Pay and Accounts Office

A Pay and Accounts Office (PAO) is the accounts office of a central civil Ministry or Department that checks bills, makes payments through the Ministry’s accredited bank and compiles the accounts. Rule 2(w) of the Central Government Account (Receipts and Payments) Rules, 2022 defines the Pay and Accounts Officer as “the officer of the Accounting Organisation under departmentalised accounts responsible for receipts, payments including Direct Benefit Transfer, bank coordination, internal audit and accounting”.

Every salary bill of a central government employee served by a non-cheque-drawing DDO in a civil Ministry leaves the Government account on a PAO’s digital signature; a cheque-drawing DDO pays from its own assignment account within the PAO’s Letter of Credit. The Drawing and Disbursing Officer prepares the pay bill; the PAO checks it, passes it within three working days under a Controller General of Accounts OM dated 12 June 2026, and sends the payment file to the bank. The same office keeps the General Provident Fund ledger of old pension scheme employees, issues the Pension Payment Order on retirement, and uploads National Pension System contributions.

PAOs exist because Union accounts were separated from audit in 1976. Until then the Comptroller and Auditor-General compiled the accounts of the civil Ministries; since then each Ministry’s Secretary is its Chief Accounting Authority and its accounts are kept by its own accounting organisation under the Controller General of Accounts. The Controller General’s Directory of the Civil Accounts Organisation counted 827 PAOs as on 1 January 2021.

The office matters to a reader when something is stuck: a returned bill, a missing increment arrear, a GPF balance that does not match, or a pension order that has not reached the bank. Each of those has a rule, a form and a time limit, and the PAO is the office they point to.

Definition in the Receipts and Payments Rules

Rule 2(w) of the Central Government Account (Receipts and Payments) Rules, 2022, notified as G.S.R. 644(E) on 20 August 2022, defines the Pay and Accounts Officer by function: receipts, payments including Direct Benefit Transfer, bank coordination, internal audit and accounting. The definition names an officer; the office is the establishment that officer heads, staffed by Assistant Accounts Officers and dealing hands.

Three other provisions of the 2022 Rules set the PAO’s legal position:

• Rule 13(1) makes the Pay and Accounts Office the default authority for withdrawal of money from the Government account.
• Rule 13(5) permits withdrawal only by a PAO from an account opened in its favour, or by a cheque-drawing DDO from an assignment account at a specified branch of the accredited bank.
• Rule 13(6)(a) requires those accounts, for a civil Ministry, to be opened by the Head of the Accounting Organisation in consultation with the Controller General of Accounts.

The Rules replaced the Central Government Account (Receipts and Payments) Rules, 1983. The earlier Rules defined an “Accounts Officer” at Rule 2(a) as the Principal Accounts Officer or a Pay and Accounts Officer functioning under departmentalisation. Other codes use the same phrase differently. Rule 3(1)(a) of the CCS (Pension) Rules, 2021 defines the Accounts Officer as an officer, “whatever his official designation”, who maintains the accounts of a Ministry, Department or office and includes an Accountant-General; Rule 2(1)(a) of the GPF (Central Services) Rules, 1960 means the officer to whom Government or the Comptroller and Auditor-General has assigned the duty of maintaining the subscriber’s account. In a civil Ministry all three point at the PAO, but a rule written for “the Accounts Officer” reaches the Accountant General or a railway or defence accounts office as well.

Most of the working procedure is in the Subsidiary Instructions issued by the Controller General of Accounts on 26 August 2022 under Rule 2(af), and in the Civil Accounts Manual, Revised Fourth Edition, 2024. Paragraph 5.1.1 of the Manual calls the PAO of each Ministry or Department “the basic unit of accounts”.

Departmentalisation of Union accounts in 1976

PAOs were created when the President relieved the Comptroller and Auditor-General of compiling the accounts of the civil Ministries, under the first proviso to Section 10(1) of the CAG’s (Duties, Powers and Conditions of Service) Act, 1971, as substituted in 1976. The substituted proviso lets the President, after consulting the Comptroller and Auditor-General, relieve that office of compiling the accounts of the Union “either at once or gradually by the issue of several orders”, or of the accounts of particular services or departments.

