What is the difference between a Money Bill & a Finance Bill? - General Knowledge Today

What is the difference between a Money Bill & a Finance Bill?

What is a Money Bill?
Article 110 defines the Money bill. A bill is considered as a Money bill if it contains only provisions dealing with all or any of the following matters: (sub headings of Article 110)
  • 110(a) Imposition, abolition, remission, alteration, regulation of any tax
  • 110(b) the regulation of the borrowing of money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;
  • 110(c) The custody of the Consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund;
  • 110(d) The appropriation of moneys out of the Consolidated Fund of India;
  • 110(e) The declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;
  • 110(f) 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
  • 110(g) Any matter incidental to any of the matters specified in sub-clauses (a) to (f).

When a Bill is not a money Bill?
Bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties or for the demand or payment of fees for licenses or fees for service rendered, or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes
Who decides whether a Bill is Money Bill or not?
If any question arises whether a Bill is a Money Bill or not, the decision of the Speaker of the House of the People thereon shall be final. The speaker of the house provides certificate signed by him that a bill is Money bill. The certificate of the speaker is final and cannot be challenged in any court of law.
What is a Finance Bill?
A finance bill is also a Money Bill. The Finance bill is one of the documents presented with the budget or annual Financial Statement as mandated in Article 110 (a). This article says:

The imposition, abolition, remission, alteration or regulation of any tax.

Finance Bill & Budget Documents:
The main Budget documents are presented to the parliament accordingly various articles of our constitution as follows:

  1. Annual Financial Statement (AFS) : As per Article 112
  2. Demand for Grants (DG) : As per Article 113
  3. Appropriation Bill: as per Article 114 (3)
  4. Finance Bill: As per article 110 (a)

The following are presented as mandated in Fiscal Responsibility and Budget Management Act 2003.

  1. Memorandum Explaining the Provisions in the Finance Bill,
  2. Macro-economic framework for the relevant financial year
  3. Fiscal Policy Strategy Statement for the financial year
  4. Medium Term Fiscal Policy Statement

Procedure:
The procedure & passage of Finance Bill are same.
Then what is the difference between Money Bill and Finance Bill?

  1. As discussed above a money bill deals with any of the maters specified above as article 110 (a) to Article 110(g). However the Finance Bill is just concerned about article 110 (a). The structure of the Finance bill presented with the documents has the following heads, supported by Schedules, statement of objects and reasons and notes on clauses. : Rates of Income Tax , Income Tax , Wealth Tax , Customs , Excise
    Service Tax, Central Sales Tax , Clean Energy Cess , Miscellaneous
  2. All of the above are within the purview of article 110(a). In simple language a money bill may have other provisions also. Like Money Bills, they can be introduced only in Lok Sabha on the recommendation of the President.
  3. Other than the one restriction that Money Bills can be introduced in Lok Sabha only, does not apply to the Finance Bills.
  4. This means the Finance Bills can be referred to a Joint Committee of the Houses while money bills can not. This also means that provisions of article 108 regarding joint sitting of both Houses do not apply to a Money Bill. This also means that a finance bill can effectively rejected by the Rajya Sabha whereas money bill cannot.
  5. Finance Bill is a bill introduced in Lok Sabha every year immediately after the presentation of the General Budget to give effect to the financial proposals of the Government of India for the following financial year. Finance Bills are treated as Money Bills as they substantially deal with amendments to various tax laws. However Article 117 (3) says that those bills which contain provisions of involvement from the consolidated fund of India are Finance bill and can be introduced in either House of Parliament. However, recommendation of the President is essential for consideration of these Bills by either House and unless such recommendation is received, neither House can pass the Bill.

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Last Updated: January 30, 2012

Comments

  1. Thanks for your prompt and clear answer!!! Very much helpful.

  2. rishita says:

    very useful info

  3. Alok garg says:

    ... It has been great working with you all! Thank you very much for all your help and support!...

  4. Satyannarayana Yedla says:

    Thank you very much!