Grants and audit

Statutory textCounsel-reviewed publication

The Central Government may, after due appropriation made by Parliament by law in this behalf, make to the State Government grants of such sums of money as the Central Government may think fit, for being utilised for the payment of fees or allowances referred to in sub-section (4) of section 7.

The State Government may set up an agency and transfer the grants made under sub-section (1) to that agency.

The agency shall pay to the District Officer, such sums as may be required for the payment of fees or allowances referred to in sub-section (4) of section 7.

The accounts of the agency referred to in sub-section (2) shall be maintained and audited in such manner as may, in consultation with the Accountant General of the State, be prescribed and the person holding the custody of the accounts of the agency shall furnish, to the State Government, before such date, as may be prescribed, its audited copy of accounts together with auditors’ report thereon.

Transcribed from the official India Code source for reading and comparison. PIH plain-language guidance is editorial and separate; this page is not legal advice.

Source: India Code, Ministry of Law and Justice, Government of IndiaRetrieved: 2026-09-10India Code PDF, pp. 7–8India Code PDF — last updated 31 August 2021

Plain Language

The Central Government may make grants to State Governments to cover fees or allowances for Local Committee members. This recognises that LC members are performing a public function and should not do so entirely at their own cost.

The State Government may set up an agency to receive transferred grants. That agency's accounts must be maintained and audited in the prescribed manner, with an audited copy and auditors' report furnished to the State Government.

The funding depends on Parliamentary appropriation — it is not automatic or unlimited. The availability of grants may vary by state and year.

Why It Matters

The grant and agency structure supports payment of prescribed fees or allowances to Local Committee members; it does not change the LC's statutory jurisdiction.

The audit requirement attaches to the agency's accounts and creates an accountability trail for transferred public funds.

The grant mechanism depends on Parliamentary appropriation and State Government implementation, so funding availability is not automatic.

Practical Example

Scenario: A Local Committee in a small district has not received any funds for member allowances for over a year.

Outcome: The LC can still function — the statute does not make funding a precondition — but the District Officer should escalate the funding gap to the State Government, which can request Central Government grants under this section.

Who Must Act

government

Make grants to State Governments for payment of fees or allowances to LC members, subject to Parliamentary appropriation.
Set up an agency where appropriate and prescribe how that agency's accounts are maintained and audited.

district officer

Receive sums from the designated agency as required for payment of prescribed Local Committee fees or allowances.

Compliance

✓

Maintain and audit the designated agency's accounts in the prescribed manner and furnish the audited copy with the auditors' report

Actor: Person holding custody of the designated agency's accounts · Rule: Section 8(4)

Common Mistakes

✗

Assuming Central Government grants are automatic — Section 8 makes them subject to Parliamentary appropriation.

✗

Attributing the agency's audit duty to the Local Committee itself — Section 8(4) addresses the agency's accounts.

Source & Status

Source and review statusPublication ready

Official source: India Code, Ministry of Law and Justice, Government of India
Source version: India Code PDF — last updated 31 August 2021
Source location: India Code PDF, pp. 7–8
Retrieved: 2026-09-10

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Statutory blocks are kept separate from PIH plain-language and operational guidance. The reading copy is not legal advice.

Legal review status: counsel-reviewed. All sections have valid documentary counsel evidence and publication signals are enabled.

Judicial material: no verified judicial interpretation is published in this reading copy. Judicial analysis is a separate layer from the statutory transcription and PIH editorial guidance.