What is a Finance Bill?

The Finance Bill forms a part of the Union Budget, with details about all the legal amendments required for the changes in taxation proposed by the Finance Minister of the country.

This topic is relevant for all IAS exam aspirants.

Finance Bill 2021 Passed

The Lok Sabha on March 23rd, 2021 passed the Finance Bill to give effect to the financial proposals of the central government for the financial year 2021-22.

Key Points

  • Finance Minister Nirmala Sitharaman said a few changes have been made largely to boost ease of doing business and easing complianc burden.
  • As per the bill, no change in the rate of income tax. However, there is a relief to Senior Citizens aged 75 year and above, who will not be required to file income tax returns in case of income only from pension or interest.
  • The Income-tax Settlement Commission shall cease to operate with effect from 1st February 2021. This means all communications between the Tribunal and the Appellant shall be electronic. Where the personal hearing is needed, it shall be done through video-confer. To impart greater efficiency, transparency, and accountability, Section 255 is amended for the establishment of a faceless, jurisdiction-less National Income Tax Appellate Tribunal, for the purposes of disposal of appeals. This will –
    1. Eliminate the interface between the Appellate Tribunal and parties to the appeal in the course of appellate proceedings to the extent technologically feasible
    2. Optimize utilization of the resources through economies of scale and functional specialisation
    3. Introduce an appellate system with dynamic jurisdiction.
  • Bill proposes to insert Section 245MA to the IT Act for constitution of Dispute Resolution Committees by the Central Government, for dispute resolution in the case of such persons as may be specified by the CBDT.
    1. The committee shall have the powers to reduce or waive any penalty imposable under the IT Act or grant immunity from prosecution for any offense punishable under the Act in case of a person whose dispute is resolved.
    2. Anyone with a taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakh shall be eligible to approach the Committee.
  • Exemption from Audit – if the turnover of any assessee exceeded Rs. 1 crore, Earlier, such assessee was liable to get their accounts audited. In February 2020, this threshold limit was raised to Rs. 5 crores.  In the 2021 Bill the it is proposed to increase the monetary limit for tax audit from Rs. 5 crore to Rs. 10 crore under Section 44AB of the IT Act. This will further incentivize digital transactions and reduce the compliance burden of persons who make 95% of digital transactions.
  • Clause 116 under the Bill proposes to introduce an Agriculture Infrastructure and Development Cess of ₹ 2.5 per litre applicable on petrol and ₹ 4 per litre applicable on Disel.
The NCERT Notes for UPSC page is an important asset that will help you prepare for the Prelims and the Mains stage of the exam !!

In addition, the following links given below will also help in strengthening the candidates’ exam preparation:

What is the difference between a money bill and Finance bill?

The Constitution defines financial legislation into two categories: Money Bills and Financial Bills.

  • Money Bills –Article 110
  • Financial Bills (I)– Article 117 (1)
  • Financial Bills (II)– Article 117 (3)

All Money bills are Financial bills but all Financial bills are not Money bills. Read further about the Money Bill on the linked page.

  • Money bills are certified by the Speaker of Lok Sabha.
  • Only those financial bills are Money bills that contain exclusively those matters which are mentioned in Article 110 of the Constitution.

The major difference between the money bill and finance bill is mentioned below:

  1. Finance Bill has the provision of including recommendations from Rajya Sabha, however, in case of a Money Bill, it is not mandatory. In case of a Money Bill, Lok Sabha has the right to reject the recommendations of the Upper house or Rajya Sabha.

Read the detailed difference between money bills and finance bills on the given link.

Types of Finance Bill

Type (I) of Financial Bill-

  1. It is dealt with under Article 117 (1) of the Constitution and contains not only any or all the matters mentioned in the Money Bill but also other matters of general legislation.
  2. It is similar to a money bill as it can be introduced only on the recommendation of the President and can be introduced only in the Lok Sabha and not in the Rajya Sabha.

In all other aspects, a finance bill is treated as an ordinary bill –

  • It can be either rejected or amended by the Rajya Sabha.
  • In case of a disagreement between the two Houses over such a bill, the President can summon a joint sitting of the two Houses to resolve the deadlock.
  • When the bill is presented to the President, he can either give his assent to the bill or withhold his assent to the bill or return the bill for reconsideration of the Houses.

Read the Difference between the ordinary bills and Money bills on the linked page.

Type (II) of Financial Bill-

  • It is dealt with under Article 117 (3) of the Constitution and contains provisions involving expenditure from the Consolidated Fund of India. It does not include any of the matters mentioned in Article 110.
  • Such Bills can be introduced in either House of Parliament.
  • It is governed by the same legislative procedure which is applicable to an ordinary bill.
  • Recommendation of the President is essential for consideration of these Bills by either House and unless such recommendation is received, neither House can pass the Bill.

How is the Finance Bill passed?

The Finance Bill is introduced in Lok Sabha. Rajay Sabha can recommend amendments in the bill. However, the bill has to be passed by Parliament within 75 days of introduction.

To know complete details on the passing of bills, check the linked article.

What is the Finance Act?

The Finance Act is an act of Parliament by which the Union Government of India gives effects to the financial proposals given by the government for the following financial year.

The finance bill is introduced to the Lower House after the Union Budget is presented by the Finance Minister. Once the proposals are passed by the parliament and assented to by the President, it becomes the Finance Act of that year.

There is a new Finance Act every financial year which makes this act an act that renews itself every year. This act basically is an umbrella act that includes all the government’s financial policies.

Related Links:

Leave a Comment

Your Mobile number and Email id will not be published. Required fields are marked *

*

*