Every year, the government presents the Finance Bill before the Parliament as part of the government’s Union Budget.
The Finance Bill is a Money Bill which is used for implementing changes in taxation as proposed by the finance minister in the annual budget.
The Union Budget 2023-24 will be presented by Finance Minister Nirmala Sitharaman in Parliament on February 1.
According to the Constitution of India’s Article 110, a Finance Bill is a Money Bill which is presented only in the Lok Sabha or the lower house of the Parliament.
The Bill can neither be referred to the Joint Committee of the two houses nor can be introduced in the Rajya Sabha.
A bill is identified as a Money Bill when it is related only to financial matters like government borrowings, public expenditures, taxation and government revenues.
Once the Lok Sabha passes the bill, it is sent to the Rajya Sabha or the Upper House which needs to send back the bill with or without recommendations in 14 days.
The recommendations made by the Rajya Sabha, if any, can be accepted or rejected by the Lok Sabha. However, if Rajya Sabha fails to return the bill within 14 days, the bill is considered to have been passed by both houses of Parliament.
It is important to understand that a Finance Bill is a Money Bill according to Article 110, however, a Money Bill doesn’t need to be a Finance Bill.
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Why is the Finance Bill presented?
Just after the announcement of the Union Budget, the Finance Bill is introduced in the Lok Sabha. The changes proposed by the government in taxes like alteration, remission, abolition, regulation and imposition of new taxes are brought into effect by the Finance Bill in the upcoming financial year.
The needed amendments in the laws related to various taxes are made by the bill and the need to introduce a new amendment law for every purpose is eliminated.
After both, the houses of the Parliament passes the Finance Bill and it receives the president’s assent, the bill finally becomes the Finance Act.
The president has the power to either give his assent to the passed Money Bill or withhold it. However, he does not hold the power to return the Money Bill to the House.
(With inputs from agencies)
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