The change was made by ordinance and then by statute:

Sources: Gazette of India, Part II Section 2, 23 March 1976, Statements of Objects and Reasons to Bills No. 45 and 46 of 1976; Controller General of Accounts history page; Central Government Account (Receipts and Payments) Rules, 1983, preface; Civil Accounts Manual, 2024.

Section 2 of the Transfer of Personnel Bill let the Central Government transfer audit and accounts staff to a Ministry on the advice of a committee, protected the transferee’s pay scale under clause 2(4), and allowed an employee who declared unwillingness to stay back unless the Government found the transfer necessary in the public interest. Appendix 4.1 of the Civil Accounts Manual records that the scheme was introduced in three phases with effect from 1 April 1976. The Controller General of Accounts marks 1 March as Civil Accounts Day.

The Indian Civil Accounts Service, a Group A Central Civil Service carved out of the Indian Audit and Accounts Service according to the Controller General’s history page, staffs the senior posts. Paragraph 1.1.5 of the Civil Accounts Manual states that its officers report both to the Secretary of the Ministry, through the Financial Adviser, and to the Controller General of Accounts.

Two accounts are still compiled by the Comptroller and Auditor-General under paragraph 1.1.2 of the Manual: those of the Indian Audit and Accounts Department itself, and of the Union territory of Chandigarh, which the Manual describes as in the process of being departmentalised.

Ministries outside the civil accounts organisation

Railways, Defence, Posts and Telecommunications have their own accounts organisations and are not served by civil PAOs. Paragraph 12.3.2 of the Civil Accounts Manual, 2024 lists the Finance Accounts material from the Principal Accounts Offices of the civil Ministries separately from that of the Deputy Director General, Postal Accounts, the Deputy Director General, Telecommunications, the Controller General of Defence Accounts and the Railway Board. Rule 13(4) of the Receipts and Payments Rules, 2022 reflects the same split: in those Ministries the Ministry itself designates cheque-drawing DDOs, on the advice of the Head of the Accounting Organisation. A railway employee’s pay and pension therefore run through railway accounts instruments, and a defence civilian’s through the defence accounts, not through the paragraphs cited in this article.

Accounting hierarchy of a civil Ministry

The Secretary of each Ministry is its Chief Accounting Authority under Rule 70 of the General Financial Rules, 2017, and two tiers sit between the Secretary and the PAO: the Principal Accounts Office and the Head of the Accounting Organisation. Paragraph 1.2.1 of the Civil Accounts Manual, 2024 states that the Secretary discharges this role through the Financial Adviser and the Head of the Accounting Organisation.

Paragraph 1.2.5.1 provides that all receipts are “finally accounted for in the books of the concerned PAO”, and paragraph 1.2.5.2 requires the specific approval of the Controller General of Accounts to create or reorganise a PAO. Under paragraph 1.2.3(a), any addition to a Ministry’s list of cheque-drawing DDOs also needs the Controller General’s specific approval.

Zonal Accounts Offices, a separate tier, appear in the Manual only for the revenue accounting of the Central Board of Direct Taxes, under paragraph 15.1.3.

Number and codes of PAOs

The Controller General’s Directory of the Civil Accounts Organisation as on 1 January 2021 counted 827 Pay and Accounts Offices in its foreword. The next edition, as on 1 August 2023, lists every PAO with its bank and officers with a PAO code column (016001 against the Controller General’s own PAO) but prints no total. CGA OM No. E-878/D-29016/1/2020/788 dated 4 June 2026 asked Ministries for their numbers of Principal Accounts Offices, PAOs, cheque-drawing DDOs and non-cheque-drawing DDOs for a new directory as on 1 July 2026.

The count is larger than the number of Ministries because a large Department runs several PAOs by location or function.

Pre-check and payment of bills

No payment is made until the Pay and Accounts Officer has approved the voucher, and that pre-check is the final stage before payment, under paragraphs 2.1.3 and 2.1.4 of the Civil Accounts Manual, 2024. Paragraph 2.1.1 adds the budget test: no payment is made in excess of the budget allotment.

