10), the

Accounts Department shall reverse the entry passed in “g” above i.e. on

preparation of Bank Receipt Voucher.

For e.g. Security Deposit received by cheque and deposited in Main Bank Account

is dishonoured. The Accounts Department shall pass the following entry for

reversal of receipt.

Code of

Account Accounting Entry Dr./ Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

450-21-(a)

Deposit from contractors –

Security Deposit

To Bank Account*

Dr.

Cr.

10,000

Cash Book,

Ledger

* Specify name of the bank and Account number

t. Subsidiary Ledgers shall be adequately updated for the reversal entry to be passed

in respect of Fees & User Charges and Sale & Hire Charges due to dishonour of

cheques.

u. An administrative charge (as per ULBs operations manual) of is normally levied

on the dishonored cheques.

v. Transfer of funds from one Bank Account to other Bank Account. Transfers from

one Bank account to another will be governed by the applicable rules. On the basis

of the cheque prepared for the transfer or on the basis of the bank intimation

received, in case of standing instructions being given to the banks for transfer of

funds, the Accounts Department shall prepare a Contra Voucher (Form GEN-6).

Accounting entries relating to this is explained below under ‘Accounting for

Contra entries.’

PROCEDURE TO BE FOLLOWED FOR ACCOUNTING OF PAYMENTS

5.8 The general procedure in respect of payments, which shall be applicable for all

payments made by the ULB including payment of supplier' s/ contractor’s bills, refund of

taxes, payment of advance, refund of deposits, investments made, loan repayments, etc., is

described below:

a. Receipt of bills/claims. The bills or claims against the ULB shall be received at the

various functions of the ULBs or at the Accounts Department as per the

procedures laid down for ULBs in this behalf. The concerned department shall

National Municipal Accounts Manual General Accounting Procedures

5.12

verify the bills/claims received. On satisfactory verification, the bills/claims shall

be entered into the Register of Bills for Payment, maintained in Form GEN-13.

b. Preparation of Payment Order. On approval of the payment by the concerned

authorities at the respective departments, the department shall forward the bills for

payment. To facilitate capture of details a model Payment Order (Form GEN-14)

is suggested. The state governments can modify this based on their requirements.

c. Bill Passing/ Approval of bills: Before release of a payment, the Accounts/ Audit

department whoever is responsible for passing shall verify and ensure the

following relating to a payment order:

¾Whether the supporting documents such as invoices, bills, etc are stamped

with ‘certified for payment’ and signed by the authorities of the concerned

department;

¾Whether adequate budget appropriation/provision is available under the

particular head.

¾Whether evidence of entry into purchase /fixed assets/ investments register

with folio and reference numbers are attached/ available;

¾A work / job completion certificate is received and a copy is attached with the

payment voucher in the case of release of security or other caution deposits

relating to construction or acquisition of fixed assets;

¾Whether a copy of the purchase order with update of items / stocks received

along with the reference to goods in good condition / satisfactory condition as

per specification receipt/ gate pass note, etc is attached with the payment

voucher.

¾Further, physical verification of the concerned registers such as fixed assets/

stocks/ investments, etc. may also be carried out to ensure that the bills under

‘payment order’are entered in the registers.

d. In case of any queries in the process of verification of ‘payment order’ explained

above, including non-reference to the relevant folio/page number of the

Stock/Measurement Book or Fixed Asset Register or Register of Bills for

Payment, the same shall be noted on the Payment Order and shall be forwarded

back to the respective department.

e. The concerned department shall resolve the query raised (in d. above), make the

necessary changes in the Payment Order and the other registers/forms, if required,

and forward the documents back to the Bill Passing authority for review of the

revised payment order.

National Municipal Accounts Manual General Accounting Procedures

5.13

f. Forwarding for payment. After a satisfactory verification of the payment order and

its supporting, the payment order shall be released for payment

g. On approval of payment, entry shall be made in the Register of Bills for Payment

maintained at Accounts Department (Form GEN-13) journal voucher is prepared.

h. Preparation of a Cash/Bank Payment Voucher. A Cash/Bank Payment Voucher

(Form GEN-5) shall be prepared for payment and verified.

i. The entries to be passed for recording the expenditure and payments have been

provided in the subsequent chapters, e.g., Chapter 11 - Public Works, Chapter 12-

Stores, Chapter 13-Employee Related Transactions, Chapter 15-Other Revenue

Expenditures, etc

j. Preparation of cheque. On verification of the Cash/Bank Payment Voucher, a

cheque shall be prepared. The date of preparation of the Bank payment voucher

shall be the date of the cheque. The person preparing the cheque shall mention the

date of the cheque. An entry of the cheque prepared shall be made in the Cheque

Issue Register, maintained in Form GEN-15.

k. Signing of the cheque. The authorised signatories shall sign the cheque,

Cash/Bank Payment Voucher and Cheque Issue Register. It is suggested that one

of the authorised signatories shall be from Accounts Department.

l. Recording of entry for payment. After the signing of the Cash / Bank Payment

Voucher, the Accounts Department shall pass the entry for the payment.

For example, the Accounts Department shall pass the following entry for payment

of rent in respect of municipal building:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220- 10-(a)

450-21-(a)

Rent, Rates & Taxes

To Bank Account*

Dr.

Cr.

5,000

Cash Book, Ledger

* Specify name of the bank and account number

(a) Insert Detailed Head Codes of Account as applicable

m. Entry in Cash Book. In practice, the above entry shall be passed in the Cash Book

(Form GEN-1), in the “Bank” column on the “Payment” side, as follows:

National Municipal Accounts Manual General Accounting Procedures

5.14

Cash Book of _______

Receipt Payment

Sr.

No. Date

Rcpt.

Vchr.

No.

Code of

Account

Particulars of

Receipt

Cash

Amount

(Rs.)

Illustrative

figures

Bank

Amount

(Rs.)

Illustrative

figures

Sr.

No. Date

Pymt.

Vchr.

No.

Code of

Account

Particulars of

Payment

Cash

Amount

(Rs.)

Illustrative

figures

Bank

Amount

(Rs.)

Illustrative

figures

1/1/04 220-10-(a) By Rent, Rates

& Taxes

5,000

n. Posting in the Ledger. From the Cash Book, a posting shall be made to the Ledger (Form GEN-3) in the “Rent, Rates & Taxes”

Account on the “Debit” side, as shown below:

Rent, Rates & Taxes Account

Dr. Cr.

Date

Code

Accou

Particulars Folio

Amount

(Rs.)

(Illustrative

figure)

Date Code of Account Particulars Folio Amount (Rs.) (Illustrative figure)

1/1/04 450-

21- (a)

To Bank Account* 5,000

* Specify name of the bank and account number

(a) Insert Detailed Head Codes of Account as applicable

Similarly, payment made to a contractor towards construction of a building block shall be accounted as follows (separate Cash

Book shall be maintained for Designated Public Works Bank Account):

National Municipal Accounts Manual General Accounting Procedures

5.15

Code of

Account Accounting Entry Dr./ Cr. Debit Amount (Rs.)

Illustrative figures

Credit Amount (Rs.)

Illustrative figures

Books to be

entered into

350-10-(a)

450-21-(a)

Creditors - Contractors Control Account

To Bank Account*

Dr.

Cr.

1,00,000

Cash Book, Ledger

* Specify name of the Bank and Account number

(a) Insert Minor Head Codes of Account as applicable

In practice, the above entry shall be passed in the Public Works Cash Book (Form GEN-1), in the “Bank” column on the

“Payment”side and posted to the Ledger (Form GEN-3), as follows:

Cash Book of _______ the name of the ULB (Public Works)

Receipt Payment

Sr.

No. Date

Rcpt.

Vchr.

No.

Code of

Account

Particulars

of Receipt L/F

Bank

Amount

(Rs.)

Illustrative

figures

Sr.

No. Date

Pymt.

Vchr.

No.

Code of

Account

Particulars of

Payment L/F

Bank

Amount (Rs.)

Illustrative

figures

1/1/04 350-10-(a) By Contractors

Control Account

1,00,000

Contractors Control Account

Dr. Cr.

Date Code of

Account Particulars Folio

Amount

(Rs.)

(Illustrative

figure)

Date Code of

Account Particulars Folio

Amount

(Rs.)

(Illustrative

figure)

1/1/04 450-21-

(a)

To Bank Account * 1,00,000

(a) Insert Minor Head Codes of Account as applicable

National Municipal Accounts Manual General Accounting Procedures

5.16

o. Updation of Subsidiary Ledgers for expenditures. The Accounts Department shall

maintain separate Subsidiary Ledger for each of the Major expense head in Form

GEN 34. The Subsidiary Ledgers would provide function-wise break-up of

above-mentioned expenses incurred by the ULBs on a daily basis. Separate folios

shall be maintained for each function. When some expenditure is incurred, it will

be first recorded in the Cash Book on the payment side or in the credit side from

journal bills submitted. Thereafter the entry will be posted to the credit of the

appropriate expense account in the Main Ledger. Simultaneously, the amount will

also be recorded in the folio for the concerned function in the Subsidiary Ledger

under the respective expense column.

p. This is illustrated with reference to the Function Public works, which have

incurred various types of expenses as listed below.

Day 1

Salaries of staff Rs. 10,000

Books & Periodicals Rs. 1,000

Consumption of stores Rs.3,000

Day 2

Repairs to Roads Rs.20,000

Communication expenses Rs.1,000

Computer consumables Rs.2,000

q. The folio for the Expense in the Subsidiary Ledger shall provide for separate

columns for various major heads of expenses. The details of expenses incurred,

after being posted in the general ledger under the respective expense head, shall be

posted in the relevant Subsidiary Ledger as follows:

Table 5.4

Function wise Expenses Subsidiary Ledger

Function:

Major Heads of Expenses

Date Ref.

No. Particulars Total

Amount Establishment Administration

Operations

maintenance

1 1 Salaries of staff 10,000 10,000

2 Books & Periodicals 1,000 1,000

3 Consumption of Stores 3,000 3,000

2 4 Repairs to Roads 20,000 20,000

5 Communication expenses 1,000 1,000

6 Computer Consumables 2,000 2,000

Total for the month 37,000 10,000 4,000 23,000

National Municipal Accounts Manual General Accounting Procedures

5.17

Major Heads of Expenses

Date Ref.

No. Particulars Total

Amount Establishment Administration

Operations

maintenance

Cum. total at the

beginning of the month

NIL NIL NIL NIL NIL

Cum. Total at the end of

the month

37,000 10,000 4,000 23,000

r. Each of the above entries will be first posted in the respective ledger accounts in

the Main Ledger. Thus, the Main Ledger will be a complete record from which a

Trial Balance can be prepared. However, for ascertaining function-wise details

the Subsidiary Ledger will need to be referred.

s. Summary of major head wise expenses for each of the function may be prepared

from the Subsidiary Ledgers in the following format (Table 5.5).

Table 5.5

Summary of major head wise expenses

Major Heads of Expenses

Sl.

No.

Function

code

Functions

Head

Total

Income Establishment Administration

Operations

maintenance

1 Public Works 37,000 10,000 4,000 23,000

Total for the major Heads of

Expenses

37,000 10,000 4,000 23,000

t. Summary total of major heads of Expenses prepared as stated above must agree

with the major expenses detailed head wise schedules prepared from Trial

Balance.

ACCOUNTING FOR JOURNAL ENTRIES

5.9 For transactions other than those involving cash and/or bank, the Accounts

Department shall prepare a Journal Voucher (Form GEN-7) for recording the entry in the

Journal Book. The following example illustrates the recording of entry in the Journal Book:

5.10 For recording the entry in respect of the raising of demand in respect of Property and

Other Taxes, the Accounts Department shall prepare a Journal Voucher (Form GEN-7) and

pass the following entry in the Journal Book (Form GEN-2):

National Municipal Accounts Manual General Accounting Procedures

5.18

Journal Book of _______ name of the ULB

Sr.

No. Date

Jrnl.

Vchr.

No.

Code of

Account Particulars L/F

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

1 1/1/04 XXX 431-10-(a)

110-01-(a)

Receivables for Property

Taxes (Year )

To Property tax

Residential Properties

50,000

(a) Insert Detailed Head Codes of Account as applicable

Posting in the Ledger. From the Journal Book, a posting shall be made to the Ledger

(Form GEN-3) as shown below:

National Municipal Accounts Manual General Accounting Procedures

5.19

Receivables for Property Tax (Year…) Account

Dr. Cr.

Date Code of

Account Particulars Folio

Amount

(Rs.)

(Illustrative

figure)

Date Code of

Account Particulars Folio

Amount

(Rs.)

(Illustrative

figure)

1/1/04 110-01-

(a)

To Property Tax - residential

Properties

50,000

Property tax – Residential properties Account

Dr. Cr.

Date Code of

Account Particulars Folio

Amount

(Rs.)

(Illustrative

figure)

Date Code of

Account Particulars Folio

Amount

(Rs.)

(Illustrative

figure)

1/1/04 431-10-

(a)

By Receivables of Property

Taxes (Year )

50,000

* Insert Detailed Head Codes of Account as applicable.

National Municipal Accounts Manual General Accounting Procedures

5.20

5.11 The Journal Entries are also passed for rectification of errors in recording of earlier

transactions.

For example, if the income in respect of sale of Forms has been taken as Registration

Fees from PW contractors:

a. The entry which should have been actually passed would be:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21 (a)

150-11-(a)

Bank Account*

To Sale Forms -

Tenders

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify name of the bank and account number

(a) Insert Minor Head Codes of Account as applicable

If the entry has been wrongly passed as follows:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21- (a)

140-10-(a)

Bank Account*

To Registration Charges

PW contractors

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify name of the bank and account number

(a) Insert Detailed Head Codes of Account as applicable

b. To rectify the above, the Accounts Department shall prepare a Journal Voucher

(Form GEN-7) and pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

140-10-(a)

150-11-(a)

Registration Charges PW

contractors

To Sale of Forms

Tender

Dr.

Cr.

1,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

PERMANENT/OFFICIAL ADVANCE

5.12 For permanent advance (imprest cash) provided to the various officers/departments of

the ULB, such payments shall be initially recorded as an advance provided. The details of the

expenditure incurred against the advance shall be recorded in a Register of Permanent

Advance maintained at the various departments in Form GEN-16. The details of the advances

given shall be recorded in the Register of Advance maintained in Form GEN-16. The

concerned department shall prepare Payment Order (Form GEN-15) for replenishment of the

permanent advance.

National Municipal Accounts Manual General Accounting Procedures

5.21

5.13 Similarly, the employees of the ULB to whom official advances are provided for

incurring expenditure on behalf of the ULB, shall prepare a Payment Order for the

expenditure incurred as soon as the purpose for which the advance was provided is

accomplished.

5.14 The Payment Order prepared for expenditure incurred against the permanent advance

or against the official advance shall be approved in the same manner as the Payment Order

prepared for normal expenditure.

BANK CHARGES:

5.15 Based on the nature of banking services availed by an ULB, service charges or

transaction processing charges (for example demand draft commission, outstation cheque

clearing charges, etc) are charged by the Banks.

5.16 The Bank through an Advice gives details of their charges. ULBs shall account for the

Bank Charges based on the Debit Advices. In the absence of receipt and accounting for bank

charges, these will be listed in the bank reconciliation statements prepared as explained in

Chapter 29 on Reconciliation Procedures, as items not accounted by the ULB. Accounting

entry for Bank Charges shall be as follows:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

240-70-(a)

450-21-(a)

Bank Charges

To Bank Account*

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify name of the bank and account number

(a) Insert Detailed Head Codes of Account as applicable

STALE/OBSOLETE CHEQUES

5.17 The normal validity period of a cheque is six (6) months or such shorter period as

specified on the cheque, from the date of the cheque. On expiry of the validity period, in case

the cheque has not been realised, it becomes a stale cheque.

5.18 At period end, the Accounts Department shall review the Cheque Issue Register

(Form GEN-15) and the Bank Reconciliation Statements (format provided in Table 30.2 of

Chapter 30 on Reconciliation Procedures) to identify the cheques, which have become stale.

It shall prepare a Bank Receipt Voucher (Form GEN-4) for recording a notional receipt in

respect of the stale cheques. The necessary details shall be updated in the Cheque Issue

the following entry:

National Municipal Accounts Manual General Accounting Procedures

5.22

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21- (a)

350-80-(a)

Bank Account*

To Other Liability

Others - Liability in

respect of Stale Cheques

Dr.

Cr.

10,000

Cash Book

* Specify name of the Bank and Account number

(a) Insert detailed Head Codes of Account as applicable

5.19 When the cheques are revalidated or a fresh cheque is issued against the stale cheques,

the Accounts Department shall prepare a Bank Payment Voucher (Form GEN-5). After

approval and signing of the Bank Payment Voucher by the concerned authorities, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-80-(a)

450-21- (a)

Other Liability Others -

Liability in respect of Stale

Cheques

To Bank Account*

Dr.

Cr.

10,000

Cash Book,

Ledger

* Specify name of the bank and account number

(a) Insert Detailed Head Codes of Account as applicable

5.20 Liability in respect of Stale Cheques account shall be reviewed periodically and those

Stale cheques which were not revalidated for a period of 3years or such period as may be

specified by the state government from the date of original issue shall be reversed as Write

back of Liability for Stale Cheques under Other incomes of the ULB. Accounts Department

shall pass the following entry for recognition of other income:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-80-(a)

180-50-(a)

Other Liability Others

Liability in respect of Stale

Cheques

To Unclaimed Liabilities

written back Stale

Cheques

Dr.

Cr.

5,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual General Accounting Procedures

5.23

GENERAL INSTRUCTION FOR PAYMENTS

5.21 All payments made by the Accounts Department shall be recorded in the Cash Book

(Form GEN-1) on a daily basis.

5.22 Payments exceeding Rs. 100/- or such other sum as may be prescribed by the ULB

rules shall be made only by “Account Payee Crossed” cheque.

5.23 All claims against the ULB, which are barred by time under any provisions of law

relating limitation, are ordinarily to be refused and no claim on account of such time barred

items is to be paid without the sanction of the Authorities as prescribed in the applicable Act /

Rules. This question shall be decided on the merits of each case.

5.24 In case of payments made by drafts that are issued by banks through a written

instruction other than a cheque, i.e., an authorisation letter, etc., the copy of the authorising

document shall be attached to the Payment Order (Form GEN-14). The entry for payments

made in this manner shall be recorded on receiving the drafts from the bank. A copy of the

draft shall also be attached to the Payment Order.

5.25 At period end, the officers/departments to whom the permanent advance is provided

shall prepare a Payment Order for the replenishment of the expenditure incurred up to the

period end and submit it to the Accounts Department within 5 days from the end of the

period.

5.26 In respect of cheques, which are cancelled or lost, the Accounts Department shall

update the Cheque Issue Register (Form GEN-15) against the specific cheque numbers. The

cheques cancelled shall bear the approval of the authorised signatories on the cheque and in

the Cheque Issue Register.

5.27 States shall define the rules and procedures for processing of duplicate bills. However

it shall be ensured that no claim is processed or paid twice. E.g. payment both against original

bill and against copies of bills etc

5.28 ULBs may also bring in additional internal control procedures. Some ULBs operate

centralised cheque issue section for delivery of cheques to the parties. Parties coming to

collect cheques need not go to any department and instead collect it from this central section.

ACCOUNTING FOR CONTRA ENTRIES

5.29 Contra entry means an Accounting Entry that is recorded on both the sides of a Cash

Book, showing inflow and outflow of funds at the same time. Contra entries are the entries

for recording deposit of cash in the bank, withdrawal of cash from the bank or transfer of

National Municipal Accounts Manual General Accounting Procedures

5.24

funds from one bank to another. For example, cash deposited with bank would be reflected as

inflow in “Bank” Column on “Receipt” side and simultaneously as outflow in “Cash”

Column on “Payment”side. Similarly, balances transferred from one bank account to another

would be shown as inflow in “Bank”Column on “Receipt” side in the receiving bank account

and simultaneously as outflow in “Bank” Column on “Payment” side in the paying bank

account. For recording of a Contra Entry, the Accounts Department shall prepare a Contra

Voucher (Form GEN-6). In respect of Contra Entries, the following entries shall be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

For recording cash deposited into bank

450-21- (a)

450-10-(a)

Bank Account*

To Cash

Dr.

Cr.

10,000

Cash Book

For recording cash withdrawn from bank

450-10-(a)

450-21-(a)

Cash

To Bank Account*

Dr.

Cr.

10,000

Cash Book

For recording transfer of funds from one

bank to another

450-21-(a)

450-21- (a)

Main Bank Account*

To Designated Bank

Account*

Dr.

Cr.

10,000

Cash Book

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

5.30 Contra Entries shall also be recorded for rectification of entries involving cash and/or

bank transactions. For example, if the amount deposited in the Designated Property Tax Bank

Account has been wrongly debited to Designated Water Supply Bank Account, then the

following entry shall be passed to rectify the error:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

450-21- (a)

Designated Property Tax Bank

Account*

To Designated Water Supply

Bank Account*

Dr.

Cr.

10,000

Cash Book

* Specify name of the bank and account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual General Accounting Procedures

5.25

Cash Book of _______ Name of ULB (Main)

Receipt Payment

Sr.

No. Date

Vchr.

No.

Code of

Account

Particulars of

Receipt

Cash

Amount

(Rs.)

Illustrative

figures

Bank

Amount

(Rs.)

Illustrative

figures

Sr.

No. Date

mt.

Vchr.

No.

Code of

Account

Particulars of

Payment

Cash

Amount

(Rs.)

Illustrative

figures

Bank

Account

(Rs.)

Illustrative

figures

1/1/04 450-21-

(a)

To Designated

Health Fund

Bank

Account*

25,000

* Specify name of the bank and account number

(a) Insert Detailed Head Codes of Account as applicable

Cash Book of _______ (Health Fund)

Receipt Payment

Sr.

No. Date

Vchr.

No.

Code of

Account

Particulars of

Receipt

Bank

Amount

(Rs.)

Illustrative

figures

Bank

Amount

(Rs.)

Illustrative

figures

Sr.

No. Date

mt.

Vchr.

No.

Code of

Account

Particulars of

Payment

Bank

Amount

(Rs.)

Illustrative

figures

Bank

Amount

(Rs.)

Illustrative

figures

1/1/04 450-21-

(a)

By Main Bank

Account*

25,000

* Specify name of the bank and account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual General Accounting Procedures

5.26

Banking arrangements

5.31 ULBs may enter arrangements with their bankers as listed below in respect of

collections and payments. Such arrangements would enable ULBs in improvement of funds

management.

5.32 Illustrative list of arrangements with Banks:

¾Acting as an authorised collection agency for direct collection. This facilitates

collection at all authorised branches of the Bank providing easy access.

¾Operation of collection counter at ULB s offices

¾Arrangement for collection of Deposits from authorised collection centres at a

fixed time (say end of the day)

¾Issuing daily Debit/Credit Advises

¾Issue Account Statements on a weekly basis or for such other periods

¾Tele banking facilities

¾Salary Credit for employees

INTERNAL CONTROLS

5.33 The following general internal controls shall be observed by the ULBs:

a. The closing balance of cash as per the Cashier s Cash Book shall be verified daily

with the physical cash balance at all the Collection Offices and must be signed by

the person verifying the cash.

b. The cash chest should have two keys. One key will be with the cashier of the

collection office and the other will be with another officer designated for this

purpose by the ULB.

c. Cash in chest should be insured for theft, fire etc.

d. The officers designated by the ULB for operating the Designated Bank Accounts

shall co-ordinate with the banks on a daily basis and ascertain the status of the

cheques/drafts deposited by them.

e. Bank reconciliation shall be carried out monthly by the officers of the ULB

designated for the purpose of handling the bank accounts and the same shall be

duly verified and signed by the designated senior officer.

f. Original copy of the cancelled Receipt shall be attached with the duplicate copy

with the words “Cancelled”marked on it.

National Municipal Accounts Manual General Accounting Procedures

5.27

g. At the time of approving payment, the Accounts Department shall ensure that the

Payment Order provides reference of Register of Bills for Payment, Measurement

Book, Stock Ledger or Fixed Asset Register, as the case may be, depending on the

purpose for which payment is made.

h. At the time of recording collections, the Accounts Department shall ensure that

the total amount of collections as per the collection register tallies with the total

amount as per Receipt register for cheques received and total of cash collections as

per summary of daily collection in form GEN - 12.

i. Original copies of all the cancelled documents such as receipts, payment vouchers

shall be retained in the office file with reasons / justification for cancellation

written on the cancelled documents.

j. At the end of each month, the Accounts Department shall ensure compliance with

the month-end procedure described in Chapter 11 Rents, Fees and Other

Incomes in respect of Fees & User Charges and Sale & Hire Charges, reference to

which is invited.

k. At the end of each month, the Accounts Department shall comply with the month-

end procedure in respect of:

Operations and Maintenance Expenses as described in Chapter 12 Public

Works,

Employee related expenses as described in Chapter 13 Employee Related

Transactions, and

Administrative Expenses as described in Chapter 16 Other Revenue

Expenditures.

l. Liability for Stale Cheques account should be reviewed at the end of every

quarter and all the stale cheques dated more than 3 years or such period as may be

specified by the state government from the date of original issue shall be identified

and reversed as other income of the ULB.

m. The Head of Accounts Department shall ensure stamping of all the bills once

approved for approval and then for payment to ensure the same bill is not

processed once again.

n. The Head of the Accounts Department shall ensure that all the bank charges

accounted based on the bank reconciliation statement are supported with original

bank debit advises.

5.34 The Head of Accounts Department shall certify all Reconciliation Statements.

National Municipal Accounts Manual General Accounting Procedures

5.28

Form GEN-1

_________________Name of the ULB

CASH BOOK

Receipt Payment

Sr.

No. Date

Rcpt.

Vchr.

No.

Code of

Account

Particulars

of Receipt L/F

Cash

Amount

(Rs.)

Bank

Account

Amount

(Rs.)

Sr.

No. Date

Pymt.

Vchr.

No.

Code of

Account

Particulars

of Payment L/F

Cash

Amount

(Rs.)

Bank

Account

Amount

(Rs.)

Notes

•Balance brought forward is the opening balance to be entered

•The date of receipt to be shown in Cash book shall be the date on which amount has actually been received

•All moneys received shall immediately and without reservations be entered in the Cash book

•The receipts shall be classified in the column provided according to budget heads

•The payment side of Cash book shall be posted from the details of vouchers and of the cheque drawn

•The amount side of each cheque shall be entered as soon as the cheque is signed

•Each entry in the cash book should be attested by the authorised officer

•The classification and totals of cash book should be initialled by some responsible officer other than the writer of Cash book

•Cash book should be closed daily

National Municipal Accounts Manual General Accounting Procedures

5.29

Form GEN-2

_________________Name of the ULB

JOURNAL BOOK

Sr.

No. Date

Jrnl.

Vchr.

No.

Code of

Account Particulars L/F Debit

Amount (Rs.)

Credit

Amount (Rs.)

National Municipal Accounts Manual General Accounting Procedures

5.30

Form GEN-3

_______________Name of the ULB

LEDGER

_______________ Account

Dr. Cr.

Date Code of

Account Particulars Folio Amount

(Rs.) Date Code of

Account Particulars Folio Amount

(Rs.)

National Municipal Accounts Manual General Accounting Procedures

5.31

Form GEN-4

________________ Name of the ULB

CASH/BANK RECEIPT VOUCHER

NAME OF THE FUND:

__________

Name of the Bank: __________

Pay-in-slip Ref. No./Date: ________ CRV/BRV No:____

Date:______

Budget

`Function Functionary

Code of

Account Account Description Chalan for Remittance of

Money No. Amount (Rs.)

123 4 5 6

Total

Prepared by: Verified by: Approved by: Posted by:

Date: Date: Date: Date:

Notes:

1. A separate Bank Receipt Voucher shall be prepared in respect of each separate Bank Book maintained.

2. All the Challans for Remittance of Money, the details of which are included in this Bank Receipt Voucher, shall be attached to it.

National Municipal Accounts Manual General Accounting Procedures

5.32

Form GEN-5

________________ Name of the ULB

CASH/BANK PAYMENT VOUCHER

NAME OF THE FUND: ___________

Name of the Bank: _________

Date: ______________

Department: ________________ CPV/BPV No:__________

Name of Claimant: ________________ P.O./W.O. No.: _________

Budget

Function Functionary Code of Account Account

Description

Payment

Order No. Cheque No. Amount (Rs.)

12 3 456 7

Total (in words):

Prepared by: Verified by: Approved by: Posted by:

Date: Date: Date: Date:

Received Payment

Signature of Receiver

Notes:

1. A separate Bank Payment Voucher shall be prepared in respect of each separate Bank Book maintained.

2. Payment Order for which payment is made shall be attached to the Bank Payment Voucher.

3. The payment vouchers and its supportings shall be cancelled with 'paid' stamp.

National Municipal Accounts Manual General Accounting Procedures

5.33

Form GEN-6

________________ Name of the ULB

CONTRA VOUCHER

Date: _________________ Contra Voucher No: ______________

Code of Account Account Description Debit Amount (Rs.) Credit Amount (Rs.)

12 3 4

Total

Prepared By Verified By Approved By Posted By

Date Date Date Date

Note:

1. The supporting documents forming the basis of the entry shall be attached to the Contra Voucher.

National Municipal Accounts Manual General Accounting Procedures

5.34

Form GEN-7

________________ Name of the ULB

JOURNAL VOUCHER

NAME OF THE FUND: ___________

Date: _________________ Journal Voucher No: ____________

Budget

Function Functionary Code of Account Account Description Debit Amount (Rs.) Credit Amount (Rs.)

12 3 4 5 6

Total

Prepared By Verified By Approved By Posted By

Date Date Date Date

Note:

1. The supporting documents forming the basis of the entry shall be attached to the Journal Voucher.

2. The narration for the entry should be clearly (understandably) stated.

National Municipal Accounts Manual General Accounting Procedures

5.35

Form GEN-8

________________ Name of the ULB

RECEIPT

Date : ___________

Received from Shri __________________ a sum of Rs. _________ (in words) towards _____________

_______________________________vide cash/cheque/demand draft/Banker' s cheque no_____________ dated ___________

drawn on ________Bank, ____________Place of the Bank.

---------------------------------------

Signature of Authorised Officer

-------------------------

Signature of Clerk

---------------------------------------- --------------

Entered in Collection Register Page No.

N.B. Cheque/Draft/Banker's cheque are subject to realisation

Note: Separate receipt books can be maintained for Cash / Cheques.

National Municipal Accounts Manual General Accounting Procedures

5.36

Form GEN-9

________________ Name of the ULB

RECEIPT REGISTER

Sr.

No.

Receipt

Number

Receipt

Date

Mode of

receipt Cash/

Che

ue/draft

Name of

the Drawer

Cheque/

Draft No.

Bank (for

amounts

received

through

Cheque/

draft

Cash (for

amounts

received

Cash)

Deposited

into Bank

Account

No.

Date of

osit

Date of

Realisation

Whether

Returned Remarks*

1 2 3 4 5 6 7 8 9 10 11 12 13

Opening total

Days total **

Closing total

* Specify the details of the substitute cheque received in case of dishonour of the cheque.

** This total shall be tallied with total as per the Collection Register for the day and also the amount as per the 'Summary of daily collections'

Note:

1. For each entry made; record the Name, Designation, and Signature of the person making the entry in the register and the person checking the entry.

2. This can be prepared in perforated sheets, as the same shall be used for making support to the deposit slip into the designated bank account or to other

collection offices.

3. Separate sheets shall be used in respect of Cash and Cheques/drafts received

National Municipal Accounts Manual General Accounting Procedures

5.37

Form GEN-10

________________ Name of the ULB

STATEMENT ON STATUS OF CHEQUES RECEIVED

FROM ____________________ BY ________________________

Date: ______________ Sr. No.: ___________

Sr.

No.

Sr. No. of the

Statement of

Cheques

Deposited

received

Date of the

Statement of

Cheques

Deposited

received

Cheque/

Draft

No.

Amount

(Rs.)

Deposited

into Bank

Account

No.

Realised/

Returned

Date of

Realisation/

Return

intimation

from the

bank

12 3 45 6 7 8

Prepared By* : _____________________ Received By*: ______________________

Checked By* : ______________________ Dated:

Dated:

* Record the name, designation and signature of the person.

National Municipal Accounts Manual General Accounting Procedures

5.38

Form GEN-11

________________ Name of the ULB

COLLECTION REGISTER OF ______________________________ FOR THE YEAR 20__ to 20__

___________________ Department

Particulars of Income

Sr.

No.

Date of

Receipt

Recei

tNo.

with book

no.

Name of the

payer

Reference

number ** Account

Head*

(Rs.)

Account

Head *

(Rs.)

Account

Head *

(Rs.)

Account

Head *

(Rs.)

Others

(Specify)*

(Rs.)

Total

(Rs.) Remarks

1 2 3 4 5 6 7 8 9 10 11

Opening total

Days total #

Closing total

Prepared By*** : ___________________________________

Checked By*** : ___________________________________ Entered By :*** ________________________________

Date: Checked By :*** ________________________________

* Specify the head of Income under which collection is made

** Specify the identification details in respect of the cheque, e.g., Bill No. in case of Property & Other Tax Collections, Tender No./Work Order No. in case of Earnest Money Deposit

or Security Deposit, etc.

*** Record the name, designation and signature of the person.

# This total shall be tallied with total as per the Receipt Register for the day and also the amount as per the ‘Summary of daily collections’

Note: Each day' s collection should be recorded on a separate page of the Register and every page should be signed as provided.

National Municipal Accounts Manual General Accounting Procedures

5.39

Form GEN-12

________________ Name of the ULB

SUMMARY OF DAILY COLLECTION OF

__________________________ COLLECTION OFFICE/COLLECTION CENTRE

Date: _______________ Sr. No. : ___________

Sr. No. Name of the

Department Name of the Revenue Head Amount (Rs.) Amount (Rs.) Deposited With*

12 3 4 5 6

Revenue accounted for on Cash basis #

1 Tax Department Property Transfer Charges

2 Octroi Penalties and transit fees

3 Water Supply Water Connection Charges

Water Tanker Charges

Road Damage Charges

Revenue accounted for on Accrual basis

4 Water Supply Water Tax, Water Benefit tax

Notice fees, Warrant fees

Grand Total

Amount in Words : Rupees ______________________________________________

Receipt No. issued by the Collection Office:

(in case collections are deposited with Collection Office)

Cash _____________ Rs: _________

Cheque _____________ Rs: _________

(For cheques realised)

Total Rs. _________

Prepared By** : ____________________ Examined and entered

Checked By** : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Specify the Bank Name and Account Number in case of amount directly deposited with bank.

** Record the name, designation and signature of the person.

# For revenues accounted for on Cash basis, one consolidated figure for the total collections may be given instead of

giving a receipt-wise entry.

# Examples of cash basis of accounting of the few of the revenue items are as follows:

a. Transfer charges relating to Transfer of Properties has to be recognised only on actual receipt basis

National Municipal Accounts Manual General Accounting Procedures

5.40

Form GEN-13

________________ Name of the ULB

Sr.

No.

Date of

presentation

by the

Supplier/

Department

Name of

Party/

Department* Particulars Amount

of Bill

(Rs.)

Initials of

Authorised

Officer

Date of

Sanction Voucher

No.

Amount

Sanct-

ioned

(Rs.)

Date of

Payment

or issue of

cheque

Amount

Dis-

allowed

(Rs.)

Balance

outstanding

at the end of

the year (Rs.)

Reason

for dela

payment

Remarks

1 2 3 4 5 6 7 8 9 10 11 12 13 14

* In respect of the register maintained at the Accounts Department, mention the date of presentation of the bill by the concerned department and the name of the

department.

Note: For each entry made; record the Name, Designation, and Signature of the person making the statement and the person checking the entry.

National Municipal Accounts Manual General Accounting Procedures

5.41

Form GEN-14

________________ Name of the ULB

PAYMENT ORDER

Bill No.: Voucher No.: Date:

Name and address of Payee:

Stock / Bills for Payment:

Reference to _________________Book / Register Head of Account:

Measurement / Fixed Asset:

Sr. No. Particular of work or articles Quality or

weight Rate Unit Amount

(Rs.)

12 3456

Total amount (in words) Rs.

(1) Amount allotted ..

(2) Previous expenditure .. Rs.

(3) Expenditure shown in the bill.. Rs.

Total of 2 and 3 .. Rs.

Certified that the rate and quantities shown in this bill are

correct and the materials, articles have been received in good

condition and have been entered in the appropriate supplies

...............................................

Balance available .. Rs.

Date . . . ...............

. .

Signature of Officer

Receiving the articles

Resolution No. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . Date . . . . .

. . .. .. .. .. .. .. .. .. ... . the`

Submitted to the Designated Authority

for sanction

sumofRs. . . .. .. .. . ......(inwords). . ..................

. . .. .. .. .. .. .. .. .. .. .. .. .. . .. .

shown in the bill is

sanctioned.

I have examined the claim and found it correct in all respects.

Date. . . .. .. .. .. .. .. .. .. .. . ...... Date. . . .. .. .. .. .. .. .. .. .. . ...

. . .

Chief Accounts Officer Commissioner or the Authorised Officer

PayRupees. . . .. .. .. .. .. .. .. .. . .......... .(inwords) To

. . .. .. .. .. .. .. .. .. .. .. .. .. . .. .. .. .. .. .. .. .. .. ... TheAccountant forpayment.

. . .. .. .. .. .. .. .. .. .. .. .. .. . .. .. .. .. .. .. .. .

. . . .. .

Date Authorised Officer Date Commissioner or the

Authorised Officer

Paid bycheque/draftNo. . . . . ........................ ....

date. . . . . .............. .

andenteredinthecashbookonPage. . . .. .. .. .. .. .. .. .. ..

. . .. .. .. .. .. .. ..

Received payment of Rs. . . . . . . . . . . .. . . .. . . (

in words)

……………………………………………

. . .. .. .. .. ................. ..........in

full settlement of the claim.

Stamp Chief Accounts Officer Commissioner or

the Authorised Officer

Payees Signature

National Municipal Accounts Manual General Accounting Procedures

5.42

Form GEN-15

________________ Name of the ULB

CHEQUE ISSUE REGISTER

Sr.

No. Date

Bank

Payment

Voucher

No. &

Date

ment

Order

Number

&Date

Name of

the

Payee

Nature

ment

Che

ue/

Draft

No.

Date of

the

Che

ue/

Draft

Amount

(Rs.)

Entered

Signature

of the First

Authorised

nator

nature of

the Second

Authorised

Signatory

Date of

Issue of

Cheque/

Draft

Signature

of the

Recipient

of Che

ue/

Draft

Date of

Clearance

Remarks

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

* Specify the details of the stale cheques and the subsequent revalidation of the cheque or issue of the fresh cheques.

Note: For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.

National Municipal Accounts Manual General Accounting Procedures

5.43

Form GEN-16

________________ Name of the ULB

Sr.

No. Date

Name of the

person to whom

the advance is

aid

Particulars

of the

Advance

Bank Pa

ment

Voucher

Number &

Date

Payment

Order

Number &

Date

Amount

(Rs.)

Date of

Repayment/

Adjustment

Voucher

Number of

Repayment/

Adjustment

Balance

remaining

unadjusted at the

end of the year

Remarks

12 3 4 5 6 7 8 9 10 11

Note:

1. After each entry, leave few blank spaces depending on the repayment/adjustment schedule of the Advance

2. For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the

entry.

National Municipal Accounts Manual General Accounting Procedures

5.44

Form GEN-17

________________ Name of the ULB

Of _________________ for the year _________________________

Initial disbursement/Recoupment of the Permanent

Advance Expenditure

Sr.

No. Date Payment

Order No.

Sr. No. of

Expenditures for

which Payment

Order is submitted

Amount

(Rs.)

Nature of

Expenditure

Date of

Bill

To whom

paid

Amount

Paid

(Rs.)

Daily

Balance

(Rs.)

Initials of

the officer

holding the

advance

Remarks

12 3 4 5 6 7 8 9 10 11 12

(5-9)

Note:

For each entry made; record the Name, Designation and Signature of the person making the statement and the person checking the entry.

National Municipal Accounts Manual General Accounting Procedures

5.45

Form GEN-18

________________ Name of the ULB

DEPOSIT REGISTER FOR THE YEAR ENDED 20_to 20

In respect of ___________________________

Refund or Adjustments

Adjusted against demand ofSr.

No. Date Name of

the Party

Nature/

Type/Kind

of Deposit

Receipt

Number

Amount

(Rs.)

Date &

Voucher

No. Income* Year Amount

(Rs.)

Amount

(Rs.)

Balance

Deposit

(Rs.)

Remarks**

12 3 4 5 6 7 8 9 10 11 12 13

* Specify the head of account of the income against which the deposit is adjusted

** Details of the Lapsed Deposits should be given in the "Remarks" column.

Note: For each entry made; record the Name, Designation and Signature of the person making the statement and the person checking the entry.

National Municipal Accounts Manual General Accounting Procedures

5.46

Form GEN-19

________________ Name of the ULB

SUMMARY STATEMENT OF DEPOSITS ADJUSTED

DURING THE PERIOD _____________________

In respect of ___________________________

Date : Sr. No. __________

Arrears (Rs.)

Particulars (Revenue

Head-wise) Year

(Others) Year (-3) Year (-2) Year (-1)

Current

Demand

(Rs.)

Total (Rs.) Deposits Adjusted

1 234567 8

Total

Amount in Words: Rupees _______________________________________________

Prepared By :* _______________________ Examined and entered

Checked By :* _______________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation and signature of the person.

National Municipal Accounts Manual General Accounting Procedures

5.47

Form GEN-20

________________ Name of the ULB

DEMAND REGISTER OF _____________ INCOME FOR THE YEAR 20__ to 20__

_____________ Department ___________ Ward or Circle

Demand Collections

Sr.

No. Date Bill No.

Name of the

person from

whom

income is

due

Particulars Revenue*

(Rs.)

Revenue*

(Rs.)

Notice

Fee (Rs.)

Warrant

Fee (Rs.)

Other

Fees (Rs.)

Penalty

(Rs.)

Others

(Specify)

(Rs.)

Total

(Rs.)

Receipt

Number

&Dateof

collection

Revenue*

(Rs.)

Revenue*

(Rs.)

Notice

Fee (Rs.)

Warrant

Fee (Rs.)

Other

Fees

(Rs.)

Penalty

(Rs.)

12 3 4 5 6 7 8 91011121314151617181920

Arrears

Year (Others)

Year (-3)

Year (-2)

Year (-1)

Current Year

Bill **

Collections Remission/Write-off Balance

Others

(Specify)

(Rs.)

Total

(Rs.)

No. and

date of

order

Revenue*

(Rs.)

Revenue*

(Rs.)

Notice Fee

(Rs.)

Warrant

Fee (Rs.)

Other

Fees (Rs.)

Penalty

(Rs.)

Others

(Specify)

(Rs.)

Total

(Rs.)

Revenue*

(Rs.)

Revenue

*(Rs.)

Notice

Fee (Rs.)

Warrant

Fee (Rs.)

Other

Fees (Rs.)

Penalty

(Rs.)

Others

(Specify)

(Rs.)

Total

(Rs.)

Remarks

21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

* Separate columns shall be maintained in respect of each revenue for which demand is raised in the same bill.

** Entries shall be separately made for each bill raised. Entry shall be made only for the current demand raised.

Notes:

1. Please provide a reference of the Bill No. for Notice Fee, Warrant Fee, Other Fees and Penalty in Column No. 3.

2. Please provide a reference of Form GEN-30 (Register of Refunds, Remissions and Write-offs for remission and write-offs in Column No. 23.

3. For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.

National Municipal Accounts Manual General Accounting Procedures

5.48

Form GEN-21

________________ Name of the ULB

BILL OF __________ INCOME

FOR THE PERIOD _____________________________

No. _________________________________________

Name _______________________________________

Address _____________________________________

Serial No. in Demand Register ____________________

The incomes shown below amounting to Rs. ______________ are due from you in respect of

__________________ and you are requested to pay the same within ___ days of presentation of this

bill.

Arrears (Rs.)

Particulars* Year

(Others)

Year

(-3)

Year

(-2)

Year

(-1)

Current

Year's First

Bill

Current

Demand

(Rs.)

Total (Rs.)

12345678

Notice Fee

Warrant Fee

Other Fees

Penalty

Others, Specify ______________

Total Bill Raised

Less: Advance

Adjusted

Balance Payable

Amount in Words : Rupees _______________________________________________________________

If, within the said period of _________ days:

(a) the sum demanded in this bill is not paid; or

(b) no cause is shown to the satisfaction of the Commissioner, why the same should not be paid; or

served upon you for the payment of the said sum.

The ULB reserves the right to adjust any deposits/sum lying with it, if the amount of this bill is not paid

Prepared By:***

___________________

Office: _____________ Checked By:*** ___________________

Dated: Commissioner/Authorised Officer

* Specify each & every income head separately for which bill is raised, if raised in the same bill.

** Amount to be inserted in words.

*** Record the name, designation and signature of the person.

National Municipal Accounts Manual General Accounting Procedures

5.49

Form GEN-22

________________ Name of the ULB

SUMMARY STATEMENT OF BILLS RAISED FOR THE PERIOD

_____________________in respect of ___________________________

Date: Sr. No. _____________

Arrears (Rs.)

___________ Ward

Particulars (Revenue

Head-wise)

Year

(Others)

Year

(-3)

Year

(-2)

Year

(-1)

Current

Year's

First Bill

Current

Demand

(Rs.)

