## Classification of Government Funds
All government money is held in one of three funds. Understanding which fund a transaction belongs to is essential for audit.
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### I. Consolidated Fund of India
This is the main government account. All of the following flow into it:
- All revenues received directly by the Government (Direct Tax, Indirect Tax)
- All loans taken by the Government of India
- All repayments of loans received by the Government
> Key rule: Any expenditure from the Consolidated Fund requires prior permission (parliamentary appropriation). You cannot spend from it without legislative sanction.
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### II. Contingency Fund of India
- Used to meet contingency / unforeseen expenditure that cannot wait for parliamentary approval
- Parliament is informed subsequently and the amount is recouped to the Contingency Fund
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### III. Public Accounts
- Covers money held by the government on behalf of others — not government revenue per se
- Examples: Provident Fund (PF), National Savings Certificate (NSC), Public Provident Fund (PPF), etc.
- These are liabilities of the government; Parliament's approval is not strictly required before withdrawal (since the government acts as a banker/trustee)
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### Quick Comparison Table
| Fund | Nature | Requires Parliamentary Approval? |
|---|---|---|
| Consolidated Fund | All revenues & loans | Yes — for every expenditure |
| Contingency Fund | Emergency spending | No (but ratified later) |
| Public Accounts | Deposits/trusts | No (government acts as trustee) |