In the Public Financial Management System the check runs at three levels under paragraphs 2.2.8 and 2.2.9: a dealing hand, the Assistant Accounts Officer and the Pay and Accounts Officer. Only the Pay and Accounts Officer can make the final return of a bill to the DDO. On a passed bill the PAO digitally signs the payment batch file and sends it to the bank. The note under paragraph 2.2.9 requires two signatures, or two digital signatures, on any cheque or electronic payment of Rs. 10 lakh and above.

The pay bill check in paragraph 2.16.1

Paragraph 2.16.1 of the Civil Accounts Manual, 2024 lists 18 checks on an establishment pay bill, which paragraph 2.16 calls “only illustrative and not exhaustive”. The checks that bear on an individual employee’s pay are these:

Item (xii) also carries a practical rule for arrears disputes. An unexplained change in pay “may be kept in objection”, and the pay bill “need not be returned un-passed on this account”. The rest of the staff are paid; the disputed amount waits.

Time limit for passing a bill

A PAO must pass a bill within three working days of receipt, under Controller General of Accounts OM No. TA-2-01002/1/2026-TA-CGA/(e-20290)/209 dated 12 June 2026. Paragraph 2.4.1 of the Civil Accounts Manual, 2024, which the OM tightened, still prints the earlier limits:

Note 1 to paragraph 2.4.1 allows the Head of the Accounting Organisation to authorise a two-level pre-check, with the Assistant Accounts Officer passing the bill, for e-payments of a gross amount up to Rs. 25,000. The PAO then post-checks 10% of those bills and records the check in Form CAM-32. A follow-up CGA OM No. Q-18001/2/2026-IAD-CGA(E-20017)/300-01 dated 11 August 2026 created Internal Audit users in PFMS to post-audit e-bills directly in the system, with Ministries to report the user identities by 21 August 2026.

Returned bills

A bill can be returned at the level of the PAO once, under paragraph 2.5.3 of the Civil Accounts Manual, 2024. A second or later return needs, as far as possible, the approval of the Deputy Controller, Controller, Chief Controller or Principal Chief Controller of Accounts; where there is no intervening officer, the PAO reports the second return to the supervisory officers by the next working day.

Paragraph 2.5.1 requires the return on a Bill Return Memo in Form CAM 14, citing the rule or order, with all objections raised together “and not in piecemeal”. Paragraph 2.5.2 lets the PAO pass a bill with a minor omission for the admissible amount and disallow the rest. Under paragraph 2.5.4 supervisors sample first-time returns each month to see that bills are not returned “on flimsy ground”. The DDO resubmits after addressing the observations under paragraph 2.2.8; the Manual sets no time limit for the resubmission.

Accredited bank, Letters of Credit and reconciliation

Every PAO pays through its Ministry’s accredited bank, which Rule 2(a) of the Receipts and Payments Rules, 2022 defines as the Reserve Bank or its agent under Section 45 of the Reserve Bank of India Act, 1934, appointed to transact that Ministry’s business with the approval of the Controller General of Accounts. Paragraph 4.1.1 of the Civil Accounts Manual, 2024 records that the RBI nominates the bank on the Controller General’s advice, and that a new bank for a Ministry needs the prior approval of both, under O/o CGA OM No. S-11012/1(31)/AC/2005/RBD/Vol. III/602 dated 9 May 2006. Under paragraph 4.1.2 the PAO sends the bank the specimen signatures of itself and of the second signatory.

A cheque-drawing DDO does not draw on the PAO’s account. Under paragraph 3.2.2 of the Manual the Pay and Accounts Officer authorises the paying branch of the bank by a Letter of Credit, and the cheque-drawing DDO withdraws from its own assignment account within that limit. Rule 2(f) of the 2022 Rules defines the bank account as a drawing or assignment account maintained by the Pay and Accounts Officer or a departmental officer in an accredited bank.

Reconciliation is the PAO’s check on the bank. Paragraph 13.1.5 of the Manual states its purpose as confirming, among other things, that payments by the RBI and the accredited banks on the Government’s account are authorised and correct. Paragraph 13.6.3 opens the PAO’s scrutiny of the bank’s main scroll with the test that the image of each paid cheque is genuine, was issued by the PAO or a cheque-drawing DDO under it, and was not time-barred. Paragraphs 13.6.11 to 13.6.16 cover the Date-wise Monthly Statement from the focal point branch and the RBI’s put-through statement, with a Register of Amounts Put Through in Form CAM-69.