Total

(Rs.)

12 34

Property & Other Taxes

Tax revenues (specify)

Notice Fee

Warrant Fee

Other Fees

Penalty

Other, Specify ________________

Total bill raised for income of ULB

Revenue collected in Advance Adjusted

Total

Amount in Words: Rupees _______________________________________________

Prepared By :* _______________________ Examined and entered

Checked By :* _______________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation and signature of the person.

Note: This statement should be prepared separately for each ward and then consolidated.

National Municipal Accounts Manual General Accounting Procedures

5.50

Form GEN-23

________________ Name of the ULB

In respect of ________________________________________

Notice Fee Warrant Fee Other Fee Penalty

Sr.

No. Date

Name and

Address of

the payer

Particulars

Fresh

Bill

No.

Notice

No.

Date

Issue

Date of

Service

Fee

Charged

(Rs.)

War-

rant No.

Date

Issue

Date of

Service

Fee

Charged

(Rs.)

Particu-

lars

Date of

Charge

Fee

Charged

(Rs.)

Bill No./

Docu-

ment No.

by which

levied

Date of

Docu-

ment

Amt.

(Rs.)

Remarks

12 3 4 5678 9 10111213141516 17181920

Note:

1. A reference of the Bill No. and fees charged should be made in Form GEN-23 (Demand Register).

2. For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.

National Municipal Accounts Manual General Accounting Procedures

5.51

Form GEN-24

________________ Name of the ULB

SUMMARY STATEMENT OF NOTICE FEE, WARRANT FEE, OTHER FEES AND

PENALTIES CHARGED

FOR THE PERIOD ____________________

in respect of ________________ Income

Sr. No. _______________

Particulars Amount (Rs.)

1 2

Notice Fee

Warrant Fee

Other Fees

Penalty

Total

Amount in Words : Rupees : ____________________________________________________

Prepared By* : ____________________ Examined and entered

Checked By* : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation and signature of the person

National Municipal Accounts Manual General Accounting Procedures

5.52

Form GEN-25

________________ Name of the ULB

in respect of ___________________________

Amount

Sr.

No. Date

Name and

Address of

the person/

party

Particulars

(Refunds/

Remission/

Write-offs)

Year in

respect of

which

granted

Order

Number

&Date

Under

Section

Name and

Designation

of the

Sanctioning

Authority

Reve

-nue

(Rs.)

Reve

-nue

(Rs.)

Reve

-nue

(Rs.)

Reve

-nue

(Rs.)

Notice

Fee

(Rs.)

Warran

tFee

(Rs.)

Other

Fees

(Rs.)

Penalty

(Rs.)

Other

(Specify)

(Rs.)

Total

(Rs.)

Date of

Payment

Voucher

No. (in

case of

Refunds)

Remarks

12 3 4 5 6 7 8 910111213141516 17 18 19 20

Arrears

Year (Others)

Year (-3)

Year (-2)

Year (-1)

Current Year

Note:

1. A reference of the folio no. of this Register for remissions and write-offs should be made in the Demand Register (Form GEN-23).

2. For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.

National Municipal Accounts Manual General Accounting Procedures

5.53

Form GEN-26

________________ Name of the ULB

SUMMARY STATEMENT OF REFUNDS AND REMISSIONS

FOR THE PERIOD ____________________

in respect of _____________________________________________

____________________ Department Sr. No. ______

Refunds Remissions

Particulars Receivables of

Revenue

Revenue received

in advance

Refunds

payable

1234

Arrears

Year (Others)

Year (-3)

Year (-2)

Year (-1)

Current Year (20XX)

Total

Amounts in Words : Rupees ___________________________________________________

Prepared By :*** __________________ Examined and entered

Checked By :*** __________________ Accountant/Authorised Officer

Dated: Dated:

* Separate Statements shall be prepared for each income in respect of which demand is raised

** Including remission of interest charged on delayed payment

*** Record the name, designation and signature of the person

National Municipal Accounts Manual General Accounting Procedures

5.54

Form GEN-27

________________ Name of the ULB

SUMMARY STATEMENT OF WRITE-OFFS

FOR THE PERIOD ____________________

in respect of _____________________________________________

____________________ Department Sr. No. ______

Write-offs

Particulars Taxes State Education

Cess

Employment

Guarantee Cess

1234

Arrears

Year (Others)

Year (-3)

Year (-2)

Year (-1)

Current Year (20XX)

Total

Amounts in Words : Rupees ___________________________________________________

Prepared By :*** __________________ Examined and entered

Checked By :*** __________________ Accountant/Authorised Officer

Dated: Dated:

* Separate Statements shall be prepared for each income in respect of which demand is raised

** Including write-offs of interest charged on delayed payment

*** Record the name, designation and signature of the person

National Municipal Accounts Manual General Accounting Procedures

5.55

Form GEN-28

________________ Name of the ULB

STATEMENT OF OUTSTANDING LIABILITY FOR EXPENSES

As on ____________________

Date : _________________________ Department _______________

Sr.

No.

Name of the

Supplier/

Contractor

Nature of

Payable

Code of

Account

Date of

Bill

Amount

(Rs.)

In respect

of Grant/

Special

Fund

Remarks

1 2 3 456 7 8

Total

Amount (in words) : Rupees ____________________________________________________

Prepared By :* _______________________ Checked By :*

* Record the name, designation and signature of the person.

National Municipal Accounts Manual General Accounting Procedures

5.56

Form GEN-29

________________ Name o the ULB

DOCUMENT CONTROL REGISTER/STOCK ACCOUNT OF RECEIPT/CHEQUE BOOK

Kind of Document ____________________

Receipt Issue To whom issued

Books Books

Date From whom

received

Number of

Forms No. No. of

pages

Voucher

No. and

Date

Number

of Forms No. No. of

pages

Designation

Signature of

person

receiving forms

or books

12 34567891011

Balance Return of books and forms Initials

Books Initials Books

Number

of Forms No. No. of

pages Clerk Authorised

Officer

Date Number

of Forms No. No. of

pages

Initials of

the person

returning

the books

Clerk Authorised

officer

Remarks

12 13 14 15 16 17 18 19 20 21 22 23 24

Note : For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.

National Municipal Accounts Manual General Accounting Procedures

5.57

Form GEN-30

________________ Name of the ULB

Asset Identification No.:

Description of the Structure:

Location of the Structure:

Survey No. of the land on which Structure is located:

Dimensions of the Structure:

Area of land on which constructed (sq. mtr.):

Title documents available:

Mode of acquisition:

Warranty / Defects Liability Clause:

Security Deposit retained:

Date and amount of Security Deposit released:

Sr.

No.

Date of

acquisition /

construction /

improvement

Payment

Order No.

Ref. No. of

Cash Book /

Journal Book /

Ledger where

entry is

recorded

Ref. No.

of Land

Cost of ac

uisition/

construction /

improvement (Rs.)

(please specify

incidental cost

separately)

To whom paid

/ Name of the

contractor

Purpose of

enditure

Source of

Funds

In case of Building,

specify how building

is being currently

used

12 3 4 5 6 7 8 9 10

Total for the year 20**-20**

National Municipal Accounts Manual General Accounting Procedures

5.58

Opening Written

Down Value (Rs.)

(equal to column

6 in first year)

Year of

Depreciation

provided (Rs.)

Closing

Written

Down Value

(Rs.)

Date of

Disposal

Receipt

Voucher No.

Name of the

person to

whom

Structure is

disposed

Sale

Value

(Rs.)

Initials of the

Authorised

Officer

Remarks

11 12 13 14 15 16 17 18 19 20

(11-13)

Total for the year 20**-20**

Notes:

1. All the structures should be categorised into relevant asset class. Unique asset identification numbers are to be provided for all assets initially. Separate

Registers shall be maintained for each class of structures owned by the ULB.

2. Each structure shall be recorded on a separate page in the register.

3. At the end of the accounting year, the amount in column 14 in respect on the current year shall be the amount to be entered in column 11 of the next

year (next row).

4. In the year in which there is any improvement to the asset, add the cost of improvement to the current year' s opening written down value.

5. For each entry made, record the Name, Designation and Signature of the person making entry in the register and the person checking the entry.

6. Totals should be taken at the end of each year in respect of total cost incurred on acquisition / construction / improvement (from the date of

acquisition/construction) for each of the Structure owned by the Municipal Body.

7. In Remarks column, indicate whether the Municipal Body has the ownership right to the property or have only utilisation rights.

National Municipal Accounts Manual General Accounting Procedures

5.59

Form GEN-31

________________ Name of the ULB

Sr.

No.

Asset

Identification

No.

Particulars

and

descri

tion of

the Pro

ert

Location

of the

Pro

ert

Number

uantit

Date of

acquisition /

construction/

rovement

Mode of

uisition

Payment

Order No.

Ref. No. of

Cash Book /

Journal Book /

Ledger where

entry is

recorded

Cost of

acquisition/

construction /

improvement

(Rs.)

whom

paid

Purpose of

enditure

Source

Funds

12 3 45 6 7 89 10 111213

Total for the year 20**-20**

National Municipal Accounts Manual General Accounting Procedures

5.60

Opening

Written Down

Value of the

property (Rs.)

(equal to

column 10 in

first year)

Year of

Depreciation

provided

(Rs.)

Closing

Written

Down

Value

(Rs.)

Date of

Disposal

To whom

Disposed

and

Nature of

Disposal

No. and

date of

Disposal

Order

Number

quantity

disposed

Amount

realised

if sold,

& date

of credit

treasury

or bank

(Rs.)

Balance

quantity

Security

Deposit

retained

(Rs.)

Date and

amount

Security

Deposit

released

Initials of

the

Authorised

Officer

Remarks

14 15 16 17 18 19 20 21 22 23 24 25 26 27

(14-16)

Total for the year 20**-20**

National Municipal Accounts Manual General Accounting Procedures

5.61

Note:

1. All the movable assets should be categorised into relevant asset class with unique ID nos. Separate Registers shall be maintained for each

class of movable assets owned by the Municipal Body.

2. At the end of the accounting year, the amount in column 17 in respect on the current year shall be the amount to be entered in column 14

of the next year (next row).

3. In the year in which there is any improvement to the asset, add the cost of improvement to the total of current year' s opening written down

value and cost of improvement.

4. For each entry made; record the Name, Designation, and Signature of the person making the entry in the register and the person checking

the entry.

5. In case of Plant & Machinery, the details should be given department-wise, location-wise. Separate folios should be allotted for each of

the locations.

6. Plant & Machinery of Water Works and Drainage System and sub-station and transformers of the Public Lighting System shall be

recorded in this form.

7. Details of any improvements to the plant and machinery, which has resulted into increasing the capacity of the plant and machinery,

should be mentioned separately.

8. In case of Plant & Machinery, specify the date of commencement of operations and the number of shifts for which plant & machinery is

operated alongwith the description of the property in column no. 3.

9. In case of Vehicles, specify the vehicle no., registration no., engine no. and chasis no. alongwith the description of the vehicle, year of

manufacture and ' make' in column no. 3.

10. In Remarks column, indicate whether the Municipal Body has the ownership right to the property or have only utilisation rights.

11. Totals should be taken at the end of each year in respect of total cost incurred on acquisition / construction / improvement (from the date

of acquisition / construction) for each of the movable asset owned by the Municipal Body.

National Municipal Accounts Manual General Accounting Procedures

5.62

Form GEN-32

________________ Name of the ULB

Asset Identification No.: Sketch the boundaries of the Land:

Description of the Land:

Specify, if leasehold/freehold:

Location of the Land:

Survey No. of the Land:

Area (sq. mtr.):

Title documents available:

Mode of acquisition:

Specify whether any building, trees, etc., acquired with land:

Value paid for acquiring building, trees, etc:

Security Deposit retained:

Date and amount of Security Deposit released:

Sr.

No.

Date of

acquisition /

improve

ment

Payment

Order No.

Ref. No. of

Cash Book

/ Journal

Book /

Ledger

where

entry is

recorded

Ref. No. of

Immovable

Property

Cost of

acquisition /

improve

ment (Rs.)

whom

paid

Pur

ose of

Expendi-

ture

Source

Funds

Specify

how land

is being

currentl

used

Date of

Dispo-

sal

Receipt

Voucher

No.

Name of

the

person

to whom

land is

dis

osed

Value

Realised

(Rs.)

Initials

of the

Author

ised

Officer

Remarks

1 2 3 4 5 6 7 8 9 101112131415 16

National Municipal Accounts Manual General Accounting Procedures

5.63

Sr.

No.

Date of

acquisition /

improve

ment

Payment

Order No.

Ref. No. of

Cash Book

/ Journal

Book /

Ledger

where

entry is

recorded

Ref. No. of

Immovable

Property

Cost of

acquisition /

improve

ment (Rs.)

whom

paid

Purpose of

Expendi-

ture

Source

Funds

Specify

how land

is being

currently

used

Date of

Dispo-

sal

Receipt

Voucher

No.

Name of

the

person

to whom

land is

disposed

Value

Realised

(Rs.)

Initials

of the

Author

ised

Officer

Remarks

1 2 3 4 5 6 7 8 9 101112131415 16

Total for the year 20**-20**

Notes:

1. Details of all the land belonging to the municipal body, irrespective of the fact, whether it is vacant or any structure has been constructed on that, should

be included here. Unique asset ID Nos. to be allotted to each item.

2. Each plot of land shall be recorded on a separate page in the register.

3. Specify if land is industrial/agricultural/residential in ' Description of Land' .

4. For each entry made, record the Name, Designation and Signature of the person making entry in the register and the person checking the entry.

5. Totals should be taken at the end of each year in respect of total cost incurred on acquisition / improvement (from the date of acquisition) for each of the

land owned / utilised by the Municipal Body.

National Municipal Accounts Manual General Accounting Procedures

5.64

Form GEN - 33

________________ Name of the ULB

FUNCTION –WISE INCOME SUBSIDIARY LEDGER

Function:

Major Heads of Income

Sl.

Function

code

Functions

Head

Total Income

(Rs.)

Tax

Revenue

Code:

Assigned

Revenue

Rental

Income

from

Properties

Fees & User

Charges

Sale & Hire

Charges

Revenue

Grants …….

Cumulative total at the beginning of the

month (Rs.)

Cumulative total at the end of the month

(Rs.)

* For each Major Revenue, columns for functions relevant to revenue will only be opened.

National Municipal Accounts Manual General Accounting Procedures

5.65

Form GEN - 34

________________ Name of the ULB

FUNCTION –WISE EXPENDITURE SUBSIDIARY LEDGER

Function:

Major Heads of Income

SI.

No.

Function

code

Functions

Head

Total

Income

(Rs.) Establishment Administrative Operations &

Maintenance

Interest &

Finance Programme Revenue

Grants …….

Total for the month (Rs.)

Cumulative total at the beginning of the

month (Rs.)

Cumulative total at the end of the month

(Rs.)

* For each major expenditure, columns for functions relevant to the expenditure will only be opened.

National Municipal Accounts Manual General Accounting Procedures

5.66

Form GEN-35

________________ Name of the ULB

ASSET REPLACEMENT REGISTER

Source Utilised

Sr.

No.

Date of

transfer to

Asset

Replacemen

t Bank

Voucher

No.

Amount

(Rs.)

Date of

acquisition /

construction /

improvement

Payment

Order No.

Ref. No. of

Cash Book /

Journal Book

/ Ledger

where entry is

recorded

Cost of

acquisition/

construction /

improvement

(Rs.) (please

specify incidental

cost separately)

To whom

paid / Name

of the

contractor

Ref. No. of

Fixed Asset

Balance

(Rs.)

12 3 4 5 6 7 8 9 10 11

Notes:

1. Separate folio should be used for different Asset-class.

2. For each entry made, record the Name, Designation and Signature of the person making entry in the register and the person

checking the entry.

* Reference shall be provided for Register of Immovable property, Register of Movable property, etc.

National Municipal Accounts Manual General Accounting Procedures

5.67

Form GEN-36

________________ Name of the ULB

Area / Location / Survey No.:

Title documents available:

Mode of acquisition

Warranty / Defects Liability Clause:

Security Deposit retained:

Date and amount of Security Deposit released:

Sr.

No.

Asset

Identification

No.

Number

of lamp

posts

Meters of

cables

used

Date of

acquisition /

improvement

Mode of

acquisition

Payment

Order

No.

Ref. No. of

Cash Book /

Journal Book

/ Ledger

where entry

is recorded

Cost of

acquisition /

improvement

(Rs.)

whom

paid

Purpose of

Expenditure

Source of

Funds

12 34 5 6 7 8 9 1011 12

Total for the year 20**-20**

National Municipal Accounts Manual General Accounting Procedures

5.68

Opening Written Down

Value (Rs.) (equal to column

9 in first year)

Year of

Depreciat

ion

Depreciation

provided (Rs.)

Closing

Written

Down

Value of

the

property

(Rs.)

Date of

Disposal

Receipt

Voucher No.

Name of the

person to

whom

Property

disposed

Value

Realis

(Rs.)

Initials of

the

Authorised

Officer

Remarks

13 14 15 16 17 18 19 20 21 22

(13-15)

Total for the year 20**-20**

Note :

1. Separate Registers shall be maintained in respect of each location.

2. At the end of the accounting year, the amount in column 16 in respect on the current year shall be the amount to be entered in column 13

of the next year (next row).

3. In the year in which there is any improvement to the asset, add the cost of improvement to the current year' s opening written down value.

4. Cost incurred in acquisition and erection of lampposts and that in respect of cables shall be indicated separately.

5. For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking

the entry.

6. Totals should be taken at the end of each year in respect of total cost incurred on acquisition / improvement (from the date of acquisition)

for each of the location.

National Municipal Accounts Manual Property & Other Taxes

6.1

CHAPTER 6

3523(57< 27+(57$;(6

INTRODUCTION

6.1 This chapter contains the recommended accounting system for Property and

Other Taxes related transactions.

6.2 Property Tax is the main source of income of most ULBs. Property tax is

levied on residential and commercial properties. Property tax is collected from the

citizens and organisations, which own the properties. In respect of property tax on

State or Central Government departments or undertakings, the property tax is received

from the State or Central Government, as the case may be and in respect of

Government undertakings, property tax is received directly from such undertakings or

from the State or Central Government.

6.3 Property Tax may comprise of the following:

i. General Tax

ii. Water Tax

iii. Water Benefit Tax

iv. Conservancy Tax or Sewerage Tax

v. Sewerage Benefit Tax

vi. Education Cess

vii. Development Cess

viii. Street Tax

ix. Fire Brigade Tax

x. Tax on Vehicles, Boats and Animals

xi. Light Tax

National Municipal Accounts Manual Property & Other Taxes

6.2

xii. Health Tax

xiii. Dog Tax

xiv. Tree Cess

xv. Fire Cess

xvi. Any other taxes

6.4 In addition to the taxes referred above, following may be collected by the

Property Tax Department:

a. Property Transfer Charges

b. Notice Fee, Warrant Fee, Other Fees and interest and penalties charged for

delays and defaults made by the taxpayers

ACCOUNTING PRINCIPLES

6.5 The following Accounting Principles shall govern the recording, accounting

and treatment of transactions relating to Property and Other Taxes:

a. Revenue in respect of Property and Other Taxes shall be recognised in

the period in which they become due and demands are ascertainable.

b. In case of new or changes in assessments, tax can be accrued in the

month in which the demand is served;

c. Interest element and Penalties, if any, in demand shall be reckoned only

on collection;

d. Revenue in respect of Notice Fee, Warrant Fee, and Other Fees charged

shall be recognised when the bills for the same are raised;

e. Revenue in respect of Property Transfer Charges shall be recognised on

actual receipt;

f. Collections to be made on behalf of state Government i.e., State

Education Cess, Employment Guarantee Cess and Library Cess and

included in the Property tax demand shall be reckoned together with

Property tax demand and credited to a control account called “State

Government Levies in Taxes- Control Account.”

g. The liability towards dues to the State Government for collections on its

behalf shall be recognised as and when they are collected;

h. Revenue in respect of Rebate from State Government for collection made

on their behalf shall be recognised at the rates prescribed by the State

Government at the time of creating the liability to the State Government;

National Municipal Accounts Manual Property & Other Taxes

6.3

i. In respect of the demand outstanding beyond two (2) years, provision

shall be made in the Demand, based on the following provisioning

norms:

¾Outstanding for more than 2 year but not exceeding 3 years: 25%

¾Outstanding for more than 3 years but not exceeding 4 years: 50%

(additional 25%)

¾Outstanding for more than 4 years but not exceeding 5 years: 75%

(additional 25%)

Outstanding for more than 5 years: 100% (additional 25%)

j. While making provision for receivables as stated above, the relevant

proportion ‘State Govt. Cesses/ levies in Property Taxes - Control account’

shall also be provided by debiting to a separate account.

k. Any additional provision for demand outstanding (net on overall basis)

required to be made during the year shall be recognised as expenditure of

the current year and any excess provision written back during the year shall

be recognised ‘as other income’ of the ULB for the current year.

l. Refunds, remissions of taxes for the current year shall be adjusted against

the income and if pertain to previous years then it shall be treated as prior

period item

m. Write-offs of taxes shall be adjusted against the provisions made and to

that extent recoverable and ‘State Government dues control’ account

balance gets reduced.

n. Any subsequent collection or recovery of ‘Receivables for Property Taxes

which were already written off” shall be recognised as a ‘Prior Period

Income’.

o. Demands raised with retrospective effect will be treated as prior period

income to the extent it pertains to earlier years.

p. Part-payments received in respect of Property and Other Tax levies shall

be adjusted as per applicable Act of the state.

q. Wherever self-assessment of taxes are prevalent, income can be accrued

based on records available with the ULB when it becomes due as per the

provisions of the respective Municipal Acts. Further changes arising out of

self-assessment will be treated as ‘Change in Demand’ and will be

accounted accordingly.

National Municipal Accounts Manual Property & Other Taxes

6.4

ACCOUNTING RECORDS AND PROCEDURES

6.6 This section describes the records, registers, documents, forms, accounting

entries, etc., in respect of accounting for transactions related to Property & Other

Taxes For the purposes of accounting of Property & Other taxes there are certain

forms, registers, etc., which are specific to Property & Other Taxes, e.g., Summary

Statement of Year-wise & Head-wise Collection of Property & Other Taxes (Form

POT-3). These (Form POT-1 to POT-5) are annexed to this chapter

TAX BILLS

6.7 A Summary Statement of Bills Raised shall be prepared ward-wise and tax-

head-wise, in Form P&OT-1 on monthly basis within 7 days from the end of the

previous month. This forms the base for accounting and the following entry shall be

passed.

a. Recording of demand raised on existing assessments:

Code of

Account

Accounting Entry

(Illustrative Heads)

Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to

be entered

into

431-10-(a)

110-01-(a)

110-02-(a)

110-03-(a)

110-(b)

431-91-(a)

Receivable for Property

Taxes (Year…)

To Property Tax –

Residential

To Property Tax –

Commercial

To Water Tax

To Sewerage Tax

To Others*

To State Govt. Cesses/

levies in Property Taxes

– Control account **

Dr.

Cr.

7,70,000

2,00,000

3,00,000

1,00,000

50,000

70,000

Journal

Book,

Ledger

* Specify the heads of each income for which demand is raised.

** Specify the name of the cess

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable

Note: The postings in the Ledger Account of “Receivables for Property Tax” Account

and Revenue accounts shall be carried out as indicated in Chapter 5 – General

Accounting Procedures. The postings in the Ledger Accounts shall be similarly carried

out in respect of all other accounting entries described subsequently in this chapter.

Whenever, the cash or the bank account is involved, there will be no entry in the Journal

Book.

1. It is a normal practice for the ULB to include the arrears of the tax dues

while issuing the fresh demand. Entries in respect of the arrears would

have already been recorded in the earlier years. The above entry to be

passed is only in respect of the current year demand.

National Municipal Accounts Manual Property & Other Taxes

6.5

2. Cesses/Levies collected on behalf of State Government together with

property tax demand shall be reckoned and credited to control account,

“State Govt. Cesses/ levies in Property Taxes - Control account”

above. However the liability to the State Government arises only upon

collection. The treatment of this is discussed subsequently.

b. Recording of demand raised in case of new assessments:

1. In case of new assessments, demand may be raised for a period earlier

to the financial year in which the assessment is made. In such case the

demand should be split according to the period to which it relates and

income related to earlier period be accounted as Prior period Income as

provided below.

Code of

Account

Accounting Entry

(Illustrative Heads)

Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered

into

431-10-(a)

110-01-(a)

280-10-(a)

431-91-(a)

Receivables for Property

Taxes (Year…)

To Property Tax –

Residential

To Prior period

Income – Taxes*

To State Govt.

Cesses/ levies in

Property Taxes –

Control account **

Dr.

Cr.

4,400

2,000

400

Journal

Book,

Ledger

* Specify the heads of each income for which demand is raised.

** Specify the name of the cess

(a) Insert Detailed Head Codes of Account as applicable

Note: The demand raised is for 2 assessment periods for Rs.2,200 each of which Rs.

200 is towards state cess.

c. Recording of Change in assessments:

Any demand raised earlier may undergo changes by court order / by the

order of Commissioner / by any other competent authority. This may

either lead to increase or decrease in demand amount. A summary

statement of all changes in Demand Raised shall be prepared, in Form

P&OT- 2 on monthly basis within 7 days from the end of the previous

month. This forms the base for accounting and the following entry

shall be passed.

i. In case the revised demand is more than what was recorded earlier,

then, the entry to be passed is same as accounting of existing

demand, for the difference amount.

National Municipal Accounts Manual Property & Other Taxes

6.6

ii. In case the revised demand is less than what was recorded earlier,

the entry passed earlier has to be reversed for the difference. The

reversal shall be reflected in the current year revenue incase the

revision in demand relates to the current year and in any other case

the reversal shall be accounted as prior period expenses. The

remission / refund amount shall be adjusted against Receivables if

the demand is outstanding. The accounting entry for the same is as

follows.

Code of

Account

Accounting Entry

(Illustrative Heads)

Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

110-90-(a)

280-50-(a)

431-91-(a)

431-10-(a)

Tax Remission & Refund -

Property & Other Taxes

Prior period expenses –

Refund of Taxes*

State Govt. Cesses/ levies

in Property Taxes –

Control Account **

To Receivables for

Property Taxes

(Year…)

Dr.

Cr.

500

100

1,100

Journal Book,

Ledger

* Specify the heads of each income for which demand is raised.

** Specify the name of the cess

(a) Insert Detailed Head Codes of Account as applicable

iii. If the demand is already paid, it will either be taken as credit and

adjusted against future payments or will be paid to the tax payee as

refund depending on the governing principle of the ULB. The

amount of refunds/remissions shall be credited to the account

‘Advance Collection of Revenues’ with account code 350-41-(a)

(instead of 431-10-(a) as indicated in the above entry) when it is to

be adjusted against future payments. If it is to be refunded then it

shall be credited to the Refunds payable account with account code

350-40-(a).

SELF ASSESSMENT

6.8 Self-Assessment of taxes is a method of bringing better compliance and

improved collection. In such cases, income shall be accrued on the due date (as per

provisions of respective Municipal Acts) based on the information available with the

ULB in the assessment records. On due date, a Summary Statement of Bills Raised

shall be prepared by the Tax Department as provided earlier and income shall be

accrued as in the normal case.

National Municipal Accounts Manual Property & Other Taxes

6.7

6.9 However on submission of self- assessment forms, upon scrutiny and approval

as per the rules and regulations laid down for this purpose, it shall be recorded in the

books of accounts. The effect of this could either lead to increase or decrease in

demand. The accounting procedure to be adopted will be same as change in

assessment.

COLLECTION OF TAXES

6.10 The procedure for accounting of collections is described below:

a. Recording of tax collections. Based on Summary of Daily Collection

(Form GEN-12) received from the various Collecting Offices / Centers,

the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

431-80-(a)

Bank Account*

To Receivables

Control Accounts –

Property Taxes

Dr.

Cr.

5,10,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

b. The Summary of daily collection (Form GEN-12) does not provide the

details in respect of the year-wise head-wise collections made in respect

of Property and Other Taxes. Hence, the total amount collected should

be credited to “Receivables Control Accounts - Property Taxes”

Account. The collection made shall be segregated into year wise, head

wise collection on a monthly basis.

c. Recording of break-up of collections: A Summary Statement of Year-

wise/ Head-wise Collection of Property & Other Taxes in Form P&OT-

3 on a monthly basis shall be prepared and sent to the Accounts

Department to record the details of collection. Interest on delayed

payment may be charged to the taxpayer in accordance with relevant

provisions. Interest shall be recognised as income only on collection.

d. To record the break-up of collections into year-wise recovery, tax

received in advance and to record the interest income the Accounts

Department shall pass the following entry:

National Municipal Accounts Manual Property & Other Taxes

6.8

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

431-10-(a)

350-41-(a)

171-80-(a)

140-20-(a)

Receivables Control Accounts

-Property Taxes

To Receivables for Property

Taxes (Year…)

To Receivables for

Property Taxes (Year…)

To Advance Collection of

Revenues –Property

Taxes*

To Other Interests –

Receivables

To Penalties and Fines

Dr.

Cr.

5,10,000

4,40,000

55,000

11,000

1,000

3,000

Journal Book,

Ledger

* Adjustment of tax collected in advance is discussed separately under section ‘Adjustment of

Tax Received in Advance’ below.

(a) Insert Detailed Head Codes of Account as applicable

RECOGNITION OF LIABILITY AND PAYMENT OF SPECIFIC STATE

GOVERNMENT DUES

6.11 Recording of liability to State Government and rebate income earned: The

specific head-wise liability in respect of the amount collected on behalf of the State

Government shall be recognised on collection based on the Summary Statement of

Year-wise Head-wise Collection of Property & Other Taxes (Form P&OT 3). Further

the ULB may be entitled to a rebate for the collections made on behalf of the State

Government. It shall be accounted as income on creation of specific head wise

liability. To record the liability and income the Accounts Department shall pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-91-(a)

350-30-(a)

140-70-(a)

State Govt. Cesses/ levies in

Property Taxes – Control

account *

To Government Dues

Payable *

To Service/

Administrative Charges

–Rebate from State

Government

Dr.

Cr.

45,000

40,500

4,500

Journal Book,

Ledger

* Specify the name of the cess

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Property & Other Taxes

6.9

6.12 Recording of payment made to State Government: A Payment Order (Form

GEN-14) is made for remittance of payment of collections made on behalf of the State

Government. Based on Payment Order the following entry shall be made to record the

payment order.

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-30-(a)

450-21-(a)

Government Dues Payable

Cess*

To Bank Account **

Dr.

Cr.

40,500

Cash Book,

Ledger

* Specify the name of the cess

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

DISCOUNT ALLOWED

6.13 The ULB may provide for discount on property & other taxes for payment

within a certain period, if allowed by its rules. Discount allowed shall be reckoned

along with the details of collection and be recorded from the Summary Statement of

Year-wise Head-wise Collection of Property & Other Taxes. To record the discount

allowed, the following accounting entry to be passed.

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

240-80-(a)

431-10-(a)

Other Finance Expenses

Discount on early payment

To Receivables for

Property Taxes (Year )

Dr.

Cr.

100

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

NOTICE FEE, WARRANT FEE, OTHER FEES AND PENALTIES

6.14 Notices of demand and warrants shall be issued and penalties may be charged

as per the relevant provisions.

6.15 Recording of demand raised: A Summary Statement of Notice Fee, Warrant

Fee and Other Fees in Form P&OT-1 shall be prepared on a monthly basis. The

following entry shall be passed to record the demand raised. :

National Municipal Accounts Manual Property & Other Taxes

6.10

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-10-(a)

140-40-(a)

Receivables for Property Taxes

(Year )

To Other Fees Notice Fees

To Other Fees - Warrant Fee

Dr.

Cr.

600

300

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

REFUNDS AND REMISSIONS

6.16 All refunds and remissions arising under eligible circumstances as provided in

the Act and regulations governing the revenues shall be duly recorded in the Demand

registers maintained and the details of the same shall also be communicated to the

Accounts Department. It is to be noted that refund/ remission on account of the

reasons referred above generally granted for the tax amounts only and the portion of

any other levy/cess in the original demand is not refunded/remitted. The reversal shall

be reflected in the current year revenue incase the revision in demand relates to the

current year and in any other case the reversal shall be accounted as prior period

expenses.

6.17 Recording of refunds/remissions payable: A Summary Statement of Refunds

and Remissions in Form P&OT- 4 on a monthly basis shall be prepared.

Refunds/Remissions pertaining to prior period shall be identified separately from the

current period based on which the Accounts Department shall pass the following

entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

110-90-(a)

280-50-(a)

350-40-(a)

Tax Remission and Refund

Property Taxes

Prior period expenses Refund

of Taxes Property Taxes

To Refunds Payable-Taxes*

Dr.

Cr.

300

200

500

Journal

Book, Ledger

*Refunds/Remissions arising on account of change in provisions shall be either passed for

‘Payment’ (Refund payable account) or credited to the account ‘Advance collection of

Revenues’ (under the account code 350-41-(a)) in accordance with the principles of the ULB.

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Property & Other Taxes

6.11

6.18 Recording of payment refunds/remissions granted: The Accounts Department

shall prepare a Payment Order (Form GEN-14) in respect of the refunds and

communicate the details of refunds made to the Tax Department for updating the

granted, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-40-(a)

450-21-(a)

Refunds Payable Taxes

To Bank Account*

Dr.

Cr.

500

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Minor Head Codes of Account as applicable

PAYMENT TO THE URBAN LOCAL BODY FOR PROPERTIES OCCUPIED

BY THE STATE GOVERNMENT IN LIEU OF GENERAL TAX AND

EDUCATION CESS:

6.19 Recording of demand raised: In case there are separate provisions under the

law for charging property tax on properties occupied by State Government, a

Summary Statement of Bills Raised (Form P&OT- 1) in this regard be prepared in the

same way as in case of other properties based on which following accounting entry

will be passed

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-10-(a)

110-01-(a)

Receivables for Property

Taxes (Year )

To Property Taxes -

Service Charges

Dr.

Cr.

1,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

6.20 The procedure for collection and accounting of sums received from the State

Government in this regard shall be the same as discussed for Property and Other

Taxes collected other wise.

PROVISION FOR UNREALISED PROPERTY AND OTHER TAX

RECEIVABLES AND WRITE-OFFS

6.21 Recording of provision for unrealised tax. The demand outstanding beyond

two (2) shall be provided for as per provisioning norms given below:

a. Outstanding for more than 2 year but not exceeding 3 years: 25%

National Municipal Accounts Manual Property & Other Taxes

6.12

b. Outstanding for more than 3 years but not exceeding 4 years: 50%

(additional 25%)

c. Outstanding for more than 4 years but not exceeding 5 years: 75%

(additional 25%)

d. Outstanding for more than 5 years: 100% (additional 25%)

6.22 For example, provision for the Period ended 31 March, 2004 is as under:

a. 25% of outstanding Receivables of Property & Other Taxes for the year

ended March 31, 2002

b. 50% of outstanding Receivables of Property & Other Taxes for the year

ended March 31, 2001

c. 75% of outstanding Receivables of Property & Other Taxes for the year

ended March 31, 2000

d. 100% of outstanding Receivables of Property & Other Taxes for the year

ended March 31, 1999 and before

While making provision for receivables as stated above, the relevant proportion State

Govt. Cesses/ levies in Property Taxes - Control account shall also be provided by

debiting to a separate account.

6.23 The amount required being provided as per provisioning norms stated above,

shall be compared with the balance lying in the Provision for outstanding Tax-PTD. If

the amount to be provided is more than the balance, then additional provision shall be

made for the difference amount. If the amount to be provided is less than the balance,

it reflects the amounts provided for has been collected, and the provision made

towards that can be written back. This process has to be carried over at every

period/yearend.

6.24 Computation of provision or write back of as at the period end date is

explained with the example given below in Table 6.1 & 6.2.

Table 6.1

Computation of Additional Provision at the Period end

Sl. No. Particulars Taxes

(Rs.)

Stat e Govt.

Dues (Rs)

a. Balance in the Provision for Outstanding Property Taxes

account as at 31 March 2003

10,000 1,000

b. Cumulative provision required to be made as at 31 March

2004

11,500 1,150

(a-c)

Additional provision to be made as at 31 March 2004 1,500 150

National Municipal Accounts Manual Property & Other Taxes

6.13

Table 6.2

Excess of provisions at the Period end

Sl.

No. Particulars Taxes

(Rs.)

Stat e Govt.

Dues (Rs)

a. Balance in the Provision for Outstanding Property Taxes

account as at 31 March 2003

10,000 1,000

b. Cumulative provision required to be made as at 31 March

2004

9,500 950

(b-a)

Excess provision to be written back as at 31 March 2004 (500) (50)

6.25 For any additional provision to be made for the period as computed in Table

6.1, the following entry shall be passed by the Accounts Department:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

270-10-(a)

432-91-(a)

432-10-(a)

Provisions for Doubtful

Receivables Property Taxes

State Govt Cesses/ levies in

Property Taxes Provision

account

To Provision for Outstanding

Property Taxes

Dr.

Cr.

1,500

150

1,650

Journal

Book, Ledger

(a) Insert Detailed Head Codes of Account as applicable

6.26 The effect of the above entry will be as follows:

a. Provision for Doubtful Receivables- Property Taxes shall be shown as

an expense under the schedule Provision & write offs.

b. State Govt. Dues provided will be a adjusted against State Govt

Cesses/ levies in Property Taxes - Control account

c. Provision for Outstanding Tax will be shown as a deduction from

Receivables for Property Taxes in the Balance Sheet as at March 31,

2004.

6.27 For any excess provision arrived for the period as computed in Table 6.2, the

following entry shall be passed by the Accounts Department:

National Municipal Accounts Manual Property & Other Taxes

6.14

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

432-10-(a)

180-60-(a)

432-91-(a)

Provision for Outstanding

Property Taxes

To Excess Provision

Written Back Property

Taxes

To State Govt. Cess/

Levies in Property Taxes

Provision account

Dr.

Cr.

550

500

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

6.28 Recording of write-offs: If for any reason, it is decided by the ULB to write-off

property and other taxes, which was earlier treated as an income, the write off shall be

adjusted against the provision made and the following entry will be passed based on

summary statement of write off in form P & OT 5.

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

432-10-(a)

431-91-(a)

431-10-(a)

432-91-(a)

Provision for Outstanding

Property Taxes

State Govt. Cesses/ levies in

Property Taxes Control

account *

To Receivables for

Property Taxes (Year )

To State Govt. Cess/ levies

in Property Taxes

Provision account

Dr.

Cr.

1,100

100

1,100

100

Journal Book,

Ledger

* Specify the name of the cess

(a) Insert Detailed Head Codes of account as applicable

6.29 Recording of subsequent collection/ recovery of Receivables of Property and

Other Taxes written off : In case of a Receivable of Property & Other taxes written

off already were recovered/collected during the year, the accounts department shall

pass the following entry:

National Municipal Accounts Manual Property & Other Taxes

6.15

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

280-30-(a)

350-30-(a)

Receivable Control Account

–Property Taxes

To Recovery of

Revenues written off –

Property Taxes

To Government Dues

Payable – Cess

Dr.

Cr.

1,100

1,000

100

Journal Book,

Ledger

(a) Insert Minor Head Codes of Account as applicable

6.30 Recording of payment made to state government dues has already been

explained in para 6.12.

TRANSFER OF AMOUNT OUTSTANDING IN RESPECT OF ARREARS

FROM SPECIFIC YEAR-WISE ACCOUNT TO GENERAL ACCOUNT

6.31 The arrears of Property and Other Taxes shall be carried forward year-wise,

i.e., in “Receivables for Property Taxes (Year…)” account up to five years. On

completion of the fifth year, the amount outstanding in the specific year-wise

receivable account shall be transferred to a general arrears account, i.e., “Receivables

for Property Taxes (Others)” Account. For example, the tax receivable in respect of

the demand raised during the accounting year 1998-99 shall be carried forward in

“Receivables for Property Taxes (1999)” Account up to the year ending March 31,

2004. On March 31, 2004, the balance outstanding in this account shall be transferred

to “Receivables for Property Taxes (Others)” Account.

6.32 Recording of transfer of arrears to general account. To record this transfer, the

Accounts Department shall pass the following entries:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-10-(a)

Receivables for Property

Taxes (Others)

To Receivables for

Property Taxes (Year…)

Dr.

Cr.

10,000

Journal Book,

Ledger

(a) Insert Minor Head Codes of Account as applicable

National Municipal Accounts Manual Property & Other Taxes

6.16

ADJUSTMENT OF TAX RECEIVED IN ADVANCE

6.33 The Tax Department shall intimate the Accounts Department of the advance

adjusted against the subsequent demand raised through the Summary Statement of

Bills Raised (Form P&OT-1).

a. Recording of subsequent demand raised. To record the demand raised for

tax, the Accounts Department shall pass the same entry as in the case of

existing assessments. The accounting entry to be passed is explained in

Para 6.7 a.

b. Recording of adjustment of advance. To record the adjustment of tax

received in advance, the Accounts Department shall pass the following

entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-41-(a)

431-10-(a)

Advance Collection of

Revenues Property Taxes

To Receivables for

Property Taxes (Year )

Dr.

Cr.

1,000

Journal

Book, Ledger

(a) Insert Minor Head Codes of Account as applicable

RECOVERY OF PROPERTY AND OTHER TAXES THROUGH LEGAL

PROCEEDINGS

Cost of Recovery

6.34 Recording of cost of recovery: Expenditure incurred in respect of attachment

and sale of the properties of the defaulter shall be recorded as cost incurred on

recovery, and the accounting entry is as follows.

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-51-(a)

450-21-(a)

Legal Expenses Cost of

Recovery Tax Revenues

To Bank Account*

Dr.

Cr.

300

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Property & Other Taxes

6.17

Collections on Sale of Attached Property

6.35 Recording of collection: On the basis of the Summary of Daily Collection

(Form GEN-12) received from the various Collection Offices and Collection Centres,

the following entry shall be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

350-90-(a)

Bank Account*

To Sale Proceeds

Attached Properties

Dr.

Cr.

5,00,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

6.36 The Tax Department shall send the details of the adjustment of the amount

collected to the Accounts Department. Based on the intimation received from the Tax

Department, to record the adjustment of the amount collected on sale of attached

property, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-90-(a)

431-80-(a)

350-30-(a)

350-40-(a)

Sale Proceeds - Attached

Properties

To Receivable Control

Accounts Property

Taxes

To Government Dues

Payable Court

Attachments

To Refunds Payable -

Attached Properties

Dr.

Cr.

5,00,000

1,00,000

50,000

3,50,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

6.37 The Tax Department shall prepare the Payment Orders (Form GEN-14) in

respect of the amounts payable subsequent to the sale of the attached property and

send it to the Accounts Department for payment. On making the payment, the

Accounts Department shall pass the following entry:

National Municipal Accounts Manual Property & Other Taxes

6.18

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-30-(a)

350-40-(a)

450-21-(a)

Government Dues Payable

Court Attachments

Refunds Payable -

Attached Properties

To Bank Account*

Dr.

Cr.

50,000

3,50,000

4,00,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

6.38 The amount to be credited to the Receivable Control Accounts - Property

Taxes shall include the amount receivable in respect of tax as well as the expenditure

incurred in respect of the recovery from the taxpayer.

6.39 The entries for adjustment of collection against year-wise receivable and

recognition of specific liabilities for collection of State Government dues shall be

recorded on the basis of the Summary Statement of Year-wise Head-wise Collection

of Property & Other Taxes which have been discussed above.

6.40 To record the receipt of cost of recovery, the Accounts Department shall pass

the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

220-51-(a)

Receivables Control

Accounts- Property Taxes

To Legal Expenses- Cost

of Recovery of Tax

Revenues

Dr.

Cr.

20,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

PROPERTY TRANSFER CHARGES

6.41 The ULB may charge fees for transfer of property. The revenue for the

Property Transfer Charges levied shall be recognised on collection.

6.42 Recording of collection. On the basis of the Summary of Daily Collection

(Form GEN-12) received from the various Collection Offices and Collection Centres,

the Accounts Department shall pass the following entry:

National Municipal Accounts Manual Property & Other Taxes

6.19

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

431-80-(a)

Bank Account*

To Receivables Control

Accounts- Property Taxes

Dr.

Cr.

300

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

6.43 Recording of specific income in respect of Property Transfer Charges: Based

on the Summary Statement of Year-wise Head-wise Collection of Property & Other

Taxes (Form P&OT-3) received from the Tax Department, the Accounts Department

shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount (Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

140-40-(a)

Receivables Control

Accounts- Property Taxes

To Other Fees Property

Transfer Charges

Dr.

Cr.

300

Journal

Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

INTERNAL CONTROLS

6.44 The following internal controls shall be observed by the ULB in respect of

Property and Other Taxes related transactions:

a. The Tax Department shall ensure those Bills / Demands are raised on a

quarterly/half yearly basis for Property and Other Taxes.

b. The Head of the Accounts Department shall ensure that taxes are

accrued in the month in which it is due and journalisation of all the

demands/bills raised for property & other taxes before accounting for

the collection.

c. The Head of the Accounts Department and the Head of the Tax

Department shall reconcile the balance at the beginning of the

accounting year in respect of the year-wise Property and Other Tax

Receivables (as appearing in the Balance Sheet of the previous year)

with the year-wise total of the arrears recorded in the Demand Register.

