The proposal for a new statute or a change to an existing one is referred to as a bill. It must be approved by both houses of parliament to become a law. The regular bill, the finance bill, and the constitutional amendment bill are three different sorts of bills.
Money Bill vs Finance Bill
Only the Lok Sabha, the lower house of parliament, may introduce a money bill; however, either of the two chambers may introduce a finance bill.
Difference Between Money Bill and Finance Bill (In Tabular Form)
|Basis||Money Bill||Finance Bill|
|Meaning||A bill is referred to as a money bill if it only addresses the topics listed in Article 110 of the Constitution.||All bills deal with provisions relating to revenue and spending.|
|Form||Government Bill||Ordinary Bill|
|Introduction||only Lok Sabha.||While Category B legislation may be introduced in either of the two chambers, Category A measures must be introduced in Lok Sabha.|
|Approval||The President or the government must first give their consent.||The President's prior consent is necessary.|
|Certification||The Lok Sabha Speaker's certification is required.||The Speaker does not certify this.|
|Rajya Sabha||Rajya Sabha's authority is constrained.||Equal power is shared between the Lok Sabha and the Rajya Sabha.|
|Joint Sitting||No option for group sitting.||There are provisions for joint sessions of the Lok Sabha and Rajya Sabha.|
What is Money Bill?
The Money Bill, which addresses financial issues, is the most important component of the Union Budget. It provides information on tax revenue and government spending, which is crucial for the Finance Bill. In Article 110, the Indian Constitution defines a currency banknote. Cash bills are used to handle financial matters including tax collecting, government spending, etc. Given that it is linked to several important topics, such as the Aadhaar Bill and the Insolvency and Bankruptcy Bill, the Bill is extremely important for Indian legislative concerns and administration. This article will discuss Money Bill, its definition, and how it differs from Financial Bill (Articles 117 (1) and 117 (3)), as well as money-related issues in India.
History of Money Bill
It is possible to trace the origins of currency back to early cultures. Here is a synopsis of the development of banknotes:
- Ancient Civilizations: Coins made of pricey metals like gold and silver were employed as currency in ancient civilizations including Mesopotamia, Egypt, and China. Paper money had not yet been invented.
- China: Paper money's use may be traced back to ancient China. The earliest paper money known to history was called "jiaozi" and was issued by the Chinese government during the Tang Dynasty (7th–10th century). These early paper bills initially served as receipts for the deposit of silk and coins before progressively becoming accepted as a form of payment.
- Middle Ages: Precious metals continued to be the predominant form of money in Europe during this time. Merchants started using bills of exchange or promissory notes, which signified a claim to a specified amount of money held by a dependable third party, such as a goldsmith or a bank, as a result of the inconvenience of transporting huge sums of currency.
- Banknotes: During the 17th century, the modern idea of paper money as we know it today first appeared. Goldsmiths and businesspeople in Europe began creating their banknotes as confirmations of the deposits of gold or silver coins. People could make purchases using these transferrable banknotes rather than coinage.
- Government-Issued Money: Governments have come to understand the advantages of printing their own paper money throughout time. The Bank of England was founded in 1694 and given the exclusive right to print money in England. To control the issuance and circulation of currency, central banks were established in other nations that followed suit.
- Evolution of Currency Notes: Paper money started to be used more frequently in the 18th and 19th centuries. Paper money has become the predominant form of money thanks to improvements in printing technology and growing faith in the reliability of government-issued currencies.
- Fiat Money: In the 20th century, the majority of nations made the switch to fiat money, which is not backed by a tangible good like gold but instead derives its value from a decree or regulation of the government. Because it is the most prevalent type of money, fiat money offers more flexibility in monetary policy.
- Modern Money Bills: Today's bills, sometimes referred to as banknotes or money, are typically constructed of a cotton and linen blend. To avoid counterfeiting, they have several security features including holograms, security threads, watermarks, and unique inks. There are various styles, denominations, and currencies used by various nations.
It is important to note that while the use of physical currency bills has decreased in various nations due to the advent of digital transactions and electronic payments in recent years, they continue to be a crucial component of the world monetary system.
Provisions of Money Bill
- the levying, repealing, waiving, modifying, or controlling of any tax.
- The Union government's ability to borrow money is regulated.
- the payment and the care of the Indian Reserve Fund or the Consolidated Fund of India. Into or take money out of any such fund.
- Funds from the Indian Consolidated Fund are appropriated.
- It is required to declare any expenditures charged to the Consolidated Fund of India or any increases to such expenditures.
- the authority or circulation of such assets, the evaluation of the Union's or a state's records, or the reception of assets for the Consolidated Fund of India or the public record of India.
- A law cannot be regarded as a money bill under certain circumstances, which are outlined in Article 110 of the Indian Constitution.
