When the government pays a salary, credits a pension or reimburses Leave Travel Concession (LTC), where is that expenditure recorded in official accounts?
The Finance Ministry has now issued a detailed rulebook to answer that question.
In an order issued on June 9, the Department of Expenditure amended the Delegation of Financial Power Rules (DFPR), 2024 and revised the list of expenditure categories, known as “Object Heads”. The changes will take effect from FY2027-28 and are aimed at creating a uniform expenditure classification system across the Centre and states.
While the move does not change salaries, pensions or allowances, it provides greater clarity on how these expenditures will be recorded in government accounts.
Salary and allowances get clearer definitions
Under the revised framework, employee-related expenditure has been classified under separate categories such as salaries, wages, rewards, medical treatment, allowances and Leave Travel Concession (LTC).
The rules also provide a detailed definition of allowances.
These include Dearness Allowance (DA), House Rent Allowance (HRA), Transport Allowance, Foreign Allowance, Children’s Education Allowance, Uniform Allowance, Risk Allowance and several other benefits paid to government employees in addition to their basic pay.
The salary category will cover pay, honorarium paid to government servants, stipend paid to interns and certain other employee-related payments.
Pension spending gets a separate category
The revised rules also give pension expenditure a dedicated classification.
According to the order, “Pensionary Charges” will include pension payments, gratuity, provident fund contributions and leave encashment paid at the time of retirement, death or termination of service.
Importantly, the category will also include the government’s contribution under the National Pension System (NPS) and the Unified Pension Scheme (UPS).
The clearer classification could help policymakers and analysts track pension-related expenditure more accurately in the years ahead.
More clarity on travel and training expenses
The revised framework separately defines domestic travel, foreign travel and training-related expenditure.
Official travel within India will be recorded under domestic travel expenses, while overseas official visits will be classified under foreign travel expenses. Training expenses will cover fees, materials and workshop-related costs but exclude domestic and foreign travel expenditure.
Why has the government made these changes?
The Finance Ministry has said the objective is to harmonise expenditure classification across the Union and state governments.
A common classification framework can make it easier to compare expenditure patterns across departments and governments, improve budget reporting and bring greater consistency to public finance data.
The revised structure also creates clearer distinctions between revenue expenditure and capital expenditure, helping improve the quality of government financial reporting.
Will employees see any change in salary or pension benefits?
No.
The order is purely an accounting and expenditure-classification reform. It does not change salary structures, DA rates, HRA rules, pension benefits, NPS contributions or any other employee entitlement.
Instead, it changes how these expenditures are categorised and reported in government accounts from FY2027-28 onward.
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