Monthly accounts and the Treasury Single Account

Each PAO compiles a monthly account and submits it to the Principal Accounts Office of its Ministry, under paragraphs 5.1.1 and 5.1.5 of the Civil Accounts Manual, 2024. The Principal Accounts Office consolidates the PAOs’ accounts for the Ministry, and the Controller General consolidates the Ministries’ accounts into the Union Government’s monthly accounts and the annual Finance Accounts. Paragraph 5.1.3 notes that the Finance Accounts also take in data from Railways, Defence and Posts.

In PFMS the PAO is responsible, under paragraph 2.2.4, for completing the 15-digit functional head mapping of its DDOs’ budgets, which is what lets a DDO’s bill be charged to the right head. For funds held under the Treasury Single Account system, paragraph 2.2.5 gives the mapping of minor heads under Major Head 8454 to the Principal Accounts Office.

GPF accounts

The PAO of the employee’s Ministry maintains the General Provident Fund account of every regular employee on the old pension scheme, under paragraph 6.1.1 of the Civil Accounts Manual, 2024. The paragraph extends that to employees on foreign service with public sector undertakings and corporations, and to employees on deputation to Railways, Defence, Posts, Telecommunications or a State or Union territory Government.

Rule 2(1)(a) of the GPF (Central Services) Rules, 1960 defines the Accounts Officer as the officer assigned this duty by Government or by the Comptroller and Auditor-General. The note to the Rule reserves to the Comptroller and Auditor-General the officers of the Indian Audit and Accounts Department and the staff of Union territory administrations whose provident fund accounts have not been departmentalised; all others are assigned by Government.

Two other arrangements sit alongside the standard one:

• All India Services officers on State cadres have their GPF accounts with the Accountant General, and those on the Union territory cadre with PAO No. VI of the Delhi Administration at Tis Hazari, under paragraph 6.1.2.
• Merged DDO scheme offices keep the ledgers with the Head of Office under paragraph 6.1.3, and the PAO keeps a DDO-wise broadsheet and reconciles it. Where the PFMS GPF module and the manual records differ, the paragraph’s note says the manual records prevail.

The PAO holds the original nomination, which moves with the account on transfer under paragraph 6.2.1. GPF withdrawals and long-term advances go to the PAO for pre-check even when the DDO has cheque-drawing powers, under paragraph 3.1.7, and the final payment bill must reach the PAO one month before retirement under paragraph 2.63(1) of the Subsidiary Instructions.

The annual statement

Paragraph 6.10.2 of the Civil Accounts Manual, 2024 requires the annual statement of account in Form CAM 49 to reach subscribers by 31 May each year, through the Heads of Office, who certify delivery. The governing rule is looser. Rule 39(1) of the GPF (Central Services) Rules, 1960 requires the statement as soon as possible after 31 March of each year, and Rule 39(2) gives the subscriber three months from the date of receipt of the statement to report an error. The Manual counts the three months from the closing date of issue and presumes the balance accepted if no discrepancy is raised in that time. Rule 39(3) entitles a subscriber to ask for the balance once, but not more than once, in a year.

Pension Payment Order and the pension case

For a civil Ministry the Pay and Accounts Officer is the Accounts Officer who assesses the pension and issues the Pension Payment Order under Rule 63 of the CCS (Pension) Rules, 2021. The Head of Office prepares the case in Bhavishya, which DoPPW OM No. 55/14/2014/P&PW(C) Part-1 dated 29 November 2016 made mandatory for central civil pension cases from 1 January 2017, and forwards it not later than four months before superannuation under Rule 60(4).

The time limits on the PAO under Rule 63 are these:

Where the final amounts are not settled within the six months allowed for provisional pension under Rule 62(6)(a), Rule 62(7) directs the Accounts Officer to treat the provisional pension and gratuity as final and issue the PPO immediately.

The PAO authorises the gratuity but does not pay it. Rule 63(2) requires the Accounts Officer to intimate the amount of gratuity to the Head of Office, who draws and disburses it after adjusting Government dues under Rule 67 and any amount withheld under Rule 68(5). The DDO draws that and the commuted value of pension on the retirement benefits bill in Form R.P.R. 50.

