Yesterday during discussion on GST bill in Rajya Sabha Ex Finance Minister Chidambaram insisted that GST bill should be brought as Finance Bill and not a money bill. Now question which comes to our mind is what is Finance Bill and What is Money Bill and how they are different from each other. Articles below contain the answer to these Questions :-

What is a Bill?

A Bill is a draft statute which becomes law after it is passed by both the Houses of Parliament and assented to by the President. All legislative proposals are brought before Parliament in the forms of Bills.

What are the different Types of Bills and their Specific Features?

(i) Bills may be broadly classified into Government Bills and Private Members’ Bills depending upon their initiation in the House by a Minister or a Private Member.

(ii) Content wise, Bills are further classified into

(a) Original Bills which embody new proposals, ideas or policies,

(b) Amending Bills which seek to modify, amend or revise existing Acts,

(c) Consolidating Bills which seek to consolidate existing law/enactments on a particular subject,

(d) Expiring Laws (Continuance) Bills which seek to continue Acts which, otherwise, would expire on a specified date,

(e) Repealing and amending Bill to cleanse the Statute Book,

(f) Validating Acts to give validity to certain actions,

(g) Bills to replace Ordinances,

(h) Money and Financial Bills, and

(i) Constitution Amendment Bills.

(iii) However, procedurally, the Bills are classified as

(i) Ordinary Bills

(ii) Money Bills and Financial Bills

(iii) Ordinance Replacing Bills and

(iv) Constitution Amendment Bills.

(iv) Money Bills are those Bills which contain only provisions dealing with all or any of the matters specified in sub-clauses (a) to (f) of clause (1) of article 110 of the Constitution. Financial Bills can be further classified as Financial Bills Categories A and B. Category A Bills contain provisions dealing with any of the matters specified in sub-clauses (a) to (f) of clause (1) of article 110 and other matters and Category B Bills involve expenditure from the Consolidated Fund of India.

Except Money Bills and Financial Bills, Category A, which can be introduced only in the Lok Sabha, a Bill may originate in either House of Parliament. As per the provisions of article 109 of the Constitution, the Rajya Sabha has limited powers with respect to Money Bills. A Money Bill after having been passed by the Lok Sabha, and sent to Rajya Sabha for its recommendations, has to be returned to Lok Sabha by the Rajya Sabha, with in a period of fourteen days from the date of its receipt, with or without recommendations. It is open for the Lok Sabha, to either accept or reject all or any of the recommendations of the Rajya Sabha. If the Lok Sabha accepts any of the recommendations of the Rajya Sabha, the Money Bill is deemed to have been passed by both Houses with the amendments recommended by the Rajya Sabha and accepted by the Lok Sabha. If the Lok Sabha does not accept any of the recommendations of the Rajya Sabha, the Money Bill is deemed to have been passed by both Houses in the form in which it was passed by the Lok Sabha without any of the amendments recommended by the Rajya Sabha. In case a Money Bill is not returned by the Rajya Sabha to the Lok Sabha within a period of fourteen days from the date of its receipt, it is deemed to have been passed by both Houses in the form in which it was passed by the Lok Sabha after the expiry of said period.

(v) Financial Bill Category A can only be 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.

(vi) Financial Bill Category B and Ordinary Bills can be introduced in either House of Parliament.

(vii) Ordinance replacing Bills are brought before Parliament to replace an Ordinance, with or without modifications, promulgated by the President under article 123 of the Constitution of a subject. To provide continuity to the provisions of the Ordinance, such a Bill has to be passed by the Houses of Parliament and assented to by the President within six weeks of the reassembly of Parliament.

(viii) As per the procedure laid down in the Constitution, Constitution Amendment Bills can be of three types viz.,

(i) requiring simple majority for their passage in each House;

(ii) requiring special majority for their passage in each House i.e., a majority of the total membership of a House and by a majority of not less than two-thirds of the members of that House present and voting (article 368); and

(iii) requiring special majority for their passage and ratification by Legislatures of not less than one-half of the States by resolutions to that effect passed by those Legislatures (proviso to clause (2) of article 368). A Constitution Amendment Bill under article 368 can be introduced in either House of Parliament and has to be passed by each House by special majority.