National Municipal Accounts Manual Property & Other Taxes

6.20

d. A quarterly reconciliation shall be carried out by the Head of the

Accounts Department and the Head of the Tax Department in respect

of the amount collected and the year-wise amount outstanding between

the balances in the Ledger Accounts maintained at the Accounts

Department and the Demand Register maintained at the Tax

Department.

e. The officers designated by the ULB for operating the Designated

Property Tax Bank Account(s) shall co-ordinate with the banks on a

daily basis and ascertain the status of the cheques/drafts deposited by

them.

f. The Tax Department shall ensure that the Receipt / Summary of daily

collection prepared, provides reference to the Tax Collection Register.

g. Write-off of Property Tax receivables should be based on specific

procedures and authorisation levels. The State Government/ ULB to lay

down the level of seniority of officers and the amounts, which they

would be competent to write-off.

h. The Chief Executive Officer/Head of the ULB shall specify such

appropriate calendar of returns /reports for monitoring.

6.45 All Reconciliation Statements shall be certified by the Head of the Accounts

Department.

PRESENTATION IN THE FINANCIAL STATEMENTS

6.46 The various heads of account used for the accounting of Property and Other

Taxes related transactions shall be reflected in the Financial Statements or in the

Schedules attached to the Financial Statements of the ULB. All these Financial

Statements and schedules should be affixed with signature and seal of designated

authorities.

6.47 The provision against the outstanding property tax receivable is to be disclosed

under the major head Accumulated Provisions as a separate line item in the Balance

Sheet below the Sundry Debtors .

6.48 The Schedule of the Income and Expenditure Statement in respect of Property

and Other Taxes is presented below.

National Municipal Accounts Manual Property & Other Taxes

6.21

Schedule I-1: Schedule of Tax Revenue

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

110-01-(a) Tax on Residential Properties

110-01-(a) Tax on Commercial Properties

110-01-(a) Service Charges in lieu of Property taxes

110-02-(a) Water Taxes

Sub-total

Less

110-90-(a) Tax Remission and Refunds

Sub-total

Total Income of Property Taxes to be shown as a part of Tax

revenue Schedule

* Insert all taxes raised along with Property Taxes

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-1 (a): Refund/Remission of revenues

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

110-90-(a) Property Taxes

Total Income of Property Taxes to be shown as a part of

Refund and Remissions of Taxes Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I – 4: Schedule of Fees and User Charges

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

140-20-(a) Penalties and Fines

140-40-(a) Mutation Fees

140-40-(a) Property Transfer Charges

140-40-(a) Notice Fees

140-40-(a) Warrant Fees

Total Income of Property Taxes to be shown as a part of

Fees and User Charges Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I – 8: Schedule of Interest Earned

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

171-80-(a) Other Interests- Interest on Receivables

Total Income of Property Taxes to be shown as a part of

Interest Earned Schedule

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Property & Other Taxes

6.22

Schedule I 9: Schedule of Other Incomes

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

180-60-(a) Excess provision written-back

Property Taxes

Total Income of Property Taxes to be shown as

a part of Other Income Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-11: Administrative Expenses

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

220-51-(a) Legal Expenses - Cost of recoveries of tax

revenues (net of amount received from State

government/assessee for the cost of recovery)

Total Ex

ense of Pro

ert

Taxes to be shown as a

art of

Administrative Expenses Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-13: Interest and Finance Charges Head-wise

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

240-80-(a) Other Finance Expenses Discount on

Early/Prompt Payment

Total Expense of Property Taxes to be shown as a part of

Interest and Finance Charges Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I 16: Schedule of Provisions and Write off

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

270-10-(a) Provision for Doubtful receivables Property Taxes

Total Expense of Property Taxes to be shown as a part of

Provision and Write off Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-18: Prior Period Items

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

Income (a)

280-10-(a) Taxes

280-30-(a) Recovery of Revenues written off

Expense (b)

280-50-(a) Refund of Taxes

Total [a-b] of Pro

ert

Taxes to be shown as a

art of

Prior Period Items Schedule

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Property & Other Taxes

6.23

6.49 The Balance Sheet Abstracts in respect of Property and Other Taxes are

presented below:

Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

350-30-(a) Government Dues Payable

350-40-(a) Refunds Payable

350-41-(a) Advance Collection of Revenues

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-15: Schedule of Sundry Debtors (Receivables)

Current Year Amount (Rs.)

Code No. Particulars Gross

Amount

Provision for

Out standing

Receivables

Net

Amount

Year

Amount

(Rs.)

12345=3 46

431-10-(a)

431-91-(a)

Receivables of Property Taxes

Less than 5 years *

More than 5 years*

Sub total

Less: State Government

Cesses/Levies in Taxes

Control Accounts

Net Receivables of Property Taxes

* Break up for provision for outstanding revenues are given in Column 4

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-17: Schedule of Cash and Bank Balances

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

1234

450-10-(a) Cash

450-21-(a) Bank Account

Total

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Property Tax

6.24

Form P&OT-1

________________ (NAME OF THE ULB)

SUMMARY STATEMENT OF BILLS RAISED

FOR THE PERIOD _____________________

in respect of Property & Other Taxes

Sr. No. ________________

______________ Ward

Arrears

Particulars Year

(Others)

(Rs.)

Year ( 5)

(Rs.)

Year ( 4)

(Rs.)

Year (-3)

(Rs.)

Year (-2)

(Rs.)

Year (-1)

(Rs.)

Current

year’s

First Bill

(Rs.)

Current

Demand

(Rs.)

Total

(Rs.)

Advance

Adjusted

(Rs.)

Outstanding

Amount

(Rs.)

(9-10)

1 2 3 4 5 6 789 10

General Tax

Water Tax

Water Benefit Tax

Conservancy/Sewerage Tax

Sewerage Benefit Tax

Education Cess

Street Tax

State Education Cess

Employment Guarantee Cess

Library Cess

Fire Brigade Tax

Dog Tax

Tree Cess

Amount Due in lieu of General

Tax

National Municipal Accounts Manual Property Tax

6.25

Arrears

Particulars Year

(Others)

(Rs.)

Year ( 5)

(Rs.)

Year ( 4)

(Rs.)

Year (-3)

(Rs.)

Year (-2)

(Rs.)

Year (-1)

(Rs.)

Current

year’s

First Bill

(Rs.)

Current

Demand

(Rs.)

Total

(Rs.)

Advance

Adjusted

(Rs.)

Outstanding

Amount

(Rs.)

(9-10)

1 2 3 4 5 6 789 10

Other Taxes*

Notice Fee

Warrant Fee

Other Fees

Total bill raised for income of

the ULB

Demand raised for taxes

collected on behalf of State

Government

Library Cess

State Education Cess

Employment Guarantee Cess

Any other Cess^

Total

Amount in Words : Rupees _____________________________________________________________________________________________

Prepared By :** ______________ Examined and entered

Checked By :** _______________________ Accountant/Authorised Officer

Dated: Dated:

* Specify the other taxes that are levied by the ULB.

^ Specify the other cess that are levied ad collected on behalf of state government

** Record the name, designation and signature of the person.

Note: 1. This statement should be prepared separately for each Ward and then consolidated.

National Municipal Accounts Manual Property Tax

6.26

Form P&OT-2

________________ (NAME OF THE ULB)

SUMMARY STATEMENT OF DEMAND ADJUSTMENTS RAISED

FOR THE PERIOD _____________________

in respect of Property & Other Taxes

Sr. No. ________________

______________ Ward

Existing Demand Proposed Demand Change in Demand

Particulars Year

(Others)

(Rs.)

Year

(5)

(Rs.)

Year

(4)

(Rs.)

Year

(-3)

(Rs.)

Year

(-2)

(Rs.)

Year

(-1)

(Rs.)

Current

year' s

Year

(Others)

(Rs.)

Year

(5)

(Rs.)

Year

(4)

(Rs.)

Year

(-3)

(Rs.)

Year

(-2)

(Rs.)

Year

(-1)

(Rs.)

Current

year' s

Year

(Others)

(Rs.)

Year

(5)

(Rs.)

Year

(4)

(Rs.)

Year

(-3)

(Rs.)

Year

(-2)

(Rs.)

Year

(-1)

(Rs.)

Current

year' s

Impact

+ / (-)

1 2345 6 7 8910111213 14151617181920 21

General Tax

Water Tax

Water Benefit Tax

Conservancy/Sewerage

Tax

Sewerage Benefit Tax

Education Cess

Street Tax

State Education Cess

Employment Guarantee

Cess

Library Cess

Fire Brigade Tax

Dog Tax

Tree Cess

Amount Due in lieu of

Education Cess

National Municipal Accounts Manual Property Tax

6.27

Existing Demand Proposed Demand Change in Demand

Particulars Year

(Others)

(Rs.)

Year

(5)

(Rs.)

Year

(4)

(Rs.)

Year

(-3)

(Rs.)

Year

(-2)

(Rs.)

Year

(-1)

(Rs.)

Current

year' s

Year

(Others)

(Rs.)

Year

(5)

(Rs.)

Year

(4)

(Rs.)

Year

(-3)

(Rs.)

Year

(-2)

(Rs.)

Year

(-1)

(Rs.)

Current

year' s

Year

(Others)

(Rs.)

Year

(5)

(Rs.)

Year

(4)

(Rs.)

Year

(-3)

(Rs.)

Year

(-2)

(Rs.)

Year

(-1)

(Rs.)

Current

year' s

Impact

+ / (-)

1 2345 6 7 8910111213 14151617181920 21

Other Taxes*

Notice Fee

Warrant Fee

Other Fees

Total bill raised for

income of the ULB

Demand raised for taxes

collected on behalf of

State Government

Library Cess

State Education Cess

Employment Guarantee

Cess

Any other Cess^

Amount in Words : Rupees _____________________________________________________________________________________________

Prepared By :** ______________ Examined and entered

Checked By :** _______________________ Accountant/Authorised Officer

Dated: Dated:

* Specify the other taxes that are levied by the ULB.

^ Specify the other cess that are levied and collected on behalf of state government

** Record the name, designation and signature of the person

Note:

1. This statement should be prepared separately for each Ward and then consolidated.

National Municipal Accounts Manual Property Tax

6.28

Form P&OT-3

________________ (NAME OF THE ULB)

SUMMARY STATEMENT OF YEAR-WISE HEAD-WISE COLLECTION OF PROPERTY & OTHER TAXES

FOR THE PERIOD _____________________

Sr. No. ___________________

_________________ Collection Centre Deposited with _____________________

Arrears

Particulars Year

(Others)

(Rs.)

Year (-5)

(Rs.)

Year (-4)

(Rs.)

Year (-3)

(Rs.)

Year (-2)

(Rs.)

Year (-1)

(Rs.)

Current

Year' s

Demand

(Rs.)

Total (Rs.)

123456789

Collection in respect of incomes for which demand is

raised

General Tax

Water Tax

Water Benefit Tax

Conservancy/Sewerage Tax

Sewerage Benefit Tax

Education Cess

Street Tax

Fire Brigade Tax

Dog Tax

Tree Cess

Amount Due in lieu of General Tax

Amount Due in lieu of Education Cess

Other Taxes*

Notice Fee

National Municipal Accounts Manual Property Tax

6.29

Arrears

Particulars Year

(Others)

(Rs.)

Year (-5)

(Rs.)

Year (-4)

(Rs.)

Year (-3)

(Rs.)

Year (-2)

(Rs.)

Year (-1)

(Rs.)

Current

Year' s

Demand

(Rs.)

Total (Rs.)

123456789

Warrant Fee

Other Fees

Penalties

Others, Specify ________________

Sub-Total

Collections of taxes on behalf of State Government

Library Cess

State Education Cess

Employment Guarantee Cess

Any other cess ^

Sub-Total

Collection in respect of incomes accounted on actual

receipt basis

Property Transfer Charges

Others, Specify _______________

Sub-Total

Collection in respect of incomes written off

Property Tax

Government Cess

Sub-total

Receipt of Cost of Recovery

Tax collected in Advance

Others, Specify _______________

Total Collections

National Municipal Accounts Manual Property Tax

6.30

Arrears

Particulars Year

(Others)

(Rs.)

Year (-5)

(Rs.)

Year (-4)

(Rs.)

Year (-3)

(Rs.)

Year (-2)

(Rs.)

Year (-1)

(Rs.)

Current

Year' s

Demand

(Rs.)

Total (Rs.)

123456789

Amount in Words : Rupees _____________________________________________________________________________________________

Prepared By :** ______________ Examined and entered

Checked By :** _______________________ Accountant/Authorised Officer

Dated: Dated:

* Specify the other taxes that are levied by the ULB

^ Specify the other cess that are levied ad collected on behalf of state government

** Record the name, designation and signature of the person

Note: This statement should be prepared separately for each Collection Office/Collection Centre and then consolidated.

National Municipal Accounts Manual Property Tax

6.31

Form P&OT-4

________________ NAME OF THE ULB

SUMMARY STATEMENT OF REFUNDS /REMISSIONS

FOR THE PERIOD ____________________

in respect of Property & Other Taxes

Sr. No _______

Refunds/Remissions*

Particulars Advances #

Rs.

Receivables #

Rs.

Refunds Payable #

Rs.

Total

Rs.

Arrears

Year (Others)

Year (-5)

Year (-4)

Year (-3)

Year (-2)

Year (-1)

Current Year (20XX)

Total

Amount in Words : Rupees______________________________________________________

Prepared By :** ______________ Examined and entered

Checked By :** ______________ Accountant/Authorised Officer

Dated: Dated:

* Include total amount of all income heads of account in respect of Property and Other Taxes.

** Record the name, designation, and signature of the person.

# The details of whether refunds/remissions are treated as refund payable or adjustment of receivables or Revenues received in advance shall be enteredinthisformin

order to account for the refunds/remissions Accordingly.

National Municipal Accounts Manual Property Tax

6.32

Form P&OT-5

________________ NAME OF THE ULB

SUMMARY STATEMENT OF WRITE OFF

FOR THE PERIOD ____________________

in respect of Property & Other Taxes

Sr. No. __________

Write-offs (Rs.)*

Particulars Taxes* State Education

Cess

Employment Guarantee

Cess Total

12345

Arrears

Year (Others)

Year (-5)

Year (-4)

Year (-3)

Year (-2)

Year (-1)

Current Year (20XX)

Total

Amount in Words : Rupees______________________________________________________

Prepared By :** ______________ Examined and entered

Checked By :** _______________________ Accountant/Authorised Officer

Dated: Dated:

* Include total amount of all income heads of account in respect of Property and Other Taxes.

** Record the name, designation, and signature of the person.

National Municipal Accounts Manual Octroi

7.1

CHAPTER 7

2&752,

INTRODUCTION

7.1 This chapter contains the recommended accounting system for Octroi related

transactions.

7.2 For determining the liability for Octroi, a valuation/assessment of the goods is carried

out at the point of entry. Octroi may be collected in one of the following ways:

a. On valuation/assessment of the goods at the point of entry into the city and spot

collection of the entire amount payable. This could include nakas located at the

roads leading to entry into the city or at major transportation hubs like railway

stations, airport, port, etc. or a post office.

b. On provisional valuation/assessment of the goods at the point of entry into the city

and spot collection of a substantial amount payable, subject to confirmation and

final valuation/assessment at the Octroi Head Office, at which time, a further

amount may be payable or a refund granted to the importer. In such cases, it is

possible that a deposit may be collected towards the octroi payable on final

assessment.

c. On valuation/assessment of the goods at the point of entry into the city, but

collected periodically. This facility is extended to regular importers whose goods

are allowed to pass without spot payment of Octroi. Such importers are allowed

Account Current facilities.

National Municipal Accounts Manual Octroi

7.2

7.3 In addition to octroi, following may be collected by the Octroi Department:

a. Transit Fees from vehicles plying across the municipal area and not intending to

bring any goods for consumption, use or sale within the city. (A Transit Deposit

may be collected from such importers on entry and refunded on exit).

b. Penalties in the event of octroi under recovery or evasion

c. Octroi on Consumption of Electricity

d. Miscellaneous receipts, e.g., escort fees, toll, etc.

7.4 Most of the transactions of the Octroi Department relate to tax revenues and fees &

user charges. The Octroi Department incurs the usual administrative expenses such as

establishment expenses, rent, printing & stationery, office expenses, etc. In addition , it may

incur the following expenses:

a. Performance Bonus payable to octroi staff;

b. Compilation fees paid to the railway and postal authorities for compiling

information with respect to the goods imported via railways and post, respectively;

c. Security charges to the Police Department or Security Agencies payable for

service rendered in connection with provision of security at the octroi nakas.

ACCOUNTING PRINCIPLES

7.5 The following Accounting Principles shall govern the recording, accounting and

treatment of transactions relating to octroi and other income:

a. Revenue in respect of octroi payable on spot assessment for non-current account

importers shall be recognised on actual receipt.

b. Revenue in respect of penalties, transit fees, etc., shall be recognised on actual

receipt.

c. In case of account current facility holders, revenue in respect of octroi shall be

recognised on a valuation/assessment being done at the time of the entry of the

goods within the municipal limits.

d. In cases where a provisional assessment is made, revenue shall be recognised in

respect of the entire amount received provisionally or by way of deposit. At the

time of final assessment, the additional amount recovered, if any, shall be

recognised as revenue when recovered.

e. Refunds shall be recognised as expenditure as and when the amounts are

determined.

f. Transit Deposits and/or any other deposits collected, including Security Deposit

National Municipal Accounts Manual Octroi

7.3

collected from account current importers, shall be recognised as a liability when

received and such liability shall be settled on its refund.

g. Transit Deposit and/or any other deposit received shall be forfeited and recognised

as income when the right for claiming refund of deposit has expired.

h. Octroi on Consumption of electricity shall be recognised as income on actual

receipt during the year. However, at year-end alone, it shall be accrued if sanction

order (or proceedings) is passed and the amount is ascertained

ACCOUNTING RECORDS AND PROCEDURES

7.6 This section describes the records, registers, documents, forms, accounting entries,

etc., in respect of accounting for transactions related to Octroi. For the purposes of

accounting of Octroi there are certain forms, registers, etc., which are specific to Octroi, e.g.,

Summary Statement of Collection/Refund of Octroi (Form OC-1). These (Form OC-1 to OC-

4) are annexed to this chapter

Octroi

7.7 The procedure, in brief, followed for levy and collection of octroi is described in

subsequent paras under two broad heads:

a. Final assessment cases at Octroi Nakas, and

b. Provisional assessment cases at Octroi Nakas.

Final Assessment cases at Octroi Nakas

7.8 In cases where a final assessment of octroi is made at the octroi naka, the steps in

accounting shall be as follows:

a. Goods imported to the ULB limits for consumption, use or sale shall be assessed

for octroi at the various octroi nakas. The amount assessed shall be collected on

the spot and a receipt shall be issued.

b. The procedure to be followed for remittance and/or deposit of octroi collections

made at the nakas and at the octroi office shall be the same as provided in the

Chapter 5 on General Accounting Procedures.

c. Recording of Octroi received. On receipt of Summary of daily collection, the

Accounts Department shall pass the following entry:

National Municipal Accounts Manual Octroi

7.4

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

110-51-(a)

Bank Account*

To Octroi & Toll

–Octroi

Dr.

Cr.

10,000

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable.

Provisional Assessment cases at the Octroi nakas

a. In cases where a provisional assessment of octroi is made on receipt of details of

collection received in Form OC – 2, the Accounts Departments shall pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

110-51-(a)

Bank Account*

To Octroi & Toll -

Provisional Octroi

Dr.

Cr.

10,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

b. On assessment of Octroi, deficit in octroi is recovered and the excess deposit /

provisional octroi collected is refunded to the importer

c. For settlement of provisional octroi cases, the following entries are passed:

i. For recovery of additional octroi in case the provisional octroi collected is less

than the final octroi assessed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

110-51-(a)

Bank Account*

To Octroi & Toll –

Provisional Octroi

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

ii. For refund of provisional octroi in case the amount collected on provisional

assessment is more than the final octroi assessed:

National Municipal Accounts Manual Octroi

7.5

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

110-51-(a)

450-21-(a)

Octroi & Toll - Provisional

Octroi

To Bank Account*

Dr.

Cr.

800

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

iii. For transfer of Provisional Octroi to Octroi Income on final assessment:

The amount adjusted against collection on provisional assessment, the

following entry will be made:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

110-51-(a)

Octroi & Toll – Provisional Octroi

To Octroi & Toll

–Octroi

Dr.

Cr.

10,200

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

Note: The net octroi collected finally should be Rs. 10,200 calculated as Rs.10,000 (provisionally

collected) plus 1,000 (additional octroi assessed) minus Rs.800 (excess provisional octroi

refunded)

Account Current facility

7.9 As per the rules of the relevant State Act, Account Current facility may be provided to

importers. The brief procedure in respect of Account Current facility shall be as under:

a. Recording of receipt of Security Deposit from Account Current importer. The

Octroi Department may collect a Security Deposit for extending the Account

Current facility. The details of the Security Deposit shall be recorded in a

‘summary statement of collection/refund’ in Form OC – 1. The Accounts

Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

340-20-(a)

Bank Account*

To Deposit Revenues –

Octroi Account Current

Dr.

Cr.

1,00,000

Cash Book, Ledger

and Deposit register

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

b. Recording of octroi due from the Account Current importers. The assessment

details of goods under current facility shall be forwarded to the Accounts

Department in Form no OC -3 and the following entry shall be passed:

National Municipal Accounts Manual Octroi

7.6

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-19-(a)

110-51-(a)

Receivables for Other Taxes -

Octroi from Account Current

Importers

To Octroi & Toll Account

Current Importers

Dr.

Cr.

10,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

c. Recording of Octroi received. The details of the consolidated recoveries from

Account Current importers shall be entered in Form OC 3 which shall be sent to

the Accounts Department, on the basis of which following entry shall be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

431-19-(a)

Bank Account*

To Receivables for Other

Taxes Octroi from Account

Current Importers

Dr.

Cr.

9,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

d. Recording of adjustment of Security Deposit against Octroi due. In case of non-

receipt of the whole or part of the amount outstanding within a specified period,

the Security Deposit received from the importer may be adjusted against the

amount outstanding. The details of the amount forfeited shall be sent to the

Accounts Department in Form OC 3, based on which the Accounts Department

shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

431-19-(a)

Deposit Revenues Octroi

Account Current

To Receivables for Other

Taxes Octroi from Account

Current Importers

Dr.

Cr.

1,000

Journal Book,

Ledger and

Deposit

(a) Insert Detailed Head Codes of Account as applicable

e. Recording of refund of Octroi Security Deposit. On payment of the security

deposit, the Accounts Department shall pass the following entry:

National Municipal Accounts Manual Octroi

7.7

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

450-21-(a)

Deposit Revenues Octroi

Account Current

To Bank Account*

Dr.

Cr.

9,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

Transit Fee and Transit Deposit

7.10 ULBs may collect transit fee and refundable transit deposit for goods imported in the

City for immediate exportation out of the City.

Transit Fee

7.11 The accounting for transit fee shall be carried out based on Statement of collection in

Form OC-1 and is as follows:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

140-12-(a)

Bank Account*

To Fees for Grant of Permit

Transit Fee

Dr.

Cr.

500

Octroi Cash

Book, Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

Transit Deposit

7.12 The accounting for transit deposit shall be carried out as follows:

a. The details of the transit deposit collected by the octroi nakas shall be recorded in

the Deposit Register maintained.

b. At the time of exit, the exit octroi naka shall refund the transit deposit (as per the

Rules prescribed by the ULB) on presentation of the Transit Pass and obtain a

confirmation of receipt from the party.

c. The exit naka shall enter the details of transit deposit refunded

d. A Consolidated statement for Transit Collection and Refunds in Form no OC 4

be forwarded to the Accounts Department, and the accounting entry passed is as

follows.

National Municipal Accounts Manual Octroi

7.8

i. To record transit deposit collected:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

340-20-(a)

Bank Account*

To Deposit Revenues

Transit Deposit

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

ii. To record transit deposit refunded:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

450-10-(a)

Deposit Revenues Transit

Deposit

To Cash

Dr.

Cr.

1,000

Cash Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

7.13 Recording of Transit Deposit lapsed. The right to claim refund of transit deposit shall

lapse if not claimed within the period stipulated, subject to any Rules framed by the ULB.

The lapsed transit deposit shall be recognised as an income of the ULB. The accounting entry

to be passed is as follows.

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

180-11-(a)

Deposit Revenues - Transit

Deposit

To Lapsed Deposit

Dr.

Cr.

100

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

Penalties

7.14 The Octroi Department may levy penalties in cases of under recovery or evasion of

octroi assessed and paid by the importer.

7.15 Recording of receipt of octroi penalty. Based on Statement of Collection (Form OC

1) received, the Accounts Department shall pass the following entry:

National Municipal Accounts Manual Octroi

7.9

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrativ

e figures

Books to be

entered into

450-21-(a)

140-20-(a)

Bank Account*

To Penalties & Fines

Octroi

Dr.

Cr.

200

Octroi Cash

Book, Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

7.16 Recording of miscellaneous income. For miscellaneous income other than those

specified above, e.g., in respect of toll, escort fees, fees for temporary import of goods for job

work, labour charges, processing charges, etc., the Accounts Department shall pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

140-40-(a)

Bank Account*

To Other Fees

Dr.

Cr.

1,500

Octroi Cash

Book, Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

Other Security Deposits received for various facilities offered

7.17 Recording of Other Security Deposit. The ULB may accept Security Deposit for

various facilities offered to the importers such as for cheque facility, temporary import of

goods, etc. The Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

340-20-(a)

Bank Account*

To Deposit Revenues

Octroi Security

Deposit

Dr.

Cr.

10,000

Octroi Cash Book,

Ledger, Deposit

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

7.18 Refund of Security Deposit. The Security Deposit shall be refunded on an application

being made by the party as per the rules and on payment, the Accounts Department shall pass

the following entry:

National Municipal Accounts Manual Octroi

7.10

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

450-21-(a)

Deposit Revenues -Octroi

Security Deposit

To Bank Account*

Dr.

Cr.

10,000

Octroi Cash Book,

Ledger, Deposit

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

ACCOUNTING FOR REFUND/REMISSION OF OCTROI

7.19 Recording of refund/remission of Octroi. Octroi collected as per the requirements of

the Rules may be refunded/remission under certain circumstances. The accounting entry for

the refund/remission shall be as follows:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

110-90-(a)

350-40-(a)

Tax Remission & Refunds

Octroi

To Refunds Payable-

Octroi**

Dr.

Cr.

1,000

Octroi Cash Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

**Refunds/Remissions arising on account of applicable rules shall be either passed for

‘Payment’ (under the account code 350-40-(a)) or credited to the account ‘Advance Collection of

Revenues - Octroi’ (under the account code 350-41-(a)) in accordance with the principles of the

ULB.

Recording of payment of refunds/remissions granted.

7.20 The Accounts Department shall prepare a Payment Order (Form GEN-14) in respect

of the refunds/remissions and communicate the details of refunds/remissions payments to the

Octroi Department for updating the Register of Demand and other registers. To record

refunds/remissions payment, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-40-(a)

450-21-(a)

Refunds Payable - Octroi

To Bank Account*

Dr.

Cr.

1,000

Cash Book, Ledger,

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

ACCOUNTING FOR OCTROI ON CONSUMPTION OF ELECTRICITY

7.21 The ULB may receive share of Octroi levied by the State on consumption of

electricity.

National Municipal Accounts Manual Octroi

7.11

7.22 Recording of receipt: Octroi on Consumption of Electricity is an income of uncertain

nature and the amount cannot be ascertained with reasonable accuracy as it depends on

consumption of electricity. Thus, it should be accounted on receipt of proceeds from the State

Government. A receipt is issued in Form GEN-8 for amount received. Based on receipt the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

120-20-(a)

Bank Account*

To Compensation in lieu of

Taxes /Duties - Octroi in

lieu of Electricity

Dr.

Cr.

10,000

Octroi Cash

Book, Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

ACCOUNTING FOR OCTROI RELATING TO PRIOR PERIOD

7.23 There may be instances wherein the assessment/ascertainment of the Octroi amount

relating of the prior years/periods is completed in the current year. The accounting entry to be

followed for this transaction is as follows:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-19-(a)

280-10-(a)

Receivables for Other Taxes

Octroi

To Prior period Income

Taxes (Octroi & Toll)

Dr.

Cr.

15,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

YEAR END ACCRUAL AND REVERSAL

7.24 Year end accrual of income: During the year the income on octroi on consumption of

electricity is accounted on collection. However, at year-end alone, it shall be accrued if

sanction order (or proceedings) is passed and the amount is ascertained.

7.25 Recording of Accrued Income. For recording the Accrued Income, the Accounts

Department shall pass the following entry:

National Municipal Accounts Manual Octroi

7.12

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-50-(a)

120-20-(a)

Receivables from

Government Octroi

To Compensation in

lieu of Taxes/ Duties

Octroi in lieu of

Electricity

Dr.

Cr.

10,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

7.26 Receipt of Accrued Income: In the next accounting period, upon receipt of accrued

income, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-50-(a)

450-21-(a)

Receivables from

Government Octroi

To Bank Account*

Dr.

Cr.

10,000

Cash Book,

Ledger

* Specify Name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

ACCOUNTING FOR EXPENDITURE

7.27 The procedure to be followed with respect to the payment of expenditures peculiar to

the Octroi Department shall be as follows:

a. Recording of Performance Bonus paid. Performance Bonus payable shall be

arrived at on the basis of Rules, if any, prescribed in this behalf. On payment, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount (Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

210-10-(a)

450-21-(a)

Octroi Performance Bonus

To Bank Account *

Dr.

Cr.

500

Cash Book,

Ledger

* Specify Name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

b. Compilation Fees may be paid to the Railway and Postal departments. The bills

received for services rendered shall be recorded on Payment, for which the

Accounts Department shall pass the following entry:

National Municipal Accounts Manual Octroi

7.13

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount (Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-80(a)

450-21-(a)

Other Operating Expenses

To Bank Account*

Dr.

Cr.

400

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert detailed Head Codes of Account as applicable

c. The ULB may pay security Charges to the Police Department or Security Agency.

On receipt of Payment Order, the Accounts Department shall pass the following

entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-11-(a)

450-21-(a)

Office Maintenance

Security Expenses

To Bank Account*

Dr.

Cr.

400

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

INTERNAL CONTROLS

The following internal controls shall be observed by the ULBs:

7.28 The Head of the Accounts Department shall exercise the following internal controls:

a. The amount remitted by the Octroi Department shall be daily reconciled with the

statement of collections and the Summary of daily collection furnished by it;

b. The balance in the Octroi Deposit ledger account shall be reconciled quarterly

with the Register of Deposits maintained at the Octroi Department;

c. For Octroi outstanding in respect of account current holders, accounts shall be

reconciled with the amount of octroi remaining unrealised as per the records

maintained by the Octroi Department on a monthly basis;

d. The balance in the account current of the importer who has been extended the

account current facility shall be reconciled on a monthly basis with the Statement

of Accounts received from the importers;

e. At the time of refund of octroi or any deposit, it shall be ensured no amount is due

from the concerned applicant;

f. The Octroi Department shall reconcile on a weekly basis the transit deposit

collected and refunded by the octroi nakas;

g. Chief Executive officer/Head of the departments of all ULBs may specify

appropriate reports to be put up for monitoring.

National Municipal Accounts Manual Octroi

7.14

7.29 All Reconciliation Statements shall be certified by the Head of the Accounts

Department

PRESENTATION IN THE FINANCIAL STATEMENTS

7.30 The various heads of accounts used for the accounting of Octroi related transactions

shall be reflected in the Financial Statements or the Schedules attached to the Financial

Statements of the ULB. All such Financial Statements and schedules should be affixed with

signature and seal of designated authorities.

7.31 The Schedule of the Income and Expenditure Statement in respect of Octroi Income is

presented below.

Schedule I-1: Schedule of Tax Revenues

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

110-51-(a) Octroi & Toll – Octroi Income

110-51-(a) Octroi & Toll – Provisional Octroi

110-51-(a) Octroi & Toll – Account Current Importers

…….. ……. ……..

Less

110-90-(a) Tax Remission and Refunds

Sub-total

Total Income of Octroi & Toll to be shown as a part of Tax

revenue Schedule

* Insert the other Heads of Account and the corresponding Codes of Account for other charges levied by the

ULB.

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-1 (a): Schedule of Remission and Refund

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

110-90-(a) Octroi & toll

Total Income of Octroi to be shown as a part of Refund and

Remissions of Taxes Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-2: Schedule of Income from Assigned Revenues & Compensations

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

1234

120-20-(a) Compensation in lieu of Taxes/Duties – Octroi in

Lieu of Electricity

Total Income of Octroi to be shown as a part of Assigned

Revenues & Compensation Schedule

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Octroi

7.15

Schedule I-4: Schedule of Income from Fees & User Charges

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

1234

140-12-(a) Fees for Grant of Permit Transit Fees

140-12-(a) Fees for Grant of Permit Escort Fees

140-20-(a) Other Fees

140-20-(a) Penalties and Fines

Total Income of Octroi to be shown as a part of Fees & User

Charges Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I – 9: Schedule of Other Incomes

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

180-11-(a) Lapsed Deposit

Total Income of Octroi to be shown as a part of Other Income

Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-18: Schedule of Prior Period Items

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

1234

Income (A)

280-10-(a) Taxes

Expense (B)

280-50-(a) Refund of Taxes

Total [A-B] of Octroi to be shown as a part of Prior Period

Items Schedule

(a) Insert Detailed Head Codes of Account as applicable

7.32 The Balance Sheet Abstracts in respect of the Octroi Income are presented below.

Schedule B-15: Schedule of Sundry Debtors (Receivables)

Current Year Amount (Rs.)

Code No. Particulars Gross

Amount

Provision

for Out

standing

Receivables

Net

Amount

Year

Amount

(Rs.)

1234

5 = 3 – 4 6

431-10-(a) Receivables of Other Taxes

Octroi & Toll

Less than 3 years *

More than 3 years*

Sub total

Total

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Octroi

7.16

Schedule B-7: Schedule of Deposits Received

Amount in Rs.

Code No. Nature of Deposit

Opening

balance as the

beginning of

the year

Additions

during the

current

year

Refunded

during

the year

Balance

outstanding

at the end of

the current

year

12 3456

340-20-(a) From Revenues - Octroi Security

Deposit (Account Current)

340-20-(a) From Revenues - Transit Deposit

340-20-(a) From Revenues - Octroi Security

Deposit (Others)

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-17: Cash and Bank Balances

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

450-10-(a) Cash

450-21-(a) Bank Account

Total

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Octroi

7.17

FORM OC - 1

__________________ (NAME OF THE ULB)

SUMMARY STATEMENT OF COLLECTION / REFUNDS OF OCTROI

FOR THE PERIOD _____________________

Date

Sr.

No. Description of the remittance

Amount Collected

(Rs.)

(1)

Amount Refunded

(Rs.)

(2)

1 Octroi Duty collected

2 Octroi Duty Penalty collected

3 Miscellaneous Income collected

Octroi Deposit

1 Octroi Deposit collected

2 Octroi Deposit adjusted for octroi duty

3 Additional Octroi duty collected where

initially octroi deposit was collected

4 Refund of excess Octroi Deposit

Deposits other than those specified above

1 Other Deposits

2 Octroi Duty refunded

3Collections, net of refund/ adjustment,

remitted to the head octroi office /

Municipal's Office/ Designated bank

account

Amount in Words : Rupees ________________________________________________________

Prepared By* : ____________________ Examined and entered

Checked By* : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation and signature of the person.

Note : This statement should be prepared separately for each Collection Office/Collection Centre and

then consolidated.

National Municipal Accounts Manual Octroi

7.18

FORM OC – 2

__________________ (NAME OF THE ULB)

SUMMARY STATEMENT OF FINAL ASSESSMENT OF PROVSIONAL

ASSESSMENT FOR THE PERIOD _____________________

Date

Sr.

No. Description of the remittance

Amount

Collected

(Rs.)

(1)

Amount

Refunded

(Rs.)

(2)

Amount

Adjusted

(Rs.)

(3)

Provisional Assessment

1 Provisional Octroi Duty collected

2 Octroi Duty assessed on final assessment *

3 Refund of excess octroi duty collected on

provisional assessment at the time of final

assessment

4 Additional Octroi Duty collected

Prepared By** : ____________________ Examined and entered

Checked By** : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Collection adjusted against amount collected will have to be shown against the column

Adjustments and the balance Amount collected / refunded will be shown under column 1 0r 2

respectively

** Record the name, designation and signature of the person.

Note : This statement should be prepared separately for each assessment Centre and then consolidated.

National Municipal Accounts Manual Octroi

7.19

FORM OC - 3

__________________ (NAME OF THE ULB)

SUMMARY STATEMENT OF ASSESSMENT OF ACCOUNT CURRENT

HOLDERS FOR THE PERIOD _____________________

Date

Sr.

No. Description of the remittance

Amount

Assessed

(Rs.)

(1)

Amount

Collected

(Rs.)

(2)

Amount

Adjusted

(Rs.)

(3)

Current Account Transaction

1 Octroi Duty Due from current account holders

2 Octroi Duty collected from current account

holders *

Deposits other than those specified above

3 Deposit received from Current Account Holder

4 Deposit adjusted from Current Account Holder

Prepared By** : ____________________ Examined and entered

Checked By** : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Collection adjusted against amount collected will have to be shown against the column

Adjustments and the balance Amount collected / refunded will be shown under column 2

** Record the name, designation and signature of the person.

Note : This statement should be prepared separately for each assessment Centre and then consolidated.

National Municipal Accounts Manual Octroi

7.20

FORM OC - 4

__________________ (NAME OF THE ULB)

SUMMARY STATEMENT OF TRANSIT FEES COLLECTIONS AND

REFUNDS FOR THE PERIOD _____________________

Date

Sr.

No. Description of the remittance

Amount

Collected

(Rs.)

(2)

Amount

Paid (Rs.)

(2)

Amount

Adjusted

(Rs.)

(3)

1 Transit Fee Collected

2 Transit Deposit Collected

3 Transit Deposit Refunded

4Net Amount remitted/deposited with Bank

(1+2-3)

5 Transit Deposit Lapsed *

Total remittance in words:

Prepared By** : ____________________ Examined and entered

Checked By** : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Transit Deposit lapsed shall be shown under the column Adjustments

** Record the name, designation and signature of the person.

Note : This statement should be prepared separately for each assessment Centre and then consolidated.

National Municipal Accounts Manual Cess

8.1

CHAPTER 8

CESS

INTRODUCTION

8.1 This chapter contains the recommended accounting system for Cess related

transactions.

8.2 Cess is the tax levied along with any other tax or in lieu of tax and is considered

income of the ULB.

8.3 It may be noted that the provisions covered in this chapter are not applicable to cesses

collected on behalf of the State Government. For e.g. Library Cess. Accounting treatment in

respect of these cess are detailed in Chapter 6 on Property and Other taxes

8.4 Cess is normally collected by self-declaration made in the returns filed under the

relevant provisions.

8.5 The normal procedure in respect of levy and collection of Cess is briefly discussed

below:

a. Every person (individual/entity) who is liable to pay Cess gets registered with the

Cess Department.

b. The registered individual/entity voluntarily assesses their Cess liability and pays

the same to the ULB at specified periodic intervals.

c. The Cess Department undertakes an assessment of the returns filed to determine

the actual Cess liability.

National Municipal Accounts Manual Cess

8.2

d. Additional demand is raised for Cess, interest and penalties if the Cess paid

voluntarily is less than the assessed Cess liability. In case the Cess paid is more

than the assessed Cess liability, the excess Cess collected is refunded.

8.6 In addition to Cess, following may be collected by the Cess Department:

a. Cess Registration Fee at the prescribed rates from the dealers applying for

registration.

b. Penalties and/or interest in the event of evasion and for delays and defaults made

by the dealers.

ACCOUNTING PRINCIPLES

8.7 The following Accounting Principles shall govern the recording, accounting and

treatment of transactions relating to Cess:

a. Revenue in respect of collection of Cess Income with Returns (on filing of returns

by the dealers) shall be recognised on actual receipt.

b. Revenue in respect of Cess Income on Assessment shall be recognised in the

period in which they become due, i.e., when the demand is raised.

c. Revenue in respect of Cess Registration Fee, Interest and Penalties levied on

assessment shall be recognised on actual receipt.

d. In respect of the demand outstanding beyond two (2) years, provision shall be

made to the extent of income of ULB, based on the following provisioning

norms:

¾Outstanding for more than 2 years but not exceeding 3 years: 50%

¾Outstanding for more than 3 years: 100% (additional 50%)

e. Any additional provision for demand outstanding (net on overall basis) required

to be made during the year shall be recognised as expenditure and any excess

provision written back during the year shall be recognised as income of the

ULB.

f. Refunds, remissions of Cess for the current year shall be adjusted against the

income and if pertain to previous years then it shall be treated as prior period

item.

g. Write-offs of taxes shall be adjusted against the provisions made and to that

extent recoverable gets reduced

National Municipal Accounts Manual Cess

8.3

h. In the case of subsequent collection or recovery of ‘Receivables of Cess

Income’ which were already written off shall be recognised as a ‘Prior Period

Income’.

i. Demands raised with retrospective effect will be treated as prior period income

to the extent it pertains to earlier years

ACCOUNTING RECORDS AND PROCEDURES

8.8 This section describes the records, registers, documents, forms, accounting entries,

etc., in respect of accounting for transactions related to Cess. For the purposes of accounting

of Cess there are certain forms, registers, etc., which are specific to Cess, e.g., Summary

Statement of Year-wise & Head-wise Collection of Cess (Form CE-2). These (Form CE-1 to

CE-4) are annexed to this chapter

CESS COLLECTION ON REGISTRATION AND FILING OF RETURNS

8.9 The following shall be the procedure for accounting of the collections made in respect

of Cess:

a. Recording of collections relating to Cess. Based on Summary of Daily Collection

(Form GEN-12) received from the various Collecting Offices / Centers, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

110-52-(a)

Bank Account*

To Cess –Gross Income

Dr.

Cr.

9,00,000

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

The summary of daily collections does not provide the details in respect of the

year-wise head-wise collections made in respect of Cess. Hence, the total amount

collected should be credited to “Gross Cess Income” Account. The Cess

department updates the Head wise & year wise collection register maintained (in

Form CE – 2) for collection based on the collection statement received from

collection centers along with bills if any.

b. Recording of break-up of collections. A Summary Statement of Year-wise/ Head-

wise Collection of Cess in Form CE -2 shall be prepared on a monthly basis and

sent to the Accounts Department to record the details of collection. To record the

head-wise break-up of the collections made and to record cess received in

advance, the Accounts Department shall pass the following entry:

National Municipal Accounts Manual Cess

8.4

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrativ

e figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

110-52-(a)

140-10-(a)

110-52-(a)

350-41-(a)

Cess - Gross Income

To Empanelment

Registration Charges

Cess

To Cess - Net Income

To Advance Collection

of Revenues- Cess*

Dr.

Cr.

9,00,000

45,000

8,50,000

5,000

Journal

Book, Ledger

* Adjustment of Cess received in advance is discussed separately under section

‘Adjustment of Cess Received in Advance’ below.

(a) Insert Detailed Head Codes of Account as applicable

RAISING OF DEMAND FOR ADDITIONAL CESS, INTEREST AND PENALTIES

ON ASSESSMENT

8.10 Recording of demand raised. On completion of assessment of the dealers, the Cess

Department shall prepare a Summary Statement of Demand Raised on Assessment in Form

CE-1 on a monthly basis and send it to the Accounts Department within 7 days from the

beginning of the month. The demand raised could be on account of additional cess, interest,

penalties and/or fines charged as per the applicable provisions. Income in respect of demand

raised for interest, penalties and/or fines charged shall be recognised as income on actual

collection. To record the demand raised in respect of additional cess, the Accounts

Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-20-(a)

110-52-(a)

280-10-(a)

Receivables for Cess (Year…)

To Cess – Net Income

To Prior Period Income

Taxes – Cess

Dr.

Cr.

50,000

44,000

6,000

Journal

Book, Ledger

(a) Insert detailed Head Codes of Account as applicable

8.11 Recording of collections in respect of demand raised. On the basis of the Summary of

Daily Collection (Form GEN – 12) received from the various Collection Offices and

Collection Centres, the Accounts Department shall pass the following entry to record

collections in respect of demand raised:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

431-80-(a)

Bank Account*

To Receivables Control

Account - Cess

Dr.

Cr.

1,00,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

National Municipal Accounts Manual Cess

8.5

8.12 Recording of break-up of collections. On the basis of monthly Summary Statement of

Year-wise Head-wise Collection of Cess (Form CE-2) received from the Cess Department,

the Accounts Department shall pass the following entry to record the break-up of the

collections made:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

431-20-(a)

171-80-(a)

140-20-(a)

Receivables Control Account –

Cess

To Receivables for Cess

(Year…)

To Receivables for Cess

(Year…)

To Other Interest –

Interest Receivable for Cess

To Penalties and Fines -

Cess

Dr.

Cr.

1,25,000

70,000

30,000

15,000

10,000

Journal

Book, Ledger

(a) Insert Detailed Head Codes of Account as applicable.

REFUNDS/REMISSIONS

8.13 The Cess Department shall duly grant refunds/remissions on account of change in

rules applicable for Cess of any other reasons as applicable. The details of the same shall be

communicated to the Accounts Department.

8.14 Recording of refunds/Remissions payable. A Summary Statement of Refunds and

Remissions in Form CE-3 shall be prepared on a monthly basis and sent to the Accounts

Department, based on which the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

280-50-(a)

350-40-(a)

Prior Period Expenses Refund of

Taxes- Cess

To Refunds Payable –

Cess*

Dr.

