Amid protests, Finance Bill approved by both Houses

Context: The government has completed its budgetary exercise for 2023­24 (Like every year), with both Houses of Parliament approving the Finance Bill, 2023, along with a fresh amendment introduced by Union Finance Minister Nirmala Sitharaman to rectify an error in the Securities Transaction Tax rates on option contracts in the earlier version of the Bill.

Money bills and Finance bills are interrelated. A financial bill (I) is a bill that contains not only any or all the matters mentioned in Article 110, but also other matters of general legislation.

So if we understand the Money Bill, we can understand the Finance Bill. Hence, Article 110 and Article 111 (Which contain the provisions related to Money Bill) is of utmost importance for comprehending the provisions related to Budget. 

What is a Money Bills? 

Article 110 of the Constitution deals with the definition of money bills. It states that a bill is deemed to be a money bill if it contains ‘only’ provisions dealing with all or any of the following matters:

  1. The imposition, abolition, remission, alteration or regulation of any tax;
  2. The regulation of the borrowing of money by the Union government;
  3. The custody of the Consolidated Fund of India or the contingency fund of India, the payment of money into or the withdrawal of money from any such fund;
  4. The appropriation of money out of the Consolidated Fund of India;
  5. Declaration of any expenditure charged on the Consolidated Fund of India or increasing the amount of any such expenditure;
  6. The receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money, or the audit of the accounts of the Union or of a state; or
  7. Any matter incidental to any of the matters specified above.

However, a bill is not to be deemed to be a money bill by reason only that it provides for:

  1. the imposition of fines or other pecuniary penalties, or
  2. the demand or payment of fees for licenses or fees for services rendered; or
  3. The imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes. 

If any question arises whether a bill is a money bill or not, the decision of the Speaker of the Lok Sabha is final. His decision in this regard cannot be questioned in any court of law or in the either House of Parliament or even the president. When a money bill is transmitted to the Rajya Sabha for recommendation and presented to the president for assent, the Speaker endorses it as a money bill.

What is the procedure for passing of money bill in parliament?

  • The Constitution lays down a special procedure for the passing of money bills in the Parliament. A money bill can only be introduced in the Lok Sabha and that too on the recommendation of the president. Every such bill is considered to be a government bill and can be introduced only by a minister. 
  • It cannot reject or amend a money bill. It can only make the recommendations. It must return the bill to the Lok Sabha within 14 days, whether with or without recommendations. The Lok Sabha can either accept or reject all or any of the recommendations of the Rajya Sabha.
  • If the Lok Sabha accepts any recommendation, the bill is then deemed to have been passed by both the Houses in the modified form. If the Lok Sabha does not accept any recommendation, the bill is then deemed to have passed by both the Houses in the form originally passed by the Lok Sabha without any change.
  • If the Rajya Sabha does not return the bill to the Lok Sabha within 14 days, the bill is deemed to have been passed by both the Houses in the form originally passed by the Lok Sabha. Thus, the Lok Sabha has more powers than Rajya Sabha with regard to a money bill. On the other hand, both the Houses have equal powers with regard to an ordinary bill.

Finally, when a money bill is presented to the president, he may either give his assent to the bill or withhold his assent to the bill but cannot return the bill for reconsideration of the Houses. Normally, the president gives his assent to a money bill as it is introduced in the Parliament with his prior permission. 

Difference between Money Bill and Ordinary Bill 

S.N.Money BillOrdinary Bill
1.It can be introduced in the Lok Sabha only not in the Rajya SabhaIt can be introduced in either house of parliament. 
2.It can be intruded in the Lok Sabha only by a minister.It can be introduced either by a minister or by a private member
3.It can be introduced only of the recommendation of the president.Recommendation of president is not required.
4.It can’t be amended or rejected by the Rajya Sabha. The Rajya Sabha should return the bill with or without recommendations, which may be rejected or accepted by the Lok Sabha.It can be amended or rejected by the Rajya  Sabha. 
5.It can be detained by the Rajya Sabha for a maximum of 14 days only.Rajya Sabha can detain it for a maximum of 6 months.
6.It requires the certification of Lok Sabha speaker when transmitted to Rajya Sabha.If it is originated in the Lok Sabha, it does not require approval of speaker when transmitted to Rajya Sabha.
7.It is sent for approval of president even if it approved by the Lok Sabha only. There is no provision of joint sitting of both houses in this regard.It is sent to the president only when it is passed by the both houses of parliament. In case of deadlock between two houses, a joint sitting of both the houses can be called by the president.
8.If this bill is defeated in the Lok Sabha, then the entire council of ministers has to resign.Its defeat in the Lok Sabha may lead to the resignation of the government if it is introduced by a member.
9.It can be rejected or accepted but can’t be returned for reconsideration by the president (because earlier permission is taken from him).It can be rejected, accepted or returned for reconsideration by the president.

What are Finance Bills and How are they different or similar from Money Bills?

Financial Bills (I)

  • A financial bill (I) is a bill that contains not only any or all the matters mentioned in Article 110, but also other matters of general legislation.
    • For instance, a bill that contains a borrowing clause, but does not exclusively deal with borrowing. 
  • Similarities:In two respects, a financial bill (I) is similar to a money bill–
    • Both of them can be introduced only in the Lok Sabha and not in the Rajya Sabha, and 
    • Both of them can be introduced only on the recommendation of the president. In all other respects, a financial bill (I) is governed by the same legislative procedure applicable to an ordinary bill.
  • Hence, it can be either rejected or amended by the Rajya Sabha (except that an amendment other than for reduction or abolition of a tax cannot be moved in either House without the recommendation of the president i.e., the recommendation of the president is not required for moving an amendment making provision for the reduction or abolition of a tax). 
  • In case of a disagreement between the two Houses over such a bill, the president can summon a joint sitting of the two Houses to resolve the deadlock. When the bill is presented to the President, he can either give his assent to the bill or withhold his assent to the bill or return the bill for reconsideration of the Houses.

Financial Bills (II)

  • A financial bill (II) contains provisions involving expenditure from the Consolidated Fund of India, but does not include any of the matters mentioned in Article 110. 
  • It is treated as an ordinary bill and in all respects, it is governed by the same legislative procedure which is applicable to an ordinary bill. 
  • The only special feature of this bill is that it cannot be passed by either House of Parliament unless the President has recommended to that House the consideration of the bill. Hence, financial bill (II) can be introduced in either House of Parliament and recommendation of the President is not necessary for its introduction. In other words, the recommendation of the President is not required at the introduction stage but is required at the consideration stage. 
  • It can be either rejected or amended by either House of Parliament. In case of a disagreement between the two Houses over such a bill, the President can summon a joint sitting of the two Houses to resolve the deadlock. When the bill is presented to the President, he can either give his assent to the bill or withhold his assent to the bill or return the bill for reconsideration of the Houses.

UPSC PYQ 2018: 

Regarding Money Bill, which of the following statements is not correct?

  1. A bill shall be deemed to be a Money Bill if it contains only provisions relating to imposition, abolition, remission, alteration or regulation of any tax.
  2. A Money Bill has provisions for the custody of the Consolidated Fund of India or the Contingency Fund of India.
  3. A Money Bill is concerned with the appropriation of moneys out of the Contingency Fund of India.
  4. A Money Bill deals with the regulation of borrowing of money or giving of any guarantee by the Government of India.

Answer: A

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