Money Bills vs Finance Bills: What are the differences, what the court has ruled

Source: The post is based on the article “Money Bills vs Finance Bills: What are the differences, what the court has ruled”  published in Indian Express on 4th August 2023.

What is the News?

The Parliamentary Affairs Minister has said that the Digital Personal Data Protection (DPDP) Bill, 2023 is an ordinary Bill and not a money bill.

Earlier, it was reported that the Bill was being introduced under Article 117 of the Constitution, which deals with special provisions for Financial Bills.

What are Financial Bills?

A Financial Bill is any Bill that relates to revenue or expenditure is a financial Bill.

A Money Bill is also a specific type of financial Bill, that must deal only with matters specified in Article 110 (1) (a) to (g).

Article 117 of the Constitution deals with the special provisions relating to financial Bills.

Financial bills are responsible for fiscal matters such as government spending or revenue.It specifies the amount of money to be spent by the government and the way it is to be spent.

The two prerequisites for any financial Bill to become a Money Bill are: First, it must only be introduced in the Lok Sabha and not the Rajya Sabha.Secondly, these bills can only be introduced on the President’s recommendation.

What are the different types of Financial Bills?

Financial Bill I: Article 117 (1) indicates that a Bill that makes provision for any of the matters specified in clauses (a) to (f) of Article 110 (1) can be introduced or moved only on the President’s recommendation and cannot be introduced in the Rajya Sabha. 

– Examples of this first category of Financial Bills are Money Bills and other Financial Bills originating solely in the Lok Sabha.

Financial Bill II: Article 117 (3) of the Constitution deals with the second category of Financial Bill.

Such Bills are more like ordinary Bills. The difference between this kind of Financial Bill and an ordinary Bill is that if the former is enacted, it will involve expenditure from the Consolidated Fund of India and cannot be passed by either House unless the President has recommended its consideration.

In other respects, such Financial Bills are just like ordinary Bills and can even be introduced in the Rajya Sabha, amended by it, or be subjected to deliberation by both Houses in a joint sitting.

What is a Money Bill?

Article 109-Special procedure in respect of Money Bills.—

(1) A Money Bill shall not be introduced in the Council of States.

(2) After a Money Bill has been passed by the House of the People it shall be transmitted to the Council of States for its recommendations and the Council of States shall within a period of fourteen days from the date of its receipt of the Bill return the Bill to the House of the People with its recommendations and the House of the People may thereupon either accept or reject all or any of the recommendations of the Council of States.

(3) If the House of the People accepts any of the recommendations of the Council of States, the Money Bill shall be deemed to have been passed by both Houses with the amendments recommended by the Council of States and accepted by the House of the People.

(4) If the House of the People does not accept any of the recommendations of the Council of States, the Money Bill shall be deemed to have been passed by both Houses in the form in which it was passed by the House of the People without any of the amendments recommended by the Council of States.

(5) If a Money Bill passed by the House of the People and transmitted to the Council of States for its recommendations is not returned to the House of the People within the said period of fourteen days, it shall be deemed to have been passed by both Houses at the expiration of the said period in the form in which it was passed by the House of the People

Article 110 defines a “Money Bill” as one containing provisions dealing with taxes, regulation of the government’s borrowing of money, and expenditure or receipt of money from the Consolidated Fund of India, among others.

Article 109 delineates the procedure for the passage of such a Bill and confers an overriding authority on the Lok Sabha in the passage of Money Bills.

The Speaker certifies a Bill as a Money Bill.

What is the key difference between a Financial Bill and a Money Bill?

The Financial Bill has the provision of including the Rajya Sabha’s (Upper House) recommendations but the Money bill does not make their inclusion mandatory.

The Lok Sabha has the right to reject the Rajya Sabha’s recommendations when it comes to Money Bills.

What are the Supreme Court’s views on the Money Bill and Financial Bill?

Finance Act 2017: In 2019, a Constitution Bench struck down amendments to the 2017 Finance Act, which was passed as a Money Bill, altering the structure and functioning of various tribunals.

– However, the Supreme Court referred the matter of whether the 2017 Finance Act amendments could have been passed as a Money Bill to a seven-judge bench, indicating uncertainty about their classification.

– In this case, the court also expressed its doubts over the correctness of the Constitution Bench’s 2018 verdict upholding the 2016 Aadhaar Act, which was passed as a Money Bill too.