Cr.

1,000

Journal

Book,

Ledger

* Refunds/Remissions arising on account of change in the applicable rules shall be either

passed for ‘Payment’ (refund payable) or credited to the account ‘Advance Collection of

Revenues’ (under the account code 350-41-(a)) in accordance with the accounting principles

of the ULB.

(a) Insert Detailed Head Codes of Account as applicable.

8.15 Recording of payment for refunds. The Accounts Department shall prepare a Payment

Order (in Form GEN- 14) in respect of the refunds and communicate the details of refunds

made to the Cess Department for updating their records. To record refunds made, the

Accounts Department shall pass the following entry:

National Municipal Accounts Manual Cess

8.6

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-40-(a)

450-21-(a)

Refund Payable-Cess

To Bank Account *

Dr.

Cr.

500

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

PROVISION FOR UNREALISED CESS RECEIVABLES

8.16 Recording of provision for unrealised Cess Income. The demand outstanding beyond

two (2) years shall be provided for as per provisioning norms given below:

a. Outstanding for more than 2 years but not exceeding 3 years: 50%

b. Outstanding for more than 3 years: 100% (additional 50%).

8.17 For example, provision for the Period ended March 31, 2004 is as under:

a. 50% of outstanding Receivables of Cess Income for the year ended March 31,

2002

b. 100% of outstanding Receivables of Cess Income for the year ended March 31,

2001 and before.

8.18 The amount required being provided as per provisioning norms stated above, shall be

compared with the balance lying in the Provision for outstanding Cess. If the amount to be

provided is more than the balance, then additional provision shall be made for the difference

amount. If the amount to be provided is less than the balance, it reflects the amounts provided

for has been collected, and the provision made towards that can be written back. This process

has to be carried over at every period/yearend.

8.19 Additional provision or reversal of excess provision for the current period shall be

calculated similar to computations explained in Tables 6.1 & 6.2 in Chapter 6 on Property &

Other Taxes.

8.20 For making the provision, the following entry shall be passed by the Accounts

Department:

National Municipal Accounts Manual Cess

8.7

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

270-10-(a)

432-20-(a)

Provision for Doubtful

Receivables Cess

To Provision for

Outstanding Cess

Dr.

Cr.

1,500

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

8.21 The effect of the above entry will be as follows:

a. Provision for Doubtful Receivables- Cess shall be shown as an expense under

the schedule Provision & write offs.

b. Provision for Outstanding Cess will be shown as a deduction from Receivables

for Cess in the Balance Sheet.

8.22 To record the write back of the provision made earlier, the following entry shall be

passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

432-20-(a)

180-60-(a)

Provision for Outstanding Cess

To Excess Provision

written back Cess

Dr.

Cr.

500

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

WRITE-OFFS

8.23 Recording of Write-offs. If for any reason, it is decided by the ULB to write-off any

Cess Income dues, the details of the write off has to be entered in the Statement of Write off

by the respective departments in Form CE 4. This form has to be prepared on a monthly

basis and forwarded to the Accounts Department and based on which , the write off shall be

adjusted against the provision made and the following entry will be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

432-20-(a)

431-20-(a)

Provision for Outstanding Cess

To Receivables for Cess

(Year )

Dr.

Cr.

500

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Cess

8.8

8.24 Recording of subsequent collection/ recovery of ‘Receivables of Cess Income’written

off: In case of a ‘Receivables of Cess Income’ written off already were recovered/collected

during the year, the accounts department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

280-30-(a)

Receivables Control Account -

Cess

To Prior period Income

Recovery of Revenues

Written off - Cess

Dr.

Cr.

1,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

TRANSFER OF AMOUNT OUTSTANDING IN RESPECT OF ARREARS FROM

SPECIFIC YEAR-WISE ACCOUNT TO GENERAL ACCOUNT

8.25 The arrears of Cess shall be carried forward year-wise, i.e., in “Receivables of Cess

Income (Year…)” Account up to three years. On completion of the third year, the amount

outstanding in the specific year-wise receivable account shall be transferred to a general

arrears account, i.e., “Receivables of Cess Income (Others)” Account. For example, the cess

receivable in respect of the demand raised during the accounting year 2000-01 shall be carried

forward in “Receivables of Cess Income (2001)” Account up to the year ending March 31,

2004. On March 31, 2004, the balance outstanding in this account shall be transferred to

“Receivables of Cess Income (Others)” Account.

8.26 Recording of transfer of arrears to general account. To record this transfer, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-20-(a)

Receivables for Cess (Others)

To Receivables for Cess

(Year…)

Dr.

Cr.

2,000

Journal

Book, Ledger

(a) Insert Detailed Head Codes of Account as applicable

ADJUSTMENT OF CESS RECEIVED IN ADVANCE

8.27 The Cess Department shall intimate the Accounts Department of the advance adjusted

against the subsequent demand raised by the Cess Department through the Summary

Statement of Demand Raised on Assessment CE-2.

a. Recording of subsequent demand raised. To record the demand raised for cess on

assessment, the Accounts Department shall pass the following entry:

National Municipal Accounts Manual Cess

8.9

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-20-(a)

110-52-(a)

Receivables for Cess (Year )

To Cess Income

Dr.

Cr.

50,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

b. Recording of adjustment of advance. To record the adjustment of Cess received in

advance, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-41-(a)

431-20-(a)

Advance Collection of Revenues

Cess

To Receivables of Cess

(Year )

Dr.

Cr.

5,000

Journal

Book, Ledger

(a) Insert Detailed Head Codes of Account as applicable

RECOVERY OF CESS THROUGH LEGAL PROCEEDINGS

8.28 The transactions in respect of recovery of Property and Other Taxes have been

described in Chapter 6 Property & Other Taxes (paras. 6.34 to 6.40) reference to which is

invited. The transactions relating to recovery of Cess shall be accounted in similar manner.

INTERNAL CONTROLS

8.29 The following internal controls shall be exercised by the ULB in respect of Cess

related transactions:

a. The Head of the Accounts Department and the Head of the Cess Department shall

reconcile the balance at the beginning of the accounting year in respect of the year-

wise Cess Receivable (as appearing in the Balance Sheet of the previous year)

with the year-wise total of the arrears recorded by the Cess Department.

b. A quarterly reconciliation shall be carried out by the Head of the Accounts

Department and the Head of the Cess Department in respect of the amount

collected and the year-wise amount outstanding between the balances standing in

the relevant Ledger Accounts maintained at the Accounts Department and the

records/registers maintained at the Cess Department.

c. The officers designated by the ULB for operating the Designated Cess Bank

Account shall co-ordinate with the banks on a daily basis and ascertain the status

of the cheques/drafts deposited by them.

National Municipal Accounts Manual Cess

8.10

d. The Head of the Cess Department shall annually co-ordinate with the department

handling the Shop and Establishment registrations and ascertain that the dealers

who have been granted new registrations and are liable to Cess have registered

with the Cess Department.

e. The Cess Department shall ensure that the Receipt / Summary of Daily Collection

prepared, provides reference to the Cess Collection Register.

f. The Chief Executive Officer/Head of the ULB shall specify such appropriate

calendar of returns /reports for monitoring.

8.30 All Reconciliation Statements shall be certified by the Head of the Accounts

Department.

PRESENTATION IN THE FINANCIAL STATEMENTS

8.31 The various heads of account used for the accounting of Cess related transactions shall

be reflected in the Financial Statements or in the Schedules attached to the Financial

Statements of the ULB. All such Financial Statements and schedules should be affixed with

signature and seal of designated authorities.

8.32 The provision against the outstanding Cess Income receivable is to be disclosed under

the major head Accumulated Provisions as a separate line item in the Balance Sheet below

Sundry Debtors .

8.33 The Schedule of the Income and Expenditure Statement in respect of Cess is presented

below.

Schedule I-1: Schedule of Tax Revenues

Code of

Account Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

110-52-(a) Cess - Net Income

Sub-total

Less

110-90-(a) Tax Remission and Refunds Cess

Sub-total

Total Income of Cess to be shown as a part of Tax revenue Schedule

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Cess

8.11

Schedule I-1 (a): Schedule of Refund and Remission

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

110-90-(a) Cess Income

Total Income of Cess to be shown as a part of Refund and

Remissions of Taxes Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-4: Schedule of Income from Fees & User Charges

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

134

140-10-(a) Empanelment & Registration Charges Cess

140-20-(a) Penalties & Fines Cess

Total

(a) Specify the Detailed Head Code of Accounts depending on the Department to which the revenue relates

Schedule I – 9: Schedule of Other Incomes

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

180-60-(a) Excess provision written-back Cess

Total Income of Cess to be shown as a part of Other Income

Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-11: Administrative Expenses

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

220-51-(a) Legal Expenses - Cost of recoveries of Cess (net

of amount received from State government for

the cost of recovery)

Total Expense of Cess to be shown as a part of Administrative

Expense Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I – _16: Schedule of Provisions and Write off

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

270-10-(a) Provision for Doubtful Receivables Cess

Total Expense of Cess to be shown as a part of Provision and

Write off Schedule

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Cess

8.12

Schedule I-18: Prior Period Items

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

Income (a)

280-10-(a) Taxes

280-30-(a) Recovery of Revenues written off

Expense (b)

280-50-(a) Refund of Taxes

Total [a-b] of Cess to be shown as a

artofPrior

Period Items Schedule

(a) Insert Detailed Head Codes of Account as applicable

8.34 The Balance Sheet Abstract in respect of Cess is presented below.

Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

350-40-(a) Refunds Payable Taxes Cess

350-41-(a) Advance Collection of Revenues

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-15: Schedule of Sundry Debtors (Receivables)

Current Year Amount (Rs.)

Code No. Particulars Gross

Amount

Provision for

Outstanding

Receivables

Net

Amount

Year

Amount

(Rs.)

12345=3 46

431-20-(a) Receivables for Cess

Less than 3 years *

More than 3 years*

Total Receivables of Cess

* Break up for provision for outstanding revenues are given in Column 4

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-17: Schedule of Cash and Bank Balances

Code of

Account

Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

450-10-(a) Cash

450-21-(a) Bank Account

Total

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Cess

8.13

Form CE-1

________________ Name of the ULB

SUMMARY STATEMENT OF DEMAND RAISED ON ASSESSMENT

FOR THE PERIOD ____________________

in respect of Cess

Sr. No. ___________

Particulars Year (Others) Year (-2) Year (-1) Current Year

12345

Cess

Others, Specify _______________

Total

Amount in Words : Rupees __________________

Advance Adjusted:

Against Voluntary Returns filed by the dealers

Against demand raised on Assessment *

Prepared By** : ____________________ Examined and entered

Checked By** : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Provide year-wise details in respect of advance adjusted against demands raised.

**Record the name, designation, and signature of the person.

National Municipal Accounts Manual Cess

8.14

Form CE-2

__________________________________________Name of the ULB

SUMMARY STATEMENT OF YEAR-WISE HEAD-WISE COLLECTION OF CESS

FOR THE PERIOD _____________________

Sr. No. __________

_________________ Collection Center Deposited with _____________

Particulars Year Others

(Rs.)

Year (-2)

(Rs.)

Year (-1)

(Rs.)

Current Year

(Rs.)

Advance

Received (Rs.) Total (Rs.)

123456

Collection in respect of incomes accounted on accrual

basis

Cess demand raised on Assessment

Others, Specify ___________

Sub-Total

Collection in respect of incomes accounted on actual

receipt basis

Cess received along with Voluntary Returns

Cess Registration Fees

Interest

Penalties

Fines

Others, Specify ___________

Sub-Total

Receipt of Cost of Recovery

Cess received in Advance

Others, Specify ___________

Total Collection

Amount in Words : Rupees ______________________________________________________________________

Prepared By** : ____________________ Examined and entered

Checked By** : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation and signature of the person.

Note :. This statement should be prepared separately for each Collection Office/Collection Centre and then consolidated.

National Municipal Accounts Manual Cess

8.15

Form CE-3

________________ NAME OF THE ULB

SUMMARY STATEMENT OF REFUNDS /REMISSIONS

FOR THE PERIOD ____________________

In respect of Cess Income

Sr. No._________

Refunds/Remissions

Particulars Advances #

Rs.

Receivables #

Rs.

Refunds Payable #

Rs.

Total

Rs.

Arrears

Year (Others)

Year (-5)

Year (-4)

Year (-3)

Year (-2)

Year (-1)

Current Year (20XX)

Total

Amount in Words : Rupees______________________________________________________

Prepared By :** ______________ Examined and entered

Checked By :** _______________________ Accountant/Authorised Officer

Dated: Dated:

* Include total amount of all income heads of account in respect of Property and Other Taxes.

** Record the name, designation, and signature of the person.

# The details of whether refunds/remissions are treated as refund payable or adjustment of receivables or Revenues received in

advance shall be entered in this form in order to account for the refunds/remissions Accordingly.

National Municipal Accounts Manual Cess

8.16

Form CE-4

________________ NAME OF THE ULB

SUMMARY STATEMENT OF WRITE OFF

FOR THE PERIOD ____________________

In respect of Cess

Sr. No. __________

Particulars Amount (Rs.)

Arrears

Year (Others)

Year (-5)

Year (-4)

Year (-3)

Year (-2)

Year (-1)

Current Year (20XX)

Total

Amount in Words : Rupees______________________________________________________

Prepared By :** ______________ Examined and entered

Checked By :** _______________________ Accountant/Authorised Officer

Dated: Dated:

* Include total amount of all income heads of account in respect of Property and Other Taxes.

** Record the name, designation, and signature of the person.

National Municipal Accounts Manual Water Supply

9.1

CHAPTER 9

WATER SUPPLY

INTRODUCTION

9.1 This chapter contains the recommended accounting system for Water Supply

related transactions.

9.2 ULBs have an obligation to make reasonable and adequate provision for the

management and maintenance of all municipal water works and the construction or

acquisition of new works necessary for a sufficient supply of water for public and private

purposes.

9.3 ULBs are entitled to charge the users for the provision of these services. The

charges for the water supply are either recovered as a Tax along with the Property Tax,

based on the Assessment Value of the property or as a charge based on measurement or

at a fixed amount or both.

9.4 The following are the revenue sources in relation to water supply:

i. Water Tax

ii. Sewerage Tax

iii. Water supply Charges

iv. Sewerage Charges

v. Meter Rent for Water Supply;

vi. Connection Charges for Water Supply and

vii. Water Tanker Charges.

viii. Road Damage Recovery Charges.

National Municipal Accounts Manual Water Supply

9.2

ACCOUNTING PRINCIPLES

9.5 The following Accounting Principles shall govern the recording, accounting and

treatment of transactions relating to Water Supply and Sewerage:

a. Revenue in respect of Water Tax, Water Benefit Tax, Water Supply Charges,

Water Meter Rent, Sewerage Charges, shall be recognised in the period in

which they become due. It is to be noted that the water tax and the related

taxes may also be included in the bill raised for property tax.

b. Revenue in respect of Notice Fee, Warrant Fee, and Other Fees shall be

recognised when the bills for the same are raised.

c. Revenue in respect of Connection Charges for Water Supply shall be

recognised on actual receipt.

d. Revenue in respect of Water Tanker Charges and Road Damage Recovery

Charges, Penalties shall be recognised on actual receipt.

e. In respect of the demand outstanding beyond two (2) years, provision shall be

made to the extent of income of the ULB as follows

¾If water tax is collected as a component in Property Tax, provisioning shall

be made in the same way as unrealised Property Tax, which is as follows:

•Outstanding for more than 2 year but not exceeding 3 years: 25%

•Outstanding for more than 3 years but not exceeding 4 years: 50%

(additional 25%)

•Outstanding for more than 4 years but not exceeding 5 years: 75%

(additional 25%)

•Outstanding for more than 5 years: 100% (additional 25%)

¾If water tax demand is raised separately, the taxes and charges shall be

provided as follows:

•Outstanding for more than 2 year but not exceeding 3 years: 50%

•Outstanding for more than 3 years: 100% (additional 50%)

National Municipal Accounts Manual Water Supply

9.3

f. Any additional provision for demand outstanding (net on overall basis)

required to be made during the year shall be recognised as expenditure and any

excess provision written back during the year shall be recognised as income of

the ULB.

g. Refunds, remissions of taxes for the current year shall be adjusted against the

income and if pertain to previous years then it shall be treated as prior period

item.

h. Write-offs in respect of water supply income shall be adjusted against the

provisions made and to that extent recoverable gets reduced.

i. Any subsequent collection or recovery of ‘Receivables of Water Supply

Income’ which were already written off it shall be recognised as a ‘Prior

Period Income’.

ACCOUNTING RECORDS AND PROCEDURES

9.6 This section describes the records, registers, documents, forms, accounting

entries, etc., in respect of accounting for transactions related to Water Supply. The

specific forms (Form WS–1 to WS -4) which are applicable to Water Supply are annexed

with this chapter.

9.7 The accounting records and procedures for accounting of Water Tax and Water

Benefit Tax (which are usually collected along with Property Tax) have been described in

Chapter 6 – Property and Other Taxes, reference to which is invited.

RAISING OF DEMAND

9.8 A Summary Statement of Bills Raised shall be prepared ward-wise and income -

head-wise, in Form WS-1 on a monthly basis within 7 days from the end of the previous

month. These forms the base for accounting and the following entry shall be passed.

National Municipal Accounts Manual Water Supply

9.4

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-30-(a)

140-50-(a)

140-(b)

Receivables for Fees & User

Charge - Water Supply

(Year…)

To User Charges -Water

Supply

To User Charges –

Sewerage

To User Charges -Meter

Charges

To Others*

Dr.

Cr.

13,000

8,000

1,000

1,500

500

Journal Book,

Ledger

* Specify the heads of each income for which bill is raised.

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor Head Codes of Account as applicable

9.9 It is a normal practice for the ULB to enter the arrears of the Water Supply Income

due while issuing the fresh demand. Entries in respect of the arrears would have already

been recorded earlier. The above entry shall therefore be passed only in respect of the

current demand.

COLLECTION OF WATER SUPPLY INCOME

9.10 The procedure for accounting of collections is described below :

a. Recording of Water Supply collections. Based on the Summary of Daily

Collection (Form GEN 12) received from various Collecting Offices/Centers,

the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

431-80-(a)

Bank Account *

To Receivables Control

Account – Water

Supply

Dr.

Cr.

1,500

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

b. The Summary of Daily collection (Form GEN-12) does not provide the details

in respect of the year-wise head-wise collections made in respect of Water

Supply. Hence, the total amount collected should be credited to “Consolidated

National Municipal Accounts Manual Water Supply

9.5

Receivables of Water Supply Income” Account. The collection made shall be

segregated into year wise, head wise collection on a monthly basis and

maintained as ‘Summary statement of year-wise head-wise collection of water

and related taxes’in Form WS-2.

c. Recording of break-up of collections. A Summary statement of year-

wise/head-wise collection of water and related taxes in Form W-2 as

explained above shall be prepared on a monthly basis and sent to the Accounts

Department to record the details of collections. To record the break-up of

collections into year-wise recovery and to record income received in advance

the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

431-30-(a)

350-41-(a)

Receivables Control Account-

Water Supply

To Receivables for Fees &

User Charges – Water

Supply (Year…)

To Receivables of Fees &

User Charges – Water

Supply (Year…)

To Advance Collection of

Revenues - Water Supply *

Dr.

Cr.

1,000

700

250

Journal

Book,

Ledger

* Adjustment of water supply income collected in advance is discussed separately under section

‘Adjustment of Water Supply Income Received in Advance’below.

(a) Insert Detailed Head Codes of Account as applicable

NOTICE FEE, WARRANT FEE AND OTHER FEES

9.11 Notices of demand and warrants shall be issued and other fees may be charged as

per the relevant provisions.

9.12 Recording of demand raised. A Summary Statement of Notice Fee, Warrant Fee

and Other Fees in Form WS – 1 shall be prepared on a monthly basis and sent to the

Accounts Department. The following entry shall be passed to record the demand raised:

National Municipal Accounts Manual Water Supply

9.6

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-30-(a)

140-40-(a)

Receivables for Fees & User

Charges Water Supply (Year )

To Other Fees Notice Fee

To Other Fees Warrant

Fee

Dr.

Cr.

500

300

200

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

REFUNDS AND REMISSIONS

9.13 All refunds and remissions granted shall be duly recorded in the Demand

Registers maintained in form GEN 20 and the details of the same shall also be

communicated to the Accounts Department.

9.14 Recording of refunds/remissions payable. A Summary Statement of Refunds and

Remissions in Form WS-3 shall be prepared on a monthly basis. Refunds/Remissions

pertaining to prior period should be identified separately from the current period based on

which the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

140-90-(a)

280-60-(a)

350-40-(a)

Fees Remission & Refund Water

Supply

Prior Period Expenses Refund of

Other Revenues Water Supply

To Refund Payable Water

Supply

Dr.

Cr.

Journal Book,

Ledger

*Refunds/Remissions arising on account of change in the applicable rules shall be either passed

for ‘Payment’ (refund payable account) or credited to the ‘Advance Collection of Revenues’

(under the account code 350-41-(a)) in accordance with the accounting principles of the ULB.

a) Insert Detailed Head Codes of Account as applicable

9.15 Recording of payment of refunds/remissions granted. The Accounts Department

shall prepare a Payment Order (Form GEN-14) in respect of the refunds and communicate

the details of refunds/remissions made to the Water Supply Department for updating the

Accounts Department shall pass the following entry:

National Municipal Accounts Manual Water Supply

9.7

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-40-(a)

450-21-(a)

Refunds Payable- Water Supply

To Bank Account*

Dr.

Cr.

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

PROVISION FOR UNREALISED REVENUE RECEIVABLES

9.16 Recording of provision for unrealised Water Tax Income. As explained in Para

9.5 (e) the provisioning policy for unrealised Water supply income will be dependent on

the basis of its charge. For example, the demand for water tax which were raised

separately and outstanding beyond two (2) years shall be provided for as per provisioning

norms given below:

¾Outstanding for more than 2 year but not exceeding 3 years: 50%

¾Outstanding for more than 3 years: 100% (additional 50%)

9.17 For example, provision for the year ended March 31, 2004 is as under:

a. 50% of outstanding Receivables of Water Supply Income for the year ended

March 31, 2002

b. 100% of outstanding Receivables of Water Supply Income for the year ended

March 31, 2001 and before.

9.18 This process has to be carried over at every Period-end. The amount required to be

provided as per provisioning norms stated above, shall be compared with the balance

lying in the Provision for Outstanding Fees & User Charges -Water Supply Account. If

the amount to be provided is more than the balance, then additional provision shall be

made for the difference amount. If the amount to be provided is less than the balance, it

reflects the amounts provided for, has been collected and the provision made towards that

can be written back.

9.19 Additional provision or reversal of excess provision for the current period shall be

calculated similar to computations explained in Tables 6.1 & 6.2 in Chapter 6 for

Property & Other Taxes.

National Municipal Accounts Manual Water Supply

9.8

9.20 For making the provision, the following entry shall be passed by the Accounts

Department:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrativ

e figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

270-10-(a)

432-30-(a)

Provision for Doubtful

Receivables Fees & User

Charges

To Provision for

Outstanding Fees & User

Charges Water Supply

Dr.

Cr.

1,500

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

9.21 The effect of the above entry will be as follows:

a. Provision for Doubtful Receivables Fees & User Charges -Water Supply will

be shown as an expense under the schedule Provisions & Write-offs.

b. Provision for Outstanding Fees & User Charges -Water Supply will be shown

as a deduction from Receivables for Fees & User Charges -Water Supply (Others)

in the Balance Sheet.

9.22 To write back the provision made earlier, the following entry shall be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrativ

e figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

432-30-(a)

180-60-(a)

Provision for Outstanding Fees &

User Charges Water Supply

To Excess Provision Written

Back Water Supply

Dr.

Cr.

500

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

9.23 Recording of Write-offs. If for any reason, it is decided by the ULB to write-off

any Water Supply Income dues, which were earlier treated as an income, the details of the

write off has to be entered in the Statement of Write off by the respective departments

in Form WS 4. This form has to be prepared on a monthly basis and forwarded to the

Accounts Department and based on which, the write off shall be adjusted against the

provision made and the following entry will be passed:

National Municipal Accounts Manual Water Supply

9.9

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

432-30-(a)

431-30-(a)

Provision for Outstanding

Fees & User Charges –

Water Supply

To Receivables for Fees &

User Charges – Water

Supply (Year…)

Dr.

Cr.

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

9.24 Recording of subsequent collection/ recovery of ‘Receivables of Water Supply

Income’written off: In case of a ‘Receivable of Water Supply Income’written off already

were recovered/collected during the year, the accounts department shall pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

280-30-(a)

Receivables Control Account

– Water Supply

To Recoveries of Revenues

Written off – Water Supply

Dr.

Cr.

1,000

Journal Book,

Ledger

(a) Insert detailed head codes of account as applicable

TRANSFER OF AMOUNT OUTSTANDING IN RESPECT OF ARREARS FROM

SPECIFIC YEAR-WISE ACCOUNT TO GENERAL ACCOUNT

9.25 The arrears of water supply income shall be carried forward year-wise, i.e., in

“Receivables of Water Supply Income (Year…)” account up to three years. On completion

of the third year, the amount outstanding in the specific year-wise receivable account

shall be transferred to a general arrears account, i.e., “Receivables of Water Supply Income

(Others)” Account. For example, the water supply income receivable in respect of the

demand raised during the accounting year 2000-01 shall be carried forward in

“Receivables of Water Supply Income (2001)” Account up to the year ending March 31,

2004. On March 31, 2004, the balance outstanding in this account shall be transferred to

“Receivables of Water Supply Income (Others)” Account.

9.26 Recording of transfer of arrears to general account. To record this transfer, the

Accounts Department shall pass the following entry:

National Municipal Accounts Manual Water Supply

9.10

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-30-(a)

Receivables for Fees & User

Charges Water Supply (Others)

To Receivables for Fees &

User Charges - Water

Supply (Year )

Dr.

Cr.

2,000

Journal Book,

Ledger

(a) Insert detailed head codes of account as applicable

ADJUSTMENT OF WATER SUPPLY INCOME RECEIVED IN ADVANCE

9.27 The Water Supply Department shall intimate the Accounts Department of the

advance adjusted against the subsequent demand raised by the Water Supply Department

through the Summary Statement of Bills Raised (Form GEN 22).

c. Recording of subsequent demand raised. To record the demand raised for

water supply, the Accounts Department shall pass the same entry as in the case

of original demand. The entry to be passed is explained in Para 9.8.

d. Recording of adjustment of advance. To record the adjustment of water supply

income received in advance, the Accounts Department shall pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount (Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-41-(a)

431-30-(a)

Advance Collection of

Revenues Water Supply

To Receivables for Fees

& User Charges - Water

Supply (Year )

Dr.

Cr.

Journal Book,

Ledger

(a) Insert detailed head codes of account as applicable

RECOVERY OF WATER SUPPLY INCOME THROUGH LEGAL

PROCEEDINGS

9.28 The transactions in respect of Recovery of Property and Other Taxes have been

described in Chapter 6 Property & Other Taxes (Paras 6.34 to 6.40), reference to which

is invited. The transactions relating to Recovery of Water Supply Income shall be

accounted in similar manner.

National Municipal Accounts Manual Water Supply

9.11

INCOME TO BE ACCOUNTED ON ACTUAL RECEIPT BASIS

9.29 The following incomes in respect of Water Supply shall be accounted on actual

receipt basis:

a. Connection Charges for Water Supply;

b. Water Tanker Charges;

c. Road Damage Recovery Charges; and

d. Penalties levied in respect of Water Supply related matters.

9.30 The Collection Offices and Collection Centres authorised to collect the above

incomes shall prepare a Summary of Daily Collection (Form GEN-12) and send it to the

Water Supply Department and the Accounts Department.

9.31 Recording of collection. On the basis of the Summary of Daily Collection (Form

GEN-12) received from the various Collection Offices and Collection Centres, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

140-40-(a)

140-50-(a)

140-70-(a)

140-20-(a)

Bank Account*

To Other Fees

Connection Charges

To User Charges - Water

Tanker

To Service/

Administrative Charges

Road Damage Recovery

To Penalties & Fines

Dr.

Cr.

100

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert the Detailed Head Codes of account as applicable

WATER DEPOSITS

9.32 The Water Supply Department may receive deposits towards Water Connection,

Water Meter, Water Tankers, etc. The Collection Offices and Collection Centres

authorised to collect Water Deposits shall prepare a Summary of Daily collection (Form

GEN-12) and send it to the Water Supply Department and the Accounts Department.

National Municipal Accounts Manual Water Supply

9.12

9.33 Recording of collection. The Accounts Department shall pass the following entry

on the basis of the Summary of Daily Collection (Form GEN- 12) received from the

various Collection Offices and Collection Centres:

Code of

Account Accounting Entry Dr./ Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

340-20-(a)

Bank Account

To Deposit Revenues-

Water Supply

Dr.

Cr.

100

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

9.34 Recording of adjustment of deposits. The Water Supply Department shall send

details of deposits adjusted in the Summary Statement of Deposits Adjusted (Form GEN-

19) to the Accounts Department on a monthly basis. To record the adjustment of Water

Deposit, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./ Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

431-30-(a)

Deposit Revenues Water

Supply

To Receivables for Fees

& User Charges - Water

Supply (Year )

Dr.

Cr.

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

9.35 Recording of refund of deposit. The deposits shall be refunded as per the rules

prescribed in this regard. A Payment Order (Form GEN- 14) shall be prepared by the

Water Supply Department for the deposits to be refunded. On refund of Water Deposit,

the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

450-21-(a)

Deposit Revenues Water

Supply

To Bank Account*

Dr.

Cr.

Cash Book,

Ledger

*Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Water Supply

9.13

9.36 Recording of income in respect of lapsed deposit. Deposits not claimed within the

period as laid down by the ULB, from the date they are due for payment, shall be lapsed

and shall not be repayable to the party. At the end of the accounting year, the Water

Supply Department shall prepare a list of such lapsed deposits. To recognise the income,

on obtaining the approval of the Authorised Officer, the Accounts Department shall pass

the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

180-11-(a)

Deposit Revenues - Water

Supply

To Lapsed Deposit

Dr.

Cr.

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

EXPENDITURE ON WATER WORKS

9.37 The accounting for expenditures pertaining to Water Supply Department shall be

similar to that described in Chapter 12 - Public Works (for expenditure incurred through

awarding of contracts to outside parties for carrying out certain activities such as laying of

new pipelines, construction of pump houses, repairs related to water supply, etc.), Chapter

13- Stores (for expenditure incurred on purchase of stores such as TCL Powder, Chlorine

Gas, etc.) and Chapter 16 - Other Revenue Expenditures (in respect of all other

expenditures pertaining to water supply related activities such as electricity charges, bulk

water purchase charges, etc.) and Chapter 21 - Fixed Assets (in respect of the fixed assets

purchased), references to which are invited.

INTERNAL CONTROLS

9.38 The following internal controls shall be observed by the ULB in respect of Water

Supply related transaction:

a. The Head of the Accounts Department and the Head of the Water Supply

Department shall reconcile the balance at the beginning of the accounting year

in respect of the year-wise Water Supply Income receivable (as appearing in

the Balance Sheet of the previous year) with the year-wise total of the arrears

recorded in the Demand Register.

b. A quarterly reconciliation shall be carried out by the Head of the Accounts

Department and the Head of the Water Supply Department in respect of the

amount collected and the year-wise amount outstanding between the balances

National Municipal Accounts Manual Water Supply

9.14

in the Ledger Accounts maintained at the Accounts Department and the

Demand Register maintained at the Water Supply Department.

c. A quarterly reconciliation shall be carried out by the Head of the Accounts

Department and the Head of the Water Supply Department in respect of the

deposits outstanding, between the balances in the Ledger Accounts maintained

at the Accounts Department and the Deposit Register maintained at the Water

Supply Department.

d. The officers designated by the ULB for operating the Designated Water

Supply Bank Account shall co-ordinate with the banks on a daily basis and

ascertain the status of the cheques/drafts deposited by them.

e. The Water Supply Department shall ensure that the Receipt / Summary of

Daily Collection prepared, provides reference to the Water Supply Income

Collection Register.

f. The Chief Executive Officer/Head of the ULB shall specify such appropriate

calendar of returns /reports for monitoring.

9.39 All Reconciliation Statements shall be certified by the Head of the Accounts

Department.

PRESENTATION IN THE FINANCIAL STATEMENTS

9.40 The various heads of account used for the accounting of Water Supply related

transactions shall be reflected in the Financial Statements or in the Schedules attached to

the Financial Statements of the ULB. All such Financial Statements and schedules should

be affixed with signature and seal of designated authorities.

9.41 The provision against the outstanding water taxes receivable is to be disclosed

under the major head Accumulated Provisions as a separate line item in the Balance Sheet

below the Sundry Debtors .

9.42 The Schedule of the Income and Expenditure Statement in respect of Water

Supply Income is presented below.

National Municipal Accounts Manual Water Supply

9.15

Schedule I-4: Schedule of Income from Fees & User Charges

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

1234

140-20-(a) Penalties & Fines

140-40-(a) Other Fees Connection Charges

140-40-(a) Other Fees Disconnection Charges

140-40-(a) Other Fees Notice Fees

140-40-(a) Other Fees Warrant Fees

140-50-(a) User Charges Water Supply

140-50-(a) User Charges Sewerage

140-50-(a) User Charges Water Tanker

140-50-(a) User Charges Water Meter

140-70-(a) Service/Administrative Charges Road

Damage Recovery

Sub-total

Less

140-90-(a) Fee Remission and Refund

Sub-total

Total Income of Water Supply to be shown as a part of

Fees & User Charges Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I – 9: Schedule of Other Income

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

1234

180-11-(a) Lapsed Deposit Water Supply

180-60-(a) Excess Provision Written Back Water

Supply

Total Income of Water Supply to be shown as a part of

Other Income Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-11: Administrative Expenses

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

220-51-(a) Legal Expenses - Cost of recoveries of Water Supply

Income (net of amount received from State

government for the cost of recovery)

Total Ex

ense of Water Su

to be shown as a

art of

Administrative Expenses Schedule

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Water Supply

9.16

Schedule I – 16: Schedule of Provisions and Write off

Code No. Particulars Current Year

Amount (Rs.) Previous Year

Amount (Rs.)

1 2 3 4

270-10-(a) Provision for Doubtful

Receivables – Water Supply

Total Expense of Water Supply to be shown as a

part of Provision and Write off Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-18: Schedule of Prior Period Items

Code No. Particulars Current Year

Amount (Rs.) Previous Year

Amount (Rs.)

1 2 3 4

Income (A)

280-20-(a) Other Revenues – Fees & User Charges

280-30-(a) Recovery of Revenues written off

Expense (B)

280-50-(a) Refund of Fees & User Charges

Total [A-B] of Water Supply to be shown as a part of

Prior Period Items Schedule

(a) Insert Detailed Head Codes of Account as applicable

8.49 The Balance Sheet Abstracts in respect of the Water Supply Income are presented

below:

Schedule B-7: Schedule of Deposits Received

Code No. Nature of Deposit

Opening

balance at

the

beginning of

the year

Additions

during the

current year

Refunded

during

the year

Balance

outstanding at the

end of the current

year

1 2 3 4 5 6

340-20-(a) Deposits Revenues

– Water Supply

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-9: Schedule of Other Liabilities

Code No. Particulars Current Year

Amount (Rs.) Previous Year

Amount (Rs.)

1 2 3 4

350-40-(a) Refunds Payable of Fees & User Charges –

Court Attachment

350-41-(a) Advance Collection of Revenues

Total

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Water Supply

9.17

Schedule B-15: Schedule of Sundry Debtors (Receivables)

Current Year Amount (Rs.)

Code No. Particulars Gross

Amount

Provision for

Outstanding

Receivables

Net

Amount

Year

Amount

(Rs.)

1 2 3 4 5 = 3 – 4 6

431-30-(a) Receivables for Fees & User Charges

Less than 3 years *

More than 3 years*

Total Receivables of Water Su

Income

* Break up for provision for outstanding revenues are given in Column 4

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-17: Schedule of Cash and Bank Balances

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

450-10-(a) Cash

450-21-(a) Bank Account

TOTAL

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Water Supply

9.18

Form WS-1

_____________Name of ULB

SUMMARY STATEMENT OF DEMAND RAISED ON ASSESSMENT

FOR THE PERIOD ____________________

in respect of Water Supply Income

Sr. No. : _____________________

Particulars Year (Others) Year (-2) Year (-1) Current Year (Rs.) Total (Rs.)

1234 5

Water Tax

Water Supply Charges

Water Meter Rent

Notice Fee

Warrant Fee

Penalties

Others, Specify _______________

Total

Amount in Words : Rupees ________________________________________________

Advance Adjusted:

Against demand raised on

Assessment*

Prepared By** : ____________________ Examined and entered

Checked By** : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Provide year-wise details in respect of advance adjusted against demands raised.

** Record the name, designation and signature of the person.

National Municipal Accounts Manual Water Supply

9.19

Form WS-2

_____________Name of ULB

SUMMARY STATEMENT OF YEAR-WISE HEAD-WISE COLLECTION OF WATER TAXES

FOR THE PERIOD _____________________

Sr. No. ___________________

_________________ Collection Centre Deposited with _____________

Particulars Year Others

(Rs.)

Year (-2)

(Rs.)

Year (-1)

(Rs.)

Current

Year (Rs.)

Advance

Received

(Rs.)

Total (Rs.)

1 234567

Collection in respect of incomes accounted

on accrual basis

Water Tax

Water Supply Charges

Water Meter Rent

Notice Fee

Warrant Fee

Other Fees

Penalties

Others, Specify ________________

Sub-Total

Collection in respect of incomes accounted

on actual receipt basis

Water connection charges

Road damage recovery charges

Water Reconnection Charges

Water Tanker Charges

Water Charges for Specific Needs

Others, Specify _______________

Sub-Total

National Municipal Accounts Manual Water Supply

9.20

Particulars Year Others

(Rs.)

Year (-2)

(Rs.)

Year (-1)

(Rs.)

Current

Year (Rs.)

Advance

Received

(Rs.)

Total (Rs.)

1 234567

Receipt of Cost of Recovery

Water Supply Income collected in Advance

Others, Specify ___________

Total Collection

* Record the name, designation and signature of the person.

Note: This statement should be prepared separately for each Collection Office/Collection Centre and then consolidated.

National Municipal Accounts Manual Water Supply

9.21

Form WS-3

_____________Name of ULB

SUMMARY STATEMENT OF REFUNDS/REMISSIONS

FOR THE PERIOD ____________________

in respect of Water Supply Income

Sr. No: ___________

Particulars Year (others)

Rs.

Year (-2)

Rs.

Year (-1)

Rs.

Current Year

Rs.

Total

Rs. Remarks #

1234

Water Tax

Water Supply Charges

Water Meter Rent

Notice Fee

Warrant Fee

Water supply incomes received in Advance

Penalties

Others, Specify ________________

Total

Amount in Words : Rupees ___________________________________________________________________

Prepared By* : ____________________ Examined and entered

Checked By* : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation, and signature of the person.

# The details of whether refunds/remissions are treated as ‘refund payable’ or ‘adjustment of receivables’ or ‘Revenues received in advance’ shall be entered in

this form for each of the entry in order to account for the refunds/remissions accordingly.

National Municipal Accounts Manual Water Supply

9.22

Form WS-4

_____________Name of ULB

SUMMARY STATEMENT OF WRITE OFFS FOR THE PERIOD ____________________

in respect of Water Supply Income

Sr. No. ______________

Particulars Year (Others)

Rs.

Year (-2)

Rs.

Year (-1)

Rs.

Current Year (Rs)

Rs.

Total

Rs.

123456

Water Tax

Water Supply Charges

Water Meter Rent

Notice Fee

Warrant Fee

Penalties

Others, Specify ________________

Total

Amount in Words : Rupees ___________________________________________________________________

Prepared By* : ____________________ Examined and entered

Checked By* : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation and signature of the person.

National MunicipalAccounts Manual Assigned Revenues

10.1

CHAPTER 10

$66,*1(' 5(9(18(6

INTRODUCTION

10.1 This chapter contains the recommended accounting system for transactions relating to

assigned revenues.

10.2 Assigned revenues are usually in the nature of a share in the revenues of the state

government, to compensate for certain losses in revenue and arrangement of resources of the

ULBs. The ratio of the share in revenues is determined on the basis of the revenues collected

by ULBs and the recommendations of the State Finance Commissions and devolution of

funds to ULBs.

ACCOUNTING PRINCIPLES

10.3 The following Accounting Principles shall govern the recording, accounting and

treatment of transactions relating to Grants:

a. Assigned revenues like Entertainment Tax, Duty / Surcharge on transfer of

Immovable properties, shall be accounted during the year only upon actual

collection. However, at year-end alone, these shall be accrued if sanction order (or

proceedings) is passed and the amount is ascertained.

b. Based on the review of recoverable position of the ‘Receivables of Assigned

Revenues’, the amount of outstanding assigned revenues to be provided or written

off shall be ascertained and accounted accordingly on obtaining the relevant

approval.

ACCOUNTING RECORDS & PROCEDURES

10.4 This section describes the records, register, documents, accounting entries, etc., in

respect of accounting for transactions related to Assigned Revenues.

National MunicipalAccounts Manual Assigned Revenues

10.2

10.5 Recording of receipt of Assigned Revenue. Details of Assigned revenues received

shall be entered in the Receipt Register (Form GEN-9) maintained at the Accounts

Department and deposited into the Main Bank Account and also a Receipt (Form GEN-8)

shall be issued to the State Government. To record the receipt of assigned revenues, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

120-10-(a)

120-(b)

Bank Account *

To Taxes and Duties Collected

by Others - Duty on Transfer

of Properties

To Taxes and Duties Collected

by Others - Entertainment

Taxes

To Others __**

Dr.

Cr.

1,00,000

40,000

30,000

30000

Cash Book,

Ledger

* Specify name of the Bank and Account number

** Specify the heads of each income of the assigned revenue

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor and Detailed Head Codes of Accounts as applicable

Note:The postings in the Ledger (Form GEN-3) of “Main Bank” Account and “Assigned

Revenue” Account shall be carried out as indicated in Chapter 5 – General Accounting

Procedures. The postings in the Ledger shall be similarly carried out in respect of all other

accounting entries described subsequently in this chapter. Whenever, the cash or the bank account

is involved, there will be no entry in the Journal Book (Form GEN-2)

10.6 Recording of accruing of assigned revenues: At the end of the accounting period, the

Accounts Department shall verify whether any proceedings or sanction order is passed and for

which money is not received as at the end of the accounting period. The amount of such

receivable as quantified in the proceedings or sanction order shall be accrued as income of the

ULB. The Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-50-(a)

120-10-(a)

120-(b)

Receivables from Government -

Assigned Revenues

To Taxes and Duties Collected

by Others –Duty on Transfer

of Properties

To Taxes and Duties Collected

by Others -Entertainment

Taxes

To Others ____*

Dr.

Cr.

80,000

20,000

25,000

35,000

Journal Book,

Ledger, Grant

* Specify the heads of each income of the assigned revenue

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor and Detailed Head Codes of Accounts as applicable

National MunicipalAccounts Manual Assigned Revenues

10.3

10.7 Recording of reversal for Accrued Assigned Revenues. At the end of the period end,

the Accounts Department shall verify whether any accrued revenue has been collected during

the period and credited to income account. If so, the accrued income shall be reversed and the

following entry shall be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

120-10-(a)

120-(b)

431-50-(a)

Taxes and Duties Collected by

Others -Duty on Transfer of

Properties

Taxes and Duties Collected by

Others -Entertainment Taxes

Others*

To Receivables from

Government - Assigned

Revenues

Dr.

Cr.

6,000

2,000

3,000

9,000

Journal Book,

Ledger and

Grant register

* Specify the heads of each income of the assigned revenue.

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor and Detailed Head Codes of Accounts as applicable

10.8 Recording of write off of outstanding assigned revenues: The Accounts department as

at the end of each year, review the outstanding assigned revenue receivable. The ULB based

on its review of the recoverability may consider either making a provision or writing off. The

accounting entries in respect of the above are as follows:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

270-30-(a)

431-50-(a)

Revenues Written Off -

Assigned revenues

To Receivables from

Government –

Assigned Revenues

Dr.

Cr.

500

Journal Book,

Ledger,

(a) Insert Detailed Head Codes of Account as applicable

PERIOD END PROCEDURES

10.9 At the period end, it shall be ensured that all the Receivables of Assigned revenues be

reviewed and write off if considered necessary be made. Further, the accounts department

shall also ensure that the necessary reversal entries are made for assigned revenues received in

the current accounting period, which were accrued in the previous period.

10.10 The Chief Executive Officer/Head of the ULB shall specify such appropriate calendar

of returns /reports for monitoring.

National MunicipalAccounts Manual Assigned Revenues

10.4

PRESENTATION IN FINANCIAL STATEMENTS

10.11 The various heads of account used for the accounting of Assigned revenues related

transactions should be reflected in the Financial Statements or in the Schedules attached to

the Financial Statements of the ULB. All such Financial Statements and schedules should be

affixed with signature and seal of designated authorities.

10.12 The Schedule of the Income and Expenditure Statement in respect of Assigned

Revenue is provided below.

