Sections 34 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Chapter VI of the Water Act is the money chapter for the Boards. Governments may contribute after appropriation. Each Board has its own fund, into which fees and other receipts also go. Boards may borrow with the Government's consent, must prepare a budget and an annual report, and must keep accounts that are audited and laid before Parliament or the State Legislature.
This article is current as amended up to the Water (Prevention and Control of Pollution) Amendment Act, 2024 (these sections were not changed by it). Later amendments and notifications should be checked. If you work with a Board on funding, fees or audit questions, our legal consultation service can help.
The Central Government and State Governments may contribute to the Boards after due appropriation. Each Board has its own fund, which takes Government sums, gifts, grants, donations, benefactions, fees and other receipts, and may also be used for Air Act functions. A Board may borrow with Government consent. It must prepare a budget, and an annual report forwarded to the Government within four months of the financial year's end, to be laid within nine months, and keep audited accounts.
Sections 34 and 35: Government contributions
| Section | Who contributes | To whom | Condition |
|---|---|---|---|
| 34 | Central Government | Central Board | After due appropriation made by Parliament by law; each financial year; such contributions as it may think necessary to enable the Board to perform its functions |
| 35 | State Government | State Board | After due appropriation made by the State Legislature by law; each financial year; such contributions as it may think necessary |
The word is "may". The sections allow contributions; they do not fix an amount, and the Act prints no figure.
Sections 36 and 37: the funds
Section 36(1): Central Board. The Central Board "shall have its own fund", and all sums paid to it by the Central Government and all other receipts "by way of gifts, grants, donations, benefactions, fees or otherwise" are carried to it, and all payments by the Board are made from it.
Section 36(2). The Board may expend such sums as it thinks fit for performing its functions under the Act "and, where any law for the time being in force relating to the prevention, control or abatement of air pollution provides for the performance of any function under such law by the Central Board, also for performing its functions under such law". That is how the Water Act fund also serves the Air Act functions.
Section 37: State Board. The same structure applies: its own fund, sums paid by the State Government and all other receipts (gifts, grants, donations, benefactions, fees or otherwise), payments made from the fund, and expenditure that may also be applied to functions under any air pollution law that gives the State Board functions.
The word "fees" is in both sections. Consent fees and similar receipts therefore go into the Board's own fund. The amount of any fee is prescribed elsewhere; see section 25 on the application and fee.
Section 37A: borrowing
"A Board may, with the consent of, or in accordance with, the terms of any general or special authority given to it by the Central Government or, as the case may be, the State Government, borrow money from any source by way of loans or issue of bonds, debentures or such other instruments, as it may deem fit, for the performance of all or any of its functions under this Act."
Borrowing needs Government consent, or must follow a general or special authority the Government has given. The sources are open: "any source". The instruments include loans, bonds, debentures and others.
Section 38: budget
The Central Board or State Board "shall, during each financial year, prepare, in such form and at such time as may be prescribed, a budget in respect of the financial year next ensuing showing the estimated receipt and expenditure". Copies go to the Central Government or the State Government.
Section 39: annual report
| Board | Prepares | Forwards to Government | Government lays before |
|---|---|---|---|
| Central Board | An annual report in the prescribed form, giving "full account of its activities under this Act during the previous financial year" | Within four months from the last date of the previous financial year | Both Houses of Parliament, within nine months from the last date of the previous financial year |
| State Board | The same | The State Government, within four months from the last date of the previous financial year | The State Legislature, within nine months from the last date of the previous financial year |
Section 40: accounts and audit
- Accounts. Every Board maintains proper accounts and other relevant records and prepares an annual statement of accounts in the form prescribed by the Central or State Government.
- Auditor's qualification. The accounts are audited by an auditor "duly qualified to act as an auditor of companies under section 226 of the Companies Act, 1956" as printed. The Companies Act, 1956 has since been replaced by the Companies Act, 2013.
- Appointment. The Central or State Government appoints the auditor on the advice of the Comptroller and Auditor General of India.
- Powers of the auditor. The right to demand books, accounts, vouchers and other documents and to inspect any of the Board's offices.
- Report. The auditor sends a copy of the report and an audited copy of the accounts to the Central or State Government.
- Laying. The Central Government lays the audit report before both Houses of Parliament, and the State Government before the State Legislature, as soon as may be after receipt.
A summary: who prepares what, for whom
| Document | Prepared by | Sent to | Laid before |
|---|---|---|---|
| Budget (s.38) | Each Board | Central or State Government | Not stated in the section |
| Annual report (s.39) | Each Board | Central or State Government within four months | Parliament or State Legislature within nine months |
| Statement of accounts (s.40(1)) | Each Board | Audited by the appointed auditor | |
| Audit report (s.40(5)-(7)) | Auditor | Central or State Government | Parliament or State Legislature |
Why this matters to businesses and advisers
- Fees. What you pay as a consent fee is received into the Board's fund under sections 36 and 37.
- Public information. Annual reports and audit reports are laid before Parliament or the State Legislature, so they are a source of information about a Board's activities and accounts.
- Parallel Air Act functions. Money received under the Water Act can be spent on the Board's functions under an air pollution law.
- Fiscal separation. The Environmental Protection Fund under the Environment (Protection) Act is a separate Fund, to which penalties are credited. Do not confuse it with a Board's own fund; see sections 15E, 15F and 16 to 16B.
The Air Act has a matching set of provisions; see sections 32 to 36 of the Air Act. For the Boards' functions that the money supports, see section 16 and sections 17 and 18.
An example
A research student, Meera, reads the annual report of her State Board to find how its fund was used. The report, prepared under section 39(2), was forwarded to the State Government within four months of the year's end and laid before the State Legislature. The audited accounts, with the auditor's report under section 40, were laid before the State Legislature as well. Meera notes that the fund includes fees, as section 37(1) says, and that the Board also records its Air Act expenditure.
Need help with Board funding and audit questions?
Questions about fees, receipts and Board accounts usually arise in disputes or in research. Our legal consultation team can help you read the relevant provisions and the Board's published reports, and advise on how they affect your position.
Key takeaways
- The Central and State Governments may contribute to the Boards after due appropriation; no figure is printed.
- Each Board has its own fund, including fees and other receipts, and may spend it on Air Act functions where an air pollution law gives it such functions.
- Borrowing needs Government consent or a general or special authority.
- Each Board prepares a budget and an annual report; the report goes to the Government within four months and is laid within nine months.
- Accounts are audited and the audit report is laid before Parliament or the State Legislature.
Read next
- Section 16: functions of the Central Pollution Control Board
- Sections 17 and 18: functions of the State Board and directions
- Sections 32 to 36 of the Air Act: contributions, fund, budget and audit
- Sections 15E, 15F and 16 to 16B of the EP Act: the Environmental Protection Fund
Disclaimer: Based on the Environment (Protection) Act, 1986, the Air (Prevention and Control of Pollution) Act, 1981 and the Public Liability Insurance Act, 1991 as amended by the Jan Vishwas (Amendment of Provisions) Act, 2023 (in force for these Acts from 1 April 2024), the Water (Prevention and Control of Pollution) Act, 1974 as amended by its Amendment Act of 2024 (which applies only in the States and Union territories it names and in States that adopt it), and the National Green Tribunal Act, 2010 as amended by the Tribunals Reforms Act, 2021, as consulted on 3 October 2026. Later amendments, rules and notifications should be checked. This article is general information, not legal advice; check the official text before acting.