(ix) Under provisions of article 108 of the Constitution, if after a Bill passed by one House and transmitted to the other House:-

(a) is rejected by the other House; or

(b) the Houses have finally disagreed as to the amendments to be made in the Bill; or

(c) more than six months elapse from the date of its receipt by the other House without the Bill being passed by it,

the President may, unless the Bill has elapsed by reason of a dissolution of the Lok Sabha, summon them to meet in a joint sitting for the purpose of deliberating and voting on the Bill. If at the joint sitting of the two Houses, the Bill, with such amendments, if any, as are agreed to in joint sitting, is passed by a majority of the total number of members of both Houses present and voting, it shall be deemed to have been passed by both Houses. However there is no provision of joint sittings on a Money Bill or a Constitution Amending Bill.

(x) After the dissolution of Lok Sabha all Bills except the Bills introduced in the Rajya Sabha and pending therein, lapse.

How a Bill becomes an Act?

(i) A Bill undergoes three readings in each House of Parliament. The First Reading consists of the Introduction of a Bill. The Bill is introduced after adoption of a motion for leave to introduce a Bill in either of the House. With the setting up of the Department-related Parliamentary Standing Committees, invariably all Bills, barring Ordinance replacing Bills; Bills of innocuous nature and Money Bills, are referred to the these Committees for examination and report within three months. The next stage on a Bill i.e., second reading start only after the Committee summits its report on the Bill to the Houses. The Second Reading consists of two stages: the ‘first stage’ consists of discussion on the principles of the Bill and its provisions generally on any of the following motions: that the Bill be taken into consideration; that the Bill be referred to a Select Committee of the Rajya Sabha ; that the Bill be referred to a Joint Committee of the Houses with the concurrence of the Lok Sabha; that it be circulated for the purpose of eliciting opinion thereon; and the ‘second stage’ signifies the clause-by clause consideration of the Bill as introduced or as reported by the Select/Joint Committee. Amendments given by members to various clauses are moved at this stage. The Third Reading refers to the discussion on the motion that the Bill (or the Bill as amended) be passed or returned (to the Lok Sabha, in the case of a Money Bill) wherein the arguments are based against or in favour of the Bill. After a Bill has been passed by one House, it is sent to the other House where it goes through the same procedure. However the Bill is not again introduced in the other House, it is laid on the Table of the other House which constitutes its first reading there.

(ii) After a Bill has been passed by both Houses, it is presented to the President for his assent. The President can assent or withhold his assent to a Bill or he can return a Bill, other than a Money Bill, for reconsideration. If the Bill is again passed by the Houses, with or without amendment made by the President, he shall not withhold assent there from. But, when a Bill amending the Constitution passed by each House with the requisite majority is presented to the President, he shall give his assent thereto.

A Bill becomes an Act of Parliament after being passed by both the Houses of Parliament and assented to by the President.

What is a Money Bill?

Under article 110(1) of the Constitution, a Bill is deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters, namely:

(a) the imposition, abolition, remission, alteration or regulation of any tax;

(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;

(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;

(d) the appropriation of moneys out of the Consolidated Fund of India;

(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;

(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

(g) any matter incidental to any of the matters specified in sub-clauses (a) to (f).

2. A Bill is not deemed to be 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 licences or fees for services 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.

3. The term “incidental” in article 110(1)(g) of the Constitution has wide implications. It is comprehensive enough to include not merely the rates, area and field of tax, but also complete machinery for assessment, appeals, revisions, etc. It is in this light that Finance Bills which, in addition to rates of taxation, contain provisions regarding machinery for collection, etc. are certified as Money Bills. Similarly, a Bill seeking to amend or consolidate the law relating to Income-tax is treated as a Money Bill. Since such Bills substantially aim at imposition, abolition, etc. of any tax, the presence of other incidental provisions do not take them out of the category of Money Bills. Thus there may be only one section in a Money Bill imposing a tax and there may be several other sections which may deal with the scope, method, manner, etc. of its imposition.

Certification of Money Bills

4. A Money Bill can be introduced in Lok Sabha only. If any question arises whether a Bill is a Money Bill or not, the decision of Speaker thereon is final. The Speaker is under no obligation to consult any one in coming to a decision or in giving his certificate that a Bill is a Money Bill. The certificate of the Speaker to the effect that a Bill is a Money Bill, is to be endorsed and signed by him when it is transmitted to Rajya Sabha and also when it is presented to the President for his assent.