Paragraph 7.3.3 of the Civil Accounts Manual, 2024 requires every PAO competent to issue PPOs to issue them in electronic form through PFMS. Under paragraph 9.2 of the Scheme for Payment of Pensions to Central Government Civil Pensioners through Authorised Banks, Sixth Edition, 2026, the electronic order travels to the Central Pension Accounting Office as a PDF and an XML data file, both digitally signed by the PAO; the office compares the two, generates its Special Seal Authority and pushes both to the Centralised Pension Processing Centre of the pensioner’s bank. The whole sequence, counted back from the retirement date, is set out in pension sanction process timeline.

NPS contributions

The PAO is the middle level of the NPS registration chain for central civil employees, registered with the Central Recordkeeping Agency in Form N2 under paragraph 7.20.2 of the Civil Accounts Manual, 2024. That paragraph summarises CGA OM No. 1(7)/2003/TA/Pt file/279 dated 2 September 2008, effective 1 July 2008, which prescribes Form N1 for the Principal Accounts Office, N2 for a PAO or cheque-drawing DDO and N3 for a DDO.

The PAO obtains a DDO Registration Number for each non-cheque-drawing DDO under it, receives the DDOs’ NPS bills by the 20th of each month, and uploads the employee’s contribution and the Government’s matching contribution to obtain the transaction identity by the 25th. Item (xviii) of paragraph 2.16.1 checks that the subscription is recovered from the first salary and that the Government contribution bill is drawn with the pay bill. Exit withdrawals under the NPS exit rules are routed from the DDO through the PAO, and the same accounts cover staff who opted for the Unified Pension Scheme.

Tax deducted from salary

The DDO deducts income tax from salary, and the PAO reports it to the Income Tax Department by book adjustment. Section 402(27)(f) of the Income-tax Act, 2025 makes the DDO the person responsible for paying in the case of Government, so the deduction under Section 392 and the salary certificate are the DDO’s. Government tax is not paid by challan; the PAO credits it to the tax head in its own accounts.

Section 397(3)(e) of the 2025 Act requires the Pay and Accounts Officer, the Treasury Officer or the cheque-drawing DDO to file the statement of tax paid without a challan. That statement generates the Book Identification Number, which the DDO quotes against each employee’s deduction in the quarterly TDS statement. A wrong or missing Book Identification Number is the usual reason a government employee’s tax does not appear in Form 26AS, and correcting it needs both offices: the PAO’s statement and the DDO’s return. The mechanics of the monthly deduction are in TDS on salary.

Pay and Accounts Office compared with the DDO, the treasury and the CPAO

A PAO is often confused with the three offices on either side of it in the payment chain.

The line between the DDO and the PAO is the one that matters most to an employee. The DDO decides what goes into the bill, and the PAO decides whether it is paid. A pay fixation error is the DDO’s to correct; a bill held because the fixation order is missing is the PAO applying item (xvi) of paragraph 2.16.1.

Where the PAO instruments disagree

The current instruments disagree on four points, and each changes how a PAO’s duty should be cited.

The Manual is an executive compilation and yields to a later OM and to the statutory rules. Until the Controller General issues a correction slip, the printed paragraph and the governing text differ.

Related Articles

• Drawing and Disbursing Officer
• Controller General of Accounts
• Indian Civil Accounts Service
• Civil Accounts Manual
• Public Financial Management System
• Central Pension Accounting Office
• Comptroller and Auditor General
• Department of Expenditure
• General Financial Rules
• Delegation of Financial Powers Rules
• Head of Office
• Central government employees in India
• Take-home salary of a central government employee
• Pay matrix
• Pay fixation
• Annual increment
• Dearness allowance
• House rent allowance
• Travelling allowance
• Leave Travel Concession
• Children Education Allowance
• Fundamental Rules
• Suspension
• Last Pay Certificate
• No demand certificate
• Deputation in central government
• Foreign service
• General Provident Fund
• Central Government Health Scheme
• Central Government Employees Group Insurance Scheme
• Old Pension Scheme
• National Pension System
• Unified Pension Scheme
• NPS exit rules
• CCS (Pension) Rules, 2021
• Pension sanction process timeline
• Bhavishya portal
• PPO and life certificate
• Provisional pension
• Gratuity for central government employees
• Death gratuity
• Commutation of pension
• Leave encashment
• Family pension
• Revision of pension
• Pension arrears
• Income-tax Act 2025
• TDS on salary
• Form 16
• Form 26AS
• Professional tax