Schedule I-2: Assigned Revenues & Compensation

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

120-10-(a) Taxes and Duties collected by others – Duty on

Transfer of Properties

120-10-(a) Taxes and Duties collected by others –

Entertainment Taxes

120-20-(a) Compensation in lieu of Taxes / duties

120-30-(a) Compensations in lieu of Concessions

Total assigned revenues & compensation

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-16 : Schedule of Provisions & Write off

Code No Particulars Current Year

Amount (Rs)

Previous Year

Amount (Rs)

12 34

270-30-(a) Revenues written off – Assigned revenues

Total Expense of Assigned Revenues to be shown as a part of

Provision and Write off Schedule

(a) Insert Detailed Head Codes of Account as applicable

10.13 The Balance Sheet Abstract in respect of Assigned Revenue is provided below.

Schedules B-15: Schedule of Sundry Debtors (Receivables)

Code No Particulars

Gross

Amount

(Rs.)

Provision for

doubtful

receivables

Amount (Rs.)

Current

Year

Amount(Rs)

Year

Amount

(Rs.)

1 2 3 4 5 (3-4) 6

431-50-(a) Receivables from Government

– Assigned Revenues

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-17: Schedule of Cash & Bank Balances

Code No Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 3 4

450-10-(a)

450-21-(a)

Cash Account

Bank account

Total

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.1

CHAPTER 11

RENTALS, FEES &

OTHER INCOMES

INTRODUCTION

11.1 ULBs derive substantial portions of their revenue from Property & other taxes, Water

Tax/Water Charges and Grants. In addition, they also have certain additional sources of

revenue like Rentals from Municipal Properties, Advertisement Taxes, License Fees, etc.

This chapter contains the recommended accounting procedures for transactions related to

such Incomes.

11.2 Some of the Incomes under these categories that may arise to ULBs are listed below:

¾ Crematorium Charges;

¾ Burial Ground Charges;

¾ Cattle Pounding Fees;

¾ Parking Fees;

¾ Fees for Pay & Use Toilets;

¾ Slaughtering Fees;

¾ Library Fees;

¾ Fire Extinguishing Service Charges;

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.2

Sale & Hire Charges, for example,

•Sale of Scrap;

Sale of Forms & Documents;

•Sale of Tender Forms;

•Hire Charges of Road Rollers;

•Hire Charges of Tools & Equipment;

•Sale of garbage/Manure;

•Sale of Trees,

•Sale of Fruits;

•Sale of Grass;

•Sale of Nursery Plants;

•Sale of Flowers; etc.

11.3 The aspects relating to Incomes to be accounted on actual receipt basis include:

Collections

Refunds.

INCOMES TO BE ACCOUNTED ON ACCRUAL BASIS

11.4 Incomes for which demand is raised shall be accounted on accrual basis. These

include the following (indicative):

i. Rental Income from Municipal Properties, for example

Rent from Markets/Shopping Complexes;

Rent from Office Buildings;

Rent from Guest Houses;

Rent from Auditorium, Art Galleries;

Rent/Lease from Parking Zones; etc.

ii. Trade License Fees

iii. Advertisement Charges/Rights

iv. Profession Tax.

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.3

11.5 The various aspects relating to Incomes to be accounted on accrual basis include:

Entry in the Demand Register

Raising of Bills

Collection of dues

Refunds, Remissions and write-offs.

ACCOUNTING PRINCIPLES

11.6 The following Accounting Principles shall govern the recording, accounting and

treatment of transactions relating to Other Incomes:

Revenue in respect of Advertisement rights shall be accrued either based on

Demand or based on the contract.

Revenue in respect of Trade License Fees shall be accrued in the year to which it

pertains and where the Demand is raised based on applicable Acts of the state.

Revenues in respect of Profession Tax on Organisations / entities shall be accrued

in the year to which it pertains where the demand is raised based on applicable

Acts of the state.

Revenues in respect of rents from properties shall be accrued based on terms of

agreement.

The Other Income, in respect of which demand is ascertainable and can be raised

in regular course of operations of the ULB, shall be recognised in the period in

which they become due, i.e., when the bills are raised.

The Other Incomes, which are of an uncertain nature or for which the amount is

not ascertainable or where demand is not raised in regular course of operations of

the ULB, shall be recognised on actual receipt.

Revenue in respect Notice Fee, Warrant Fee, Other Fees shall be recognised when

the bills for the same are raised.

Interest element and Penalties, if any, in demand shall be reckoned only on

collection.

In respect of the demand outstanding beyond two (2) years, provision shall be

made to the extent of income of ULB, based on the following provisioning norms:

•Outstanding for more than 2 year but not exceeding 3 years: 50%

•Outstanding for more than 3 years: 100% (additional 50%)

Any additional provision for demand outstanding required to be made during the

year shall be recognised as expenditure and any excess provision written back

during the year shall be recognised as income of the ULB.

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.4

Refunds, remissions of Rents, Fees & Other Incomes for the current year shall be

adjusted against the income if pertain to previous years then it shall be treated as

prior period item.

Write-offs of Other Incomes shall be adjusted against the provisions made and to

that extent recoverable gets reduced.

Any subsequent collection or recovery of ‘Receivables of Rental, Fees and Other

Incomes’ which were already written off shall be recognised as a ‘Prior Period

Income’.

ACCOUNTING RECORDS AND PROCEDURES

11.7 This section describes the records, registers, documents, forms, accounting entries,

etc., in respect of accounting for transactions related to Rental, Fees and Other Incomes. For

the purposes of accounting of Other incomes there are certain forms, registers, etc., which are

specific to certain type of other incomes, e.g., Summary Statement of Year-wise Head-wise

Collection of Rents or similar incomes (Form OTH-1). These Forms OTH –1 to OTH –4 are

annexed to this chapter.

Accounting for incomes to be accounted on Actual receipt basis

Collection

11.8 The following shall be the procedure for accounting of the collections made in respect

of these Incomes:

Recording of income. To record the income in respect of these Incomes

accounted on actual receipt basis, based on the Summary of Daily Collection

(Form GEN- 12) received from the various Collection Offices and Collection

Centers, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

140-(b)

150-(b)

Bank Account*

To ________ (Fees &

User) Charges

To ________ (Sale &

Hire) Charges

Dr.

Cr.

10,000

7,000

3,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert detailed Head codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable.

Note: The postings in the Ledger (Form GEN-3) of “Bank” Account and “_____User Charges”

Account shall be carried out as indicated in Chapter 5 – General Accounting Procedures. The postings

in the Ledger shall be similarly carried out in respect of all other accounting entries described

subsequently in this chapter. Whenever, the cash or the bank account is involved, there will be no entry

in the Journal Book (Form GEN-2)

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.5

Receipt of Incomes in Advance

11.9 In cases where the Incomes that are accounted on actual receipt basis are received in

advance, i.e., before providing the services/goods, they shall be recorded as income on

collection. In case the amount collected is to be refunded, the refund shall be recorded as

expenditure.

11.10 For example, if a sum of Rs. 1,000/- has been received in advance for Service

Charges. On receipt, the amount shall be recorded as Fees & User Charges. To record the

income, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

140-(b)

Bank Account*

To _______ (Fees &

User) Charges**

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert detailed Head codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable.

11.11 In case the service is not provided and the customer demands a refund of the amount

paid by him in advance. To record the refund, the Accounts Department shall pass the

following entry on payment of the refund:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

140-(b)

450-21-(a)

Refund - _______ (Fees &

User) Charges *

To Bank Account*

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify name of the Bank

(a) Insert detailed Head Codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable.

Deposits

11.12 In respect of certain Incomes (including incomes accounted for on accrual basis), a

deposit is taken at the time of receiving the application for providing the services/goods, e.g.,

Rent Deposit, etc. The accounting for the different transactions in respect of deposits received

in respect of Incomes, have been discussed below, using the example of Rent Deposit.

11.13 Recording of receipt of deposits. On receipt of deposit, the same shall be treated as a

liability. To record the receipt of Rent Deposit, say of Rs. 10,000/-, the Accounts Department

shall pass the following entry:

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.6

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

340-20-(a)

Bank Account*

To Deposits Revenues

Rent

Dr.

Cr.

10,000

Cash Book,

Ledger

* Specify Name of the Bank and account number

(a) Insert detailed Head codes of account as applicable

11.14 Recording of adjustment of deposits. The ULB may adjust the deposits received

against the cost of the services rendered by it to the customer. On adjustment of deposits, the

respective departments shall send the details of deposits adjusted in the Summary Statement

of Deposits Adjusted (GEN- 19) to the Accounts Department on monthly basis. If Rent

Deposit of Rs. 5,000/- has been adjusted against Rent Income, to record the adjustment of

deposits, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

130-(b)

Deposit Revenues Rent

To Rental Income from

Municipal Properties

Dr.

Cr.

5,000

Journal Book,

Ledger

(a) Insert detailed Head codes of account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable.

11.15 Recording of refund of deposits. The deposits shall be refunded when an application

is made for it as per the rules prescribed for the same. A Payment Order (GEN 14) shall be

prepared by the respective departments for the refund of the deposits. On refund of the

balance Rent Deposit of Rs. 5,000, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

450-21-(a)

Deposit Revenues Rent

To Bank Account *

Dr.

Cr.

5,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert detailed Head Codes of Account as applicable

11.16 Recording of income in respect of lapsed deposit. Deposits not claimed within the

period as laid down by the ULB, from the date it is due for payment, shall be considered as

lapsed and shall not be repaid to the party. At the end of each accounting year, the respective

departments shall prepare a list of such lapsed deposits. To recognise the income, on

obtaining the approval of the Authorised Officer, the Accounts Department shall pass the

following entry (assuming Rent Deposit of Rs. 1,000 has lapsed):

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.7

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

180-11-(a)

Deposit Revenues – Rent

To Lapsed Deposit-Rent

Dr.

Cr.

1,000

Journal Book,

Ledger, Deposit

(a) Insert detailed Head Codes of Account as applicable

11.17 Similar entries as above shall be passed for recording the various transactions in

receipt of other deposits for example deposits relating to License Fees and Advertisement

Taxes.

ACCOUNTING FOR INCOMES TO BE ACCOUNTED ON ACCRUAL BASIS

11.18 The accounting of the various aspects relating to Incomes accounted on accrual basis

have been discussed below in respect of Rent, License Fees, and Advertisement Taxes are

explained below:

A. Rental income

Demand Raised

11.19 In respect of the demand raised, the Accounts Department shall do the following:

Recording of demand raised. The demand raised for Incomes shall be recognised

as an income for the ULB and correspondingly as a current asset. Accordingly,

based on the Summary Statement of Bills Raised (Form OTH –1) received from

the respective departments, the Accounts Department shall pass the following

entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-40-(a)

130-(b)

Receivables from Other

Sources -Rent (Year…)**

To Rental Income from

Municipal Properties

Dr.

Cr.

20,000

Journal Book,

Ledger

(a) Insert detailed Head Codes of Account as applicable

(b) Insert Minor & detailed Head Codes of Account as applicable

11.20 It is a normal practice for the ULB to enter the arrears of the dues while issuing the

fresh demand. Entries in respect of the arrears shall have already been recorded earlier. The

above entry shall be passed only in respect of the current demand of Other Incomes. The

rental incomes earned out of shopping complexes, markets, office buildings, etc shall be

entered in the relevant fixed assets register for E.g. Register of Immovable properties in form

GEN 30 or in Register of Movable Properties in form GEN 31. The registers shall be updated

periodically as per the provisions and rules of the Act governing the ULBs.

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.8

Collection of accrued incomes

11.21 The following shall be the procedure for accounting of the collections made in respect

of accrued Incomes:

11.22 Recording of Income collections. To record the income based on the Summary of

Daily Collections (Form GEN-12) received from the various Collection Offices and

Collection Centers, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

431-80-(a)

Bank Account*

To Receivables Control

Account – Rent

Dr.

Cr.

15,000

Cash Book,

Ledger

* Specify Name of the Bank and account number

(a) Insert detailed Head Codes of Account as applicable

11.23 For Other Incomes to be accounted on accrual basis, the Summary of Daily Collection

(Form GEN- 12) does not provide the break-up of the collections into arrears collected,

collections received in advance and collection made in respect of the current year' s demand.

Hence, the total amount collected is credited to “Consolidated Receivables of Rent” Account

which shall be segregated on a monthly basis.

11.24 Recording of break-up of collections. A Summary Statement of Year-wise/ Head-wise

Collection of various other incomes in Form OTH-2 shall be prepared on a monthly basis by

the respective departments and sent to the Accounts Department to record the details of

collection. . To record the break-up of the collections made in respect of Incomes accounted

for on accrual basis, into current and arrears recovery and to record any income collected in

advance, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

431-40-(a)

350-41-(a)

Receivables Control

Account -Rent

To Receivables from

Other Sources –

Rent (Year…)

To Receivables from

Other Sources –

Rent (Year…)

To Advance Collection

of Revenues – Rent *

Dr.

Cr.

18,000

15,000

2,000

1,000

Journal Book,

Ledger

* Adjustment of income collected in advance is discussed separately under section ‘Adjustment of

Other Incomes received in Advance’

(a) Insert detailed Head Codes of Account as applicable

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.9

Notice Fee, Warrant Fee and Other Fees

11.25 Notices of demand and warrants shall be issued and other fees may be charged as per

the relevant provisions.

11.26 Recording of demand raised. A Summary Statement of Notice Fee, Warrant Fee and

Other Fees Charged in Form GEN 24 shall be prepared on a monthly basis and sent to the

Accounts Department.

11.27 For recording the demand raised in respect of Notice Fee, Warrant Fee and Other Fees

charged for rent not received, on the basis of the Summary Statement of Notice Fee, Warrant

Fee and Other Fees Charged received from the respective departments, the Accounts

Department shall pass the same entry as explained in Para 6.15 of Chapter 6 on Property &

Other Taxes.

Refunds and Remissions

11.28 All refunds and remissions arising on account of certain changes or amendments of

the provisions or acts governing the revenues shall be duly recorded in the Demand Registers

maintained and the details of the same shall also be communicated to the Accounts

Department.

11.29 Recording of refunds/remissions payable. A Summary Statement of Refunds and

Remissions in Form OTH 3 shall be prepared on a monthly basis. Refunds / Remissions

pertaining to prior period shall be identified separately from the current period based on

which the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

130-90-(a)

280-60-(a)

350-40-(a)

Rents Remission & Refund

Prior Period Expenses

Refund of Other Revenues

Rent

To Refund Payable Rent*

Dr.

Cr.

500

100

600

Journal Book,

Ledger

* Refunds/Remissions arising on account of change in the applicable rules shall be either passed

for ‘Payment’ or credited to the account ‘Advance Collection of Revenues- Rent’ (with account

code 350-41-(a)) in accordance with the accounting principles of the ULB.

(a) Insert detailed Head Codes of Account as applicable

11.30 Recording of payment of refunds/remissions granted: The Accounts Department shall

prepare a Payment Order (Form GEN-14) in respect of the refunds and communicate the

details of refunds/remissions payments to the concerned departments for updating the

shall pass the following entry:

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.10

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-40-(a)

450-21-(a)

Refund Payable Rent

To Bank Account*

Dr.

Cr.

500

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert detailed Head Codes of Account as applicable

Adjustment of Incomes received in advance

11.31 The respective departments shall intimate the Accounts Department of the advance

adjusted against the subsequent bills raised through the Summary Statement of Bills Raised

(Form OTH 1).

(a) Recording of subsequent demand raised in the normal course. To record the

demand raised for rent, the Accounts Department shall pass same entry as in the

case of original demand as explained in Para 11.19.

(b) Recording of adjustment of advance. To record the adjustment of Other Incomes

received in advance, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-41-(a)

431-40-(a)

Advance Collection of

Revenues Rent

To Receivables from

Other Sources Rent

(Year )

Dr.

Cr.

1,000

Journal Book,

Ledger

(a) Insert detailed Head Codes of Account as applicable

Deposits

11.32 The accounting in respect of receipt, adjustment, refund of deposits and recognising

income in respect of lapsed deposits for Incomes accounted on accrual basis shall be similar

to that for Incomes accounted for on actual receipt basis. The entry for adjustment of deposit

for income to be accounted on accrual basis has been given below.

11.33 Recording of adjustment of deposits. The ULB may adjust the deposits received

against the cost of the services rendered by it to the customer. The respective departments

shall send the details of deposits adjusted in the Summary Statement of Deposits Adjusted

(Form GEN-19) to the Accounts Department on monthly basis.

11.34 If Rent Deposit of Rs. 5,000/- has been adjusted against recovery of dues towards

Rent Income, to record the adjustment of deposits, the Accounts Department shall pass the

following entry:

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.11

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-20-(a)

431-40-(a)

Deposit Revenues Rent

To Receivables from

Other Sources - Rent

(Year )

Dr.

Cr.

5,000

Journal Book,

Ledger

(a) Insert detailed Head Codes of Account as applicable

Provision for Unrealised Revenue Receivables

11.35 Recording of provision for unrealised Income. The demand outstanding beyond two

(2) years shall be provided for as per provisioning norms given below:

Outstanding for more than 2 year but not exceeding 3 years: 50%

Outstanding for more than 3 years: 100% (additional 50%)

For example, provision for the year ended March 31, 2004 is as under:

a. 50% of outstanding Receivables of Rent for the year ended March 31, 2002

b. 100% of outstanding Receivables of Rent for the year ended March 31, 2001 and

before.

11.36 Additional provision or reversal of excess provision for the current period shall be

calculated similar to computations explained in Tables 6.1 & 6.2 in Chapter 6 for Property &

Other Taxes.

11.37 For making the provision, the following entry shall be passed by the Accounts

Department:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

270-10-(a)

432-40-(a)

Provision for Doubtful

Receivables- Rent

To Provision for

Outstanding Other

Receivables Rent

Dr.

Cr.

1,500

Journal Book,

Ledger

(a) Insert detailed Head Codes of Account as applicable

11.38 The effect of the above entry will be as follows:

a. Provision for Doubtful Receivables - Rent will be shown as a separate item under

the Major expense head Provisions and Write off;

b. Provision for Outstanding Other Receivables will be shown as a deduction from

Receivables from Other Sources- Rent in the Balance Sheet.

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.12

11.39 To write back the provision made earlier, the following entry shall be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

432-40-(a)

180-60-(a)

Provision for Outstanding

Other Receivables Rent

To Excess Provision

Written Back Rent

Dr.

Cr.

500

Journal Book,

Ledger

(a) Insert detailed Head Codes of Account as applicable

Write-offs

11.40 Recording of Write-offs. If for any reason, it is decided by the ULB to write-off any

Other Income dues, the details of the write off has to be entered in the Statement of Write

off by the respective departments in Form OTH 4. This form has to be prepared on a

monthly basis and forwarded to the Accounts Department and based on which , the write off

shall be adjusted against the provision made and the following entry will be passed:

Code of

Account* Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

432-40-(a)

431-40-(a)

Provision for Outstanding

Other Receivables Rent

To Receivables from

Other Sources Rent

(Year )

Dr.

Cr.

500

Journal Book,

Ledger

(a) Insert detailed Head Codes of Account as applicable

11.41 Recording of subsequent collection/ recovery of Receivables of Rents/License

Fees/Advertisement Taxes written off : In case of a Receivables of Rents/License

Fees/Advertisement Taxes written off already were recovered/collected during the year, the

accounts department shall pass the following entry:

Code of

Account* Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

280-30-(a)

Receivables Control

Account - - Rent

To Prior period

Income Recovery of

Revenues written off-

Rent

Dr.

Cr.

1,000

Journal Book,

Ledger

(a) Insert detailed Head Codes of Account as applicable

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.13

Transfer of amount outstanding in respect of arrears from specific year-wise account to

general account

11.42 The arrears of Other Income shall be carried forward year-wise, e.g., in “Receivables

of Other Income (Year…)” account up to three years. On completion of the third year, the

amount outstanding in the specific year-wise receivable account shall be transferred to a

general arrears account, i.e., “Receivables of Other Income (Others)” Account. For example,

the rent receivable in respect of the demand raised during the accounting year 2000-01 shall

be carried forward in “Receivables of Rent (2001)” Account up to the year ending March 31,

2004. On March 31, 2004, the balance outstanding in this account shall be transferred to

“Receivables of Rent (Others)” Account.

11.43 Recording of transfer of arrears to general account. To record this transfer, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-40-(a)

Receivables from Other

Sources –Rent (Others)

To Receivables from

Other Sources –Rent

(Year…)

Dr.

Cr.

5,000

Journal Book,

Ledger

(a) Insert detailed Head Codes of Account as applicable

Recovery of other incomes through legal proceedings

11.44 The transactions in respect of Recovery of Property and Other Taxes have been

described in Chapter 6 – Property & Other Taxes (paras. 6.34 to 6.40), reference to which is

invited. The transactions relating to Recovery of Other Incomes shall be accounted in similar

manner.

B. License Fees

11.45 The license fees charged for granting license to any trade, shops, markets etc. Similar

to accruing of rental income, license fees shall also be accrued based on raising a demand in

form OTH – 1. Accounting entries in respect of Demand and Collection are detailed below.

However in respect of notice fees, refunds, adjustment of advances & deposits, provisions,

write off and transfer outstanding from specific year to general account, reference is invited

to entries explained above under Section A – Rental Income.

Demand Raised

11.46 Recording of demand raised. The demand raised for Income shall be recognised as an

income for the ULB and correspondingly as a receivable. Accordingly, based on the

Summary Statement of Bills Raised (Form OTH –1) received from the respective

departments, the Accounts Department shall pass the following entry:

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.14

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-30-(a)

140-11-(a)

Receivables for Fees & User

Charges - License Fees

(Year )

To Licensin

Fees - Trade

Dr.

Cr.

20,000

Journal Book,

Ledger

(a) Insert detailed Head Codes of Account as applicable

11.47 It is a normal practice for the ULB to enter the arrears of the dues while issuing the

fresh demand. Entries in respect of the arrears shall have already been recorded earlier. The

above entry shall be passed only in respect of the current demand of Other Incomes.

Collection of accrued incomes

11.48 The following shall be the procedure for accounting of the collections made in respect

of accrued Incomes:

a. Recording of Income collections. To record the income based on the Summary of

Daily Collections (Form GEN-12) received from the various Collection Offices

and Collection Centres, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

431-30-(a)

Bank Account*

To Receivables Control

accounts - License

Fees

Dr.

Cr.

15,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert detailed Head Codes of Account as applicable

b. For Other Incomes to be accounted on accrual basis, the Summary of Daily

Collection (Form GEN- 12) does not provide the break-up of the collections into

arrears collected, collections received in advance and collection made in respect

of the current year' s demand. Hence, the total amount collected is credited to

Consolidated Receivables of License Fees Account which shall be segregated

on a monthly basis.

c. Recording of break-up of collections. A Summary Statement of Year-wise/ Head-

wise Collection of various other incomes in Form OTH-2 shall be prepared on a

monthly basis by the respective departments and sent to the Accounts

Department to record the details of collection. . To record the break-up of the

collections made in respect of Incomes accounted for on accrual basis, into

current and arrears recovery and to record any income collected in advance, the

Accounts Department shall pass the following entry:

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.15

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

431-30-(a)

350-41-(a)

Receivables Control Account

License Fees

To Receivables for Fees

&UserCharges-

License Fees (Year )

To Receivables for Fees

&UserCharges

License Fees (Year )

To Advance Collection

of Revenues License

Fees *

Dr.

Cr.

18,000

15,000

2,000

1,000

Journal Book,

Ledger

* Adjustment of income collected in advance is discussed separately under section ‘Adjustment

of Other Incomes received in Advance’

(a) Insert detailed Head Codes of Account as applicable

C. Advertisement Fees

11.49 The advertisement fees charged towards advertisement rights. Similar to accruing of

rental income and license fees, advertisement fees shall also be accrued based on raising a

demand in form OTH 1.

Demand Raised

11.50 Recording of demand raised. The demand raised for Advertisement fees incomes shall

be recognised as an income for the ULB and correspondingly as a current asset. Accordingly,

based on the Summary Statement of Bills Raised (Form OTH 1) received from the

respective departments, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-30-(a)

140-40-(a)

Receivables for Fees &

User Charges

Advertisement Fees

(Year )

To Other Fees

Dr.

Cr.

20,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

11.51 It is a normal practice for the ULB to enter the arrears of the dues while issuing the

fresh demand. Entries in respect of the arrears shall have already been recorded earlier. The

above entry shall be passed only in respect of the current demand of Other Incomes.

Collection of accrued incomes

11.52 The following shall be the procedure for accounting of the collections made in respect

of accrued Incomes:

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.16

a. Recording of Income collections. To record the income based on the Summary of

Daily Collections (Form GEN-12) received from the various Collection Offices

and Collection Centres, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

431-80-(a)

Bank Account*

To Receivables Control

accounts advertisement

Fees

Dr.

Cr.

15,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert detailed Codes of Account as applicable

b. For Other Incomes to be accounted on accrual basis, the Summary of Daily

Collection (Form GEN- 12) does not provide the break-up of the collections into

arrears collected, collections received in advance and collection made in respect

of the current year' s demand. Hence, the total amount collected is credited to

Consolidated Receivables of Advertisement Taxes Account which shall be

segregated on a monthly basis.

c. Recording of break-up of collections. A Summary Statement of Year-wise/ Head-

wise Collection of various other incomes in Form OTH-2 shall be prepared on a

monthly basis by the respective departments and sent to the Accounts

Department to record the details of collection. To record the break-up of the

collections made in respect of Incomes accounted for on accrual basis, into

current and arrears recovery and to record any income collected in advance, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-80-(a)

431-30-(a)

350-41-(a)

Receivables Control

Account Advertisement

Fees

To Receivables for Fees

&UserCharges

Advertisement Fees

(Year )

To Receivables for Fees &

User Charges

Advertisement Fees

(Year )

To Advance Collection of

Revenues

Advertisement Fees*

Dr.

Cr.

18,000

15,000

2,000

1,000

Journal Book,

Ledger

* Adjustment of income collected in advance is discussed separately under section ‘Adjustment

of Other Incomes received in Advance’

(a) Insert detailed Codes of Account as applicable

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.17

Internal controls

11.53 The following internal controls shall be observed by the ULB in respect of transaction

related to Other Incomes:

The Head of the Accounts Department and the head of the respective departments

shall reconcile the balance at the beginning of the accounting year in respect of the

Sundry Income Receivables Arrears (as appearing in the Balance Sheet of the

previous year) with the year-wise total of the arrears recorded in the Demand

Registers.

A quarterly reconciliation shall be carried out by the Head of the Accounts

Department and the head of the respective departments in respect of the amount

collected and the arrears outstanding between the balances standing in the Ledger

maintained at the Accounts Department and the Demand Registers maintained at

the respective departments.

A monthly reconciliation shall be carried out by the Head of the Accounts

Department and the head of the respective departments in respect of the various

deposits collected, between the balances standing in the Ledger maintained at the

Accounts Department and the Deposits Registers maintained at the respective

departments.

The head of the respective departments shall ensure that the Receipt / Chalan for

Remittance of Money prepared, provides reference to the Consolidated Collection

The Chief Executive Officer/Head of the ULB shall specify such appropriate

calendar of returns /reports for monitoring.

Levy of stallages, rents and fees in Municipal Markets, Slaughter-houses and

Stock-yards;

Registration of Births and Deaths Fees;

Fee for grant of licence to Surveyors, Architects, Engineers, Structural Designers,

Clerk of Works, and Plumbers;

Professional Tax;

Advertisement Charges/Rights;

Development Charges; etc.

Registration of Births and Deaths Fees;

Fee for grant of licence to Surveyors, Architects, Engineers, Structural Designers,

Clerk of Works, and Plumbers;

Professional Tax;

Advertisement Charges/Rights;

Development Charges; etc.

Registration of Births and Deaths Fees;

Fee for grant of licence to Surveyors, Architects, Engineers, Structural Designers,

Clerk of Works, and Plumbers;

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.18

Professional Tax;

Advertisement Charges/Rights;

Development Charges; etc.

Levy of stallages, rents and fees in Municipal Markets, Slaughter-houses and

Stock-yards; A. F. Ferguson & Co.

11.54 All Reconciliation Statements shall be certified by the Head of the Accounts

Department:

Presentation in financial statements

11.55 The various heads of account used for the accounting of Other Incomes related

transactions should be reflected in the Financial Statements or in the Schedules attached to

the Financial Statements of the ULB. All such Financial Statements and schedules should be

affixed with signature and seal of designated authorities.

11.56 The provision against the Outstanding Rental and Other Incomes receivable is to be

disclosed under the major head Accumulated Provisions as a separate line item in the Balance

Sheet below the Sundry Debtors .

11.57 The Schedule of Income and Expenditure Statement in respect of Other Incomes are

presented below.

Schedule I-3: Rental income from Municipal Properties

Minor Head

Code Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

130-10-(a) Rent from Civic Amenities

130-20-(a) Rent from Office Buildings

130-30-(a) Rent from Guest Houses

130-40-(a) Rent from lease of lands

130-80-(a) Other rents

Sub-Total

Less:

130-90-(a) Rent Remission and Refunds

Sub-total

Total Rental Income from Municipal Properties

(a) Insert detailed Codes of Account as applicable

Schedule I-4: Schedule of Income from Fees & User Charges

Detailed

Head Code Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

140-11-(a) Licensing Fees

140-20-(a) Penalties and Fines

140-40-(a) Other Fees Advertisement Fees

140-50-(a) User Charges

140-60-(a) Entry Fees

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.19

Detailed

Head Code

Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

140-80-(a) Other Charges

Sub-Total

Less:

140-90-(a) Rent Remission and Refunds

Sub-total

Total Income of Other income to be shown as part of Fees & User

Charges – Income head-wise Schedule

(a) Insert detailed Codes of Account as applicable

Schedule I-5: Income from Sale & Hire Charges

Detailed

Head Code Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

1 2 3 4

150-11-(a) Sale of Forms & Publications

150-12-(a) Sale of stores & scrap

150-30-(a) Sale of Others

150-40-(a) Hire Charges for Vehicles

150-41-(a) Hire Charges for Equipment

Total Other income to be shown as part of Sale & Hire Charges –

Income head-wise Schedule

(a) Insert detailed Codes of Account as applicable

Schedule I-9: Schedule of Other Income

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

180-10-(a) Deposits Forfeited

180-11-(a) Lapsed Deposits Rent

180-20-(a) Insurance Claim Recovery

180-60-(a) Excess Provisions written back Rental Income

180-80-(a) Miscellaneous Income

Total Rental, Fees and Other Income to be shown as part of

Other Income Schedule

(a) Insert detailed Codes of Account as applicable

Schedule I-16: Schedule of Provisions & Write off

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

270-10-(a) Provisions for Doubtful receivables Rent

270-30-(a) Revenues written off Rent

Total expense of Rental, Fees & Other Incomes to

shown as part of Provision and Write off Schedule

(a) Insert detailed Codes of Account as applicable

Schedule I-18: Schedule of Prior Period Items

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

Income

280-20-(a) Other Revenues

280-30-(a) Recovery of revenues written off Rent

280-40-(a) Other income

Sub – Total Income (A)

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.20

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

Expenses

280-60-(a) Refund of Other Revenues- Rent

280-80-(a) Other Expenses

Sub Total Income (B)

Total expense of Rental, Fees & Other Income to be shown as

part of Prior Period (net) Schedule (A-B) -

(a) Insert detailed Codes of Account as applicable

11.58 The Balance Sheet Abstract in respect of the other Incomes are presented below.

Schedule B-7: Schedule of Deposits Received

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

340-20-(a) Deposit Revenues Rent

Total

(a) Insert detailed Codes of Account as applicable

Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)

Code of

Account Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

350-40-(a) Refunds Payable

350-41-(a) Advance Collection of Revenues

Total

(a) Insert detailed Codes of Account as applicable

Schedule B-15: Schedule of Sundry Debtors (Receivables)

Current Year Amount (Rs.)

Code No. Particulars Gross

Amount

Provision for

Outstanding

Revenues

Net

Amount

Year

Amount

(Rs.)

12345=3 46

431-30-(a) Receivables for Fees and User Charges

Less than 3 years*

More than 3 years*

Sub total

431-40-(a) Receivables from Other Sources- Rent

Total of Receivables of Rentals, Fees

& Other Incomes

*Break up for provision for outstanding revenues are given in Column 4

(a) Insert detailed Codes of Account as applicable

Schedule B-17: Schedule of Cash and Bank Balances

Code of

Account Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

450-10-(a) Cash

450-21-(a) Bank Account

Total

(a) Insert detailed Codes of Account as applicable

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.21

Form OTH-1

________________ Name of the ULB

SUMMARY STATEMENT OF DEMAND RAISED ON ASSESSMENT

FOR THE PERIOD ____________________

in respect of Other Incomes

Sr. No. _____________

Particulars Year (Others) Year (-2) Year (-1) Current Year

1 2 3 4 5

Property Rental

Trade License Fees

Advertisement Taxes

Others, Specify _______________

Total

Amount in Words : Rupees ________________________________________________

Advance Adjusted:

Against demand raised on Assessment *

Prepared By*: ____________________ Examined and entered

Checked By* : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation and signature of the person.

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.22

Form OTH-2

______________________Name of the ULB

SUMMARY STATEMENT OF YEAR-WISE HEAD-WISE COLLECTION

OF OTHER INCOMES FOR THE PERIOD _____

Sr. No. ___________

_________________ Collection Centre Deposited with _____________

Particulars Arrears

Recovery

Year (-2)

(Rs.)

Year (-1)

(Rs.)

Current Year

(Rs.)

Advance

received (Rs) Total (Rs.)

1234567

Collection in respect of incomes accounted on accrual basis

Property Rental

Trade License fees

Advertisement Taxes

Others, Specify ___________

Sub-Total

Collection in respect of incomes accounted on actual receipt

basis

Sale of Fixed assets/scrap

Water Tanker Charges

Penalties

Fines

Others, Specify ___________

Sub-Total

Receipt of Cost of Recovery, if any

Others, Specify ___________

Total Collection

Amount in Words : Rupees ______________________________________________________

Prepared By* : ____________________ Examined and entered

Checked By* : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation and signature of the person.

Note: This statement should be prepared separately for each Collection Office/Collection Centre and then consolidated.

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.23

Form OTH -3

___________Name of the ULB

SUMMARY STATEMENT OF REFUNDS

FOR THE PERIOD ____________________

In respect of Other Incomes

Sr. No. _____________

Particulars Year (Others) Year (-2) Year (-1) Current Year

(Rs.) Total (Rs.)

1 23456

Property Rental

Trade License fees

Advertisement Taxes

Sale of Fixed assets/scrap

WaterTankerCharges

Advance received in respect of Other

incomes

Others, Specify ___________

Total

Amount in Words : Rupees ___________________________________________________________________

Prepared By* : ____________________ Examined and entered

Checked By* : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation, and signature of the person.

National Municipal Accounts Manual Rentals, Fees & Other Incomes

11.24

Form OTH –4

___________Name of the ULB

SUMMARY STATEMENT OF WRITE OFFS

FOR THE PERIOD ____________________

in respect of Other Incomes

Sr. No. __________________

Particulars Year (Others) Year (-2) Year (-1) Current Year

(Rs.) Total (Rs.)

1234 5

Property Rental

Trade License fees

Advertisement Taxes

Others, Specify ___________

Total

Amount in Words : Rupees _____________________________________________________________

Prepared By* : ____________________ Examined and entered

Checked By* : ____________________ Accountant/Authorised Officer

Dated: Dated:

* Record the name, designation and signature of the person.

National Municipal Accounts Manual Public Works

12.1

CHAPTER 12

38%/,&:25.6

12.1 This chapter contains the recommended accounting system for Public Works

transactions undertaken by the Urban Local Body (ULB). These would generally include

construction/expansion/major modification of buildings, development of land, construction of

roads, construction of water works, construction of drainage systems or other public utilities.

Repairs and maintenance of these would also constitute Public Works. Apart from these, any

non-civil contracts (e.g., for furniture) undertaken by the ULB through the Public Works

Department would also be covered here. This chapter also covers the accounting treatment

for ‘Deposit works’ executed by the ULB on behalf of the Government or Government

Departments and recognition on revenue from these Deposit works.

12.2 ‘Original Works’ includes all new constructions or additions and alterations to

existing works. Repairs to newly purchased or previously abandoned buildings, which are

required for bringing them into use, should be classified as Original Works. Where a portion

of an existing structure is dismantled and replaced and if the cost of such replacement

represents a genuine increase in the permanent value of the property as an asset, the work

should be classified as ‘Original Works’.

12.3 ‘Repairs and Maintenance’ includes works, other than those specified under Original

Works, required to maintain buildings, roads, water work assets, drainage system and other

works in proper condition for ordinary use.

12.4 ‘Fees & User Charges’: Where the Public Works Department issues any permission

for road digging or any other activity for private purpose, it recovers the charges incurred for

repair of the damaged road or any other structure from the person seeking permission.

National Municipal Accounts Manual Public Works

12.2

12.5 The Public Works may be carried out in a municipal area either from Municipal

Funds or from Grants or Special Funds. The accounting procedure for dealing with the

various transactions of Public Works would be similar irrespective of the source of funds.

The accounting entries in respect of works executed from Grants have been described in

Chapter 17 on Grants. Similarly, accounting entries in respect of works executed from

Special Funds have been described in Chapter 19 on Special Funds. This chapter describes

the accounting entries for works executed out of Municipal Funds of the ULB.

12.6 Deposit works: The Governmental departments or the State Governments may use

the services of ULB, for execution of certain works/schemes/approved infrastructure

schemes. Money received from the Governments for the above shall be treated as Deposit

works and are accounted as a liability of an ULB. ULBs are provided certain percentage of

the value of the works/scheme/project/plans completed as their service charges.

ACCOUNTING PRINCIPLES

12.7 The following Accounting Principles shall govern the recording, accounting and

treatment of transactions relating to public works:

a. The cost of fixed assets shall include cost incurred/money spent in acquiring or

installing or constructing fixed assets, interest on borrowings attributable to

acquisition or construction of qualifying fixed assets up to the date of

commissioning of the assets and other incidental expenses incurred up to that date.

b. Any addition to or improvement to the fixed asset that results in increasing the

utility or capacity or useful life of the asset shall be capitalised and included in the

cost of asset. Revenue expenditure in the nature of repairs and maintenance

incurred to maintain the asset and sustain its functioning or the benefit of which is

less than for a year, shall be charged off

c. Assets under erection/installation on existing projects and capital expenditures on

new projects (including advances for capital works and project stores) shall be

shown as "Capital Work-in-Progress".

d. The Earnest Money Deposit and Security Deposit received if forfeited shall be

recognised as income when the right for claiming refund of deposit has expired.

e. Deposit received under Deposit works shall be treated as a liability till such time

the projects for which money is received is completed. Upon completion of the

projects, the cost incurred against it shall be reduced from the liability.

f. Revenues (percentage charges) in respect of Deposit works shall be accrued along

with expenditure of Deposit works.

National Municipal Accounts Manual Public Works

12.3

ACCOUNTING RECORDS AND PROCEDURES

12.8 This section describes the records, registers, documents, forms, accounting entries,

etc., in respect of accounting for transactions related to Public Works. For the purposes of

accounting of Public Works there are certain forms, registers, etc., which are specific to

Public Works, e.g., Statement of status of Capital Work-in-Progress PW – 1, etc. These

Forms (Forms PW - 1 and PW - 2) are annexed to this chapter and are prefixed “PW”.

12.9 The procedure for accounting of works expenditure is briefly described below:

a. Earnest Money Deposit (EMD) may be received from the bidders bidding for the

tender as per the principle and the procedures prescribed by the ULB. On tender

being awarded, EMD shall be refunded to the unsuccessful bidders.

b. An agreement may be entered into with the successful bidder as per the terms of

the Tender and agreement, Security Deposit may be taken in advance.

c. Advance may be provided to the contractor as per the terms and procedures of the

ULB and agreement entered into with the contractor.

d. Payment shall be made against bill raised after deducting Security Deposit,

income tax, works contract tax and other deductions/ recovery including advance

provided, if any.

e. Security Deposit shall be refunded after successful completion of the work as per

terms of agreement

f. In case of Original Works, the expenditure incurred shall be capitalised and

disclosed as an asset in the Balance Sheet.

ACCOUNTING FOR RECEIPT OF EARNEST MONEY DEPOSIT

12.10 The following procedure shall be followed for accounting of receipt of EMD received

in respect of works executed.

a. The procedure to be followed for collection of EMD and its remittance and/or

deposit to the Accounts Department or in the Bank shall be the same as provided

in the Chapter 5 on General Accounting Procedures. The following entry for the

amount received is passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

340-10-(a)

Bank Account *

To From Contractors/

Suppliers– EMD

Dr.

Cr.

10,000

Cash Book,

Ledger

* Specify name of Bank and account number

(a) Insert detailed Head Codes of Account as applicable

National Municipal Accounts Manual Public Works

12.4

Note: The postings in the Ledger Account of "Earnest Money Deposit - Public Works

Department" Account shall be carried out as indicated in Chapter 5 – General Accounting

Procedures. The postings in the Ledger Accounts shall be similarly carried out in respect of

all other accounting entries described subsequently in this chapter. Whenever, the cash or the

bank account is involved, there will be no entry in the Journal Book.

ACCOUNTING FOR REFUND OF EARNEST MONEY DEPOSIT

12.11 The procedure followed for accounting of refund shall be the same as any payment

provided in Chapter 5 on General Accounting Procedures.

12.12 Recording of refund of Earnest Money Deposit. After the receipt of approval for

payment and upon payment, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

450-21--

(a)

From Contractors/Suppliers–

EMD

To Bank Account*

Dr.

Cr.

9,000

Cash Book,

Ledger

*Specify name of Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

Accounting for conversion of Earnest Money Deposit into Security Deposit

12.13 Recording of conversion of Earnest Money Deposit into Security Deposit. On receipt

of intimation for conversion of EMD of the successful bidder into Security Deposit payable

the following entry shall be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

From Contractors/Suppliers–

EMD

To From Contractors/

Suppliers-Security

Deposits

Dr.

Cr.

1,000

Journal

Book, Ledger

(a) Insert Detailed Head Codes of Account as applicable

RECEIPT OF SECURITY DEPOSIT

12.14 Recording of Security Deposit received: The procedure followed for accounting of

Security Deposit is similar to that of Earnest Money Deposit. The Accounts Department shall

pass the following entry:

National Municipal Accounts Manual Public Works

12.5

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

340-10-(a)

Bank Account*

To From Contractors/

Suppliers– Security

Deposits

Dr.

Cr.

10,000

Cash Book,

Ledger

* Specify name of Bank and account number

(a) Insert detailed Head Codes of Account as applicable

12.15 As per the terms of agreement entered into with the contractor, Security Deposit may

be deducted from the contractor’s bill. For accounting treatment for Security Deposit

deducted from the contractor’s bill, refer section “Expenditure” in this chapter.

Advances

12.16 Recording of payment of advance for work carried out from Municipal Fund, Grant

and Special Fund. As per the terms of agreement, advance may be paid to the contractor.

Advance may be provided either in cash or in kind, i.e., by way of supply of materials. On

receipt of approval for payment, and on payment, entries will be made for money advanced in

Cheque Issue Register in Form GEN –15 and in Register of Advance in Form GEN – 16 for

the cheques issued to the contractor. The accounting entries to be passed are :

a. For recording advance sanctioned for payment

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrativ

e figures

Books to be

entered into

460-40-(a)

350-10-(a)

350-20-(a)

Advance to Suppliers

&Contractors

To Creditors –

Contractors

Advance Control

Account

To Recoveries Payable –

TDS from Contractors

Dr.

Cr.

1,000

950

Journal Book,

Ledger

(a) Insert detailed Head Codes of Account as applicable

b. For recording disbursement of advance,

i. In cash/cheque:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-10-(a)

450-21-(a)

Creditors –Contractors Advance

Control Account

To Bank Account *

Dr.

Cr.

950

Cash Book,

Ledger

*Specify name of Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Public Works

12.6

ii. Materials supplied to the Contractor:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

460-40-(a)

430-(b)

Advances to Contractors-

Material Issued to contractors

ToStockinHand

Purchase of Materials

Dr.

Cr.

950

Cash Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

(b) Insert Minor & Detailed Head Codes of Account as applicable.

Note: This entry will be passed along with other items of consumption based on valuation

statement as explained in Paras 13.24 to 13.27 of Chapter 13 on Stores Accounting.

EXPENDITURE

12.17 Preparation of Bill for payment. On the basis of work completed as per governing

rules, a bill shall be prepared and sent for payment. The amount of security deposit, income

tax deducted at source, works contract tax and any other recovery or deduction, including

recovery for supply of material by the Stores and money advanced to the contractor, should

be specified in the Bill. Running bills are submitted during the progress of work and final bill

is normally submitted on completion of work. The Contract Completion Certificate shall be

annexed to the final bill.

12.18 Recording of Contractor s bill in respect of Original Work , On receipt of the

processed bill, the particulars be entered in a Register of Bills for Payment in Form GEN

13. To record the liability in respect of contractor s bill for Original Works undertaken, the

following entry shall be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

412-(a)

350-10-(b)

340-10-(b)

460-40-(b)

350-20-(b)

460-40-(b)

Capital Work-in-Progress

To Creditors Contractors

Account

To From Contractors /

Suppliers Security Deposits

To Advance to Suppliers &

Contractors

To Recoveries Payable from

TDS Contractors

To Recoveries Payable

Works Contract Tax

To Advance to Contractors -

Material Issued to

Contractors *

Dr.

Cr.

50,000

44,000

2,500

500

1,000

1,500

500

Journal

Book, Ledger

* At agreement rates for material issue with the Contractor

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Public Works

12.7

12.19 The Capital Work-in-Progress Account shall be a control account wherein details of

expenditure incurred on capital projects shall be recorded. Separate Capital Work-in-Progress

Control Accounts shall be opened for Civil, Electrical, Water Works and Other projects.

