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Finance Bill 2025: Understanding Its Constitutional Significance

The Finance Bill 2025 was recently passed by the Lok Sabha, marking a crucial step in India's financial legislation. This bill plays a key role in implementing the Union Budget and enacting tax-related changes. The Constitution of India classifies financial legislation into two categories: Money Bills (Article 110) and Financial Bills (Article 117).


Types of Financial Bills

  1. Money Bill (Article 110)

    • Contains only provisions related to taxation, borrowing, expenditure from the Consolidated Fund of India (CFI), or matters incidental to these.

    • Can only be introduced in the Lok Sabha with the President’s recommendation.

    • Rajya Sabha can only suggest amendments but cannot reject or modify the bill.

  2. Financial Bills (Article 117)

    • Article 117(1) Bills:

      • Include provisions related to Money Bills but not solely based on them.

      • Require the President’s recommendation before introduction in Lok Sabha.

      • Rajya Sabha can amend or reject them.

    • Article 117(3) Bills:

      • Involve expenditure from the Consolidated Fund of India.

      • Can be introduced in either House but require the President’s recommendation before passing.

      • Rajya Sabha has the same powers over these bills as with ordinary legislation.


Finance Bill vs. Appropriation Bill

  • The Finance Bill includes changes in tax laws, duties, and levies.

  • The Appropriation Bill seeks approval for government spending.

  • Both are essential for the Union Budget’s implementation.


Significance of the Finance Bill

✅ Ensures Fiscal Stability: Allows the government to implement tax policies and mobilize revenue.

✅ Parliamentary Oversight: Ensures financial control by elected representatives.

✅ Affects Citizens Directly: Changes in tax laws impact individuals and businesses.


However, concerns exist regarding limited scrutiny in Rajya Sabha, especially when bills are classified as Money Bills to bypass the Upper House.


UPSC Prelims Question

Which of the following statements regarding Financial Bills is correct?

  1. A Money Bill can be introduced in either House of Parliament.

  2. Financial Bills under Article 117(1) require the President’s recommendation for introduction in Lok Sabha.

  3. Rajya Sabha has no power to amend Financial Bills under Article 117(3).

Select the correct answer:

(a) 1 and 2 only

(b) 2 only

(c) 1 and 3 only

(d) 1, 2, and 3



UPSC Mains Question

Q. Discuss the constitutional provisions related to Financial Bills in India. How do these provisions impact the role of Rajya Sabha in financial legislation?

(GS Paper 2 – Indian Polity & Governance)


 
 
 

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