Every bill which has provisions related to financial matters is a Financial Bill. There are three kinds of Financial Bills in Indian parliament viz.
- Money Bills
- Financial Bills category-I
- Financial Bill category-II.
This simply implies that all money bills are financial bills, but all financial bills are not money bills.
Money Bills
Only those financial bills which contain provisions exclusively on matters listed in article 110 of the constitution are called Money Bills. On this basis, a bill is money bill if:
- It results in imposition, abolition, remission, alteration or regulation of any tax at union or state level but NOT at local level. Thus, money bills exist in Parliament and State legislature only. If a financial bill results in imposition, abolition, remission, alteration or regulation at local level by a local body, it is not considered to be a money bill.
- It results in regulation of borrowing of money or results in any guarantee by Government of India.
- Results in withdrawal of money from Consolidated or Contingency fund
- Receipt of money in consolidated fund and public account.
Question of whether a financial bill is money bill or not, is decided by Speaker. Such bill needs to be endorsed by Speaker when passed by Lok Sabha and sent to Rajya Sabha.
Procedure for Passing of the Money Bills
The money bills have special features which make the procedure of their passage in parliament distinct. These special features are as follows:
- A money bill can be introduced / originated only in Lok Sabha {or in legislative assembly in case of bicameral legislature in states}.
- A money bill can be introduced only on prior recommendations of the President {or governor in case of state}
- A money bill can be a government bill only. No private bill can be a money bill.
- Once a money bill is passed in Lok Sabha, it is transmitted to Rajya Sabha for its consideration. But Rajya Sabha has limited powers in this context. It can neither reject nor amend the money bill. It can make only recommendations and has to return the bill with or without recommendations to Lok Sabha in 14 days.
- The Lok Sabha may or may not accept the recommendations of Rajya Sabha. Whether or not accepted those recommendations, thus returned bill is considered passed in both houses. If Rajya Sabha does not even return the bill in 14 days, it is considered passed in both houses.
- President can withhold assent to money bill but cannot return it for reconsideration of the Lok Sabha.
- There is no question of joint sitting in case of money bills because opinion of Rajya Sabha is immaterial in their case.
Example of a money bill is Finance Bill which is introduced with Budget in India. Usually such bill has provisions related to article 110 (1)(a) {imposition, abolition, remission, alteration or regulation of any tax} and is certified as a money bill. It has its endorsement by speaker as money bill and Rajya Sabha has no power to change its fate.
Financial Bill Category-I and Category-II
Sometimes, a bill apart from being a money bill {i.e. having provisions of article 110}, may also have other provisions. Example of such bill is Central Road Fund Bill (now Central Road Fund Act), which proposed to establish a non-lapsable fund to impose cess/tax by the Union Government on the consumption of Petrol and High Speed Diesel to develop and maintain National Highways. This bill contained provisions of not only imposition of taxes but also putting its proceeds in Consolidated Fund and withdrawing the same from it for development of roads. It has other detailed provisions on how it will be used, what will be duties of government etc. etc. Thus, apart from being a money bill, it also has other provisions and thus called Financial Bill of Category-I.
A financial bill of category-I is considered same as Money Bill and introduced in the Lok Sabha on the recommendation of the President. However once it has been passed by the Lok Sabha, it is like an ordinary Bill and there is no restriction on the powers of the Rajya Sabha on such Bills. Rajya Sabha has powers to reject it and also there is a provision of joint sitting in this case.
A financial bill of category-II is one which although has provisions involving expenditure from Consolidated Fund of India but does not have anything mentioned in article 110. We may take the example of “President’s (Emoluments and) Pension Act” to understand this kind of bill. This bill has provisions that money has to be taken out of the Consolidated Fund to pay salary to president but there is nothing in the bill as per provisions of article 110.
Such a bill is ordinary in all respects and both Lok Sabha and Rajya Sabha enjoy equal powers in this bill. However, only special feature of this bill is that recommendation of the President is essential for consideration and passing of these Bills by either House.