12.20 At period-end, the departments incurring expenditure on capital projects shall submit

a Summary Statement of Status on Capital Work-in-Progress in Form PW 1 detailing total

expenditure incurred till date on each of the capital projects. The details of total expenditure

incurred on each of the capital projects can be collated from the Work Sheet (Form PW 2).

12.21 The Contractors Control Account shall be a control account in which the liability for

amount payable to various contractors for work executed shall be credited and the amount

paid to the various contractors shall be debited.

12.22 Recording of payment made to Contractors. The procedure to be followed for

approval of a contractor s bill for payment and making payment shall be the same as

provided in Chapter 5 on General Accounting Procedures to which reference is invited. The

Accounts Department shall, on receipt of Payment Order in Form GEN 14 together with the

Work Sheet and Contract Completion Certificate, where applicable, after making the

payment, enter the details of the payment in the Work Sheet (Form PW 2) and pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-10-(a)

450-21-(a)

Creditors Contractors

Account

To Bank Account *

Dr.

Cr.

44,000

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

12.23 Recording of payment of TDS Payable and Works Contract Tax Payable. The income

tax and works contract tax deducted from the bills of the contractors shall be paid by the

Accounts Department to the concerned authorities as and when due as per the relevant laws

in force. On payment of Income Tax and Works Contract Tax deducted, the Accounts

Department shall pass the following entry:

National Municipal Accounts Manual Public Works

12.8

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-20-(a)

450-21-(a)

Recoveries Payable -TDS

from Contractors

Recoveries Payable -Works

Contract Tax

To Bank Account*

Dr.

Cr.

1,050

1,500

2,550

Cash Book,

Ledger

*Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

12.24 Recording of difference between the Stores Issue Rate and the Recovery Rate for

material issued to Contractors. The Accounts Department shall determine the difference

between the Stores Issue Rate and the Recovery Rate for material issued to Contractors. To

record the difference, the Accounts Department shall pass either entry (a) or entry (b) given

below:

a. In case of favorable Rate Variance, where Stores Issue Rate is less than Recovery

Rate with the Contractor for materials issue:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

460-40-(a)

412-(a)

Advance to Contractors -

Material issued to Contractors

To Capital Work-in-

Progress

Dr.

Cr.

Journal Book,

Ledger

(a) Insert Minor & Detailed Head Codes of Account as applicable

b. In case of Adverse Rate Variance, where Stores Issue Rate is greater than

Recovery rate from the Contractor for materials issue:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

412-(a)

460-40-(a)

Capital Work-in-Progress

To Advance to Contractors

Material issued to

Contractors

Dr.

Cr.

Journal

Book, Ledger

(a) Insert Minor & Detailed Head Codes of Account as applicable

Works executed by Public Works Department

12.25 The accounting procedure and the accounting entries to be recorded for materials

purchased for works shall be the same as provided in Chapter 13 on Stores.

National Municipal Accounts Manual Public Works

12.9

12.26 Recording of materials consumed in Original Works. Based on the bill received from

the Public Works Department for works executed, the Accounts Department shall pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

412-(a)

430-(a)

Capital Work-in-Progress

ToStockinHand –

Purchase of Materials

Dr.

Cr.

5,000

Journal Book,

Ledger

(a) Insert Minor & Detailed Head Codes of Account as applicable.

Note: This entry will be passed along with other items of consumption based on valuation

statement as explained in Paras 13.24 to 13.27 of Chapter 13 on Stores Accounting

CAPITALISATION OF CAPITAL WORK-IN PROGRESS

12.27 On completion of construction of the asset, the asset becomes ready for use. Thus, it

becomes necessary to transfer the cost incurred for construction (which is temporarily

accounted in capital work-in-progress account) to the relevant asset account. This process is

called capitalisation.

12.28 Recording of capitalisation of Capital Work-in-progress. On receipt of Contract

Completion Certificate, the Accounts Department shall capitalise the amount lying in the

Capital Work-in-Progress Account and convert the amount pertaining to the Capital Work-in-

Progress and lying in the Capital Work-in-Progress Account into a Fixed Asset. The

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

410-(a)

412-(a)

Fixed Asset (Name of the Fixed

Asset) (1)

To Capital Work-in-

Progress (please specify)

Dr.

Cr.

1,00,000

Journal Book,

Ledger

Movable/

Immovable

Assets

(a) Insert Minor & Detailed Head Codes of Account as applicable

(1) Fixed Assets of a particular class shall be accounted for under one broad fixed asset

account head. For instance, ULB may have more than one hospital building, then all the

hospital buildings shall be recorded under one broad head of Buildings (Code of Account

410-20-(a)). Any new hospital building constructed, though shall be recorded separately

in the Register of Buildings, shall be recorded under the account head ‘Hospital

Buildings’.

National Municipal Accounts Manual Public Works

12.10

12.29 Recording of deductions from contractor’s bill . For deductions made from contractor' s

bills, which is in the nature of penalty or liquidated damages levied on the contractor for

delay in completion of construction or sub-standard construction or for any other reason, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-10-(a)

180-80-(a)

Creditors –Contractors Account

To Other Income –

Miscellaneous Income

Dr.

Cr.

5,000

Journal

Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

12.30 Where any loan has been borrowed for the construction of any qualifying fixed asset,

i.e., Original Works, the cost of construction of qualifying fixed asset shall also include the

interest paid on that loan till the date of capitalisation of the asset. The accounting procedure

to be followed and accounting entries to be recorded for receipt of loan, payment of interest

on funds borrowed and repayment of loan has been provided in Chapter 18 on Borrowings.

12.31 The amount of interest to be charged to the Original Works under consideration shall

bear the same proportion to the total interest payable on loan as the project cost of the

concerned work bears to the total project cost for which funds have been borrowed. However,

in case where the loan has been specifically borrowed for the execution of a particular work,

the entire amount of interest payable on that loan shall be capitalised. The accounting entry

for capitalisation of interest shall be passed for the interest accrued, whether paid or not, till

the date of capitalisation of the work.

12.32 Recording of capitalisation of interest paid on loans borrowed for original works. At

the period-end, for capitalising interest accrued, the Accounts Department shall pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

412-(a)

240-(a)

Capital Work-in-Progress

To Interest & Finance

Charges

Dr.

Cr.

10,000

Journal Book,

Ledger

(a) Insert Minor and Detailed Head Codes of Account as applicable

12.33 The amount to be capitalised at the completion of the construction of the original

work shall be inclusive of the amount of interest charged to the work.

National Municipal Accounts Manual Public Works

12.11

12.34 The Register of Immovable Property maintained in Form GEN – 30 shall be updated

at the time of capitalisation of the Original Work.

REFUND OF SECURITY DEPOSIT

12.35 Security Deposit shall be refunded after the expiry of the liability period, including

defects liability period, as specified in the agreement entered into with the contractor.

a. Recording of refund of Security Deposit after adjusting for recoveries. In case

where any dues are recoverable from the contractor, after the receipt of approval,

draw the cheque for net amount after deducting the recoveries to be made from the

contractor. The accounting entry to be passed is as follows:

i. For recording adjustment of recoveries against Security Deposit

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

180-80-(a)

From Contractors / Suppliers–

Security Deposits

To Other Income –

Miscellaneous Income

Dr.

Cr.

5,000

Journal

Book, Ledger

(a) Insert Detailed Head Codes of Account as applicable

ii. For recording payment of net Security Deposit

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

450-21-(a)

From Contractors /Suppliers–

Security Deposits

To Bank Account*

Dr.

Cr.

20,000

Cash Book,

Ledger

* Specify Name of Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

ACCOUNTING FOR LAPSED DEPOSITS

12.36 The Earnest Money Deposit and Security Deposit received, if forfeited, shall be

recognised as income in the year in which the right for claiming refund of these deposits has

expired. The following entries shall be passed:

National Municipal Accounts Manual Public Works

12.12

a. For Earnest Money Deposit lapsed. To record Earnest Money Deposit lapsed.

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

180-11-(a)

From Contractors /

Suppliers– EMD

To Other Income Lapsed

Deposit –Contractors/

Suppliers

Dr.

Cr.

2,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

b. For Security Deposit lapsed. To record Security Deposit lapsed.

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

180-11-(a)

From Contractors /

Suppliers– Security Deposit

To Other Income Lapsed

Deposit – Contractors/

Suppliers

Dr.

Cr.

5,000

Journal

Book, Ledger

(a) Insert Detailed Head Codes of Account as applicable

ACCOUNTING FOR REPAIRS AND MAINTENANCE WORKS

12.37 As per the principles framed by the ULB, tenders may be floated for award of repairs

and maintenance work. . The accounting procedure to be followed, the accounting entries to

be recorded and accounting records to be updated in respect of receipt of Earnest Money

Deposit, refund of Earnest Money Deposit to the unsuccessful bidders and conversion of

Earnest Money Deposit of successful bidders into Security Deposit shall be the same as

provided in the section on “Accounting for Original Works” earlier in this chapter.

12.38 Where the terms of agreement entered into with the contractor provide for collection

of a certain percentage of Security Deposit in advance, a receipt (Form GEN – 8) shall be

issued for the amount collected to the successful bidder. The accounting procedure to be

followed, accounting entries to be recorded and the accounting records to be updated in

respect of receipt of Security Deposit and deduction of Security Deposit from the contractor’s

bills shall be the same as provided in the section on “Accounting for Original Works” earlier

in this chapter.

12.39 As per the terms of agreement, advance may be paid to the contractor. The accounting

procedure to be followed, accounting entries to be recorded and the accounting records to be

updated shall be the same as provided in the section on “Accounting for Original Works”

earlier in this chapter.

National Municipal Accounts Manual Public Works

12.13

12.40 The accounting procedure to be followed and the accounting records to be updated on

receipt of bill shall be the same as provided in the section on Accounting for Original

Works earlier in this chapter.

12.41 Recording of Contractor’s bill in respect of Repairs and Maintenance Work . On

receipt of processed bill, for recording the liability in respect of the repairs and maintenance

work, the following entry shall be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

230-(a)

350-10-(b)

340-10-(b)

460-40-(b)

350-20-(b)

460-40-(a)

Repairs & Maintenance- #

To Creditors – Contractors

Control Account

To Deposits Received from

Contractors /Suppliers–

Security Deposits

To Advance to Suppliers &

Contractors

To Recoveries Payable from

TDS Contractors

To Recoveries Payable –

Works Contract Tax

To Advance to Contractors –

Material Issued to

Contractors *

Dr.

Cr.

10,000

7,900

500

100

200

300

1,000

Journal Book,

Ledger

# Specify the nature of asset for which the repairs are made.

* At agreement rates for material issue with the Contractor

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

12.42 Repairs and Maintenance Ledger Accounts shall be opened in respect of repairs &

maintenance expenditure incurred for each class of assets. All the repairs and maintenance

expenditure pertaining to a class of asset shall be debited to the Repairs and Maintenance

Ledger Account maintained for that class of asset.

12.43 The Accounts Department shall maintain a Function-wise Expense Subsidiary Ledger

in Form GEN – 34 for each function, in which, asset-wise, total operations and maintenance

expenditure incurred by the department shall be recorded. On recording of repairs and

maintenance expenditure, the Accounts Department shall simultaneously update the

Subsidiary Ledger mentioned above. The procedure for updating Subsidiary Ledger has been

provided in Chapter 5 – General Accounting Procedures, reference to which is invited.

12.44 Recording of payment to Contractor. On making of payment to the contractor, the

Accounts Department shall pass the following entry:

National Municipal Accounts Manual Public Works

12.14

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-10-(a)

450-21-(a)

Creditors - Contractors

Control Account

To Bank Account*

Dr.

Cr.

7,900

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

12.45 Recording of difference between the Stores Issue Rate and the Recovery Rate for

material issued to Contractors. The Accounts Department shall determine the difference

between the Stores Issue Rate and the Recovery Rate for material issued to Contractors. To

record the difference, the Accounts Department shall pass either entry (a) or entry (b) given

below:

a. In case of Favorable Rate Variance, where Stores Issue Rate is less than Recovery

Rate with the Contractor for materials issue:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

460-40-(a)

230-(b)

Advance to Contractors -

Material issued to Contractors

To Repairs & Maintenance *

Dr.

Cr.

Journal Book,

Ledger

* Specify the type of asset for which repairs are made

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable

b. In case of Adverse Rate Variance, where Stores Issue Rate is greater than

Recovery Rate with the Contractor for materials issue:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

230-(a)

460-40-(b)

Repairs & Maintenance *

To Advance to

Contractors -Material

issued to Contractors

Dr.

Cr.

Journal

Book,

Ledger

* Specify the type of asset for which repairs are made

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

12.46 Recording of materials consumed in Repairs and Maintenance Works. At times, the

Public Works Department may execute repairs and maintenance work from its own resources

without awarding the contract through tender or otherwise. In such case, on the basis of bill

received from the Public Works Department in respect of materials consumed, the Accounts

Department shall pass the following entry:

National Municipal Accounts Manual Public Works

12.15

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

230-30-(a)

430-10-(a)

Consumption of Stores

ToStockinHand –

Purchase of Materials

Dr.

Cr.

2,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable

12.47 The Function wise Expense Subsidiary Ledger (Form GEN – 34) shall be updated in

respect of stores released for repairs and maintenance work.

12.48 The income tax and the works contract tax deducted from the contractor’s bill shall be

paid by the Accounts Department to the concerned authorities as and when due as per the

relevant law in force. The accounting entries to be recorded and the accounting records to be

updated in respect of payment of TDS Payable and Works Contract Tax Payable shall be the

same as provided in the section on Accounting for Original Works earlier in this chapter

DEPOSIT WORKS

12.49 The procedure involved in such works is briefly described below:

¾Receipt of money from Governmental Departments as Deposits towards their

works.

¾Execution of works as in case of any other Public works

¾Settlement of Accounts on completion of works

12.50 ULBs are normally paid at some percentage of works as service charges. These

service charges are accrued along with the bills for expenditure. The accounting procedures

for these transactions are detailed in the subsequent paras.

12.51 The Accounts Department shall maintain a Deposit Works Register in Form PW-3

with separate registers for each kind of the Deposit works. (For example, Civil, Electrical,

etc). Separate pages for each ‘deposit work’ for recording details of receipt of grant and

expenditures incurred from it.

Receipt of Money

12.52 Receipt of money from Governments/Departments for ‘Deposit works: The procedure

to be followed for collection of ‘Deposit works money’ and its remittance and/or deposit to

the Acc1ounts Department or in the Bank shall be the same as provided in the Chapter 5 on

General Accounting Procedures. The details of the Deposit works contract (including names

of the departments who have entrusted the deposit works) shall be recorded in the Deposit

Works Register (in form PW – 3). The Accounts department shall pass the following entry

for receipt of money:

National Municipal Accounts Manual Public Works

12.16

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

341-10-(a)

341-20-(a)

341-30-(a)

Bank Account *

To Deposit Works-Civil

Works

To Deposit Works –

Electrical

To Deposit Works – Others

Dr.

Cr.

10,00,000

5,00,000

4,00,000

1,00,000

Cash Book,

Ledger

*Specify name of Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

12.53 Receipt and refund of earnest money deposits: Accounting entries for receipt and

refund of earnest money deposits shall be same as explained in Para 12.10 & 12.11.

12.54 Receipt and conversion / receipt of Security deposits: Accounting entries for

conversion of earnest money deposits into Security Deposits and receipt of Security Deposit

shall be same as explained in Paras 12.13 &12.14.

Advances

12.55 Advance to the Contractors: Accounting for advances made to the Contractors allotted

for Deposit works shall be same as explained in Para 12.16.

Payment

12.56 Preparation of Bill for payment. On the basis of work completed as per governing

rules, a bill shall be prepared and sent for payment. The amount of security deposit, income

tax deducted at source, works contract tax and any other recovery or deduction, including

recovery for supply of material by the Stores and money advanced to the contractor, should

be specified in the Bill. Running bills are submitted during the progress of work and final bill

is normally submitted on completion of work. The Contract Completion Certificate shall be

annexed to the final bill.

12.57 Recording of Contractor’s bill in respect of Deposit Works: On receipt of the

processed bill, the particulars be entered in a Register of Bills for Payment in Form GEN –

13. To record the liability in respect of contractor’s bill for Deposit Works undertaken and

also a percentage (as agreed with the Government/Department) of works completed as an

income for the ULB, the following entry shall be passed:

National Municipal Accounts Manual Public Works

12.17

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

470-10-(a)

350-10-(a)

340-10-(a)

460-40-(a)

350-20-(a)

460-40-(a)

140-70-(a)

Deposit Works – Expenditure

To Creditors – Contractors

Account

To from Contractors /

Suppliers– Security Deposits

To Advance to Suppliers

& Contractors

To Recoveries Payable

From TDS Contractors

To Recoveries Payable –

Works Contract Tax

To Advance to contractors –

Material Issued to Contractors

To Service/Administrative

Charges – Percentage on

Deposit Works

Dr.

Cr.

510,000

440,000

25,000

5,000

10,000

15,000

5,000

10,000

Journal

Book, Ledger

* At agreement rates for material issue with the Contractor

(a) Insert Detailed Head Codes of Account as applicable

Notes:

(i) The Deposit Works -Expenditure Account shall be a control account wherein details of

expenditure incurred on Deposit Works shall be recorded. Separate Deposit Works Control

Accounts shall be opened for Civil, Electrical, and other work projects.

(ii) The Contractors Control Account shall be a control account in which the liability for

amount payable to various contractors for Deposit works executed shall be credited and the

amount paid to the various contractors shall be debited.

12.58 Recording of payment to Contractors: Accounting for payment made to the

Contractors allotted for Deposit works shall be same as explained in Para 12.22.

12.59 Recording of payment of TDS Payable and Works Contract Tax Payable. Accounting

entries for payment of TDS and Works contract Tax shall be same as explained in Para.12.23.

Materials Consumed

12.60 Recording of difference between the Stores Issue Rate and the Recovery Rate for

material issued to Contractors. The Accounts Department shall determine the difference

between the Stores Issue Rate and the Recovery Rate for material issued to Contractors. To

record the difference, the Accounts Department shall pass either entry (a) or entry (b) given

below:

a. In case of favorable Rate Variance, where Stores Issue Rate is less than Recovery

Rate with the Contractor for materials issue:

National Municipal Accounts Manual Public Works

12.18

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

460-40-(a)

470-10-(a)

Advance to contractors -

Material issued to Contractors

To Deposit Works –

Expenditure

Dr.

Cr.

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

b. In case of adverse Rate Variance, where Stores Issue Rate is greater than

Recovery Rate with the Contractor for materials issue:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

470-10-(a)

460-40-(a)

Deposit Works-Expenditure

To Advance to contractors

- Material issued to

Contractors

Dr.

Cr.

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

Final Payment to Contractors & Refund of security deposit

12.61 Recording of deductions from contractor’s bill . For deductions made from contractor' s

bills, which is in the nature of penalty or liquidated damages levied on the contractor for

delay in completion of construction or sub-standard construction or for any other reason, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-10-(a)

341-(b)

Creditors-Contractors Account

To Deposit Works

Dr.

Cr.

3,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable

12.62 Recording of refund of Security Deposit after adjusting for recoveries. Security

Deposit shall be refunded after the expiry of the liability period, including defects liability

period, as specified in the agreement entered into with the contractor. In case where any dues

are recoverable from the contractor, after the receipt of approval, draw the cheque for net

amount after deducting the recoveries to be made from the contractor. The accounting entry

to be passed is as follows:

National Municipal Accounts Manual Public Works

12.19

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

341-(b)

From Contractors / Suppliers

– Security Deposits

To Deposit works

Dr.

Cr.

2,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable

12.63 For recording payment of net Security Deposit

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

450-21-(a)

From Contractors /Suppliers–

Security Deposits

To Bank Account*

Dr.

Cr.

20,000

Cash Book,

Ledger

* Specify Name of Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

Accounting for lapsed deposits of Deposit works

12.64 Accounting for lapsed deposits in respect of deposit works shall be same as explained

in Para 12.36.

Closure of deposit works-expenditure account

12.65 On completion of Deposit works, the assets under Deposit works becomes ready for

use and will be handed over to the concerned government department and the balance if any

shall be refunded. Thus, it becomes necessary to adjust the cost incurred for Deposit works

against the money received. The Account Department shall pass the following for transfer of

Deposit expenses to Deposit Works account:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

341-10-(a)

341-20-(a)

341-30-(a)

470-10-(a)

Deposit works – Civil Works

Deposit works – Electrical

works

Deposit works – Others

To Deposit Works –

Expenditure

Dr.

Cr.

4,50,000

3,85,000

65,000

900,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Public Works

12.20

Refund of balance ‘Deposit Works Money’

12.66 The balance amount after utilisation of the amounts for the Deposit works shall be

refunded to the Governments/Government Departments by transferring the balance in

‘Deposit Works’ account to a liability account. The Accounts Department shall pass the

following entry for creation of liability account:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

341-10-(a)

341-20-(a)

341-30-(a)

350-40-(a)

Deposit Works –Civil

Deposit Works – Electrical

Deposit Works – Others

To Refund Payable –

Deposit Works

Dr.

Cr.

55,000

15,000

35,000

1,05,000

Journal

Book, Ledger

(a) Insert Detailed Head Codes of Account as applicable

12.67 Accounting entry for recording of payment of ‘Deposit Works Refund payable after

the above entry is as follows:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-40-(a)

450-21-(a)

Refund Payable - Deposit

Works

To Bank Account*

Dr.

Cr.

105,000

Journal Book,

Ledger

* Specify Name of Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

PERIOD END PROCEDURE

12.68 At the period-end, the Public Works Department shall ensure that all the bills received

in respect of work executed before the last date of the accounting period, are processed and

forwarded to the Accounts Department for accounting and payment within one month where

the accounting period is a financial year and in other cases in 15 days from the end of the

accounting period. The accounting entry to be recorded shall be the same as provided in para.

12.18 above in case of Original Works and para. 12.41 for Repairs and Maintenance Works.

12.69 At period-end, the departments incurring expenditure on Deposit Works shall submit

a Summary Statement of Status on Deposit Works Expenditure maintained category wise as

Civil, Electrical and Others in Form PW – 1 (similar to Capital work in progress) detailing

total amount of works incurred till date on each of the Deposit Works. The details of total

expenditure incurred on each of the Deposit Works can be collated from the Work Sheet

(similar to Capital work in progress) in Form PW – 2.

National Municipal Accounts Manual Public Works

12.21

INCOME

12.70 Tender Form Fees. For tender forms sold to the intended bidders, a receipt shall be

issued for the amount received in Form GEN – 8.

12.71 The Public Works Department shall recover in advance, the charges estimated for

repairing of roads or any other structure damaged, from the person to whom permission is

issued for laying of telephone or electrical cables or for any other purpose, which results in

damage of road, or any other public structure.

12.72 The procedure to be followed with reference to these incomes for remittance and/or

deposit of collections made to the Accounts Department or in the Bank shall be the same as

provided in the Chapter 5 on General Accounting Procedures, reference to which is invited.

12.73 Recording of Tender Form Fees. On the basis of the Summary of Daily Collection

(Form GEN – 12) received from the Public Works Department, for accounting collections

received, the Accounts Department shall pass the following accounting entries:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

150-11-(a)

Bank Account *

To Tender Form Fees**

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify Name of Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

12.74 Similar accounting entries shall be passed in respect of other incomes earned by the

Public Works Department.

INTERNAL CONTROLS

12.75 The following internal controls shall be observed by the ULB:

12.76 The Public Works Department and the Chief of Accounts or any other responsible

officer as defined by the applicable Acts, shall ensure the availability of adequate budget

allocation after considering all commitments made against that budget allocation before

undertaking any new work, whether being an Original Work or Repairs and Maintenance

Work.

12.77 The Head of the Accounts Department shall exercise the following internal controls:

a. A distinction should be maintained between the works of capital nature and

revenue nature.

National Municipal Accounts Manual Public Works

12.22

b. A quarterly reconciliation of the balance as per the Deposit Register maintained at

the Public Works Department shall be carried out with the Deposit Ledger

accounts.

12.78 On the completion of an Original Work, reconciliation should be carried out in respect

of the amount expended as shown in the records maintained by the Public Works Department

and the capital work-in-progress control ledger account maintained by the Accounts

Department.

12.79 On receipt of Summary Statement of Status on Capital Work-in-Progress (Form PW –

1), the Accounts Department shall ensure that total expenditure incurred as stated in the

Statement tallies with the cumulative total of several Capital Work-in-Progress Ledger

Accounts.

12.80 The Accounts Department shall ensure that the tax deducted at source and works

contract tax deducted from the contractor’s bill, etc., is deposited with the Government in

accordance with the provisions of the relevant Acts.

12.81 At the end of each month, the Accounts Department shall reconcile the total

expenditure as per the Functional Expense (Repairs and Maintenance) Subsidiary Ledger (in

form GEN –34) with the total expenditure recorded in the several Repairs and Maintenance

Ledger Accounts.

12.82 The Public Works Department, Accounts Department and the Audit Department shall

exercise the following internal controls:

a. Ensure budget availability at the time of approval of the bill.

b. Ensure that all the dues, including liquidated damages/penalties, are recovered

from the contractor before making the final payment in respect of any contract.

c. Ensure that no amount is due from suppliers/contractors, which may be otherwise

adjusted before payment.

d. Ensure that all the bills/invoices of contractors were journalised before release of

the payments.

12.83 At period-end, the Head of the Accounts shall review the Work Sheets maintained for

ascertaining whether any of the capital work in progress qualifies for capitalisation.

National Municipal Accounts Manual Public Works

12.23

12.84 The Chief Executive Officer/Head of the ULB shall specify such appropriate calendar

of returns /reports for monitoring.

12.85 All Reconciliation Statements shall be certified by the Head of the Accounts

Department.

PRESENTATION IN THE FINANCIAL STATEMENTS

12.86 The various heads of accounts used for the accounting of Public Works shall be

reflected in the Financial Statements or the Schedules attached to the Financial Statements of

the ULB. All such Financial Statements and schedules should be affixed with signature and

seal of designated authorities.

12.87 The Schedules of the Income and Expenditure Statement in respect of Public Works

are presented below.

Schedule I-4: Schedule of Fees & User Charges

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

140-70-(a) Service/Administrative Charges - Percentage Charges

on Deposit Works

Total Income from Public Works shown as

artofFees&User

Charges Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-5: Schedule of Income from Sale & Hire Charges

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

150-11-(a) Sale of Forms & Publications- Tender Fees

150-30-(a) Sale of Others

Total income from

ublic works shown as

artofSaleandHire

Charges Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-9: Schedule of Other Income

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

180-11-(a) Lapsed deposit income

180-80-(a) Miscelleneous Income

Total income form Public Works shown as part of Other Income

Schedule

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Public Works

12.24

Schedule I-12: Schedule of Operations and Maintenance

Code No. Particulars Current Year

Amount (Rs.) Previous Year

Amount (Rs.)

1 2 3 4

230-30-(a) Consumption of Stores

230-50-(a) Repairs & maintenance -Infrastructure Assets

230-51-(a) Repairs & maintenance - Civic Amenities

230-52-(a) Repairs & maintenance – Buildings

230-53-(a) Repairs & maintenance – Vehicles

230-59-(a) Repairs & maintenance – Others

230-80-(a) Other operating & maintenance expenses

Total Expense of Public Works to be shown as part of Operations &

Maintenance – Expense head wise Schedule

(a) Insert Detailed Head Codes of Account as applicable

12.88 The cost incurred on the Original Works should be categorised as Capital Work-in-

Progress and disclosed on the Asset side of the Balance Sheet of the ULBs. After completion

of the construction, the Capital Work-in-progress should be capitalised and recorded as Fixed

Asset in the Balance Sheet.

12.89 The Balance Sheet Abstracts in respect of Public Works are presented below.

Schedule B-7: Schedule of Deposits Received

Code No. Particulars Current Year

Amount (Rs.) Previous Year

Amount (Rs.)

1 2 3 4

340-10-(a) From Contractors and Suppliers – EMD

340-10-(a) From Contractors and Suppliers – Security Deposits

340-80-(a) From Others

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B -8: Schedule of Deposits Works

Code No. Nature of Deposit

Opening balance

at the beginning

of the year

Amount (R.s)

Additions

during the

current year

Amount (Rs.)

Utilisation /

expenditure

Amount (Rs.)

Balance

outstanding at

the end of the

current year

Amount (Rs.)

1 2 3 4 5 6

341-10-(a) Civil Works

341-20-(a) Electrical works

341-30-(a) Others

Total

(a) Insert Detailed Head Codes of Account as applicable

Note:

1. The amount received from the department on whose behalf the deposit works have been undertaken would

appear in col. 4

2. Expenditure incurred including percentage (departments) charges would appear in Col 5

3. Balance as in Col. 6 would appear in the balance sheet as a liability

National Municipal Accounts Manual Public Works

12.25

Schedule B–_9: Schedule of Other Liabilities (Creditors)

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

350-10-(a) Creditors – Contractors Account

350-40-(a) Refunds Payable – Deposit Works

350-20-(a) Recoveries Payable –TDS from Contractors

350-20-(a) Recoveries Payable - Works Contract Tax

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-17: Schedule of Cash and Bank Balances

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

450-10-(a) Cash

450-21-(a) Main Bank Account

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedules B-18: Schedule of Loans, Advances & Deposits

Code No. Particulars

Opening

Balance at the

beginning of

theyear(Rs.)

Paid during

the current

year (Rs.)

Recovered

during the

year (Rs.)

Balance

outstanding

at the end of

the

ear (Rs.)

12 3456

460-40-(a) Advance to Suppliers &

Contractors – Public Works

460-40-(a) Advance to Suppliers &

Contractors – Public Works

Total

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Public Works

12.26

Form PW – 1

_____________ Name of the ULB

SUMMARY STATEMENT OF STATUS OF CAPITAL WORK-IN-PROGRESS/DEPOSIT WORKS

Name of the Department: _____________ For the Quarter : ________

Work

Order

No.

Name of Project

Value of Work

/ Contract

Amount

Expenditure

incurred at the

beginning of

the quarter

Expenditure

incurred (bills

admitted) during the

quarter

Total expenditure

incurred at the

end of the quarter

Amount of

Contract

remaining

unexecuted

Whether

project

completed

(Yes/No)

Rs. Rs. Rs. Rs. Rs.

1 2 3 4 5 6 = (4+5) 7 = (3-6) 8

Prepared by* : _____________ Checked by* : _____________

* Record the Name, Designation and Signature of the person making the entry in the Summary Statement and the person checking the entry

National Municipal Accounts Manual Public Works

12.27

Form PW - 2

_______________ Name of the ULB

WORK SHEET

Details of Advance Provided

Voucher No. Date Amount (Rs.) Initials of Authorised

Officer

Serial No. of estimate

Work Order No.

Name of Work

Nature of Work 12 3 4

Contract Amount (Rs.)

Number and date of order sanctioning the estimate (Administrative Approval)

Order sanctioning the contract (No. and Date of Resolution)

Name of the Contractor

Bill

No.

Date

of Bill

Amount

claimed

payable as per

the

contractor' s

bill (Rs.)

Amount

approved

by the

Authorised

Officer

(Rs.)

Cumu-

lative

appro-

ved bill

amount

(Rs.)

Contract

amount

unutili-

sed (Rs.)

Initials

of the

Author

ised

Officer

-PWD

Security

Deposit

deduct-

ed (Rs.)

TDS

(Rs.)

Works

Contract

Tax (Rs.)

Recovery

for

material

issued

(Rs.)

Recovery

for

advance

provided

(Rs.)

Other

Deductions

(Rs.)

Net

Amount

paid (Rs.)

Initials of the

Authorised

Officer –

Accounts

Department

Remarks

12 3 4 5 6 7 8 9 10 11 12 13 14 15 16

{6-(7+8+9+ 10+11+12+ 13)}

Note:

1. For each entry made; record the Name, Designation and Signature of the person making the entry in the work sheet and the person checking the entry

2. A separate Work sheet shall be prepared for each of the multiple transaction contract which shall be sent alongwith each contractor' s bill

3. At the completion of contract and at the time of final payment being made to the Contractor, it shall be ensured that the sum total of Column 3 of ' Details of Advance

Provided' equals to sum total of Column 12

National Municipal Accounts Manual Public Works

12.28

Form PW-3

Name of the ULB

DEPOSIT WORKS REGISTER*

Money Received #

Sr. No. Name of the

Deposit Works

Order/Designation of the

Authority sanctioning the

Deposit Works

Nature of the

Deposit Works*

Period for execution

of Works

Total Amount

(Rs.) Date Amount (Rs.)

12 3 4 5 67 8

Expenditure Incurred on Deposit Works Refund of unutilised De

osit Works Mone

Date Voucher Number Nature of

Payments***

Amount

(Rs.)

Date of

Payment

Deposit Works Money

unutilised on

com

letion of the works

(Rs.)

Date Amount (Rs.)

910111213141516

* Maintain separate registers for each kind of Deposit works.

** State whether Deposit works received from Central Govt Department, State Govt. or Other Govt. departments

*** Nature of payments shall also include the % of Charges recognised as revenue of the ULB for the execution of the Works.

# Money received shall also include any other sum received in respect of the Deposit works in the form of penalties/charges for delay or defect

from Sub-contractors

Note:

1. Open Separate folios for each of the Deposit works within the register

2. For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.

National Municipal Accounts Manual Stores

13.1

CHAPTER 13

$% #$

INTRODUCTION

13.1 This chapter contains the recommended accounting system for stores related

transactions.

13.2 The functions of the Stores, involving procurement, storage, issue, disposal and

accounting of materials, may be performed either centrally by Central Stores (referred to as

Municipal Stores) or by the Department Stores empowered by the ULB to perform the

aforesaid functions for specific departments of the ULB. Generally, the ULB empowers the

Public Works, Health - Sanitation, Health - Medical, Water Works, Workshop for Vehicles

and Machinery repairs and Public Lighting Departments to maintain their own stores.

13.3 The financial transactions carried out by Stores will arise on account of:

a. Receipt of Earnest Money Deposit (EMD) from the bidders to a contract

b. Refund of EMD to the unsuccessful bidders

c. Payment of advance to the contractor

d. Delivery of material and its documentation

e. Consumption of materials

f. Payments to Suppliers

g. Adjustments of Security Deposits

h. Write-off / disposal of obsolete, scrap and unusable materials.

National Municipal Accounts Manual Stores

13.2

ACCOUNTING PRINCIPLES

13.4 The following Accounting Principles shall govern the recording, accounting and

treatment of transactions relating to stores:

a. Expenditure in respect of material, equipment, etc., procured shall be recognised

on accrual basis, i.e., on admission of bill by the Local Body in relation to

materials, equipment, etc., delivered.

b. Accounting of ‘goods received & accepted but no bills received’ as at the cut off

date shall be accounted based on purchase orders.

c. The stock lying at the period-end shall be valued at cost in accordance with the

First in – First out method.

d. Revenue in respect of disposal of material shall be recognised on actual receipt.

e. Finished goods and work-in-progress (WIP) related to goods produced for sale

will be valued at cost or market value whichever is lower. Cost of finished and

work-in-progress includes all direct costs and applicable production overheads to

bring the goods to the present location and condition.

ACCOUNTING RECORDS AND PROCEDURES

13.5 This section describes the records, registers, documents, forms, accounting entries,

etc., in respect of accounting for transactions related to Stores. For the purposes of

accounting of Stores there are certain forms, registers, etc., which are specific to Stores, e.g.,

Stores Ledger – Form ST-3. These Forms (Form ST - 1 to ST- 3) are annexed to this chapter

and are prefixed “ST’.

13.6 In case tenders are floated for procuring materials, Earnest Money Deposit (EMD)

may be collected from the bidders on such basis as prescribed by the ULB at the time of

submitting their tenders. A receipt shall be issued for the amount collected in Form GEN – 8.

13.7 The following procedure shall be followed for accounting of receipt of EMD:

a. The procedure to be followed for remittance and/or deposit of EMD to the

Accounts Department or in the Bank shall be the same as provided for in the

Chapter 5 on General Accounting Procedures.

b. The Stores shall prepare a Summary of Daily Collection in Form GEN – 12, which

shall be forwarded to the Accounts Department.

c. Recording of Earnest Money Deposit received. On receipt of Summary of Daily

collections, the Accounts Department shall pass the following entry:

National Municipal Accounts Manual Stores

13.3

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

340-10-(a)

Bank Account *

To From Contractors/

Suppliers – EMD

Stores

Dr.

Cr.

500

Cash Book,

Ledger

*Specify name of the Bank and account number

(a) Insert detailed Head Codes of Account as applicable

Note: The postings in the Ledger Account of “Earnest Money Deposit” Account shall be

carried out as indicated in Chapter 5 – General Accounting Procedures. The postings in the

Ledger Accounts shall be similarly carried out in respect of all other accounting entries

described subsequently in this chapter. Whenever, the cash or the bank account is involved,

there will be no entry in the Journal Book.

13.8 The EMD shall be refunded as per the terms of tender issued to the unsuccessful

bidders. The procedure followed for accounting of refund of EMD shall be as under:

a. The Stores shall prepare a Payment Order (PO) in Form GEN – 14 for refund of

deposits, make an entry in the Deposit Register (Form GEN – 18) against the

relevant entries made therein and then forward the PO to the Accounts Department

for payment.

b. Recording of refund of Earnest Money Deposit. After the receipt of approval for

payment and upon payment, the Accounts Department shall pass the following

entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

450-21-(a)

From Contractors/Suppliers –

EMD Stores

To Bank Account *

Dr.

Cr.

400

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

13.9 Recording of conversion of Earnest Money Deposit into Security Deposit. On receipt

of intimation from the Stores for conversion of Earnest Money Deposit of successful bidder

into Security Deposit payable by him, the Accounts Department shall pass the following

entry:

National Municipal Accounts Manual Stores

13.4

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

340-10-(a)

From Contractors/Suppliers –

Earnest Money Deposit

To From Contractors/

Suppliers -Security

Deposit Stores

Dr.

Cr.

100

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

13.10 Recording of additional Security Deposit received. Where the terms of agreement

entered into provide for collection of a certain percentage of Security Deposit in advance, a

receipt (Form GEN – 8) shall be issued to the successful bidder for the amount collected. The

procedure followed for accounting of Security Deposit is the same as described for Earnest

Money Deposit. On receipt of additional Security Deposit, the Accounts Department shall

pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

340-10-(a)

Bank Account *

To From Contractors/

Suppliers – Security

Deposit Stores

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

13.11 Recording of advance paid to suppliers. As per the terms of agreement, advance may

be provided to the supplier. On receipt of an application for grant of advance, the Stores shall

prepare a Payment Order and forward it to the Accounts Department. The procedure to be

followed for payment of advance shall be the same as provided in the Chapter 5 on General

Accounting Procedures. On payment, the Accounts Department shall pass the following

entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

460-40-(a)

450-21-(a)

Advance to Suppliers &

Contractors – Stores

To Bank Account*

Dr.

Cr.

2,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Stores

13.5

RECEIPT OF MATERIALS

13.12 As per the terms of the agreement with the Supplier, the materials shall be delivered to

the ULB. The Stores shall prepare a Material Receipt Note in Form ST-1.

13.13 From the Material Receipt Note, the Stores shall record the receipt of materials in the

Stores Ledger maintained in Form ST-2.

13.14 On receipt of bill from the supplier, the Stores shall verify the bill received with the

Material Receipt Note and record it in the Register of Bills for Payment maintained in Form

GEN – 13.

13.15 Recording of liability due in respect of materials purchased. On acceptance and

approval of the material supplied and on receipt of the processed bill from the Stores

Department, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

430-10-(a)

350-10-(a)

460-40-(a)

StockinHand-Purchaseof

Materials Stores

To Creditors –

Suppliers/

Contractors Stores

To Advance to

Suppliers &

Contractors Stores

Dr.

Cr.

4,000

3,800

200

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

13.16 Recording of payment made to supplier. The procedure to be followed for approval of

a supplier’s bill for payment and making payment shall be the same as provided in the

Chapter 5 on General Accounting Procedures. On receipt of Payment Order (Form GEN – 14)

together with the supporting documents and on making payment, the Accounts Department

shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-10-(a)

450-21-(a)

Creditors – Suppliers/

Contractors Stores

To Bank Account*

Dr.

Cr.

3,800

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

13.17 The Accounts Department shall intimate the Stores of the payment made.

National Municipal Accounts Manual Stores

13.6

RETURN OF MATERIALS

13.18 If the materials supplied are found to be defective or not in accordance with the terms

specified in the agreement, the Stores shall return it back to the supplier concerned and make

an entry for return of material in the Issue Column of the relevant folio in the Stores Ledger

(Form ST – 2). The details of the materials returned shall be communicated to the Accounts

Department.

13.19 Recording of adjustment for material returned to Supplier, if payment is not made. In

case the payment for materials received has not been made to the supplier, for reducing the

amount of liability in respect of material returned, the Accounts Department shall pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-10-(a)

430- 10-(a)

Creditors –Suppliers/

Contractors Stores

ToStockinHand –

Purchase of Materials

Stores

Dr.

Cr.

1,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

13.20 Recording of transactions for materials returned to Supplier, if payment has been

already made. On receipt of communication from the Stores relating to return of materials, the

Accounts Department shall pass the following entries:

a. On raising of the claim

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-10-(a)

430-10-(a)

Creditors –Suppliers

/Contractors Stores

ToStockinHand–Purchase

of Materials Stores

Dr.

Cr.

1,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

b. On receipt of money from the Supplier for materials returned

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

350-10-(a)

Bank Account*

To Creditors –Suppliers/

Contractors Stores

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Stores

13.7

VALUATION OF CLOSING STOCK AT PERIOD-END

13.21 At the end of every accounting period, the Stores shall send a Statement of Closing

Stock in Form ST – 3. Such a statement shall consist of two parts; Part A shall show the items

in respect of which the invoices/bills received from the suppliers have already been sent by

the Stores to the Accounts Department after processing by the Stores. Part B shall consist of

the items for which the materials have been received and accepted by the Stores but for which

the invoices/bills have not been processed as yet by the Stores. This Statement shall be drawn

from the entries made in the Stores Ledger.

13.22 At the end of the financial year, a reconciliation shall be carried out by the Stores-in-

charge to match the physical stock with the book stock and discrepancies identified shall be

incorporated in the Statement of Closing Stock.

13.23 The balances in various accounts of the item-wise Stores Ledger shall be extracted

and valued as per First In First Out (FIFO) Method. The FIFO Method is explained as

follows:

a. Under this method, the consignment of material, which shall be received first,

shall be issued first.

b. The example below illustrates the FIFO method:

Opening Stock of TCL Powder as on 1st March was 200 nos. acquired at the rate

of Rs.2 per unit. Subsequent purchase and issue transactions during the month of

March were as follows:

Date Transaction Units Rate

Mar 2 Purchase from ABC 200 nos. Rs.3/- per unit

Mar 4 Purchase from B 600 nos. Rs.4/- per unit

Mar 6 Issued to Dept. X 500 nos.

Mar 10 Purchase from B 700 nos. Rs.4/- per unit

Mar 18 Issued to Dept. Y 800 nos.

Mar 20 Purchase from C 300 nos. Rs.5/- per unit

Mar 23 Issued to Dept. Z 100 nos.

Mar 31 Issued to Dept. Q 500 nos.

Mar 31 Purchase from ASD 200 nos. Rs.6/- per unit

13.24 Entries in Stores Ledger for the aforesaid transactions shall be made as depicted in

Table 13.1 below.

National Municipal Accounts Manual Stores

13.8

Table 13.1

Entries in Stores Ledger for the financial year 20XX - 20XX

Item Description: TCL Powder Item Code: XXXXXXXX

Receipts Issues Balance

Date MRN

No.

Qty. Rate

(Rs.)

Value

(Rs.)

MRIN

No.

Qty. Rate

(Rs.)

Value

(Rs.)

Qty. Rate

(Rs.)

Value

(Rs.)

Remarks

Mar 1 Opening

Stock

200 2 400

Mar 2 200 3 600 200

200

400

600

1000

Mar 4 600 4 2400 200

200

600

1000

400

600

2400

3400

Mar 6 200

200

100

500

400

600

400

1400

500 4 2000

Mar 10 700 4 2800 500

700

1200

2000

2800

4800

Mar 18 500

300

800

2000

1200

3200

400 4 1600

Mar 20 300 5 1500 400

300

700

1600

1500

3100

Mar 23 100 4 400 300

300

600

1200

1500

2700

Mar 31 300

200

500

1200

1000

2200

100 5 500

Mar 31 200 6 1200 100

200

300

500

1200

1700

MRN - Material Receipt Note

MRIN - Material Requisition-cum-Issue Note

Note: Details & break up of materials issued

Materials issued on 6th March is towards consumption for usage in production process

Materials issued on 18th March is towards repair works of the ULB

Materials issued on 23rd March is to the Contractors for the works undertaken by them

Materials issued on 31st March is to the capital works of the ULB

National Municipal Accounts Manual Stores

13.9

13.25 Accordingly, the closing stock of 300 units of TCL Powder shall be valued at Rs. 5 for

100 units and at Rs. 6 for the remaining 200 units. This is because the TCL Powder received

earlier is still there in Stock on the valuation date, which has to be valued at the rates

applicable for that consignment.

