Honorarium and fee

An honorarium is a recurring or non-recurring payment granted to a government servant from the Consolidated Fund of India, as remuneration for special work of an occasional or intermittent character, defined in Fundamental Rule 9(9). A fee is a recurring or non-recurring payment to a government servant from a source other than the Consolidated Fund, whether paid directly or through the government, for work done, defined in Fundamental Rule 9(6-A). The essential distinction is the source of the money: an honorarium comes from government funds for extra government work, while a fee comes from an outside person or body for work done for them. The grant and acceptance of both are governed by Fundamental Rule 46, and neither forms part of pay.

This article explains the two: the definitions and the exclusions, the conditions for an honorarium and the standardised sanction rules, the conditions for a fee and the one-third crediting rule, the distinction between them, the consequence that neither is pay, and the tax position. It uses the central Fundamental Rules; some state adaptations renumber these clauses, so the numbers here are the central ones.

The fee definition carries an exclusion worth noting at the outset. Fundamental Rule 9(6-A) does not treat as a fee the income from property, dividends and interest on securities, which is unearned income, or the income from literary, cultural, artistic, scientific or technological effort where that effort is not aided by knowledge acquired in the course of service. So an employee’s book royalties or investment income are not a fee in this sense; a fee is remuneration for a service performed.

The honorarium

An honorarium is dealt with in Fundamental Rule 46(b). The central government may grant, or permit a government servant to receive, an honorarium as remuneration for work that is occasional or intermittent in character and either so laborious or of such special merit as to justify a special reward. Except where special reasons recorded in writing justify a departure, the sanction should not be given unless the work was undertaken with the prior consent of the government and the amount was settled in advance. And under Fundamental Rule 46(c), the sanctioning authority must record in writing that due regard was paid to the general principle in Fundamental Rule 11, that the whole time of a government servant is at the disposal of the government, and the reasons that justify the extra remuneration.

The Department of Personnel and Training has narrowed this over the years. Under the Office Memorandum of 17 July 1998, an honorarium is payable only for duties of a purely occasional nature, and it must not be paid for functions that are a legitimate part of one’s defined duties; an annexure to the order lists the routine items for which honorarium is barred. Where the total honorarium payable to an individual in a financial year exceeds Rs. 2,500, the concurrence of the financial adviser is required. The overriding principle, from the 5th Central Pay Commission, is that an honorarium should never become a regular addition to pay.

Common examples of honorarium work are setting or valuing examination papers, evaluation for a departmental examination, acting as a member of a Departmental Promotion Committee or a selection board, membership of a commission or committee, translation, and the verbatim reporting of committee proceedings. Service as an Inquiry Officer or a Presenting Officer in a departmental disciplinary proceeding also carries an honorarium, at a standardised rate per case fixed by the Department of Personnel and Training, with an additional amount for each further charged officer in common proceedings.

The fee

A fee is dealt with in Fundamental Rule 46(a), with the sanctioning powers delegated under Fundamental Rule 47. Subject to the medical-officer rule, a government servant may be permitted, if it can be done without detriment to official duties, to perform a specified service for a private person or body, or a public body including one administering a local fund, and to receive remuneration for it, as a non-recurring or recurring fee. The prior sanction is required, and the work must not interfere with official duties.

The retention of a fee is limited, and the rule that most affects an employee is the one-third crediting rule, set out in the consolidated instructions of 11 February 1980 as revised on 21 January 1998. A government servant may retain the full fee up to Rs. 1,500 in a financial year. Where the fee exceeds Rs. 1,500, one-third of the excess is credited to general revenues, that is the Consolidated Fund, subject to the amount the employee retains not falling short of Rs. 1,500. Recurring and non-recurring fees are dealt with separately and are not added together: for a non-recurring fee the Rs. 1,500 limit applies to each individual case, and for a recurring fee it applies to the total received in the financial year. The Rs. 1,500 figure is the current one; an older threshold of Rs. 400 that is sometimes quoted was superseded in 1998, so a reader should use Rs. 1,500.

The distinction, at a glance

The two are easy to confuse, and the table sets them apart.

There is a related provision, Fundamental Rule 48, which lists rewards a government servant may receive and keep without special permission, such as a prize in a public essay or plan competition, a reward for the arrest of a criminal or for information in the administration of justice, a statutory reward, a reward in the administration of the customs and excise laws, and a fee for a duty performed in an official capacity under a special or local law. These are distinct from the honorarium and fee, and do not need the FR 46 sanction.

Neither is pay

A point that follows from the definitions, and that decides a good deal, is that neither honorarium nor fee is pay. The definition of pay in Fundamental Rule 9(21) does not include either, so an honorarium or a fee does not count for dearness allowance , house rent allowance, pension, gratuity or the annual increment , and it does not enter the pay fixation on promotion or revision. It is additional, occasional remuneration, not a component of the salary, which is why it can be paid for a one-off task without disturbing the pay structure, and why it does not follow through into the pension the way basic pay does.

The tax position

Both an honorarium and a fee are taxable income, and there is no blanket exemption for either. An honorarium paid for work arising out of or connected with the employment is generally taxable under the head salaries, and one unconnected with the office may fall under income from other sources. A fee for outside professional work is generally taxable under income from other sources, or, where it amounts to a profession or vocation, under the head profits and gains of business or profession, and tax may be deducted at source on it. The figures and the treatment depend on the individual case; the income tax for government employees article covers the deductions, and anyone with a material amount should confirm the position with a tax adviser for the year in question.

See also

• Allowances for central government employees
• Take-home salary for central government employees
• Income tax for government employees
• Basic pay
• Pay fixation
• Pay fixation on promotion
• Fundamental Rules
• CCS Conduct Rules
• Overtime allowance
• Deputation in central government
• Non-practising allowance
• Children education allowance
• Annual increment
• Grade pay
• Dearness allowance
• Pay matrix
• Form 16
• Standard deduction
• Old versus new tax regime
• Central government pension
• Gratuity for central government employees
• Leave encashment
• 7th Central Pay Commission
• Department of Personnel and Training
• Department of Expenditure
• Central government employees in India
• Seniority in central government service
• Lien
• Joining time
• Take-home salary calculator
• 7th CPC salary calculator

External references

• Department of Personnel and Training
• DoPT establishment orders
• Department of Expenditure

References

1. Fundamental Rules, FR 9(6-A) (definition of fee) and FR 9(9) (definition of honorarium), and FR 9(21) (definition of pay, which excludes both).
2. Fundamental Rules, FR 46 (grant of fees under FR 46(a) and honoraria under FR 46(b), and the recording of reasons under FR 46(c)), read with FR 11.
3. Fundamental Rules, FR 47 (delegation of the power to sanction honoraria and fees) and FR 48 (rewards a government servant may receive and retain without special permission).
4. Department of Personnel and Training Office Memorandum No. 16013/1/79-Estt.(All) dated 11 February 1980 (consolidated instructions on the acceptance of fees), as revised by Office Memorandum No. 16013/1/93-Estt.(Allowances) dated 21 January 1998 (the Rs. 1,500 retention limit and the one-third crediting rule).
5. Department of Personnel and Training Office Memorandum No. 17011/3/97-Estt.(AL) dated 17 July 1998 (guidelines on the grant of honorarium; the Rs. 2,500 financial-adviser threshold and the barred routine items).