Money Bill- Finance Bill issue "EMPOWER IAS"

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In a pre-emptive move, the opposition has written to Lok Sabha Speaker, urging him not to bypass the Rajya Sabha by declaring key Bills as “money bills”.

What is a Money Bill?

A money bill is defined by Article 110 of the Constitution, as a draft law that contains only provisions that deal with all or any of the matters listed therein.
These comprise a set of seven features, broadly including items such as-

Imposition, abolition, remission, alteration or regulation of any tax
Regulation of the borrowing of money by the GOI
Custody of the Consolidated Fund of India (CFI) or the Contingency Fund of India, the payment of money into or the withdrawal of money from any such fund
Appropriation of money out of the CFI
Declaration of any expenditure charged on the CFI or increasing the amount of any such expenditure
Receipt of money on account of the CFI 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
Any matter incidental to any of the matters specified above.

Who controls such bills?

In the event proposed legislation contains other features, ones that are not merely incidental to the items specifically outlined, such a draft law cannot be classified as a money bill.
Article 110 further clarifies that in cases where a dispute arises over whether a bill is a money bill or not, the Lok Sabha Speaker’s decision on the issue shall be considered final.

What surrounds the ‘Money Bill’ controversy?

While all Money Bills are Financial Bills, all Financial Bills are not Money Bills.
For example, the Finance Bill which only contains provisions related to tax proposals would be a Money Bill.
However, a Bill that contains some provisions related to taxation or expenditure, but also covers other matters would be considered a Financial Bill.
Again, the procedure for the passage of the two bills varies significantly. The Rajya Sabha (where the ruling party might not have the majority) has no power to reject or amend a Money Bill.
However, a Financial Bill must be passed by both Houses of Parliament.
The Speaker (nonetheless, a member of the ruling party) certifies a Bill as a Money Bill, and the Speaker’s decision is final.
Also, the Constitution states that parliamentary proceedings, as well as officers responsible for the conduct of business (such as the Speaker), may not be questioned by any Court.

What is a Finance Bill?

As per Article 110 of the Constitution, 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.

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.

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.