Financial Bill, Meaning, Types, Significance and Need

Financial Bill

The Finance Bill also referred to as the “Act for Appropriation of Funds for Appropriations,” is a law that details the sum of money that the Government of India will spend and how it will be spent. Bills classified as financials deal with fiscal matters including revenue and expenditure. The Constitution does, however, use the term “finance bill” in a technical meaning.

The Union Budget’s Finance Bill outlines all the legal modifications required for the proposed tax adjustments by the Finance Minister. The Financial Bill is an important part of Indian Polity which an important subject in UPSC Syllabus. Students can also go for UPSC Mock Test to get more accuracy in their preparations.

Understand the meaning of Financial Bill

Financial Bills, also known as “Acts for Appropriation of Funds,” are different from Money Bills mentioned in Article 110 of the Indian Constitution. They manage fiscal matters like government spending and revenue, detailing how much money the government can spend and how it should be used. Financial Bills are part of the Constitution and the Union Budget, proposing legal changes needed for tax adjustments. If there’s a question about whether a bill is a Money Bill, the Speaker of the House makes the final decision.

According to Rule 219 of the Lok Sabha’s Rules of Procedure, a Finance Bill is introduced each year to implement the Government’s financial proposals for the upcoming fiscal year, as well as any supplementary proposals.

Features of Financial Bill

A fairly accurate picture of a nation’s finances is a finance bill, which is an account of what is paid and what is received. This receipt details the transaction between the two parties, in this instance, the bilateral trade between the two nations. This is a written request for goods delivered by one party to another with the guarantee that payment will be made in full or by a specific date.

Also Read: Money Bill

Financial Bill Types

Financial bills (I) Article 117 (1)

A Financial Bill (I) is a piece of legislation that incorporates additional general legislative provisions in addition to any or all of the topics listed in Article 110. For instance, a law that includes a section on borrowing but is not entirely focused on borrowing. A money bill and a finance bill (I) are similar in that both can only be introduced in the Lok Sabha and not the Rajya Sabha, and both can only be introduced on the president’s recommendation.

The legislative process for a Finance Bill (I) is similar to that of regular bills. The Rajya Sabha can reject or change it, but any tax-related amendments require the president’s approval. If the two Houses can’t agree, the president may call a joint session to resolve the issue. When the bill is presented to the president, he can approve it, reject it, or send it back for further discussion.

Financial bills (II) Article 117 (3)

A financial bill (II) does not contain any of the items listed in Article 110, but it does contain measures impacting Consolidated Fund of India spending. It is regarded as an ordinary bill and is handled in every way by the same parliamentary process as an ordinary bill. This bill’s only unique feature is that it cannot be passed by either House of Parliament unless the President has asked for that House to take the proposal under consideration.

The President’s consent is not needed to introduce Finance Bill (II) in Parliament. It is only required during the consideration stage. Either House of Parliament can accept or change it. If there is a disagreement between the Houses, the President may call a joint session. When the bill reaches the President, he can approve it, reject it, or send it back to the Houses for further discussion.

Also Read: Public Accounts Committee

Finance Bill Significance

The Finance measure is important for Indian politics and government since it is a measure that discusses all the important concerns that the nation must solve, particularly those that relate to spending. This measure addresses issues like tax relief, inflation, interest rates, and other things. Additionally, it discusses how political parties founded on similar principles are supported electorally. From this law, the government previously passed a number of significant Acts, including the Right of Citizens Act (RC), the Company Law Amendment Act (CLAA), the First Information Report Act (FIRAA), and others.

Need for a Financial Bill

The Union Budget proposes several tax changes for the upcoming fiscal year, even if not all are mentioned in the Finance Minister’s speech. These changes will affect various tax laws in the country. The Finance Bill aims to update all relevant laws without needing separate amendment bills for each one.

This bill is crucial for addressing major issues like spending, tax relief, inflation, and interest rates in Indian politics. It also supports political parties focused on these topics. Important laws, such as the Right of Citizens Act and the Company Law Amendment Act, have been enacted through this process.

For example, changes in the Union Budget may require updates to laws like the Income Tax Act and the Money Laundering Act. The Finance Bill makes these necessary amendments and repeals outdated provisions.

Money Bill Vs Financial Bills

Conclusion

Finance Bills are an important tool for the government to manage the economy. Unlike Money Bills, Finance Bills are part of the Annual Financial Statement, also known as the Union Budget of India, which outlines expected expenses and income for the fiscal year. According to Article 110(a) of the Indian Constitution, a Finance Bill must be presented alongside the budget.

Financial Bill UPSC

Both a Finance bill and a Money bill were introduced into our parliament during the period of India’s independence. Financial Bills are governed by Articles 117(1) and 117(2). Financial bills come in various forms, but not all financial invoices are money bills. Since then, it has been put to use in numerous applications. The country’s maintenance depends on the finance bill, and our government depends on the money bill. Students can read all the details related to UPSC by visiting the official website of StudyIQ UPSC Online Coaching.

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