25. In the preparation of the budget the aim is to achieve as close an approximation to the actuals as possible. It is, therefore, essential that not merely should all items of revenue and receipts that can be foreseen be provided but also only so much, and no more, should be provided as is expected to be realised, including past arrears, in the budget year. The following instructions should be carefully observed in preparing the estimates :

(1) The estimates should be based on the existing rules and rates of taxes, duties, fees, etc. and no increases or reductions in such rates which have not been sanctioned by the Government should be proposed.

(2) An estimate should show the amounts actually expected to be received during the budget year and those only. The arrears, if any, standing over from past years for collection should be included if there is a reasonable certainty that they would be realised within that year. On the other hand, the estimates should exclude any receipts which, although falling due during the budget year, are not expected to be actually realised within that year.

(3) In preparing the estimates of the receipts of a fluctuating nature careful attention should be given to all abnormal factors as well as to normal conditions and tendencies as explained below :

(a) Circumstances may have arisen in the current year which make it evident that the estimate for that year will be substantially departed from. If this should be the case, any such expected departure from the original estimate for the current year should be taken into account in estimating the probable realisations of the budget year on the basis of the figures of the past three years and the revised estimate for the current year.

(b) Events may have occurred in the current year which make it obvious that unusually large arrears will be outstanding for collection in the budget year. Any such addition to the total amount of receipts due for realisation during the coming year should be taken into account in framing the estimates of receipts for that year, but the amount to be included should be that which is expected to be actually realised and the balance should be shown in the 'Remarks' column with reasons in brief.

(c) Conditions may have arisen that enable the estimating authorities to forecast some particular effect on the revenue receipts in the coming year, e.g. an irrigation work may have been opened or improved or extended, resulting in an additional income from extra water supply to cultivators. Estimates for increased or additional revenue on these accounts should, however, be proposed only if the estimating authorities are certain about this and full reasons must be given in the budget note.

Some calamity may have supervened which will have a definite effect in reducing revenue during the coming year, e.g. the breaching of an embankment which cannot be repaired before the cultivating season in the coming year, which will lead to reduction in revenue receipts. Account must be taken of this.

It is, thus, particularly necessary to guard against accepting the estimates of the current year blindly as a basis for framing the estimates of the following year.

(4) The gross transactions should be exhibited in full, unless in any particular case there are definite instructions to the contrary when net receipts may be entered and a brief explanation given in the remarks column.

(5) Refunds - Refunds of revenues are not regarded as expenditure for purposes of grants or appropriation. Provision should be made in the revenue estimates, where necessary.

'Refunds of Revenue' shall, as a general rule, be taken in reduction of the revenue receipts. "Deduct-Refunds" (code '900') may be opened as a minor head under the major / sub-major heads falling in the Sector "B. Non-Tax Revenue", unless it is not practicable to account for such refunds as sub-heads below the concerned programme minor heads under the relevant major / sub-major heads. This minor head may also be opened under the major / sub-major heads of the sector "C. Grants-in-Aid and Contributions". In respect of major / sub-major heads falling under the sector "A. Tax Revenue", the head "Deduct-Refunds" should however be opened as a distinct sub-head below the appropriate minor heads so that the net collection of each tax / duty is readily ascertainable from the accounts.

26. The reasons which have led to the proposing of estimates for the ensuing year should be fully and clearly explained, item by item, in the budget note of the estimating officer, specially when the estimate proposed for the ensuing year is in any way abnormal, due regard being paid to the following variations :

(a) actuals of the past year compared with the original and the revised estimates of that year ;

(b) revised estimates for the current year as compared with the original estimates; and

(c)  budget estimates proposed for the following year as compared with the original and revised estimates for the current year.

27. Where several items of a miscellaneous nature are grouped under a single head of account, details of the more important items should be given along with the estimates proposed for each in the budget note.