In a Parliament, a bill that has provisions related to financial matters is termed as a Financial Bill. There are 3 kinds of Financial Bills in the Parliament, viz. Money Bills, Financial Bills category-I and Financial Bill category-II. The Finance Bill is part of the Union Budget and contains information on all of the legal amendments required for the tax changes proposed by the Finance Minister. A money bill, on the other hand, is concerned with financial issues such as taxation, public expenditure, and so on. Thus, the basic difference is that all money bills are financial bills, but not all financial bills are money bills.

This topic of the difference between money bill and finance bill is important from the perspective of the UPSC IAS Examination, which falls under General Studies Paper 2 (Mains) and General Studies Paper 1 (Prelims) and particularly in the Polity section. In this article, we shall discuss the What is a money bill? What is a finance bill? And differences between them in a tabular format & More!

Also, read about the Finance Bill vs Money Bill in Hindi!

Difference Between Finance Bill and Money Bill Notes

The difference between Finance Bill and Money Bill is explained in detail in the table below. 

Also, read about the Types of Funds in India - Its Overview, Types & Other Details here!

What is Money Bill?

Financial bills which contain provisions on matters listed exclusively under Article 110 of the Constitution are called Money Bills. The decision to declare a financial bill as a money bill is made by the Lok Sabha Speaker. Such a bill is endorsed by the Speaker when passed by Lok Sabha and sent to Rajya Sabha. Certain criteria determine that a bill is a money bill if it deals with the following:

• Imposition, abolition, remission, alteration or regulation of any tax at the union or state level.
• Regulation of borrowing of money or any guarantee by the Government of India.
• Withdrawal of money from the Consolidated or Contingency fund of India.
• Receipt of money in the public account and consolidated fund.

Also, read about the Difference Between Ordinary Bill And Money Bills - In detail here.

How are Money Bills passed?

• Money bills deal with financial matters like taxes, government spending, and budget.
• As per the Constitution, money bills can only be introduced in the Lok Sabha on recommendation of the president.
• The Rajya Sabha cannot reject a money bill, it can only recommend amendments which may or may not be accepted by the Lok Sabha.
• After being passed by the Lok Sabha with or without amendments, the money bill is sent to the Rajya Sabha for its recommendations.
• If the recommendations are agreed to by the Lok Sabha, the bill is deemed to have been passed by both Houses with amendments.
• If not agreed to, the bill is considered as passed in the form it was passed by the Lok Sabha without any amendment from the Rajya Sabha.
• The passed money bill is then presented to the president for ascent to become an Act.

Importance of Money bill

Money bills, also known as "Acts for raising Revenue," are significant in Indian politics because Parliament has used them for many years. These bills are important for governance because they are used to authorise government spending. These bills include numerous clauses which allow the government to raise taxes and authorise borrowing money through the issuance of securities.

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What is Financial Bill Category-I?

Sometimes, a bill having provisions of Article 110 may also have other provisions and, thus, referred to as the Financial Bill of Category-I. This category bill is similar to the Money Bill and is introduced in the Lok Sabha on the prior recommendation of the President. However, once passed by the Lok Sabha, it is similar to an ordinary Bill.Thus, Rajya Sabha has the power to reject it. There is the provision of joint sitting.

Also, read about the Finance Bill - Its Origin, Features, and Objectives here!

What is Financial Bill Category-II?

The bill does not have provisions mentioned in Article 110, although it has provisions involving expenditure from the Consolidated Fund of India. This bill is similar to ordinary bills in all respects. Such a bill can be passed by either House. Both Lok Sabha and Rajya Sabha exercise equal powers in this bill.

Also, read about the Types Of Majority In The Indian Parliament here!

How are Finance Bills Passed?

Finance Bills, which deal with taxation, government spending, and other financial matters, go through a specific process for approval:

• Presentation: Finance Bills are introduced in the lower house of the parliament, such as the Lok Sabha in India, by the Finance Minister.
• Discussion: The bill is discussed and debated in the parliament, allowing members to express their views on various financial provisions.
• Approval: Members vote on the bill, and if the majority approves, it moves to the next stage.
• Rajya Sabha Consideration: The bill is then sent to the Rajya Sabha, the upper house, for consideration. While the Rajya Sabha can't amend money-related provisions, it can suggest amendments for non-money matters.
• Returning to Lok Sabha: If the Rajya Sabha proposes amendments, the bill returns to the Lok Sabha for consideration. The Lok Sabha can accept or reject these amendments.
• President's Assent: Once both houses agree on the content, the bill is sent to the President for approval. The President's assent is usually a formality.
• Enactment: After receiving the President's assent, the Finance Bill becomes law, officially enacting the proposed financial measures.

Also, read about the Parliamentary System: Features of Indian Parliament here!

Importance of Finance bill

The Finance Bill is significant for Indian politics and governance because it addresses all of the major issues that the country must address, particularly those concerning expenditure. Finance bills address issues such as tax relief, inflation, and interest rates, among others. It also discusses electoral support for political parties formed on similar issues. A few notable examples of finance bills that have already been passed by the Parliament include the Right of Citizens Act (RC), the Company Law Amendment Act (CLAA), the First Information Report Act (FIRAA), and numerous other important Acts.

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