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Volume IconWhat is Money Bill?

Money Bill is the most crucial part of any Union Budget. It comes under the Finance Bill and tells us about taxation and government spending. Our next report tells us more about Money Bill

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A Bill is a statute in draft. It has to receive the approval of both the houses of Parliament and also the President’s nod to turn into a law.

Procedurally, bills can be divided into four parts. They are ordinary bills, money bills and finance bills, Ordinance Replacing Bills and Constitutional amendment bills

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Apart from the money and finance bills, the other two bills can be presented in either of the houses. But the money and finance bills have to be introduced in Lok Sabha. The Upper House of the Parliament has limited power over it.

Let us understand this through an example. Before it turned into an Act in 2016, the Aadhaar Bill was introduced as a money Bill in Lok Sabha, where it easily sailed through as BJP enjoyed a majority in the lower house of Parliament.

It also led to a row, as the opposition didn’t agree with the government’s classification of the Aadhaar Bill as a money bill, in which the Rajya Sabha has no power to veto. Then in 2018, a five judge Supreme Court bench had held its Constitutional validity. The bench was led by the then chief justice of India, Deepak Mishra. And the sole dissenter was Justice Chandrachud J.

Let us now understand what a money bill is. Defined in Article 110 of the Constitution, money bill contains tax proposals of the government, telling about the new taxes and changes in rates of existing taxes. It also contains government’s expenditure, revenues, and borrowings.

According to the Constitution, a money bill contains the imposition, abolition, remission, alteration or regulation of any tax. But the imposition of local taxes doesn’t come under the purview of the money bill.

The regulation of the borrowing of money by the Union government also comes under its ambit. The payment of moneys into or the withdrawal of moneys from Consolidated Fund or the Contingency Fund of India also come under this bill.

As explained in an earlier episode, the consolidated fund of India contains direct and indirect taxes and loans taken by the government. Loans or interest given to the government are also put in this fund. The Union government needs Parliamentary approval to deposit or take out money from it. And this is done through the introduction of the money bill. While the contingency fund of India is an emergency fund.

The appropriation of money out of the Consolidated Fund of India and the declaring of any expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure comes under money bill.

So, for example, if the government wants to increase the salary of the President of the country -- which is drawn from the Consolidated Fund of India -- it will have to introduce a money bill. The same process will have to be followed if the government wants to raise the salaries of the Lok Sabha Speaker or the Chairman of Rajya Sabha.

The receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a state comes under the money bill.

And the last but not the least point. Any matter “incidental” to any of the matters specified above also comes under the money bill. There is no exact definition of the word “incidental” given in Article 110. So for long the governments have been allegedly misusing this clause to expand the ambit of the money bill. The Opposition alleges that it happened in the Aadhaar case.

The Speaker of the Lok Sabha takes the final call if a bill is a money bill or not. And his decision cannot be challenged in any court of the country. 

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First Published: Jan 26 2022 | 8:45 AM IST

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