Characteristics of Money Bill
- It oversees tax collection, government association consumption, and credits, joint reserves, etc.
- It could very likely be tabled in the Lok Sabha. The President's recommendation must be followed.
- The Money bill may be proposed and approved by a minister.
- A money bill may be approved by the Speaker, and the Speaker's decision is final.
- Rajya Sabha is unable to change the Bill. It might recommend changes.
- The Bill must be sent back to Lok Sabha by Rajya Sabha in no less than 14 days.
Types of Money Bill
- Bill of Appropriations: - The Indian Constitution's Article 114 addresses the Appropriation Bill. The combined asset assets may be used by the public authority within a financial year thanks to this Bill.
- Budget Bill: - This Bill is presented in the Lok Sabha shortly after the association's financial plan to make the public authority's financial arrangements applicable for the following fiscal year. All money bills are cash bills, but Lok Sabha's Rule 219 defines the Finance Bill as something different.
The Process By Which Money Bill Becomes An Act
To turn a bill into an act, one must follow a specific process that is outlined in the Indian Constitution.
Role of the Lok Sabha in the Budget Bill
A money measure may be introduced right away in the Lok Sabha, the Parliament's lower body. Before proposing a money bill in Lok Sabha, the President's prior consent is required. After being approved by the Lok Sabha, it was presented before the Rajya Sabha. If the Bill doesn't pass with a majority in the Lok Sabha, the current administration is thought to have lost.
The Money Bill and the Veto Power:
Without prior approval from the President, a cash bill cannot be submitted in the Lok Sabha. Additionally, if the Bill is approved by both chambers and delivered to the President for his signature, he will be unable to send it back to Lok Sabha for another look since it was presented there with his approval. As a result, the President is unable to use his veto power over appropriations measures. At every stage, the Speaker's judgment is conclusive.
The money bill addresses financial issues and has three readings:
- initial reading
- The following reading
- second reading
Facts about Money Bills
- Different Sizes and Colors: Around the world, currency comes in a variety of sizes and hues. Individuals, particularly those with visual impairments, can more easily recognize and distinguish between various denominations thanks to this differentiation.
- Microprinting: The printing of minute, detailed writing that is challenging to duplicate is a common element of contemporary currency. Microprinting prevents counterfeiting by acting as a security measure.
- Hidden Images: Some currency bills feature secret designs or images that are only visible in situations, such as when the bill is held up to the light or viewed from a specific angle. These covert characteristics improve security and make counterfeiting more difficult.
- Money banknotes have distinctive serial numbers printed on them. These figures aid in both tracking bill circulation and recognizing specific banknotes. Additionally acting as a security measure, serial numbers help identify fake currency.
- Many nations have switched from paper-based currency to banknotes made of polymer. To boost their longevity, resistance to ripping and water damage, and security features, polymer banknotes are comprised of a thin, flexible plastic material.
- A variety of security features, including security threads, holograms, watermarks, raised printing, color-changing ink, and fluorescent ink, are included on currency notes as anti-counterfeiting measures. These precautions make it more challenging to create counterfeit money.
- Banknotes' Lifespan: Depending on the country and the denomination, a bill's life duration varies. Due to greater circulation and wear and tear, lesser denominations typically last less time. Higher denominations typically last longer.
- Portraits of illustrious historical personalities, world leaders, or important cultural icons are frequently found in currency. These pictures represent the history, culture, and identity of the nation.
- Governments regularly redesign their currencies to include the most recent security measures and thwart counterfeiting. Redesigns of currency can also be used to exhibit artistic elements, cutting-edge technology, or to honor significant occasions.
- Numismatics, or the study and collection of money, is a well-liked hobby all around the world. Rare, vintage, or distinctive banknotes are of particular interest to collectors, and some currency bills can be highly valuable.
What is Finance Bill?
The Finance Bill is a Money Bill in which the government tries to impose new taxes, make changes to the existing tax system, or make proposals for the continuation of the current tax system for a specific amount of time after the Parliament initially approved it. This measure is given a year's worth of funding by Parliament. The Finance Act is the result of the Finance Bill being approved.
Features of Finance Bill
Finance Bills are broken down into three categories: the Money Bill, Finance Bill Category I, and Finance Bill Category II.
- Category A: The provisions of Article 110(1) of the Indian Constitution are covered by the bill. It can only be started in Lok Sabha with the president of the nation's approval.
- Category B: It includes provisions about Consolidated Fund of India expenditures. Such legislation may be proposed in any of the two houses. The President's prior consent is required before any bills may be considered.
- Money Bills include clauses that deal with regulation or borrowing, changes to federal or state tax rules, the withdrawal of funds from a contingency or pooled fund, etc.
- Both types of finance bills include clauses that deal with taxes, spending, and other issues.
- A finance bill is always a money bill. A Finance Bill, however, need not always be a Money Bill.
