Topics Covered: Government Budgeting.
What is Finance Bill?
What to study?
For Prelims and Mains: Features, components and significance of the bill.
Context: Finance bill passed ahead of coronavirus lockdown.
What is a Finance Bill?
As per Article 110 of the Constitution of India, the Finance Bill is a Money Bill.
- The Finance Bill is a part of the Union Budget, stipulating all the legal amendments required for the changes in taxation proposed by the Finance Minister.
- This Bill encompasses all amendments required in various laws pertaining to tax, in accordance with the tax proposals made in the Union Budget.
- The Finance Bill, as a Money Bill, needs to be passed by the Lok Sabha — the lower house of the Parliament.
- Post the Lok Sabha’s approval, the Finance Bill becomes Finance Act.
Difference between a Money Bill and the Finance Bill:
- A Money Bill has to be introduced in the Lok Sabha as per Section 110 of the Constitution. Then, it is transmitted to the Rajya Sabha for its recommendations. The Rajya Sabha has to return the Bill with recommendations in 14 days. However, the Lok Sabha can reject all or some of the recommendations.
- In the case of a Finance Bill, Article 117 of the Constitution categorically lays down that a Bill pertaining to sub-clauses (a) to (f) of clause (1) shall not be introduced or moved except with the President’s recommendation. Also, a Bill that makes such provisions shall not be introduced in the Rajya Sabha.
Who decides the Bill is a Finance Bill?
The Speaker of the Lok Sabha is authorised to decide whether the Bill is a Money Bill or not. Also, the Speaker’s decision shall be deemed to be final.
Why Finance Bill is needed?
The Union Budget proposes many tax changes for the upcoming financial year, even if not all of those proposed changes find a mention in the Finance Minister’s Budget speech. These proposed changes pertain to several existing laws dealing with various taxes in the country.
- The Finance Bill seeks to insert amendments into all those laws concerned, without having to bring out a separate amendment law for each of those Acts.
- For instance, a Union Budget’s proposed tax changes may require amending the various sections of the Income Tax law, Stamp Act, Money Laundering law, etc. The Finance Bill overrides and makes changes in the existing laws wherever required.
Insta Link:
Prelims Link:
- What changes can be made via Finance Bill?
- How can changes related to income tax be made?
- How can changes to Stamp duty and GST be made?
- Money Bill vs Finance bill.
- Who decides on matters related to Money and Finance Bills.
Mains Link:
How does a money bill differ from a financial Bill? Analyze whether the process of classifying a bill as money bill needs change?
Sources: the Hindu.
