FINANCIAL ADMINISTRATION AND MANAGEMENT M A PUBLIC ADMINISTRATION

FINANCIAL ADMINISTRATION AND MANAGEMENT M. A. (PUBLIC ADMINISTRATION ) UNIT III MINISTRY OF FINANCE • Prof. Mohd. Nafees Ahmad Ansari • Dept. of Political Science • Aligarh Muslim University

MINISTRY OF FINANCE (INDIA) INTRODUCTION: Ø Ministry of Finance is an important ministry within the Government of India concerned with the economy of India. Ø It concerns itself with taxation, financial legislation, financial institutions, capital markets, centre and state finances, and the Union Budget. Ø The apex controlling authority of the Indian Revenue Service, Indian Economic Service, Indian Cost Accounts Service and Indian Civil Accounts Service. Ø Established in 29 October 1946. Ø It is concerned with all economic and financial matters affecting the country as a whole including mobilization of resources for development and other purposes. Ø It regulates expenditure of the Government including transfer of resources to the states. Ø comprises three departments, namely, (i) Economic Affairs, (ii) Expenditure and (iii) Revenue. Ø R. K. Shanmukham Chetty was the first Finance Minister of independent India. He presented the first budget of independent India on 26 November 1947.

Ø The Mo. F performs the following function in relation to budget making: (1) Consolidation of budget estimates on the basis of classification. (2) Detailed scrutiny of the estimates including standing charges. (3) Collection and collation of figures to be arranged into Finance Bill and Appropriate Bill. • (4) Review of standing charges, ongoing schemes and new projects included in the budget. (5) Resolution of differences with the advice of the cabinet. • (6) Coordination of estimates with the allocations in Five Year Plans with the consultation of Planning Commission. • (7) Preparation of economic classification of budget and other documents including the speech of the finance minister.

The Consti tution of India provides Articles from 112 to 117 which are as below: (1) The President shall in respect of every financial year cause to be laid before both the Houses of Parliament a statement of the estimated receipts and expenditure of the Government of India for that year. This is known as ‘Annual Financial Statement’ (Article 112). (2) No demand for a grant shall be made except on the recommendation of the President (Article 113). (3) No money shall be withdrawn from the Consolidated Fund of India except appropriation made by law (Article 114). (4) No Money Bill imposing tax shall be introduced in the Parliament except on the recommen dationof the President, and such a bill shall not be introduced in Rajya Sabha (Article 117). (5) No tax shall be levied or collected except by authority of law (Article 265). •

Organizational Structure

AD MIN ISTR AT IV E STRUC TURE M OF

DEPARTMENT OF EXPENDITURE

Department of Expenditure Ø The Department of Expenditure is the nodal Department for overseeing the public financial management system in the Central Government and matters connected with state finances. Ø It is responsible for the implementation of the recommendations of the Finance Commission and Central Pay Commission, monitoring of audit comments/ observations, preparation of Central Government Accounts. Ø It further assists central Ministries/ Departments in controlling the costs and prices of public services, reviewing system and procedure to optimize outputs and outcomes of public expenditure. Ø The principal activities of the Department include overseeing the expenditure management in the central Ministries/ Departments through the interface with the Financial Advisers and the administration of the Financial Rules/ Regulations/ Orders, pre sanction appraisal of major schemes/ projects, handling bulk of the central budgetary resources transferred to State. Ø The business allocated to the Department of Expenditure is carried out through its Personnel &Establishment Division, Public Finance (States) and Public Finance (Central) Divisions, Office of Controller General of Accounts, Office of Chief Adviser Cost, and Central Pension Accounting Office. Ø The Department also has under its administrative control the National Institute of Financial Management (NIFM), Faridabad, which is an autonomous body.

DEPARTMEN T OF E CO NO MI C AFFAIRS

DEPARTMEN T OF ECO NO MI C AFFAIRS Ø The Department of Economic Affairs, is responsible for advice on economic issues having a bearing on internal and external aspects of the Indian economy including inflation, price control, foreign exchange management, Official Development Assistance domestic finance and preparation of the Union Budget, bilateral and multilateral engagement with international financial institutions and other countries. Ø The Department is also the parent cadre maintains the cadre of the Indian Economic Service. Ø DEA is divided into fourteen functional divisions viz. (i) Administration, (ii) Aid, Accounts and Audit, (iii) Bilateral Cooperation (iv) Budget, (v) Currency and Coinage (vi) Economic Division, (vii) Financial Markets, (viii) Commodative Derivatives, (ix) FSLRC (x) FSDC, (xi) Infrastructure and Energy, (xii) Investment, (xiii) Multilateral Institutions and (xiv) Multilateral Relations. Ø Department tenders economic advice to the government on important economic policy matters and handles public grievances. Ø Public policy issues in the fields of public finance, money and credit, prices and wages, foreign trade, balance of payments, external assistance and international finance are studied by the department. Ø It works in close cooperation with the Reserve Bank of India, the Planning Commission, the Central Statistical Organisation, the ministry of commerce and the economic and statistical wings of other ministries. Ø https: //dea. gov. in/divisionbranch/major functions. . . visit the site for divisional functions of the department.

DEPARTMENT O F REVENU E

DE PA RT ME NT O F REVEN UE Ø The Department of Revenue functions under the overall direction and control of the Secretary (Revenue). Ø It exercises control in respect of matters relating to all the Direct and Indirect Union Taxes through two statutory Boards namely, the Central Board of Direct Taxes (CBDT) and the Central Board of Indirect Taxes and Customs (CBIC). Ø Each Board is headed by a Chairman who is also ex officio Special Secretary to the Government of India. Ø Matters relating to the levy and collection of all Direct Taxes are looked after by the CBDT whereas those relating to levy and collection of Customs and Central Excise duties and other Indirect Taxes fall within the purview of the CBIC. Ø The two Boards were constituted under the Central Board of Revenue Act, 1963. At present, the CBDT has six Members and the CBIC has six Members. The Members are also ex officio Special Secretaries to the Government of India.

Department of Revenue is mainly responsible for the following functions: Ø All matters relating to levy and collection of Direct Taxes. Ø All matters relating to levy and collection of Indirect Taxes. Ø GST comes under it. Ø investigation into economic offences and enforcement of economic laws. Ø Prevention and combating abuse of Narcotic drugs and psychotropic substances and illicit traffic therein. Ø Enforcement of FEMA and recommendation of detention under COFEPOSA. Ø Work relating to forfeiture of property under Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 and Narcotics Drugs and Psychotropic Substances Act, 1985. Ø Levy of taxes on sales in the course of inter state trade or commerce. Ø Matters relating to consolidation/reduction/exemption from payment of Stamp duty under Indian Stamp Act, 1899. Ø Residual work of Gold Control Ø Matters relating to CESTAT.

CENTRAL D IR EC T TA XA TI ON BOARD Ø The CDTB was established in the year 1964 under Revenue Board Act, 1963. Ø Assessment and realisation of entire tax income is the board’s responsibility. Ø The board has a chairman and 6 members. Eight directorates work under the control of the board. Directorate of Income Tax (Methods): Ø headed by a chief commissioner. Ø assisted by two senior officials working as commissioner (administration) and commissioner (appeals). Ø The number of deputy commissioners varies from five to ten depending on their workload. The assistant commissioners and ITO are spread all over the country.

CENTRAL BOARD OF EXCISES AND CUSTOM • The CBEC assesses and realizes indirect taxes. • The excise and customs inspectors of the board control illegal activities and tax evasion. • The board advises the finance ministry about proper realizations of customs and excise duties.

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