- Only the Lok Sabha or the lower house of Parliament may introduce the Finance Bill.
- To the bill, the Rajya Sabha may offer recommendations. The Rajya Sabha must return the bill within 14 days of receiving it; otherwise, it would be considered to have been passed.
- The bill will be submitted to the President for approval if it is returned to the Lok Sabha without any suggestions.
- The Lok Sabha has the authority to accept or reject each recommendation, even if the bill is returned with recommendations. The Lok Sabha must inform the Rajya Sabha about the progress of the recommendations.
- The bill would be considered enacted by both Houses whether or not the Lok Sabha approves all of the proposals.
- For all other bills, the Rajya Sabha will be where the legislation is finally passed. However, the Lok Sabha will be where Money Bills are finally passed. The Indian President will then be notified of this for approval.
- A Money Bill with recommendations cannot be returned by the President to the Lok Sabha for any reason.
Facts about Finance Bills
- A finance bill is a proposed piece of legislation that the government submits to pass changes to the country's financial regulations, tax laws, budgetary allocations, and other fiscal issues.
- Finance bills are frequently referred to in the government's yearly budget presentation. They provide a breakdown of the upcoming fiscal year's budgeted revenues and expenses.
- Finance bills frequently include provisions for tax reforms, such as adjustments to tax rates, deductions, exemptions, and credits.
- Economic Stimulus: In times of economic downturn or crisis, finance bills may include policies intended at promoting economic expansion, such as tax breaks for corporations, financial support for infrastructure projects, or investment incentives.
- Before turning into regulation, finance payments commonly want to obtain parliamentary approval from the perfect legislative frame, together with the parliament or Congress. Voting, amendments, and discussions can also all be a part of the method.
- Impact on Individuals: Changes in personal earnings tax rates, tax credits, and deductions may have an immediate effect on an individual. They may additionally influence oblique taxes that affect the price of products and services, like income taxes or price-brought taxes (VAT).
- Finance legislation often includes clauses referring to corporate taxation, along with changes to tax charges, commercial enterprise tax incentives, and regulations stopping tax evasion or avoidance.
- Budgetary Allocation: Finance payments define how the cash might be allotted to diverse applications and industries, such as infrastructure, social welfare, protection, and education.
- Finance bills may also cowl topics like borrowing caps, issuing authorities bonds, and reimbursement schedules which might be relevant to coping with the country's debt.
- Financial Regulations: To assure stability and transparency inside the financial machine, finance regulation can also undertake or change monetary regulations and tracking methods. Regulations approximately the banking, securities, coverage, and other economic industries may additionally fall underneath this class.
- International commerce: To manipulate imports and exports and increase financial competitiveness, finance legal guidelines may encompass provisions relating to worldwide commerce, such as price lists, customs taxes, and alternate agreements.
- Finance legislation frequently reflects the larger economic policy goals of the government, including encouraging investment, lowering inflation, ensuring fiscal sustainability, and tackling income inequality.
- The executive branch, which is in charge of introducing the bill, works with the legislative body, which is in charge of reviewing and passing it, to create and pass finance legislation.
- Impact on Markets: Changes in tax rules, regulations, and budget allocations that may have an impact on investors' profitability or investment choices are constantly monitored by firms and investors. As a result, finance bills can have a considerable impact on financial markets.
- Public Participation: Before becoming law, finance legislation is subject to public review and may be the subject of public hearings to get input from interested parties, professionals, and the general public.
Main Points of Difference Between a Money Bill and a Finance Bill
- A bill is regarded as a money bill if it only addresses the issues outlined in the first paragraph of Article 110 of the Constitution. A proposed law in the parliament called a "finance bill" includes provisions concerning revenues and expenses.
- A finance bill is a variation on the standard bill, but a money bill is more comparable to a government bill.
- Only the Lok Sabha may initiate a money bill. On the other hand, a finance bill of category A can be introduced in either chamber of Parliament, or category B can originate in Lok Sabha.
- A money bill must be approved by the President or the Central Government before the measure's introduction. For the Finance Bill, however, the President's recommendation is required.
- Money bills are just those finance legislation that has the speaker's certification; all other bills are considered to be finance bills.
- Rajya Sabha's authority is constrained because the money bill can be passed with or without Rajya Sabha's approval. In contrast, because the financial measure cannot be passed without their approval, both the Lok Sabha and the Rajya Sabha have equal authority in this scenario.
- A money bill does not have a clause addressing joint sitting. Contrarily, there are several provisions about joint sessions of the Lok Sabha and Rajya Sabha in the budget bill.
Consequently, using the discussion from above, you might be able to distinguish between the two types of bills. Furthermore, unless specifically designated as a money measure by the Speaker of the Lok Sabha, every money bill is a finance bill. Furthermore, not all financial bills are money bills.