Finance Bill

By : Neha Dhyani

Updated : May 20, 2022, 12:26

The Finance Bill is an integral constituent of the Budget of India that incorporates all legislative changes required for the Finance Minister's proposed tax change. The House of Representatives of Lok Sabha Parliament must pass the Finance Bill to convert it into a Finance Act. After Lok Sabha's approval, Bill becomes a financial law.

What Is A Finance Bill?

The Finance Bill is a money bill, which is presented by the government to impose new taxes, change the current tax system, or make proposals to maintain the current tax system beyond the period originally approved by the Parliament.

The Parliament may approve it for one fiscal year after which the Finance Bill becomes a Finance law.

Features of the Finance Bill

The feature of the Finance Bill are as follows:

  • A Finance Bill is an account of what is paid and what is received, which is a very good representation of a country's finances.
  • This is a receipt showing the exchange between the two parties, in this case, the international trade of each country.
  • This is a written order sent by one party to another that promises to receive goods in an amount paid or to be paid by a date.

Types of Finance Bill

Finance Bill falls into three classes -

  • Finance Bill category I
  • Finance Bill category II
  • Money bills

Since these transactions are made between countries and are of great value, only banks and other financial institutions process these transactions.

Finance Bills are most beneficial in international trade because they can easily adapt to the risks associated with international trade and its fluctuations.

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A Finance Bill can be termed as a Money Bill, but the same does not apply to vice versa. Money bills include regulations and borrowing, changes to federal and state tax laws, and withdrawal of funds from emergency funds and integrated funds.

Finance Bills in both categories include provisions for costs, taxes, and more. Finance Bills can only be introduced in the House of Representatives of the Parliament or Lok Sabha.

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Finance Bill Key Facts

  • The Rajya Sabha can make suggestions within 14 days. If there is no recommendation or modification suggested from their side, it will be considered accepted.
  • Even if the invoice is returned with the recommendations, Lok Sabha has the authority to accept or reject such recommendations and notify Rajya Sabha of the same.
  • Regardless of whether Lok Sabha accepts all recommendations, the bill is considered passed by both homes.
  • For all other Bills, the final passage of that bill will take place in Rajya Sabha. However, for money bills, the final delivery will be at Lok Sabha after which it is sent to the President of India for approval.
  • The President cannot return a willing recommendation to Lok Sabha for any purpose.

The Finance Bill is ina substantial part of the Indian Budget System. Any law or rule related to any financial amendment, taxation, or the increase or decrease in commodity prices, first needs to be presented through this Finance Bill. The conditions will be met only after it has been thoroughly reviewed and approved by the authorities as specified above.

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FAQs on Finance Bill

Q.1. Who approves the final Finance Bill?

The president's approval and recommendation are required to pass Finance Bill.

Q.2. What is the role of the Rajya Sabha in the Finance Bill?

Rajya Sabha has the authority to amend or reject Finance Bill I. This law does not require speaker consent to be classified as Finance Bill I.

Q.3. Where are both the Finance Bills- I & II introduced?

Finance Bill I can only be introduced in Lok Sabha and Finance Bill II can be deployed in both the Lok Sabha and the Rajya Sabha.

Q.4. Which Article in the Constitution of India monitors Finance Bill I and II?

Finance Bill -I am dealt with in Article 117 (1) of the Constitution and Fiscal Bill II is dealt with in Article 117 (3) of the Constitution. Finance Bill, I deal with other general legal issues as well as the provisions of Article 110. Finance Bill II deals with provisions on the costs of India's Integrated Fund but is not included in Article 110. Both the bills are considered Ordinary Bills.