Grant Utilisation Certificate: How to Document Spending

A grant utilisation certificate (UC) is your formal proof of what a business grant paid for: the amount received, the amount spent on approved items, any unspent balance and interest earned, and whether the targets linked to that money were met. It is usually signed by a director or partner and certified by a chartered accountant, and it must tie exactly to your bank statement, invoices and ledger. Rules quoted here are from the General Financial Rules (GFR), 2017 and official scheme guidelines as of November 2026; the format and deadline in your own sanction letter take priority.

Why the UC matters

• It unlocks the next tranche. Under the Startup India Seed Fund Scheme guidelines, for example, a startup had to submit an interim progress update and utilisation certificate to start the release of each later grant instalment, and a final report with an audited UC at the end.
• It closes the grant. Without a final UC, the agency may treat the money as unaccounted and seek recovery.
• It is checked against targets. GFR Rule 238 says UCs for certain grants should disclose whether specified targets were reached, and if not, why; the assessment should be output-based, not just a list of expenses.

What the rules say

GFR governs central government grant sanctioning. When a grant reaches you through an incubator or a state agency, that body usually prescribes a simpler template and its own deadline. Use the format named in your sanction letter or agreement.

What a UC typically contains

1. Sanction letter number and date, grant amount sanctioned and received to date
2. Opening unspent balance (if any) from the previous period
3. Grant received during the period, with dates
4. Interest or other income earned on the grant money
5. Expenditure by approved budget head (equipment, consumables, manpower, testing, travel, and so on)
6. Closing unspent balance
7. Statement that the money was spent for the sanctioned purpose and the conditions were met
8. Physical progress against targets or milestones
9. Signatures of the authorised signatory and the chartered accountant, with the CA's membership number

Worked example: a ₹15 lakh grant

The figures are illustrative.

A startup receives ₹15,00,000 in two tranches during FY 2026-27 into a dedicated current account. The account earns ₹12,000 of interest.

• Unspent grant: ₹15,00,000 − ₹13,60,000 = ₹1,40,000
• Interest earned: ₹12,000, shown separately
• Total to be accounted for: ₹1,40,000 + ₹12,000 = ₹1,52,000

The UC must show ₹13,60,000 spent, ₹1,40,000 unspent and ₹12,000 interest. What happens next depends on the sanction: the ₹1,40,000 may be carried forward with approval or refunded, and the ₹12,000 may need to be remitted rather than spent. Do not quietly use the interest on project costs unless the agreement allows it.

Note also that under-spending on "Travel" does not let you overspend "Components" without approval. Most agencies require written permission to move money between heads.

Records checklist

• Sanction letter, agreement and approved budget by head
• Statement of the dedicated grant account (or a clearly tagged ledger if the agency allows a shared account)
• Invoices in the business's name, with GSTIN where applicable, and payment proof for each
• Asset register for equipment bought from the grant, with serial numbers and location
• Salary slips, contracts and attendance for staff charged to the grant
• Approvals for any reallocation between heads or extension of time
• Milestone or progress reports and technical proof
• Interest certificate from the bank for the grant account
• CA working papers reconciling ledger, bank and UC

Your bank statement is the backbone of the UC: every expense line should match a debit, and every grant release a credit.

Common mistakes

If you are combining a grant with your own money, keep both trails clear; see government loan vs subsidy vs grant vs credit guarantee for how agencies view the different funding types, and separating personal and business finances for setting up accounts.

How to escalate if the agency does not act on your UC

1. Send the UC with a covering letter and ask for written acknowledgement.
2. After the stated processing time, write to the programme officer and the scheme's nodal or grievance officer.
3. If there is no response, file on CPGRAMS at pgportal.gov.in against the department concerned.
4. For a bank holding a credit-linked grant or subsidy and not acting, complain to the bank's grievance officer, then the RBI Integrated Ombudsman at cms.rbi.org.in after 30 days.

Key takeaways

• A utilisation certificate shows grant received, spending by approved head, unspent balance, interest earned and progress against targets.
• GFR Rule 238 sets Form GFR 12-A for non-recurring central grants to institutions and asks for output-based reporting within twelve months of the financial year's close.
• In the ₹15 lakh example, ₹1,40,000 unspent and ₹12,000 interest both had to be shown and dealt with as per the sanction.
• Keep a dedicated account, an asset register and approvals for any change between budget heads.
• Do not sell grant-funded assets or spend interest without checking the sanction terms.

Related guides: SHG Equipment Purchase: Who Owns the Asset and Invoice?, Training Stipend vs Business Grant: What Support Is Offered?.