13.26 On the basis of Statement of Closing Stock, the Accounts Department shall compute

the Stores consumed in the following manner:

Compute the total purchases made by the Stores during the accounting period. The

value of the purchases made in the above illustration is Rs. 8500;

Add the Opening Stock at the Stores valued at Rs. 400 to the total purchases made

to determine the total stores available for consumption. Thus total stores available

for consumption as per above illustration, is Rs. 8900 computed as Rs. 8500

(purchases) + Rs. 400 (opening stock) ;

Deduct the Closing Stock valued at Rs. 1700, on the basis of Statement of Closing

Stock, from the total stores available for consumption;

The balance value represents the stores that have been consumed during the

accounting period i.e. Rs. 8900 (total stores available for consumption) – Rs. 1700

(closing stock) = Rs. 7200 (consumption).

13.27 Recording of Closing Stock. On the basis of Statement of Closing Stock (Form ST –

3) received from Stores, for recording closing stock, the Accounts Department shall pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

230-30-(a)

230-(b)

412-(b)

460-40-(a)

430-10-(a)

Consumption of Stores(1)

Repairs and Maintenance (2)

Capital work in progress(3)

Advance to Contractors- Material

Issued to Contractors/Stores (4)

StockinHand –StoresClosing

Stock

To Stock in Hand –Purchase

of Materials Stores

ToStockinHand-Stores

Opening Stock

Dr.

Cr.

1,400

3,200

2,200

400

1,700

8,500

400

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

(b) Insert Minor & Detailed Head Codes of Account as applicable

(1) Consumption of Stores is debited for value of materials consumed in relation to production

of any goods for sale.

(2) Repairs and Maintenance account is debited for value of materials used for any of the

repairs and maintenance of ULBs assets.

(3) Capital work in progress account is debited for value of materials issued to the Capital

works of the ULBs.

(4) Material Issued to Contractors account is debited for value of materials issued to the

contractors.

National Municipal Accounts Manual Stores

13.10

13.28 Similar entries shall also be passed in respect of consumption/CWIP and closing stock

at each of the other stores.

13.29 The closing stock at the end of an accounting period shall be the opening stock of the

subsequent accounting period for which the Accounts Department shall pass the following

entry on the first day of the subsequent accounting period:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

430-10-(a)

StockinHand-Stores

Opening Stock

ToStockinHand-Stores

Closing Stock

Dr.

Cr.

1,700

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable.

13.30 Similar entries shall be passed for recognising closing stock of each of the other stores

as opening stock of the subsequent accounting period.

FINISHED GOODS & WIP RELATED TO GOODS PRODUCED FOR SALE

13.31 At the end of every accounting period, the finished goods and work-in-progress

related to goods produced for sale shall be valued at cost.

13.32 The cost of finished goods and WIP shall include all direct costs and applicable

production overheads to bring the goods to the present location and condition. It shall include

the following:

a. Costs of purchase including duties and taxes, freight inwards and other

expenditure directly attributable to the purchase. Trade discounts, rebates, duty

drawbacks and other similar items should be deducted from the costs of purchase;

b. Costs of direct labour for converting the materials into finished goods;

c. Variable production overheads i.e. those direct costs of production that vary

directly with the volume of production, such as, Power and other consumables.

The variable production overheads are allocated to per unit of production;

d. Fixed production overheads i.e. those indirect costs of production that remain

constant irrespective of the volume of production, such as depreciation and

maintenance costs of production facilities. The fixed production overheads are

period costs, which are apportioned over the total units of production over that

period.

National Municipal Accounts Manual Stores

13.11

13.33 The cost of finished goods and WIP shall, however, not include the following:

a. Abnormal amount of wasted material, labour or other production costs;

b. Storage costs, unless these are necessary in the production process prior to a

further production stage;

c. Administrative overheads that do not contribute to bringing the goods to their

present location and condition;

d. Selling and distribution costs;

e. Interest and other borrowing costs.

13.34 Based on these guidelines each local body can develop detailed guideline for each of

the manufactured product meant for sale. The Cost sheet would serve as a base for arriving at

the value.

MATERIALS PURCHASED FROM ANY GRANT OR SPECIAL FUNDS

13.35 The accounting procedure to be followed for purchase of material, the cost of which is

met from any Grant or from funds set aside under any Special Fund, and its issue shall be the

same as provided earlier in this chapter. However, the accounting entries in respect of these

have been described in Chapter 17 on Grants and Chapter 19 on Special Funds respectively.

13.36 The materials purchased in terms of any grant or special fund shall be recorded in

separate folios in the Stores Ledger or in the Stock Account of Books and Forms and the

procedure to be followed for valuation of closing stock shall be the same as provided earlier

in this chapter.

PERIOD END PROCEDURE

13.37 At the period-end, the Stores Department shall ensure that all the bills in respect of

stores received and accepted before the last date of the accounting period, are processed and

forwarded to the Accounts Department for accounting and payment within one month where

the accounting period is a financial year and in other cases in 15 days from the end of the

accounting period. The accounting entry to be recorded shall be the same as provided above

in para 13.15 in the section on “Receipt of Materials”. In addition, in respect of ‘goods

received & accepted but no bills received’ as at the cut off date shall be accounted based on

purchase orders.

DISPOSAL OF MATERIAL

13.38 The unutilised/unusable material in the Stores of the ULB may be disposed of as per

the principles framed by the ULB.

National Municipal Accounts Manual Stores

13.12

13.39 For such disposal of material by Stores, the accounting procedure to be followed and

accounting entries to be passed for receipt and refund of EMD and conversion of EMD into

Security Deposit shall be the same as provided earlier in this chapter. The accounting

procedures to be followed on realisation of sale value shall be the same as provided in

Chapter 5 on General Accounting Procedures.

13.40 Recording of disposal of material. An entry for the material disposed shall be made in

the records maintained at the Stores. The accounting entries passed in respect of disposal of

stores are as follows:

a. Recording of receipt of sale proceeds: The Stores shall prepare a Summary of

Daily Collection (Form GEN –12) for sale proceeds and forward it along with

the collection to the Accounts Department. (For example an amount of Rs 600

realised against the sale of stores with a recorded value of Rs 500). On receipt

of Summary of Daily Collections, the Accounts Department shall pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

350-90-(a)

Bank Account *

To Sale Proceeds from

Stores

Dr.

Cr.

600

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Insert Detailed Head Codes of Account as applicable.

b. Recording of profit or loss on disposal: In the example explained above, there

is a profit amounting to Rs 100 the Accounts Department shall pass the

following entry in respect of the same:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-90-(a)

430-10-(a)

150-12-(a)

Sale Proceeds from Stores

ToStockinHand-Purchase

of Materials Stores

To Sale & Hire Charges –

Sale of Stores

Dr.

Cr.

600

500

100

Journal Book,

Ledger

Note: If the amount realised for sale is Rs 400, the difference of Rs 100 shall be debited to ‘Loss

to disposal of Stores’.

(a) Insert Detailed Head Codes of Account as applicable.

WRITE-OFF OF MATERIAL

13.41 The pilfered/damaged material in the Stores of the ULB may be written-off as per the

principle framed by the ULB.

National Municipal Accounts Manual Stores

13.13

13.42 Recording of write-off of material. An entry for the material written-off shall be made

in the records maintained at the Stores. On the basis of intimation received from the Stores,

the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

270-40-(a)

430-10-(a)

Assets Written off -Stores

ToStockinHand –Stores

Opening Stock

Dr.

Cr.

Journal Book,

Ledger &

Stores Register

(a) Insert Detailed Head Codes of Account as applicable.

INTERNAL CONTROLS

13.43 The following internal controls shall be observed by the ULB in respect of Stores

related transactions:

a. The Head of the Accounts Department shall ensure budget availability with

respect to the expenditure incurred at the time of accruing of the expenditure i.e

Budget monitoring shall be on accrual basis rather than payment basis.

b. The Head of the Accounts Department shall ensure that all the purchase

bills/invoices were journalised before release of the payments.

c. At the end of the financial year, the Stores-in-charge, the Head of the Accounts

Department and the Municipal Chief Auditor shall physically verify the stock

lying in stores and compare it with the stock as per the book records and in case of

any difference, appropriate remedial steps as prescribed by the ULB shall be taken.

d. The Stores-in-charge shall ensure availability of adequate budget allocation before

procuring any material, after considering all commitments made against the

budget allocation.

f. At the time of issue of any material to the Departments, the Stores-in-charge shall

ensure that there is an adequate budget provision in respect of that department.

g. The Head of the Accounts Department shall ensure that all the dues recoverable

including advance provided to supplier has been recovered before making the final

payment to the supplier. Further, it should be ensured that only net amount has

been paid to the supplier, as may be applicable to the materials actually received or

accepted.

h. Before releasing payment to the supplier, the Head of the Accounts Department

shall ensure that the material received is recorded in the Stores Ledger. Further, it

National Municipal Accounts Manual Stores

13.14

shall be ensured that the Payment Order provides reference to the Stores Ledger

where the entry for receipt of material is recorded. In addition, at the time of

payment to Suppliers/contractors and any other creditors it shall be ensured that no

amount is due from them, which may be adjusted before payment.

i. The Stores-in-charge shall ensure that materials in respect of which bills have

been received but have not been forwarded to the Accounts Department are stated

separately in the Statement of Closing Stock (Form ST – 3).

j. The Head of the Accounts Department shall ensure that the ‘Purchase of

Materials’ account has been reconciled at the period and the balance has become

nil on accounting of stock entries for the closing stock(on the basis of Statement of

Closing Stock in Form ST –3) and consumption of stores.

k. Also the Head of Accounts Department shall ensure that the balance in the

‘Opening Stock’ account has become nil at the period end on accounting of stock

entries and consumption based on the closing stocks.

l. The Chief Executive Officer/Head of the ULB shall specify such appropriate

calendar of returns /reports for monitoring.

13.44 All Reconciliation Statements shall be certified by the Head of the Accounts

Department and verified by the Municipal Chief Auditor.

PRESENTATION IN THE FINANCIAL STATEMENTS

13.45 The various heads of accounts used for the accounting of Stores shall be reflected in

the Financial Statements or the Schedules attached to the Financial Statements of the ULB.

All such Financial Statements and schedules should be affixed with signature and seal of

designated authorities.

13.46 The Schedules of the Income and Expenditure Statement in respect of Stores are

presented below.

Schedule I-5: Income from Sale & Hire Charges

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

1234

150-12-(a) Sale of stores & scrap

150-30-(a) Sale of Others

Total Income from Stores to be shown as part of Sale & Hire

charges Schedule

(a) Insert Detailed Head Codes of Account as applicable.

National Municipal Accounts Manual Stores

13.15

Schedule I-12: Schedule of Operations and Maintenance

Code No. Expenditure Amount

(Rs.)

Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12345

230-30-(4a) Consumption of Stores

230-51-(a) Repairs & Maintenance –

Infrastructure Assets

230-52-(a) Repairs & Maintenance – Civic

amenities

230-53-(a) Repairs & Maintenance –

Buildings

230-54-(a) Repairs & Maintenance – Vehicles

230-59-(a) Repairs & Maintenance – Others

Total of Expense of Stores to be shown as part of

Operations & Maintenance Expense Schedule

(a) Insert Detailed Head Codes of Account as applicable.

13.47 The Balance Sheet abstracts in respect of Stores are presented below.

Schedule B-7: Deposits Received

Amount in Rs.

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

340-10-(a) From Contractors/Suppliers – EMD

340-10-(a) From Contractors/Suppliers – Security

Deposits

340-80-(a) From Others

Total

(a) Insert Detailed Head Codes of Account as applicable.

Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

350-10-(a) Creditors - Suppliers /Contractors Payable

Stores Account

Total

(a) Insert Detailed Head Codes of Account as applicable.

Schedule B-14: Stock in Hand (Inventories)

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

430-10-(a) Stores

430-20-(a) Loose Tools

430-30-(a) Others

Total Stock in hand

(a) Insert Detailed Head Codes of Account as applicable.

National Municipal Accounts Manual Stores

13.16

Schedule B-17: Schedule of Cash and Bank

Code No. Particulars Current Year Amount

(Rs.)

Previous Year Amount

(Rs.)

12 3 4

450-10-(a) Cash Account

450-21-(a) Bank Account

Total

(a) Insert Detailed Head Codes of Account as applicable.

Schedules B-18: Schedule of Loans, Advances & Deposits

Code No. Particulars

Opening

Balance at

the beginning

of the year

(Rs.)

Paid during

the current

year

(Rs.)

Recovered

during the

year

(Rs.)

Balance

outstanding

at the end of

the year

(Rs.)

12 3456

460-40-(a) Advance to Suppliers &

Contractors – Stores

460-40-(a) Advance to Suppliers &

Contractors – Material Issued

to Contractors /Stores

Total

(a) Insert Detailed Head Codes of Account as applicable.

National Municipal Accounts Manual Stores

13.17

ST-1

___________________ Name of the ULB

MATERIAL RECEIPT NOTE

________________________ Stores

Book No._________________ Receipt No._____________

Date __________________

Received following material from ___________________________ (name of the supplier)

vide their delivery challan number __________ bill number __________ dated _________

against Purchase Order No. ______________

Sr. No. Particulars (Product details and

specifications)

Quantity

Accepted Inspected by Remarks

12 345

Material received by Entered in Store Records

Entry No.: _______________

____________ _____________

Stores Clerk Stores-in-charge

National Municipal Accounts Manual Stores

13.18

ST-2

___________________ Name of the ULB

STORES LEDGER

Item Description__________________________

Receipt

Date of Receipt Material

Receipt No.

Reference of Cash

Book / Journal Book

/ Ledger where entry

is recorded

Department

for which

purchase

made

Quantity Rate per unit

(Rs.) Value (Rs.)

Initials of

Authorised

Officer

Number Weight

12 3 456789

Issues Balance

Date of Issue

Material

Requisition

cum Issue

Note No.

Department to

which issued Quantity

Rate per

unit

(Rs.)

Value

(Rs.)

Initials of

Authorised

Officer

Quantity

Rate

per

unit

(Rs.)

Value

(Rs.)

Number Weight Number Weight

10 11 12 13 14 15 16 17 18 19 20 21

(5-13) (6-14)

Note: For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the

entry

National Municipal Accounts Manual Stores

13.19

ST-3

___________________ Name of the ULB

STATEMENT OF CLOSING STOCK AS ON ___

________________ Stores Sr. No. _________

Reference No. of

Stores Ledger Item Description Quantity

Unit rate for

valuation

(Rs.)

Amount

(Rs.) Remarks *

123456

Total

Details of Material issues

Purpose Reference No. of

Stores Ledger

Item

Description Quantity

Unit rate for

valuation

(Rs.)

Amount (Rs.)

123456

For Consumption

For Repairs &

Maintenance

For Capital Work In

Progress

For Sale

Written off

Contractors**

Total

Verified by Stores-in-charge / Authorised Officer

(Audit Department)

* In case of obsolete, unservicable, defective inventory, please indicate so in the Remarks column

** Contractor wise details of the Materials issued shall be given as per annexure attached with this form.

National Municipal Accounts Manual Stores

13.20

Annexure to Form ST 3

Details of Material issued to Contractors

Reference number

of Stores Ledger

Name of the

Contractor

to whom the

materials

issued

Item Description Quantity

Unit Rate

for

Valuation

(Rs)

Value of

the

Materials

(Rs)

123456

Total *

Verified by Stores-in-charge / Authorised Officer

(Audit Department)

* The total of this table shall agree to the value of ‘materials issued to Contractors’.

National Municipal Accounts Manual Employee Related transactions

14.1

CHAPTER 14

EMPLOYEE RELATED

TRANSACTIONS

INTRODUCTION

14.1 This chapter contains the recommended accounting system on matters (i.e., salaries,

allowances, deductions, Provident Fund, Pension Fund, loans, advances, etc.) pertaining to

the employees of the Urban Local Body (ULB). The Accounting principles and procedures

explained below for maintaining the employee related transactions on the following

assumptions

¾ The employee related funds (for e.g. PF fund account) are maintained within

the ULB.

¾ Processing of payroll and related approvals are decentralised.

ACCOUNTING PRINCIPLES

14.2 The following Accounting Principles shall govern the recording, accounting and

treatment of employee related transactions:

a. Expenses on Salaries and other allowances shall be recognised as and when

they are due for payment (i.e. at the month end).

b. Statutory deductions from salaries including those for income tax, profession

tax, provident fund contribution, etc., shall be recognised as liability in the

same period in which the corresponding salary is recognised as expense.

National Municipal Accounts Manual Employee Related transactions

14.2

c. Formation of Trusts shall be considered for management of Provident Funds.

However it will be the responsibility of the ULB to form the trusts and meet the

shortfall of the fund, if any.

d. Provident Fund money shall be invested as per the guidelines applicable to any

Employee Provident Fund.

e. Separate Funds may also be formed for meeting the pension and other

retirement benefits including Gratuity and Leave Encashment. The State

Governments can decide on this and can define the modus operandi also. The

State may form Trusts either at the state level or at the municipal level.

f. Contribution due towards Pension and other retirement benefit funds shall be

recognised as an expense and a liability. State Government to define the rate of

contribution. One basis for such rate could be at the rate generally prescribed

for state government employees on deputation. Actuarial valuation has not been

considered due to practical limitations of the ULBs. If an ULB wants to make

an actuarial valuation, their applicable state laws can guide this.

g. Interest receivable on loans given to employees shall be recognised as revenue

at the end of the period in which these have accrued.

h. In respect of loans to employees, penal interest leviable on default in repayment

of principal or payment towards interest shall be recognised on accrual basis.

i. Bonus, ex-gratia, overtime allowance, other allowances and reimbursements to

the employees shall be recognised as an expense as and when they are due for

payment.

ACCOUNTING RECORDS & PROCEDURES

14.3 This section describes the records, registers, documents, forms, accounting entries,

etc., in respect of accounting for employee related transactions. For the purposes of

accounting of employee related transactions there are certain forms, registers, etc., which

are specific to employee related transactions, e.g., Pay bill – Form ES -1. These (Forms ES –

1 to ES – 6) are annexed to this chapter and are prefixed “ES”.

PAY BILL & DEDUCTIONS

14.4 A Pay Bill shall be prepared for each department on the basis of employee muster and

service book maintained. The Pay Bill shall provide computation of gross salaries payable to

the employees as per the conditions of service. From the gross salary, adjustments shall be

National Municipal Accounts Manual Employee Related transactions

14.3

made for deductions in respect of statutory payments such as income tax, profession tax,

provident fund, etc., voluntary deductions such as group insurance premium, investment by

employees, contribution to various societies, loan recovery for external agencies, etc., as well

as recoveries in respect of loans, advances, etc., to arrive at the net salary payable to the

employees.

14.5 Pay bills are normally drawn by Drawing and Disbursing Officer (DDO) in every

department. There may be more than one DDO in a Department. The pay bills drawn by all

DDOs in a Department may be consolidated and sent to Accounts Department for payment.

14.6 The Accounts Department shall prepare a Consolidated Pay Bill summary in Form

ES- 1 from the Departmental Pay Bills. Preparation of Consolidated Pay Bill summary would

involve consolidation and summation of the individual Departmental Pay Bills.

14.7 On the basis of the Consolidated Pay Bill, the Accounts Department shall pass the

following entries every month for recognising the expense and the corresponding liability:

a. Recording of salary, allowances and corresponding liability. For recognising the

expense under various heads and the liability to the employees in respect of gross

salaries, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

210-(a)

350-11-(b)

Establishment Expenses –

To Employee Liabilities –

Gross Salaries Payable

Dr.

Cr.

1,00,000

Journal

Book, Ledger

(a) Insert Major and Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

Note: The postings in the Ledger Accounts of “Establishment Expenses” Account and “Gross

Salaries Payable” Account shall be carried out as indicated in Chapter 5 – General

Accounting Procedures. The postings in the Ledger Accounts shall be similarly carried out in

respect of all other accounting entries described subsequently in this chapter. Whenever, the

cash or the bank account is involved, there will be no entry in the Journal Book.

b. The department-wise details of establishment expenses will be available in the

Consolidated Pay Bill prepared by the Accounts Department, reference to which

may be made at the time of preparation of Financial Statements.

c. The Accounts Department shall maintain a separate Functional Expense

Subsidiary Ledger in Form GEN – 34 for recording Function-wise establishment

expenses. On recording of establishment expenditure in the Journal Book, the

Accounts Department shall immediately update the Subsidiary Ledger mentioned

above. The procedure for updating Subsidiary Ledger has been provided in

Chapter 5 – General Accounting Procedures, reference to which is invited

National Municipal Accounts Manual Employee Related transactions

14.4

d. Recording of statutory and other deductions and recoveries from salaries. For

accounting liabilities towards amounts payable to different authorities in respect of

statutory deductions, and, dues towards settlement of obligations on behalf of

employees (e.g. housing loan, contribution to various societies, loan recovery for

external agencies, group insurance premium, investment by employees, etc.),

recovery of instalments of loans or interest levied on loan and/or advances from

employees, etc., the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-11-(a)

350-20-(a)

311-(b)

350-20-(a)

460-10-(a)

431-40-(a)

350-20-(a)

460-10-(a)

460-20-(a)

350-11-(a)

Employee Liabilities - Gross

Salaries Payable

To Recoveries Payable-

TDS from Employees

To Recoveries Payable-

Profession Tax

To- Provident Fund (for

own employees)

To Recoveries payable –

Provident Fund for

Employees on Deputation

To Loans to Employees

To Receivable from Other

Sources-Interest due from

Employees Loans

To Recoveries Payable -

Others*

To Advance to Employees

To Employee Provident

Fund Loans

To Employee Liabilities –

Net Salaries Payable

Dr.

Cr.

1,00,000

1,000

9,000

1,000

1,500

200

7,500

1,500

300

77,000

Journal Book,

Ledger,

Employee

Advances,

Loans to

Employees,

Interest on

Loans to

Employees

* This may include voluntary deductions with respect to Insurance Premium deduction, deduction

for Investment by Employees, deduction for Contribution to various Societies, Loan recovery for

External Agencies, etc.

(a) Insert Detailed Head Codes of Account as applicable

e. Accounts Department shall update the Register of Employee Advances

maintained in Form ES-2 for recovery of Loans / advances and Register of

Interest on Loans to Employees maintained in Form ES-3 for recovery of loans

and interest respectively.

f. Salaries may be paid to the employees either (i) by Cheque or (ii) by directly

crediting the amount to employees’ bank account; or (iii) in cash. (efforts may

be made to move towards direct credit of salaries to bank accounts)

g. Recording of payment of salaries by cash: For accounting of payment of salary

by cash, the Accounts Department shall pass the following entries:

National Municipal Accounts Manual Employee Related transactions

14.5

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

On Withdrawal of cash

450-10-(a)

450-21-(a)

Cash Account

To Bank Account *

Dr.

Cr.

7,000

Cash Book

For payment of salary by cash (if paid fully)

350-11-(a)

450-10-(a)

Employee Liabilities -Net

Salaries Payable

To Cash Account

Dr.

Cr.

7,000

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

Note: If the salary is not fully paid, the accounting treatment is described subsequently.

h. Recording of payment of salaries through bank: For accounting of payment of

salary by cheque or direct credit of the salary to employee bank account, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-11-(a)

450-21-(a)

Employee Liabilities – Net

Salaries Payable

To Bank Account*

Dr.

Cr.

70,000

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

Note: If the salary is not fully paid, the accounting treatment is described subsequently.

i. Recording of payment of statutory deductions made from salaries. For

discharging liabilities towards statutory deductions (e.g., income tax, profession

tax, etc.), on payment, the Accounts Department shall pass the following

entries:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-20-(a)

450-10-(a)

450-21-(a)

Recoveries Payable – TDS

from Employees

To Cash Account

To Bank Account*

Dr.

Cr.

1,000

950

Cash Book,

Ledger

350-20-(a)

450-10-(a)

450-21-(a)

Recoveries Payable –

Profession Tax

To Cash Account

To Bank Account*

Dr.

Cr.

1,000

100

900

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Employee Related transactions

14.6

j. Recording of payment of other deductions made from salaries. For discharging

liabilities towards voluntary deductions (e.g., group insurance premium,

investment made by employees, contribution to various societies, repayment of

loan to various external agencies, etc.) made on behalf of employees, on

payment, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-20-(a)

450-10-(a)

450-21-(a)

Recoveries Payable- Others

To Cash Account

To Bank Account*

Dr.

Cr.

7,500

500

7,000

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

Note: Recoveries Payable – Others may include voluntary deductions with respect to Insurance

Premium deduction, deduction for Investment by Employees, deduction for Contribution to

various Societies, Loan recovery for External Agencies, etc.

Unpaid Salaries

14.8 If the salary remains unpaid to the employees, it shall be recorded in the Unpaid

Salary Register maintained in Form ES-4.The register shall have the details for unclaimed

salary as well as subsequent payment of salary. Cheques remaining unpaid and cash

withdrawn for payment of salary remaining unpaid for a period of three (3) months shall be

re-deposited in the Bank Account and the details recorded in the Unpaid Salary Register.

14.9 Recording of unpaid salaries (bank). In case cheques issued to the employees have not

been encashed for three months or such other period as may be prescribed by the State /

applicable acts, such cheques shall be cancelled. On cancellation of cheques, the Accounts

Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

350-11-(a)

Bank Account*

To Employee Liabilities

– Unpaid Salaries

Dr.

Cr.

1,000

Cash Book,

Ledger, Unpaid

Salary Register

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

14.10 Recording of unpaid salaries if cash is withdrawn but not collected by the employee.

In case of salary payments by cash, if the amount has not been collected, the Accounts

Department shall pass the following entries:

National Municipal Accounts Manual Employee Related transactions

14.7

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

Assuming that Rs. 500 is unpaid out of Rs. 7000 drawn and only Rs. 6500 has been paid,

the entry for the payment would be:

350-11-(a)

450-10-(a)

Employee Liabilities - Net

Salaries Payable

To Cash

Dr.

Cr.

6,500

Cash Book,

Ledger, Unpaid

Salary Register

For depositing the cash lying in hand in respect of unpaid salary, the entry would be:

450-21-(a)

450-10-(a)

Bank Account*

To Cash

Dr.

Cr.

500

Cash Book

For recording the unpaid salary, the following entry shall be passed:

350-11-(a)

Employee Liabilities - Net

Salaries Payable

To Employee Liabilities –

Unpaid Salaries

Dr.

Cr.

500

Journal Book,

Ledger, Unpaid

Salary Register

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

14.11 Recording of payment of unpaid salaries. On payment of unpaid salaries, the Accounts

Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-11-(a)

450-10-(a)

450-21-(a)

Employee Liabilities – Unpaid

Salaries

To Cash

To Bank Account*

Dr.

Cr.

700

100

600

Cash Book,

Ledger, Unpaid

Salary Register

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

The illustrative amount indicates that of Rs. 700 outstanding in Salaries Unpaid Account, Rs. 100

is paid in Cash and Rs. 600 is paid by cheque.

LOANS AND ADVANCES TO EMPLOYEES

Loans and Advances given

14.12 Recording of advances and loans to employees. ULB may grant loans (interest bearing

or interest free) and advances (temporary, standing, etc.) to the employees. On payment of

loans and advances by the ULB, the Register of Employee Loans / Advances (Form ES-2)

shall be updated by the Accounts Department. These registers shall be maintained

department-wise. For recording the payment of loans and advances to employees, the

Accounts Department shall pass the following entries:

National Municipal Accounts Manual Employee Related transactions

14.8

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

For Advances given to employees

460-10-(a)

450-21-(a)

Advance to Employees

To Bank Account*

Dr.

Cr.

10,000

Cash Book,

Ledger, Register

of Employee

Advances

For Loans granted to employees

460-10-(a)

450-21-(a)

Loans to Employees

To Bank Account*

Dr.

Cr.

10,000

Cash Book,

Ledger, Register

of Loans to

Employees

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

14.13 The Accounts Department shall intimate the concerned department to update the

respective Service Books for recording the loans and advances taken by the employees of that

department.

Accrual of Interest on Loans provided to employees

14.14 Recognising interest on loans and advances granted to the employees at the period-

end. As per the terms and conditions of the loan agreement, interest is levied on the monthly

outstanding balance of loans. The amount of interest accrued shall be communicated by the

concerned department to the Accounts Department at the period-ends for which an entry shall

be made in the Register of Interest on Loans to Employees (Form ES-3). On the basis of

intimation received, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

431-40-(a)

171-20-(a)

Receivable from Other Sources

- Interest due on Employee

Loans

To Interest on Loans and

advances to Employees

Dr.

Cr.

1,000

Journal Book,

Ledger, Register

of Interest on

Loans to

Employees

(a) Insert Detailed Head Codes of Account as applicable

14.15 Recording of Penal Interest for non-payment of principal or interest installment. In

case of default in either repayment of principal or payment of interest, penal interest shall be

levied at the rates and in the manner prescribed. To record penal interest levied, the Accounts

Department shall pass the entry passed in para 14.14 above.

Recovery of Loans and Advances

14.16 Normally as per the terms and conditions of service and loan agreement, recovery of

the principal amount of loan assumes precedence over recovery of interest. Interest accrued

National Municipal Accounts Manual Employee Related transactions

14.9

for the intervening period, i.e., the period between the date of disbursement of loan and full

repayment of loan shall be recognised as an asset, recoverable after the repayment of principal

in full.

14.17 The Accounts Department shall update the Register of Employee Loans / Advances

(Form ES-2) for the amount of advances and loans recovered. The entries for recovery of

loans and advances every month from the Pay Bill, have already been described above in para

14.7 (d).

Recovery of Interest accrued on Loans provided to employees

14.18 Recovery of interest installment. As per the terms and conditions of loan agreement,

interest accrued and recognised, as an asset receivable shall be recovered in instalments. The

accounting entry for interest recovery from the monthly pay-bill has already been described in

para 14.7 (d) above.

PAYMENTS OTHERWISE THAN FROM PAY BILL

14.19 For various types of employee related payments such as leave travel concession,

bonus & ex-gratia, overtime, medical reimbursement, hospitalisation claim, suspension

allowance, gratuity, leave salary, house rent reimbursement, etc., the concerned department

shall send the approved Payment Order along with the supporting documents to the Accounts

Department.

14.20 Recording of payments otherwise than from Pay Bill. On payment being made, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

210-(a)

450-10-(a)

450-21-(a)

Establishment Expenses-

To Cash

To Bank Account*

Dr.

Cr.

10,000

4,000

6,000

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Major & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

Note: Separate entry shall be passed for each of the Payment Order.

14.21 Upon payment, the Accounts Department shall immediately update the Function wise

Expense Subsidiary Ledger maintained in Form GEN-34.

National Municipal Accounts Manual Employee Related transactions

14.10

PROVIDENT FUND

Employees’ Provident Fund Contribution

14.22 A deduction shall be made for employees’ provident fund contribution from the

salaries of the employees from the Pay Bill. The entry for this has already been described

above in para 14.7 (d).

14.23 Recording of transfer of money to Provident Fund Bank Account. The Accounts

Department shall transfer the amount deducted as contribution from Main Bank Account to

Provident Fund Bank Account and pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-41-(a)

450-21-(b)

Designated Bank Account*

To Bank Account*

Dr.

Cr.

9,000

Cash Book

* Specify name of the Banks and Account number

(a) Insert Detailed Head Codes of Account as applicable

Payment of Provident Fund Contribution in respect of employees on deputation

14.24 Recording of payment of Provident Fund Contribution in respect of employees on

deputation. Provident Fund Contribution deducted on behalf of State Government or other

organisations/authorities from the salary of employees on deputation to the ULB shall be

deposited with the relevant authority every month. On payment, the Accounts Department

shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

350-20-(a)

450-21-(a)

Recoveries payable -

Provident Fund Contribution

for Employees on Deputation

To Bank Account*

Dr.

Cr.

1,000

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

Loans to Employees against Provident Fund

14.25 Recording of the loans granted against Provident Fund Contribution. As per the

prescribed rules, the ULB may grant loans to the employees against balance standing to the

credit of their Provident Fund account. On receipt of approved payment order, the Accounts

Department shall pass the following entry:

National Municipal Accounts Manual Employee Related transactions

14.11

Code of

Account Accounting Entry Dr./

Cr.

Debit Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

460-20-(a)

450-21-(a)

Employee Provident Fund

Loans

To Bank Account*

Dr.

Cr.

1,000

Journal Book

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

Recovery of Provident Fund Loan

14.26 A deduction shall be made for recovery of loan given from the provident fund, from

the salaries of the employees from the Pay Bill. The entry for this has already been described

above in para 14.7 (d).

14.27 Recording of transfer of money to Provident Fund Bank Account. The Accounts

Department shall transfer the amount deducted towards recovery of provident fund loans from

Main Bank Account to Provident Fund Bank Account and pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-41-(a)

450-21-(a)

Designated Bank Account*

To Bank Account*

Dr.

Cr.

300

Cash Book

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

Investments of Employees’ Provident Fund Contribution

14.28 The Provident Fund money shall be invested as per the guidelines applicable to any

Employee Provident Fund.

14.29 Investments made in respect of Provident Fund Contribution shall be entered in a

Provident Fund Investment Register to be maintained in Form IN-1 (provided in Chapter 20

on Investments). The accounting procedures to be followed and the accounting entries to be

passed in respect of investments of such moneys are similar to those followed in respect of

other investments. They relate to investments, maturity of investment, recording of interest,

profit/loss on sale/maturity of investments, etc. These have been described in Chapter 20 on

Investments.

Interest on Provident Fund

14.30 For recording interest shortfall. Interest, which is earned on Investments made out of

the Provident Fund Reserve, will be credited to the Provident Fund Reserve as well as

individual employees. In situations wherein the interest earned is lower than the stipulated

National Municipal Accounts Manual Employee Related transactions

14.12

rate payable to the employees, the shortfall in payment of interest shall be made good by the

ULB for which the Accounts Department shall pass the following entries:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

210-40-(a)

311-(b)

Other Terminal & Retirement

Benefits– Provident Fund

shortfall

To Provident Fund

Dr.

Cr.

100

Journal Book,

Ledger

For transfer of money from Main Bank Account to the Provident Fund Bank Account

450-41-(a)

450-21-(a)

Designated Bank Account*

To Bank Account*

Dr.

Cr.

100

Cash Book

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

Withdrawal from Provident Fund

14.31 The balance standing to the credit of the employee' s provident fund account may be

withdrawn either at the time of employee' s retirement or otherwise in accordance with the

prescribed rules in this behalf.

14.32 The employee may, in accordance with the prescribed rules, withdraw the balance

standing to the credit of his/her provident fund account during the continuation of his/her

employment. On receipt of approved payment order (Form GEN - 14), the Accounts

Department shall pass the following entries:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

For recognising the provident fund contribution and interest due to an employee

311-(a)

350-11-(b)

Provident Fund

To Employee Liabilities –

Provident Fund Payable

Dr.

Cr.

150

Journal Book,

Ledger

On payment

350-11-(b)

450-41-(b)

Employee Liabilities –

Provident Fund Payable

To Designated Bank

Account*

Dr.

Cr.

150

Ledger

* Specify name of the Bank and Account number

(a) Insert Minor & Detailed Head Codes of Account as applicable

(a) Insert Detailed Head Codes of Account as applicable

14.33 When any employee ceases to be an employee of the ULB, the Provident Fund

account of the employee shall be closed and he shall be paid the amount to the credit of his

Provident Fund account (contribution, interest, etc.) from the Provident Fund Bank Account.

The Accounts Department shall pass the entries referred in para 14.24 above for recognition

National Municipal Accounts Manual Employee Related transactions

14.13

of liability, for payment of provident fund dues and for payment of the amount determined

from the Provident Fund Bank Account.

RETIREMENT BENEFITS

14.34 Retirement benefits for employees of ULB usually consist of:

a. Pension;

b. Gratuity; and

.Leave Encashment.

Pension

14.35 The pension would be payable at the time of their retirement either on superannuation

or otherwise in accordance with the prescribed rules. Details of pension liability for each

pensioner shall be maintained separately in Pension Register in Form ES-6. The ULB may

pay pension directly or through a Fund established for this purpose

14.36 Payment of pension shall be made on the basis of the approved Pension Payment

Order (PPO). The details of PPO shall be recorded in Pension Payment Order Register in

Form ES-5.

Accounting for Pension

Direct Payment

14.37 If the pension amounts were directly paid without creation of a separate fund, the

Accounts department shall pass the following entries for accrual of pension expenses and

payment of the same.

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

On creation of liability for pension

210-30-(a)

350-11-(a)

Pension-Pension /Family

Pension Expenses

To Employee Liabilities

–Pension Payable

Dr.

Cr.

1,000

Journal Book,

Ledger,

Pension

On payment of commuted pension

350-11-(a)

450-21-(a)

Employee Liabilities –

Pension Payable

To Bank Account*

Dr.

Cr.

1,000

Ledger,

Pension

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Employee Related transactions

14.14

Through Fund

14.38 The ULB shall, on a monthly basis, contribute a sum as determined by the State

Government towards the Pension Fund. The contribution shall be recorded as an expense and

charged to the Statement of Income and Expenditure and shall also be recognised as a

liability.

Creation of Fund

14.39 For creation of Pension Fund. Every month, contribution to the Pension Fund shall be

made for the employees on the payroll. For recognising the liability in respect of Pension

Fund contribution, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

210-30-(a)

311-(b)

Pension-Pension/Family

Pension Expense

To Pension Fund

Dr.

Cr.

1,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable

14.40 For transfer of money to Pension Fund Bank Account. An amount equivalent to the

contribution to Pension Fund shall be transferred from Main Bank Account to Pension Fund

Bank Account. On transfer, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-(a)

450-21-(b)

Bank Account*

To Bank Account*

Dr.

Cr.

1,000

Cash Book,

Pension Fund

Cash Book

* Specify name of the Bank and Account number

(a) Insert Major & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

Payment of Pension to Employees

14.41 On retirement, as per the prescribed rules, the employee may have a choice of taking

his full pension either through monthly payments or by commuting a portion thereof payable

at the time of retirement and the balance through monthly payments after retirement.

National Municipal Accounts Manual Employee Related transactions

14.15

Commuted Pension

14.42 On commutation of pension. On the basis of approved Pension Payment Order (Form

ES-5), on payment of Commuted Pension, the Accounts Department shall pass the following

entries:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

On creation of liability for commutation of pension

311-(a)

350-11-(b)

Pension Fund

To Employee Liabilities

-Pension

Dr.

Cr.

100

Journal Book,

Ledger,

Pension

On payment of commuted pension

350-11-(b)

450-41-(b)

Employee Liabilities –Pension

Payable

To Designated Bank

Account*

Dr.

Cr.

100

Ledger,

Pension

* Specify name of the Bank and Account number

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

Uncommuted Pension

14.43 Recording of payment of uncommuted pension. A Pension Pay Bill shall be prepared

for making monthly pension payment to the individual pensioners. On receipt of approved

Pension Pay Bill, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

311-(a)

450-41-(a)

Pension Fund

To Designated Bank

Account*

Dr.

Cr.

500

Pension Fund

Cash Book,

Ledger,

Pension

* Specify name of the Bank and Account number

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

Pension Fund deficit

14.44 An amount equivalent to the deficit in the Pension Fund, i.e., the amount by which the

Pension Fund is inadequate to pay pension to the pensioners, shall be transferred from the

Main Bank Account to the Pension Fund Bank Account. On transfer of funds, the Accounts

Department shall pass the following entry:

National Municipal Accounts Manual Employee Related transactions

14.16

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-41-(a)

450-21-(a)

Designated Bank Account*

To Main Bank Account*

Dr.

Cr.

200

Cash Book,

Pension Fund

Cash Book

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

14.45 The shortfall in the Pension Fund Bank Account, which is met by way of transfer from

the Main Bank Account, shall be treated as an expense of the accounting period in which such

transfer is made. For this, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

210-30-(a)

311-(b)

Pension-Pension Fund Deficit

Contribution

To Pension Fund

Dr.

Cr.

200

Cash Book,

Pension Fund

Cash Book

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable

Employees on Deputation

14.46 On payment of pension contribution in respect of employees on deputation at ULB. In

respect of State Government employees or employees of other organisations/authorities, who

have been deputed to the ULB, if pension contribution is payable by the ULB, to the

concerned authorities, the Accounts Department shall pass the following entry on payment:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

210-30-(a)

450-21-(a)

Pension–Pension Contribution

Employees on Deputation

To Bank Account*

Dr.

Cr.

200

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

GRATUITY AND LEAVE ENCASHMANT

14.47 The ULB may form separate funds for Gratuity and Leave Encashment as per the rules

prescribed by the State Government in this behalf. The ULB shall make contribution to the

Fund at the rates prescribed by the State Government in this behalf.

National Municipal Accounts Manual Employee Related transactions

14.17

14.48 For recognising the liability in respect of contribution to the fund, the Accounts

Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

210-40-(a)

311-(b)

Other Terminal Expenses –

Leave Encashment

Other Terminal Expenses-

Gratuity Expense

To ______Fund

Dr.

Cr.

1,000

500

1,500

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable

14.49 The procedure and the accounting entries in respect of transfer of money to the fund

bank account, payments from the fund, etc. shall be similar to as discussed above in respect of

Pension Fund.

Direct Payment

14.50 If the gratuity and leave encashment amounts were directly paid without creation of a

separate fund, the Accounts department shall pass the following entries for accrual of pension

expenses and payment of the same.

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

On creation of liability for gratuity and leave encashment

210-40-(a)

350-11-(a)

Other Terminal Benefits -Leave

Encashment

Other Terminal Benefits

Gratuity Expenses

To Employee Liabilities

- Gratuity

To Employee Liabilities

- Leave Salary

Dr.

Cr.

1,000

500

1,000

500

Journal Book,

Ledger,

On payment of liability for gratuity and leave salary payable

350-11-(a)

450-41-(a)

Employee Liabilities –

Leave Salary

Employee Liabilities -

Gratuity

To Bank Account

Dr.

Cr.

1,000

500

1,000

500

Journal Book,

Ledger,

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Employee Related transactions

14.18

Employees on Deputation

14.51 On payment of Leave Encashment contribution in respect of Employees on deputation

at ULB. In respect of State Government employees or employees of other

organisations/authorities, who have been deputed to the ULB and if leave encashment

contribution is payable by the ULB to the concerned authorities, on payment, the Accounts

Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

210-40-(a)

450-21-(a)

Other Terminal Benefits –Leave

Salary Contribution for

Employees on Deputation

To Bank Account*

Dr.

Cr.

200

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

INVESTMENT OF RETIREMENT BENEFITS FUNDS

Investment of Pension Fund

14.52 Investments made in respect of Pension Fund shall be entered in a Pension Fund

Investment Register to be maintained in Form IN-1 (provided in Chapter 20 on Investments).

The accounting procedures to be followed and the accounting entries to be passed in respect

of investments of such moneys are similar to those followed in respect of other investments.

They relate to investments, maturity of investment, recording of interest, profit/loss on

sale/maturity of investments, etc. These have been described in Chapter 20 on Investments.

Investment of Other Retirement Benefits Fund

14.53 Investments made in respect of other retirement benefits funds including gratuity and

leave encashment shall be entered in a separate Investment Register to be maintained in Form

IN-1 (provided in Chapter 20 on Investments). The accounting procedures to be followed and

the accounting entries to be passed in respect of investments of such moneys are similar to

those followed in respect of other investments, as described in Chapter 20 on Investments.

ACCOUNTING IN RESPECT OF TRUSTS FORMED BY THE ULB

14.54 The ULB may form Trusts for management of provident fund, pension fund, gratuity

fund, leave encashment fund and other retirement benefits funds as per the guidelines of the

State Government in this behalf.

National Municipal Accounts Manual Employee Related transactions

14.19

14.55 In case Trusts are formed, the ULB shall transfer its contribution to the Trusts as per

the prescribed dates. For recording the transfer of its contribution to the Trusts, the Accounts

Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

311-(a)

210-30-(b)

210-40-(b)

450-21-(b)

Provident Fund*

Pension- Pension/Family

Pension

Other Terminal & Retirement

Benefits -Leave Encashment

Other Terminal & Retirement

Benefits – Gratuity Expense

To Bank Account**

Dr.

Cr.

9,000

1,000

500

11,500

Journal Book,

Ledger

* Provident Fund contribution deducted from the monthly salaries of the employees, as shown

under Para 14.7 (d), should be transferred to the Trust as per the prescribed dates.

** Specify name of the Bank and Account number

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

14.56 The Trusts shall manage the funds transferred to it by the ULB. It shall invest the

funds as per the rules prescribed by the State Government in this behalf.

14.57 The Trust shall maintain books of accounts to record transactions in respect of funds

received by it from the ULB, the funds invested by it, the payments made to the employees,

the interest received on the investments made, etc. The accounting entries to be passed by the

Trusts would be similar to as discussed above under the section ‘Provident Fund’ and

‘Retirement Benefits’. It may be noted here that the ULB shall only record the entry as

discussed in Para 14.53 and all subsequent accounting entries would be passed by the Trust in

its books of accounts.

14.58 At the end of the accounting period, the Trusts shall prepare financial statements in

respect of the funds managed by it. A copy of the financial statements shall be provided to the

ULB by the prescribed dates. The ULB shall attach these to the financial statements of the

ULB.

INTERNAL CONTROLS

14.59 The following internal controls shall be observed by the ULB:

a. Separate Pay Bills shall be prepared by each DDO.

b. Consolidation of Pay Bills of DDO shall be made Department wise and

Department bills are consolidated for ascertainment of ULB level information.