5. The Speaker’s certificate on a Money Bill once given is final and cannot be challenged.

6. A Money Bill cannot be referred to a Joint Committee of the Houses.

Money Bill as distinguished from Financial Bill

7. Whereas a Money Bill deals solely with matters specified in article 110(1) (a) to (g) of the Constitution, a Financial Bill does not exclusively deal with all or any of the matters specified in the said article that is to say it contains some other provisions also.

8. Financial Bills can be divided into two categories. In the first category are Bills which inter-alia contain provisions attracting article 110(1) (a) to (f) of the Constitution. They are categorised as Financial Bills under article 117(1) of the Constitution. Like Money Bills, they can be introduced only in Lok Sabha on the recommendation of the President. However, other restrictions in regard to Money Bills do not apply to this category of Bills. Financial Bill under article 117(1) of the Constitution can be referred to a Joint Committee of the Houses.

9. In the second category are those Bills which inter-alia contain provisions which would on enactment involve expenditure from the Consolidated Fund of India. Such Bills are categorised as Financial Bills under article 117 (3) of the Constitution. Such Bills 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.

Constitution Amendment Bills—not treated as Money Bill

10. A Constitution Amendment Bill is not treated as a Money Bill even if all its provisions attract article 110(1) for the reason that such amendments are governed by article 368 which over-rides the provisions regarding Money Bills.

Some Categories of Money Bills

11. Finance Bill : Finance Bill is a secret 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.

12. Appropriation Bill : An Appropriation Bill is introduced in Lok Sabha immediately after adoption of the relevant demands for grants. Such Bills are categorised as Money Bills as they seek to authorise appropriation from the Consolidated Fund of India, of all moneys required to meet the grants made by the House and the expenditure charged on the Consolidated Fund of India.

Role of Rajya Sabha

13. Rajya Sabha is required to return a Money Bill passed and transmitted by Lok Sabha within a period of fourteen days from the date of its receipt. The period of fourteen days is computed from the date of receipt of the Bill in the Rajya Sabha Secretariat and not from the date on which it is laid on the Table of Rajya Sabha.

14. Rajya Sabha may return a Money Bill transmitted to it with or without its recommendations.

15. If a Money Bill is returned by Rajya Sabha without any recommendation, it is presented to the President for his assent.

16. If a Money Bill is returned by Rajya Sabha with recommendations it is laid on the Table of Lok Sabha. Any Minister in the case of a Government Bill or any member in the case of a private member’s Bill after giving two days notice, or with the consent of the Speaker without notice, move that the amendments recommended by Rajya Sabha be taken into consideration. After the motion is carried, the amendments are put to vote. If Lok Sabha accepts the amendment recommended by Rajya Sabha, the Money Bill is deemed to have been passed by both Houses of Parliament with the amendments recommended by Rajya Sabha and accepted by Lok Sabha. If Lok Sabha does not accept any of the amendments recommended by Rajya Sabha, the Money Bill is deemed to have been passed by both the Houses of Parliament in the form in which it was passed by Lok Sabha without any of the amendments recommended by Rajya Sabha and it is presented to the President for his assent. However, if Rajya Sabha does not return a Money Bill within the prescribed period of fourteen days, the Bill is deemed to have been passed by both Houses of Parliament at the expiry of the said period of fourteen days in the form in which it was passed by Lok Sabha and thereafter it is presented to the President for his assent.

17. Provisions of article 108 regarding joint sitting of both Houses do not apply to a Money Bill.

Assent to Money Bills

18. Lok Sabha Secretariat is responsible for obtaining assent of all Money Bills after they have been passed or are deemed to have been passed by the Houses of Parliament.

19. The President may either give or withhold his assent to a Money Bill. Under the Constitution, a Money Bill cannot be returned to the House by the President for reconsideration.

[Money Bills are governed by articles 108, 109, 110, 111 and 117 of the Constitution and Rules 72, 96, 103 to 108 of the Rules of Procedure and Conduct of Business in Lok Sabha]

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