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WHAT ARE FINANCIAL BILLS?

Why in the News?

The Finance Bill 2024 was passed by the Lok Sabha with amendments that eased the proposed Long-Term Capital Gains Tax (CGT) on real estate.

The Finance Bill is a component of the Union Budget, outlining the legal amendments needed to implement the changes in taxation proposed by the Finance Minister.

The financial Bills are of the following types:

  1. Money Bill
  2. Financial Bill I
  3. Financial Bill II
  4. Money Bill: 
  • It can be introduced only in Lok Sabha.
  • It is introduced on the prior recommendation of the President.
  • It generally deals with matters such as the imposition of tax, regulation of borrowings, appropriation of money out of CFI, declaration of expense as charged upon CFI, etc.
  • The governmental finances are of extreme importance and keeping in mind the fiscal aspect of the union’s administration the Money bill has been provided with certain provisions:
  1. Rajya Sabha Can not reject a Money Bill.
  2. Rajya Sabha can suggest amendments that may or may not be acceptable to the Lok Sabha.
  3. Rajya Sabha can delay a Money bill by a maximum of 14 days.

Financial BilI: 

  • It deals with the matters wherein it has any or all matters of Article 110 but importantly it also deals with other general legislations.
  • It is similar to the Money Bill in the following ways:
  1. It can be introduced only in the Lok Sabha.
  2. It requires the prior recommendation of the President.
  • It is like an ordinary bill on all other matters. That is, it can be rejected by the Rajya Sabha, or it can be delayed beyond 14 days.
  • A joint sitting can be called in case of a deadlock.

Financial Bill II:

  • This generally deals with those matters where expenditure is involved from CFI but not the matters mentioned in Article 110.
  • It can be introduced in either House of the Parliament.
  • The recommendation of the President is required at the consideration stage.

How is a Money Bill different from a Financial Bill?

While all Money Bills are Financial Bills, all Financial Bills are not Money Bills. For instance, the Finance Bill, which solely includes tax-related provisions, is classified as a Money Bill.
On the other hand, a bill that includes provisions related to taxation or government spending but also addresses other matters is categorized as a Financial Bill.

The Rajya Sabha does not have the authority to amend or reject a Money Bill, but it can amend or reject a Financial Bill.

Both Money Bills and Financial Bills

  • Money Bills can only be introduced in the Lok Sabha,
  • whereas a Financial Bill can be introduced in either the Rajya Sabha or the Lok Sabha.

In the event of a deadlock over a financial bill, the president can call for a joint meeting between Lok Sabha and Rajya Sabha. However, no such provision exists for a Money Bill.

Features

Money Bill

Article 110

Financial Bill

Article 117(1)

Financial Bill

Article 117 (2)

Purpose

Matters under Article 110

Matters under Article 110 and ‘’ General Legislation ‘’

Expenditure from CFI but not matters listed under Article 110

Introduced by

Only by a Minister

Only in Lok Sabha

Only by a Minister

Only in Lok Sabha

Generally a Minister

Role of Rajya Sabha

Returns with or without recommendation

Can reject or amend the bill

Can reject or amend the bill

Role of Speaker

No specific role

No specific role

No specific role

Required Majority

Simple Majority

Simple Majority

Simple Majority

President’s Role

Give or withhold assent but cannot return

Give, without or return the bill for reconsideration

Give, without or return the bill for reconsideration

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