National Municipal Accounts Manual Employee Related transactions

14.20

c. Consolidated paybill summary shall be checked with previous month for ensuring

all DDO and departments bills are included.

d. A monthly reconciliation shall be carried out by the Head of the Accounts

Department and the Head of Establishment Department in respect of loans and

advances outstanding between the balances in the Ledger Accounts maintained at

the Accounts Department and the Register of Employee Advances and Register of

Loans to Employees. Further, at the period-end, the Head of the Accounts

Department shall ensure that accounting entry for recording income in respect of

interest accrued on loans provided to employees has been passed.

e. Every month, the Head of the Accounts Department shall ensure timely remittance

of the various deductions made from the employees' salaries in the Pay Bill to the

concerned authorities.

f. The Head of the Accounts Department shall ensure that the total establishment

expenditure incurred and recorded in the Functional Expense Subsidiary Ledger

reconciles with the balance as per the respective Establishment Expense Ledger

Account. The Subsidiary Ledger shall record total establishment expenses

incurred, including that paid through Pay Bill.

g. Every month, the Head of the Accounts Department or other officers of the ULB

designated by him shall verify that Provident Fund and Pension Fund contribution

deducted for the employees on deputation have been deposited with the concerned

authorities.

h. At every year-end, the Head of the Accounts Department or other officers of the

ULB designated by him shall verify whether interest received or receivable on the

provident fund investment is less than the statutory liability for interest payment to

employees on their balance in the provident fund reserve account, and if so, ensure

that the difference of interest payable is provided for and to that extent amount has

been transferred from Main Bank Account to Provident Fund Bank Account.

i. The Head of the Accounts Department or other officers of the ULB designated by

him shall ensure that payment of pension and other retirement benefits to the

employees at retirement should be made from the Pension Fund and other

retirement benefits funds created by the ULB.

j. All the pension payments shall be made only from the Pension Fund Bank

Account. To the extent of difference/deficit in the Pension Fund, an amount

equivalent to the deficit shall be transferred from the Main Bank Account to the

Pension Fund Bank Account. The transfer shall be made before making payment

to the pensioners from the Pension Fund Bank Account.

National Municipal Accounts Manual Employee Related transactions

14.21

k. The Head of the Accounts Department shall ensure that whenever the entries in

para 14.7 (d) is passed, the equivalent amount of money in respect of deduction of

provident fund contribution and provident fund loan is simultaneously transferred

from the Main Bank Account to the Provident Fund Bank Account.

l. The Chief Executive Officer/Head of the ULB shall specify such appropriate

calendar of returns /reports for monitoring.

14.60 All Reconciliation Statements shall be certified by Head of the Accounts Department.

PRESENTATION IN FINANCIAL STATEMENTS

14.61 The various heads of account used for the accounting of Employee Related

Transactions shall be reflected in the Financial Statements or the Schedules attached to the

Financial Statements of the ULB. All such Financial Statements and schedules should be

affixed with signature and seal of designated authorities.

14.62 The Schedules of Income and Expenditure Statement in respect of Employee Related

Transactions are presented below.

Schedule I-8: Schedule of Interest Earned

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

171-20-(a) Interest on Loans and advances to Employees

Total Income earned from Employees to be shown Interest Earned

Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-9: Schedule of Other Income

Code No. Heads of Account Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

180-40-(a) Recovery from Employees

Total Income earned from Employees to be shown Other Income

Schedule

(a) Insert Detailed Head Codes of Account as applicable

Schedule I-10: Establishment Expenses -Expense head wise

Code No. Head of Account Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

210-10-(a) Salaries, Wages and Bonus

210-20-(a) Benefits and Allowances

210-30-(a) Pension

210-40-(a) Other Terminal & Retirement Benefits

Total Ex

ense of Em

ees to be shown as

artofestablishment

expenses– expense head wise Schedule

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Employee Related transactions

14.22

Note: Details of any other establishment expenses incurred, which has not been specifically disclosed above,

shall be collated and disclosed as Other Administrative expenses, provided the expense incurred does not exceed

the disclosure limits prescribed in this Accounts Manual.

14.63 The Balance Sheet Abstracts in respect of the Employee Related Transactions are

presented below.

Schedule B-2: Schedule of Earmarked Funds

Schedule B – 2: Special Funds

Amount in Rs.

Particulars Pension

Fund

General

Provident

fund

(a) Opening Balance

(b) Additions to the Special Fund

(i) Transfer from Municipal Fund

(ii) Interest/Dividend earned on Special Fund Investments

(iii) Profit on disposal of Special Fund Investments

(iv) Appreciation in Value of Special Fund Investments

(v) Other addition (Specify nature)

Total (b)

Total (a+b)

(i) Capital expenditure on

Fixed Assets*

Others

Sub –total

(ii) Revenue Expenditure on

Salary, Wages and allowances etc.

Rent

Other administrative charges

Sub –total

(iii) Other:

Loss on disposal of Special Fund Investments

Diminution in Value of Special Fund Investments

Transferred to Municipal Fund

Sub –total

Total of (i+ii+iii) (c)

Net balance at the year end –(a+b)-(c)

Grant Total of Special Funds

Note: All funds are to be shown as separate fund either in the schedule or in a separate schedule with the

corresponding indication in the balance sheet under “Funds” on liability.

Additions during the year:

a. Addition to Pension Fund would be out of the "Transfer to Funds" from Income and Expenditure Account as

per the accounting principles.

b. Addition to General Provident and Contributory Provident Fund are the deductions from salary.

c. Interest from investments of Funds would be added to respective Funds.

Deductions during the year:

a. Deductions from Pension Fund means payments made on account of Pension/Family pension

b. Deduction from Gross Provident Fund/Contributory Provident Fund - Advances/Withdrawals.

National Municipal Accounts Manual Employee Related transactions

14.23

Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)

Code No. Particulars

Current

Year

Amount

(Rs.)

Year

Amount

(Rs.)

1234

350-11-(a) Employee Liabilities –Gross Salaries payable

350-11-(a) Employee Liabilities –Salaries Unpaid

350-11-(a) Employee Liabilities –Net Salaries Payable

350-11-(a) Employee Liabilities –Pension payable

350-11-(a) Employee Liabilities –Provident Fund Payable

350-11-(a) Recoveries payable -Provident Fund Contribution for Employees on

Deputation Payable

350-11-(a) Recoveries payable -Investment by Employees Payable

350-11-(a) Recoveries payable –Contribution to Societies Payable

350-11-(a) Recoveries payable -Loan Recovery for External Agencies Payable

350-20-(a) Recoveries Payable -TDS from Employees

350-20-(a) Recoveries Payable Profession Tax Payable

350-20-(a) Recoveries Payable Insurance Premium Payable

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-17: Schedule of Cash and Bank Balances

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

450-10-(a) Cash

450-21-(a) Bank Account

450-41-(a) Designated Bank Account

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-18: Schedule of Loans, advances and deposits

Code No. Particulars

Opening

Balance at

the beginning

of the year

(Rs.)

Paid

during the

current

year

(Rs.)

Recovere

d during

the year

(Rs.)

Balance

outstanding at

the end of the

year

(Rs.)

12 3456

460-10-(a) Loans and advances to employees

460-20-(a) Employee Provident Fund Loans

Total

461-(b) Less: Accumulated Provisions

against Loans, Advances and

Deposits

Net total of Receivables from

Employees

(a) Insert Detailed Head Codes of Account as applicable

(b) Insert Minor & Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Employee Related Transactions

14.24

Form ES-1

______________ Name of the ULB

CONSOLIDATED PAY BILL SUMMARY ROLL OF THE PERMANENT/TEMPORARY ESTABLISHMENT

FOR THE MONTH OF ______

Substantive pay (Personal pay or

special pay, if any, should also be

showninthiscolumnasaseparate

entry below substantive pay)

Leave

Salary

Officiating

pay

Compensatory

or other

allowances

Total

Serial No. Section of

establishment

Rs. Rs. Rs. Rs. Rs.

12 3 4567

National Municipal Accounts Manual Employee Related Transactions

14.25

Deductions

Pay, officiating

pay or leave

salary held over

for future

payment

Income

Tax

Provident Fund

Subscription

Other

deductions *

Miscellaneous

recoveries

(Fines and

advances, house

rent, etc.)

Net amount

payable Remarks Date of receipt

of bill

Rs. Rs. Rs. Rs. Rs. Rs.

8 9 10 11 12 13 14 15

*Please specify the nature of Deduction

Total

(in words ………..)

National Municipal Accounts Manual Employee Related Transactions

14.26

Form ES-2

______________ Name of the ULB

FOR THE YEAR 20 ____to 20____

Repayments or adjustments

Month and date

and name of the

employee

Particulars

of advance

Voucher or

receipt number Amount Monthly

Total April May June July August September

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

1234567891011

National Municipal Accounts Manual Employee Related Transactions

14.27

Repayments or adjustments

October November December January February March

Total

Repayment

for the year

Date and

voucher number

of repayment/

adjustment

Balance

remaining

unadjusted at

the end of the

year

Remarks

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

12 13 14 15 16 17 18 19 20 21

Entered By :# ___________________ Checked By :# _________________

** Total repayment in Column 18 shall be the sum total of Columns 6 to 17

# For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry.

National Municipal Accounts Manual Employee Related Transactions

14.28

Form ES-3

______________ Name of the ULB

FOR THE YEAR 20 __to 20__

Interest Accrued during the

Quarters

Repayments or

Adjustments *

Name of

Employee

Particulars of

Loans

Opening

Cumulative

Accrued Interest Quarter

Quarter

III

Quarter

Total

Interest

Accrued

during the

year

Total

Cumulative

Accrued

Interest April May June

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

1 2 3 4567 8 9 101112

(4+5+6+7) (3+8)

National Municipal Accounts Manual Employee Related Transactions

14.29

Repayments or Adjustments *

July August September October November December January February March

Total Interest

Recovered

during the year

Balance

remaining

unadjusted at

the end of the

year***

Remarks

Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs. Rs.

13 14 15 16 17 18 19 20 21 22 23 24

(9-22)

Entered By :#___________________ Checked By :#___________________

** Column 22 shall be sum total of columns 10 to 21

*** Balance in Column 23 at the end of the accounting year shall be the opening balance of Column 3 in the next year

# For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry

National Municipal Accounts Manual Employee Related Transactions

14.30

Form ES-4

______________ Name of the ULB

UNPAID SALARY REGISTER FOR THE YEAR 20___to 20__

Payments

Date Serial No. of credit Name of person On what account Amount (Rs.) Initials of

Authorised Officer

12 3456

Payments

Date Serial No. of

payment

Name of person Amount(Rs.) Acquittance of

payee

Initials of

Authorised Officer

789 11 1213

Entered By :*______________ Checked By :*______________

*For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry

National Municipal Accounts Manual Employee Related Transactions

14.31

Form ES-5

______________ Name of the ULB

Number of Pension Payment Order Name of Pensioner Monthly amount

(Rs.) Remarks

1234

Entered By :* ______________ Checked By :*______________

* For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry

National Municipal Accounts Manual Employee Related Transactions

14.32

Form ES-6

______________ Name of the ULB

PENSION REGISTER

Name of Pensioner_____________

Orders sanctioning the pension_________________

20__ to 20 __ 20__ to 20 __ 20__ to 20 __ 20__ to 20 __

Month Date of

payment

Voucher

No.

Initials of

Authorised

Officer

Date of

payment

Voucher

No.

Initials of

Authorised

Officer

Date of

payment

Voucher

No.

Initials of

Authorised

Officer

Date of

payment

Voucher

No.

Initials of

Authorised

Officer

Remarks

1 2 3 4 5 6 7 8 9 10 11 12 13 14

April ..

May ..

June ..

July ..

August ..

September ..

October ..

November ..

December ..

January ..

February ..

March ..

Entered By :* ______________ Checked By :* ______________

* For each entry made; record the Name, Designation and Signature of the person making the entry in the register and the person checking the entry

National Municipal Accounts Manual Health & Sanitation

15.1

CHAPTER 15

+($/7+ 6$1,7$7,21

INTRODUCTION

15.1 This chapter contains the recommended accounting system for transactions

relating to health and sanitation activities in the Urban Local Body (ULB).

15.2 The Health Department is primarily involved in operating the hospitals,

dispensaries & maternity homes and in monitoring sanitation and other public health

related activities, within the limits of the ULB.

15.3 The main sources of incomes earned by the Health Department are as follows:

a. Fees and User Charges (accounted under Code of Account -)

Fees from Medical Institutions

Registration Fees for Patients

Recovery of Cost of Medicines

Examination Charges [X -Rays, Tests, Ultra-Sound, etc.]

Ambulance Charges

Funeral/Hearse Van Services

License fees from Butchers and Traders of Meat

Meat and Poultry Trade Licensing Fees, etc.

Disposal Charges (Solid Waste)

National Municipal Accounts Manual Health & Sanitation

15.2

b. Sale & Hire Charges (accounted under Code of Account -)

Sale of Garbage/Manure

15.4 Besides incurring the usual administrative expenses such as establishment

expenses, printing, stationery, office expenses, etc., the Health Department incurs

expenses related to its Health and Sanitation functions. Following is an illustrative list

of the expenses incurred in respect of the Health Department:

a. Sanitation related expenses

Solid Waste Management related expenses

SCity cleaning and sweeping

SGarbage clearance

SDumping ground maintenance

Repairs and Maintenance – Solid Waste Management related expenses

SDustbin repairs and maintenance

SCattle-shed maintenance

SCrematoria operation and maintenance

Own Programmes

Consumption of Health Stores – Solid Waste Management, etc.

SPurchase of cleaning material

SInsecticides and pesticides

SInsecticides and pesticide spraying

b. Hospitals and Dispensaries related

Medical related expenses,

Testing & inspection fees,

Repairs and Maintenance – Medical/Health related assets,

Consumption of Medical Stores, etc.

c. Public Health progamme/scheme related

Health Program related expenses,

SFamily welfare expenses

SPulse polio vaccination expenses

SSchool children health program related expenses

SAids awareness expenses, etc.

National Municipal Accounts Manual Health & Sanitation

15.3

ACCOUNTING PRINCIPLES

15.5 The following Accounting Principles shall govern the recording, accounting

and treatment of transactions relating to health and sanitation:

a. Revenue in respect of the following shall be recognised on actual receipt.

i. Hospital fees, maternity homes fees, diagnostic centre fees and

dispensaries fees

ii. Hospital training fees

iii. Rent and/or hire charges in respect of ambulance, hearse, suction unit,

meat van and road roller

iv. Sale of fertilisers and waste, sale of animals and sale of scrap.

b. Revenue in respect of Trade License Fees shall be accrued in the year to

which it pertains and where the demand is raised based on applicable Acts

of the state.

c. Revenue in respect of rent of equipment provided to the contractors,

deducted from their bills, shall be recognised as and when the deductions

are made.

d. All revenue expenditures incurred shall be recognised on admission of the

bills for payment by the ULB.

e. Provision shall be made at the year-end for all bills received up to a cut off

date (30th April of the next financial year). However, the State

Governments, depending on practicality and materiality involved can

decide on this.

ACCOUNTING RECORDS & PROCEDURES

15.6 This section describes the records, registers, documents, forms, accounting

entries, etc., in respect of accounting for transactions related to Health & Sanitation.

For the purposes of accounting of Health & Sanitation all the forms applicable, are

generally applicable in respect of the transactions of the ULB including in respect of

Health & Sanitation.

National Municipal Accounts Manual Health & Sanitation

15.4

ACCOUNTING FOR INCOME AND OTHER RECEIPTS

Medical Fees

15.7 The procedure to be followed for the collection and accounting of medical fees

shall be as follows:

a. The collection in respect of the medical fees shall be made at the respective

units (i.e. Hospitals, Dispensaries, Maternity Homes, etc.). A Receipt

(Form GEN-8) or pre-denominated tokens shall be issued to the person

making the payment at the respective units.

b. The amount collected by the units shall be deposited in a Designated Bank

Account or forwarded to the Ward Office or to the Accounts Department.

c. The procedures for cash/cheque collection, remittance and/or deposit have

been described in Chapter 5 - General Accounting Procedures, reference to

which is invited. These procedures should be followed for Health and

Sanitation related transactions.

d. Recording of collection of medical fees. On the basis of the Summary of

Daily Collection (Form GEN-12) received from the various entities, i.e.,

Units, Ward Offices, Health Department, etc., the Accounts Department

shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

140- (b)

Bank Account*

To ________ Charges**

Dr.

Cr.

10,000

Cash Book,

Ledger

* Specify name of the Bank and account number

(a) Specify the Detailed head codes of account as applicable

(b) Insert Minor & Detailed Head Codes of account as applicable.

Note: The postings in the Ledger Account of “________ Charges” Account shall be carried

out as indicated in Chapter 5 – General Accounting Procedures. The postings in the Ledger

Accounts shall be similarly carried out in respect of all other accounting entries described

subsequently in this chapter. Whenever, the cash or the bank account is involved, there will be

no entry in the Journal Book.

National Municipal Accounts Manual Health & Sanitation

15.5

Hospital Training Fees

15.8 Recording of collection of hospital training fees. Hospital training fees are

charges from medical colleges for granting internship facilities to their students in the

hospitals owned by the ULB. The procedure followed for collection of hospital

training fees shall be the same as described above for the collection of medical fees.

To record the collection of hospital training fees, the Accounts Department shall pass

the entry referred to in para. 15.7 (d).

Trade License Fees

15.9 The income in respect of trade license fees shall be recognised on accrual

basis. It shall be accrued in the year to which it pertains and where the demand is

raised based on applicable Acts of the State.

15.10 The procedure and accounting entries in respect of demand raised for trade

license fees, collections made, provisioning for unrealised fees, etc. shall be similar to

as described under section ‘Accounting for Incomes to be accounted on Accrual

Basis’ in Chapter 11 – Rentals, Fees, and Other Incomes.

Other Incomes

15.11 The other incomes pertaining to the health and sanitation related activities

such as ambulance rent, suction unit rent, dumping ground charges, etc., shall be

accounted for in the manner as has been described under section ‘Accounting for

Other Incomes to be accounted on Actual Receipt Basis’ in Chapter 11 - Rentals,

Fees, and Other Incomes.

EXPENDITURES PERTAINING TO HEALTH AND SANITATION

15.12 The accounting for expenditures pertaining to hospitals, dispensaries,

sanitation, scavenging, etc., shall be similar to that described in Chapter 12 - Public

Works (for expenditure incurred through awarding of contracts to outside parties for

carrying out certain activities), Chapter 13 - Stores (for expenditure incurred on

purchase of stores such as medicines, insecticides, pesticides, etc.) and Chapter 16 -

Other Revenue Expenditures in respect of all other expenditures pertaining to health

and sanitation related activities.

15.13 At the period-end, the Health Department shall ensure that all the bills

received in respect of expenses incurred before the last date of the accounting period,

are processed and forwarded to the Accounts Department for accounting by 30th April

of the next financial year if the accounting period is a financial year and in other cases

in 15 days from the end of the accounting period.

National Municipal Accounts Manual Health & Sanitation

15.6

INTERNAL CONTROLS

15.14 The following internal controls shall be observed by the ULB in respect of

health and sanitation related transactions :

a. A quarterly reconciliation shall be carried out by the Head of the Accounts

Department and the Head of the Health Function in respect of the amount

collected under the various heads based on the balances standing in the

Functional Income Subsidiary Ledger (Form GEN-33) in respect of Fees &

User Charges and Sale & Hire Charges relating to Health Function

maintained at the Accounts Department and the Collection Register (Form

GEN–11) maintained at the Health Department.

b. The officers designated by the ULB for operating the Designated Hospital

Bank Account shall co-ordinate with the banks on a daily basis and

ascertain the status of the cheques deposited by them.

c. The Head of the Accounts Department shall ensure budget availability

with respect to the expenditure incurred at the time of accruing of the

expenditure.

d. The Head of the Accounts Department shall ensure that all the

bills/invoices were journalised before release of the payments.

e. The Chief Executive Officer/Head of the ULB shall specify such

appropriate calendar of returns /reports for monitoring.

15.15 All Reconciliation Statements shall be certified by the Head of the Accounts

Department and verified by the Municipal Chief Auditor.

PRESENTATION IN THE FINANCIAL STATEMENTS

15.16 The various heads of accounts used for the accounting of Health and

Sanitation related transactions shall be reflected in the Financial Statements or the

Schedules attached to the Financial Statements of the ULB. All such Financial

Statements and schedules should be affixed with signature and seal of designated

authorities.

15.17 The Schedules of Income and Expenditure Statement in respect of Health and

Sanitation related income and expenses are presented below.

National Municipal Accounts Manual Health & Sanitation

15.7

Schedule I-4: Schedule of Income from Fees & User Charges – Income head-wise

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

140-10-(a) Empanelment & Registration Charges- Patients

140-40-(a) Other Fees- Health Fees

140-50-(a) User Charges-Medicines

140-50-(a) User Charges-Examination Charges

140-50-(a) User Charges-Ambulance

Total income of Health & Sanitation to be shown as part of

Fees & User Charges – Income head-wise Schedule

(a) Specify the Detailed head codes of account as applicable

Schedule I-5: Schedule of Income from Sale & Hire Charges – Income head-wise

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

150-11-(a) Sale of Forms

150-41-(a) Hire Charges of Equipment – Medical Equipment

Total income of Health & Sanitation to be shown as part of

Sale & Hire Charges – Income head-wise Schedule

(a) Specify the Detailed head codes of account as applicable

Schedule I-12: Schedule of Operations & Maintenance – Expenditure head-wise

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

230-51-(a) Repairs & maintenance - Civic Amenities

230-52-(a) Repairs & maintenance – Hospital Buildings

230-53-(a) Repairs & maintenance – Health Vehicles

230-59-(a) Repairs & maintenance – Others

Total expense of Health & Sanitation to be shown as part of

Operations & Maintenance Expenses Schedule

(a) Specify the Detailed head codes of account as applicable

Schedule I-14: Schedule of Programme Expenses

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

250-20-(a) Own Programmes

250-30-(a) Share in Programmes of others

Total expense of Health & Sanitation to be shown as part of

Program Expenses Schedule

(a) Insert the Detailed head codes of account as applicable

National Municipal Accounts Manual Health & Sanitation

15.8

15.18 The Balance Sheet Abstract in respect of Health & Sanitation Expense is

presented below:

Schedule B-17: Schedule of Cash and Bank Balances

Code of

Account Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

1234

450-10-(a) Cash

450-21-(a) Bank Account

Total

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Other Revenues Expenditures

16.1

CHAPTER 16

27+(55(9(18((;3(1',785(6

INTRODUCTION

16.1 This chapter contains the recommended accounting system for transactions

relating to revenue expenditures other than the employees related expenses, the Public

Works and the Stores. The expenditures discussed in this chapter are those in respect of

which the benefits expire in a short period of time, i.e., less than one year.

16.2 The revenue expenditures discussed in this chapter could illustratively include:

a. Administrative Expenses

¾Books and Periodicals, Newspapers

¾Legal expenses

¾Fuel

¾Printing

¾Stationery

¾Advertisement and publicity

¾Service Postage / Stamps

¾Electricity and power

¾Telephone and communication expenses

¾Rent, Rates and Taxes

¾Suit Compromises

National Municipal Accounts Manual Other Revenues Expenditures

16.2

¾Professional and other Fees/charges

¾Insurance charges

¾Hospitality expenses

¾Training expenses

¾Computer related expenses (Revenue Expenses)

¾Any other expenses, etc.

b. Programme Expenses

¾Election Expenses

¾Own Programmes

¾Share in Programmes of others

¾Census Expenses; etc

c. Miscellaneous Expenses

¾Miscellaneous contingent expenses

¾Women and Child Welfare Expenditure

¾Backward Class Expenditure; etc.

16.3 Payment in respect of all the expenses incurred or borne by the ULB shall be

made centrally by the Accounts Department. However, payment for certain categories of

expenses, may be made from the Permanent Advance granted to a Head of the

Department as resolved by the ULB or from the advance provided to the employees of the

ULB.

16.4 Permanent Advance refers to those advances, which are granted to the Heads of

the Departments for incurring certain specific expenditure, usually of a minor nature

involving payments of small amounts, subject to bye-laws framed by the ULB in this

behalf.

16.5 The ULB may also grant Miscellaneous Advance for incurring expenditure to the

employees of the ULB. Such advances are expected to be settled immediately after the

purpose for which they were sanctioned has been fulfilled.

National Municipal Accounts Manual Other Revenues Expenditures

16.3

ACCOUNTING PRINCIPLES

16.6 The following Accounting Principles shall govern the recording, accounting and

treatment of transactions relating to Other Revenue Expenditures:

a. Other Revenue Expenditures shall be treated as expenditures in the period in

which they are incurred.

b. Provision shall be made at year-end for all bills received upto a cut off date

(30thApril of next financial year). However, state governments, depending on

practicality and materiality involved can decide on this.

c. Any expenditure for which the payment has been made in the current period

but the benefit and/or service is likely to arise in a future period shall be

treated as an expenditure for the period in which its benefit arises and/or

services are received.

d. The expenditure for the current period shall include the proportionate value of

the benefits and/or services arising in the current period even if the payment

therefor has been made in the previous period.

ACCOUNTING RECORDS & PROCEDURES

16.7 This section describes the records, registers, documents, forms, accounting

entries, etc., in respect of accounting for transactions related to Other Revenue

Expenditures. For the purposes of accounting of Other Revenue Expenditures all the

forms applicable, are the ones generally applicable in respect of the transactions of the

ULB.

16.8 The concerned department, on receipt of bill or invoice for goods purchased or

services received, shall prepare a Payment Order in Form GEN-14 and forward it to the

Accounts Department for payment.

16.9 On receipt of the Payment Order, the Accounts Department shall enter the

particulars thereof in a Register of Bills for Payment (Form GEN-13).

16.10 The procedure to be followed for approval and accounting of payment of

expenditure is the same as provided in Chapter 5 on General Accounting Procedures.

National Municipal Accounts Manual Other Revenues Expenditures

16.4

16.11 Recording payment of expenditure. With regard to the payment made towards an

expenditure, the benefit of which is likely to expire within a financial year in which it is

incurred, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-(a)

230-(a)

271-(a)

450-21-(b)

_________ Expenses**

_________ Expense**

To Bank Account*

Dr.

Cr.

25,000

15,000

10,000

50,000

Cash Book,

Ledger

* Specify name of the Bank and Account number

** Specify the appropriate expense head.

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

Note: The postings in the Ledger Account of “__________ Expenses” Account shall be

carried out as indicated in Chapter 5 – General Accounting Procedures. The postings in the

Ledger Accounts shall be similarly carried out in respect of all other accounting entries

described subsequently in this chapter. Whenever the cash or the bank account is involved,

there will be no entry in the Journal Book.

16.12 The Accounts Department shall maintain a Functional Expense Subsidiary Ledger

in Form GEN–34 for each function in which various administrative expenditure incurred

by a function shall be recorded on a daily basis. On payment of administrative

expenditure, the Accounts Department shall immediately update the Functional Expense

Subsidiary Ledger. The procedure for updating Subsidiary Ledger has been provided in

Chapter 5 – General Accounting Procedures, reference to which is invited.

TREATMENT OF EXPENSES INVOLVING AN ELEMENT OF PREPAYMENT

16.13 In case of expenses for which payment is made in one accounting period and the

benefit is likely to be received in the period within which the payment is made as well as

the next period, the accounting entries shall be as explained below. This is illustrated with

reference to rent payment.

16.14 Suppose the rent is payable in advance for a calendar year, e.g., January 2004 to

December 2004. The bill for this is received in the month of November 2003. The portion

in respect of January 2004 to March 2004 will pertain to the financial year 2003-2004.

The portion in respect of April 2004 to December 2004 will pertain to the financial year

2004-2005.

National Municipal Accounts Manual Other Revenues Expenditures

16.5

16.15 Recordings of payment say in November 2003. The Accounts Department shall

pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-10-(a)

450-21-(a)

Rent, Rates & Taxes

To Bank Account*

Dr.

Cr.

48,000

Cash Book,

Ledger**

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

16.16 Recording of adjustment of prepaid rent. Immediately on expenditure being

incurred, the amount of rent paid in advance shall be determined for recording the prepaid

rent. For adjusting the rent paid for April 2004 to December 2004, i.e., for the next

financial year, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

440-20-(a)

220-10-(a)

Prepaid Expenses –

Administration

To Rent, Rates &

Taxes

Dr.

Cr.

36,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

Note: This entry shall be passed only if the prepaid amount is ascertainable at the time of

recording expenditure. If such amount is not ascertainable at the time of recording of

expenditure, the same shall be ascertained at the period-end and recorded then.

16.17 Recording of rent expense in next year. In the financial year 2004-2005, in April

2004, the following entry shall be passed:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-10-(a)

440-20-(a)

Rent, Rates & Taxes

To Prepaid Expenses –

Administration

Dr.

Cr.

36,000

Journal Book,

Ledger

(a) Insert Detailed Head Codes of Account as applicable

16.18 By passing the entries in the above manner, the following shall happen:

a. Rent expense for the year 2003-2004 shall be shown as at Rs. 12,000 (Rs.

48,000 less Rs. 36,000).

National Municipal Accounts Manual Other Revenues Expenditures

16.6

b. Prepaid rent of Rs. 36,000 shall be carried forward in the Balance Sheet as at

31st March 2004 and shown as an asset.

c. Rent expense for the year 2004-2005 shall be shown at Rs. 36,000 as far as it

relates to the payment made in November 2003.

d. For the payment made during financial year 2004-2005, similar entries as

above would need to be passed. It is likely that a further Rs. 12,000 shall be

treated as an expense in the financial year 2004-2005 and therefore, the total

rent for the financial year 2004-2005 shall be Rs. 48,000 (Rs. 36,000 paid in

previous year plus Rs.12, 000 paid in the year 2004-2005).

16.19 All other expenses shall be treated in a similar manner.

16.20 Most expenses which are payable on a time basis shall be treated in the above

manner. In case of expenses of a sporadic nature, if the entire service has not been

received in the year of payment, an estimate would need to be made at the end of the

financial year to carry forward the unexpired portion of the benefit or service to the next

financial year.

ACCRUED EXPENDITURE

16.21 There may be instances of expenditures, which pertain to a particular accounting

period in respect of which the bills have been received but may not have been admitted

for payment by the ULB. These shall be provided at the end of an accounting period to

fully reflect the revenue expenditures incurred in that period.

16.22 For this, at the end of the accounting period, each of the departments shall collate

the details of the accrued expenditure from the bills received during or after the

accounting period but pertaining to the accounting period and remaining unpaid at the end

of the accounting period. The said information shall be collated in Form GEN-28 by 30th

April of the next financial year where the accounting period is a financial year and in

other cases in 15 days from the end of the accounting period.

16.23 The portion of a bill representing accrued liability in respect of an accounting

period shall be accounted for in that period’s books, irrespective of the fact that it has

been received in the next accounting period.

National Municipal Accounts Manual Other Revenues Expenditures

16.

16.24 Recording of Accrued Expenditure. For recording the accrued expenditure, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-(a)

360-10-(b)

__________ Expenses*

To Provision for

Expenses

Dr.

Cr.

2,00,000

Journal Book,

Ledger

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

16.25 Payment of Accrued Expenditure. In the next accounting period, upon payment of

accrued expenditure, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

360-10-(a)

450-21-(a)

Provision for Expenses

To Bank Account*

Dr.

Cr.

2,00,000

Cash Book,

Ledger

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

16.26 Suppose the bill in respect of legal fees of Rs. 10,000/- payable for the months of

March 2004 and April 2004 is received at the end of April 2004 with the expenditure for

the month of April being separately quantified at Rs. 5,000/-.

a. Recording the liability. For the accrued expenditure, the Accounts Department

shall pass the following entry for legal fees in the books of accounts of

financial year 2003 – 2004:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-51-(a)

350-10-(a)

Legal Expenses – Legal Fees

To Creditors -Expenses

Dr.

Cr.

5,000

Journal Book,

Ledger**

(a) Insert Detailed Head Codes of Account as applicable

b. Recording of payment of Legal Fees. When the payment is made in the month

of April 2004, the following entry shall be passed in the books of accounts of

financial year 2004-2005:

National Municipal Accounts Manual Other Revenues Expenditures

16.8

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-51-(a)

350-10-(a)

450-21-(a)

Legal Expenses – Legal

Fees

Creditors – Expenses

To Bank Account*

Dr.

Cr.

5,000

10,000

Cash Book,

Ledger

* Specify Name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

16.27 The effect of the above entries shall be as follows:

a. Legal Expenses shall be reflected for March 2004 in the accounts for the

period 2003-2004 and an outstanding liability created.

b. When the actual payment is made, the legal expenses ledger account shall be

debited for that portion of legal fees which pertains to April 2004 and

Creditors for Other Expenditures shall be debited for that portion of legal fees

which pertains to March 2004 for which a liability was created in the financial

year 2003-2004.

PAYMENT AGAINST PERMANENT ADVANCE

16.28 Recording of grant of Permanent Advance. Permanent Advance may be provided

to the heads of the departments for incurring specific expenditure, as per the bylaws of the

ULB or as approved by the ULB. The Accounts Department shall record the grant of

Permanent Advance in Register of Permanent Advance in Form GEN-17 and pass the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

460-50-(a)

450-21-(a)

Advance to others –

Permanent Advance

To Bank Account*

Dr.

Cr.

2,500

Cash Book,

Ledger, Register

of Advances

* Specify Name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

16.29 Recording of other revenue expenditure incurred. Expenditure in respect of which

Permanent Advance has been provided shall be initially incurred against it. At intervals of

not more than one month, the concerned department shall prepare a Payment Order (Form

National Municipal Accounts Manual Other Revenues Expenditures

16.9

GEN-14) and forward it to the Accounts Department. On receipt of Payment Order, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-(a)

460-50-(b)

__________ Expenses*

To Advance to others

Permanent Advance

Dr.

Cr.

1,000

Journal Book,

Ledger, Register

of Advances

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

16.30 The Accounts Department after recording the aforesaid entry shall replenish the

permanent advance to the extent of the amount expended and in respect of which entry as

referred to in para. 16.28 shall be passed.

16.31 For recovery of Permanent Advance.The permanent advance granted to the

Departments shall be recovered at the end of the financial year. On receipt of money, the

Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

460-50-(a)

Bank Account*

To Advance to others –

Permanent Advance

Dr.

Cr.

1,500

Cash Book,

Ledger, Register

of Advances

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

PAYMENT AGAINST MISCELLANEOUS ADVANCE

16.32 Recording of grant of Miscellaneous Advances. Miscellaneous Advances may be

given to the employees of the ULB for incurring specific expenditure for the ULB. The

Accounts Department at the time of granting of miscellaneous advance shall make an

entry in the Register of Advance (Form GEN-16) and pass the following entry:

National Municipal Accounts Manual Other Revenues Expenditures

16.10

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

460-10-(a)

450-21-(a)

Advances to Employees-

Miscellaneous Advance

To Bank Account*

Dr.

Cr.

1,500

Cash Book,

Ledger, Register

of Advances

* Specify Name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

Expenses incurred are less than the advance given

16.33 Recording of Expense incurred. The concerned employee shall prepare a Payment

Order (Form GEN-14) for the expenditure incurred against the miscellaneous advance

provided (for e.g. - expenses incurred are Rs. 1,000 against advance provided Rs. 1,500)

and forward it to the Accounts Department. The excess cash shall be re-deposited with

the Accounts Department. The Accounts Department shall update the Register of

Advances (Form GEN-16) for the Payment Order received and pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-(a)

460-10-(b)

Administrative Expenses –

Others

To Advances to

Employees –

Miscellaneous Advance

Dr.

Cr.

1,000

Journal Book,

Ledger, Register

of Advances

(a) Insert Minor and Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

16.34 Re-deposit of excess cash. For excess cash tendered along with the Payment

Orders, the Accounts Department shall pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

450-21-(a)

460-10-(a)

Bank Account*

To Advances to

Employees –

Miscellaneous

Advance

Dr.

Cr.

500

Cash Book,

Ledger, Register

of Advances

* Specify name of the Bank and Account number

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Other Revenues Expenditures

16.11

Expenses incurred are more than the advance given

16.35 Recording of Expense incurred. The concerned employee shall prepare a Payment

Order (Form GEN-14) for the expenditure incurred against the miscellaneous advance

provided (for e.g. - expenses incurred are Rs. 2,500 against advance provided Rs. 1,500)

and forward it to the Accounts Department. The Accounts Department shall update the

following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-(a)

460-50-(b)

___________ Expenses*

To Advances to

Employees –

Miscellaneous Advance

Dr.

Cr.

1,500

Journal Book,

Ledger, Register

of Advances

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

16.36 Recording extra expense incurred. In case, expenditure incurred is more than the

advance provided to the employee, for recording the extra expenditure incurred and

payment for it, either to the employee or to the supplier, the Accounts Department shall

pass the following entry:

Code of

Account Accounting Entry Dr./

Cr.

Debit

Amount

(Rs.)

Illustrative

figures

Credit

Amount

(Rs.)

Illustrative

figures

Books to be

entered into

220-(a)

450-21-(b)

__________ Expenses**

To Bank Account*

Dr.

Cr.

1,000

Cash Book,

Ledger, Register

of Advances

* Specify name of the Bank and Account number

(a) Insert Minor & Detailed Head Codes of Account as applicable

(b) Insert Detailed Head Codes of Account as applicable

ACCOUNTING OF EXPENDITURE INCURRED IN TERMS OF ANY GRANT

OR SPECIAL FUND

16.37 The procedure to be followed for accounting of expenditure incurred in pursuance

of the terms and conditions of any Grants or Special Funds, shall be the same as what is

described above in respect of expenditure incurred by the ULB during the normal course

of its operations. The expenditure so incurred shall be paid from the respective designated

bank accounts. The accounting entry to be passed for expenditure incurred and paid shall

National Municipal Accounts Manual Other Revenues Expenditures

16.12

be the same as what has been described in Chapter 17 on Grants in respect of expenditure

incurred under any Grant and Chapter 19 on Special Funds in respect of expenditure

incurred from any Special Fund.

INTERNAL CONTROLS

16.38 The following internal controls shall be observed by the ULB:

a. The Head of the Accounts Department shall ensure budget availability with

respect to the expenditure incurred at the time of accruing of the expenditure.

b. The Head of the Accounts Department shall ensure that all the bills/invoices

were journalised before release of the payments.

c. The Head of the Accounts Department shall ensure proper authorisation of

Payment Order as per the authorities delegated by the ULB.

d. The Head of the Accounts Department shall ensure that the relevant

supporting documents are annexed to the Payment Order submitted by the

Department.

e. The Head of the Accounts Department shall ensure appropriate classification

both in terms of expenditure head and the period in which the expenditure has

been accounted with reference to the nature of the bill and the date of the bill,

respectively.

f. On a quarterly basis, and, also in between, on a random basis, the Head of the

Accounts Department shall conduct physical verification of cash in hand held

at the various departments and tally it with the departmental records

maintained there and thereafter with the Register of Advances (Form GEN-16)

maintained at the Accounts Department.

g. At the time of making payment, the Accounts Department shall ensure that

reference to the departmental Register of Bills for Payment where the payment

bill has been recorded by the department concerned, is provided in the

Payment Order. In case of non-referencing, the Accounts Department shall

return the Payment Order to the concerned Department for rectification and

resubmission. In addition, at the time of payment to Suppliers/contractors and

any other creditors it shall be ensured that no amount is due from them, which

may be adjusted before payment.

National Municipal Accounts Manual Other Revenues Expenditures

16.13

h. The Head of the Accounts Department shall ensure that a monthly

reconciliation of total expenditure incurred and recorded in the Departmental

Expense (Administrative Expenses) Subsidiary Ledger is carried out with the

total expenditure recorded in several Administrative Expense Ledger

Accounts.

i. The Chief Executive Officer/Head of the ULB shall specify such appropriate

calendar of returns /reports for monitoring.

16.39 All Reconciliation Statements shall be certified by the Head of the Accounts

Department.

PRESENTATION IN FINANCIAL STATEMENTS

16.40 The prepaid expenses and accrued liability shall be identified for proper disclosure

in the Balance Sheet of the ULB.

16.41 The various heads of accounts used for the accounting of Other Revenue

Expenditures shall be reflected in the Financial Statements or the Schedules attached to

the Financial Statements of the ULB. All such Financial Statements and schedules should

be affixed with signature and seal of designated authorities.

16.42 The Schedules of Income and Expenditure Statement in respect of Other Revenue

Expenditures are presented below.

Schedule I-11: Schedule of Administrative Expenses – Expenditure head-wise

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

220-10-(a) Rent, Rates and Taxes

220-51-(a) Legal Expenses

220-80-(a) Other Administrative Expenses

Total expense of Other Revenue Expenditure to be shown as part

of Administrative expenses – expense head wise Schedule

(a) Insert Detailed Head Codes of Account as applicable

16.43 The abstracts of Balance Sheet in respect of Other Revenue Expenditures are

presented below:

National Municipal Accounts Manual Other Revenues Expenditures

16.14

Schedule B-9: Schedule of Other Liabilities (Sundry Creditors)

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

350-10-(a) Creditors – Payable against Expenses

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-10: Schedule of Provision for Expenses

Code No. Particulars Current Year

Amount (Rs.)

Previous Year

Amount (Rs.)

12 34

360-10-(a) Provision for Expenses

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-16: Schedule of Prepaid Expenses

Code No. Particulars Current year

Amount (Rs.)

Previous year

Amount (Rs)

12 3

440-20-(a) Administration

Total

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-17: Schedule of Cash and Bank Balances

Code No. Particulars Current year

Amount (Rs.)

Previous year

Amount (Rs.)

12 34

450-10-(a) Cash Account

450-21-(a) Bank Account

450-41/61-(a) Designated Bank Account

Total Cash and Bank balances

(a) Insert Detailed Head Codes of Account as applicable

Schedule B-18: Schedule of Loans, advances and deposits

Code No. Particulars

Opening

Balance at

the

beginning of

the year

(Rs.)

Paid during

the current

year

(Rs.)

Recovered

during the

year

(Rs.)

Balance

outstanding

at the end of

the year

(Rs.)

12 3456

460-50-(a) Advance to Others

Net total of Loans,

advances, and deposits

(a) Insert Detailed Head Codes of Account as applicable

National Municipal Accounts Manual Grants

17.1

CHAPTER 17

*5$176

INTRODUCTION

17.1 This chapter contains the recommended accounting system for transactions relating to

Grants received by the Urban Local Body (ULB).

17.2 The ULB receives grants from the State and/or Central Government(s). The grants

received by the ULB could be either for general purposes or for carrying out specific

projects/schemes or in form of reimbursements for specific expenditures.

NATURE OF GRANTS

17.3 Grants received by the ULB may be of a capital or revenue nature. A Capital Grant is

usually utilised for capital expenditure i.e. creation of a fixed asset (like purchase of land,

building, equipment, facilities, etc.). The benefits of such expenditure are of an enduring

nature and spread over an extended period of time. A Revenue Grant, on the other hand, is

generally utilised for meeting recurring expenditure, the benefits of which usually expire

within the accounting year in which it is incurred. Revenue Grants are usually in the nature of

a subsidy. Grants may be for a non-specific purpose, i.e., General Grants or for a specific

purpose, i.e., Specific Grants. These are further described below.

National Municipal Accounts Manual Grants

17.2

GENERAL GRANTS

17.4 Grants received for general (unspecified) purposes are usually in the form of a

lumpsum payment from the State Government to facilitate meeting certain expenditure

(usually revenue in nature) relating to the ULB’s activities.

17.5 Following is an illustrative list of the General Grants that may be received by the ULB

from the State Government:

¾Motor Vehicles Tax grant

¾Stamp Duty grant

¾District Court grant

SPECIFIC GRANTS

17.6 The ULB usually also receive grants for carrying out specific projects/schemes or for

meeting specific expenditures. These can be Revenue or Capital in nature based on the

purpose for which they are received Certain Specific Grants can have both, capital and

revenue components, e.g., grant for construction of new roads and subsequent repairs and

maintenance of roads. Specific Grants may either be received in advance or as a

reimbursement of the expenditure incurred by the ULB.

17.7 The following is an illustrative list of Specific Grants that may be received by the

ULB:

Revenue Grants for meeting expenditure incurred during the ordinary course of

activites of the ULB:

•Dearness Allowance Expenditure Reimbursement Grant,

•Grant for Chemicals used for Water Supply Works, etc.

Revenue Grants for operating specific projects/schemes:

•Census Grant,

•Pulse Polio Grant,

•Family Welfare Grant,

•Tuberculosis Control Grant,

•Malaria Control Grant,

•Aids Awareness Grant,

•School Children Health Program Grant, etc.

National Municipal Accounts Manual Grants

17.3

Capital Grants for meeting capital expenditures under specific projects/schemes:

•Backward Classes Development Grant,

•Integrated Urban Areas Development/Integrated Development of Small and

Medium Towns Grant,

•Public Toilets Construction grant, etc.

17.8 When a Specific Grant is received in advance, the ULB is required to submit an

“Utilisation Certificate” in the manner, prescribed in the Grant Sanction Order.

17.9 The claim for grant receivable as a reimbursement of expenditure incurred is made by

submitting “Statement of Expenditure” to the sponsoring agency at such intervals as

prescribed in the Grant Sanction Order.

17.10 Some Specific Grants require opening of a Designated Bank Account from which all

expenditures in respect of the grant are paid and/or maintenance of separate Books of

Accounts.

ACCOUNTING PRINCIPLES

17.11 The following Accounting Principles shall govern the recording, accounting and

treatment of transactions relating to Grants:

a. General Grants, which is of a revenue nature, shall be recognised as income on