External references

• Office of the Controller General of Accounts
• Central Government Account (Receipts and Payments) Rules, 2022 and Subsidiary Instructions
• Civil Accounts Manual, Revised Fourth Edition 2024
• General Financial Rules, 2017
• Central Pension Accounting Office
• Public Financial Management System
• Department of Pension and Pensioners’ Welfare

References

1. Central Government Account (Receipts and Payments) Rules, 2022, notified as G.S.R. 644(E) on 20 August 2022 by the Ministry of Finance, Department of Expenditure, Office of the Controller General of Accounts: Rule 2(a) (accredited bank), Rule 2(f) (bank account), Rule 2(s) (Drawing and Disbursing Officer), Rule 2(w) (Pay and Accounts Officer), Rule 2(af) (Subsidiary Instructions) and Rule 13 (authority for withdrawal); Subsidiary Instructions of 26 August 2022, para 2.63(1).
2. Civil Accounts Manual, Revised Fourth Edition, Controller General of Accounts, 2024: paras 1.1.2, 1.1.5, 1.2.1 to 1.2.5.2, 2.1.1 to 2.1.4, 3.1.1, 2.2.4, 2.2.5, 2.2.8, 2.2.9, 2.4.1, 2.5.1 to 2.5.4, 2.16.1, 3.1.7, 3.2.2, 4.1.1, 4.1.2, 5.1.1, 5.1.3, 5.1.5, 6.1.1 to 6.2.1, 6.10.2, 7.3.3, 7.20.2, 12.3.2, 13.1.5, 13.6.3 to 13.6.16, 15.1.1, 15.1.3 and Appendix 4.1.
3. Gazette of India, Extraordinary, Part II Section 2, 23 March 1976: Bill No. 45 of 1976 (CAG’s (Duties, Powers and Conditions of Service) Amendment) and Bill No. 46 of 1976 (Departmentalisation of Union Accounts (Transfer of Personnel)), with their Statements of Objects and Reasons; Comptroller and Auditor-General’s (Duties, Powers and Conditions of Service) Act, 1971 (56 of 1971), Section 10(1), first proviso.
4. Controller General of Accounts OM No. TA-2-01002/1/2026-TA-CGA/(e-20290)/209 dated 12 June 2026 (bills to be passed within three working days of receipt) and OM No. Q-18001/2/2026-IAD-CGA(E-20017)/300-01 dated 11 August 2026 (Internal Audit users for post-audit of e-bills in PFMS).
5. Central Civil Services (Pension) Rules, 2021: Rule 3(1)(a) (Accounts Officer), Rule 60(4), Rule 62(6) and (7), and Rule 63(1), (2), (4) and (5).
6. General Provident Fund (Central Services) Rules, 1960: Rule 2(1)(a) (Accounts Officer) and Rule 39 (annual statement of account).
7. Controller General of Accounts OM No. 1(7)/2003/TA/Pt file/279 dated 2 September 2008, effective 1 July 2008 (NPS registration of Pay and Accounts Offices and DDOs), as summarised in para 7.20.2 of the Civil Accounts Manual, 2024.
8. Department of Pension and Pensioners’ Welfare OM No. 55/14/2014/P&PW(C) Part-1 dated 29 November 2016 (Bhavishya mandatory from 1 January 2017); Central Pension Accounting Office, Scheme for Payment of Pensions to Central Government Civil Pensioners through Authorised Banks, Sixth Edition, 2026, para 9.2 (electronic PPO files).
9. Income-tax Act, 2025: Section 392, Section 397(3)(e) and Section 402(27)(f).
10. Controller General of Accounts, Directory of the Civil Accounts Organisation as on 1 January 2021, foreword (827 Pay and Accounts Offices), and edition as on 1 August 2023.; CGA OM No. E-878/D-29016/1/2020/788 dated 4 June 2026 (directory as on 1 July 2026).