FINANCE BILL
1.Context
The Finance Bill 2023 was passed by voice vote in the Lok Sabha last week with 64 amendments.
While these amendments warranted extensive debate and examination of their far-reaching consequences, no such discussion took place in the House
Among the amendments passed is the contentious decision to scrap the tax benefit for debt mutual funds
2. What is Finance Bill
- When a piece of legislation is yet to be passed as a law by the Houses of Parliament, it is termed a Bill. A Finance Bill is a Bill that, as the name suggests, concerns the country's finances it could be about taxes, government expenditures, government borrowings, revenues, etc. Since the Union Budget deals with these things, it is passed as a Finance Bill
- Rule 219 of the Rules of Procedure of Lok Sabha states: ‘Finance Bill’ means the Bill ordinarily introduced in each year to give effect to the financial proposals of the Government of India for the following financial year and includes a Bill to give effect to supplementary financial proposals for any period
- There are different kinds of Finance Bills:The most important of them is the Money Bill, The Money Bill is concretely defined in Article 110
- A Money Bill is certified by the Speaker as such in other words, only those Financial Bills that carry the Speaker’s certification are Money Bills
Article 110 states that a Bill shall be deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters:
(a) the imposition, abolition, remission, alteration or regulation of any tax;
(b) the regulation of the borrowing of money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;
(c) the custody of the Consolidated Fund or the Contingency Fund of India, the payment of money into or the withdrawal of money from any such Fund
(b) the regulation of the borrowing of money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;
(c) the custody of the Consolidated Fund or the Contingency Fund of India, the payment of money into or the withdrawal of money from any such Fund
(d) the appropriation of money out of the Consolidated Fund of India;
(e) the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;
(f) 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; or
(g) any matter incidental to any of the matters specified in sub clauses (a) to (f)
(e) the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;
(f) 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; or
(g) any matter incidental to any of the matters specified in sub clauses (a) to (f)
- A Bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences or fees for services rendered, or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes
- If any question arises whether a Bill is a Money Bill or not, the decision of the Speaker of the House of the People thereon shall be final
- There shall be an endorsement of every Money Bill when it is transmitted to the Council of States under Article 109, and when it is presented to the President for assent under Article 111, the certificate of the Speaker of the House of the People signed by him that it is a Money Bill
3. Indexation
- Which is offered to debt fund investors if the investment is redeemed after 36 months means adjusting the cost of funds by taking inflation into consideration
- In the case of debt funds, long-term capital gains were taxed at 20 per cent with indexation benefits
- This benefit brought down an investor’s tax liability
- However, there are concerns that the withdrawal of the benefit will lead to investors reassessing their allocations to debt mutual funds
- This may impact flows into these funds. And as debt mutual funds in turn channel funds into the bond market, this move is being seen as one that is to the detriment of the growth and development of the bond market in India
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For Prelims: Money Bill, Finance Bill, Lok Sabha, Rajya Sabha
For Mains:
1. What do you understand by money bill and How is it different from Finance Bill? (250 Words)
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Previous Year Questions:
1.Regarding Money Bill, Which of the following statements is not correct? (UPSC 2018)
A. A bill shall be deemed to be a money bill if it contains only provisions relating to imposition, abolition, remission,
B. A money Bill has provisions for the custody of the Consolidated fund of India or the Contingency Fund of India
C. A money bill is concerned with the appropriation of money out of the Contingency Fund of India
D. A money Bill deals with the regulation of borrowing of Money or giving of any guarantee by the Government of India
Answer (C)
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Source: Business Standard
