When can a bill be designated as a ‘money bill’

Subject: Polity

Section: Parliament

Context: A seven-judge SC bench will hear a challenge to the Centre’s use of money bills for passing important laws.

More about the news:

Chief Justice of India DY Chandrachud announced the formation of a seven-judge bench to address legal challenges against the government’s use of the money bill route to pass certain key legislations.
The challenge includes amendments to the Prevention of Money Laundering Act (PMLA) and Finance Acts passed between 2015 and 2019.
Previously, the Supreme Court upheld the Aadhaar Act as a money bill in 2018, with Justice Chandrachud as the lone dissenter.
The court also referred the money bill aspect of tribunal reform to a larger constitution bench in 2019.

What is Money Bill:

Article 110 defines a money Bill as one containing provisions dealing with taxes, regulation of the government’s borrowing of money, and expenditure or receipt of money from the Consolidated Fund of India, among others.
Article 109 delineates the procedure for the passage of such a Bill and confers an overriding authority on the Lok Sabha in the passage of money Bills.
The Speaker certifies a Bill as a Money Bill, and the Speaker’s decision is final.

What is Finance Bill:

In a general sense, any Bill that relates to revenue or expenditure is a financial Bill.
A money Bill is also a specific type of financial Bill, that must deal only with matters specified in Article 110 (1) (a) to (g).
Financial bills are responsible for fiscal matters such as government spending or revenue.
It specifies the amount of money to be spent by the government and the way it is to be spent.
More specifically, Article 117 of the Constitution deals with the special provisions relating to financial Bills.
Finance Bills are divided into three categories: the Money Bill, Finance Bill Category I, and Finance Bill Category II.

What is the difference between money Bills and financial Bills:

Classification Distinction: Money Bills encompass tax-related provisions, while Financial Bills cover various subjects, including taxation and expenditure. The Finance Bill, solely dealing with tax proposals, qualifies as a Money Bill. For e.g The Compensatory Afforestation Fund Bill, 2015, which establishes funds and covers other issues, was introduced as a Financial Bill.
The procedure for the passage:
- Money Bill: The Rajya Sabha cannot amend or reject Money Bills. It offers non-binding recommendations within 14 days, but if the Lok Sabha declines them, the Bill passes as is.
- Financial Bill: It must be approved by both houses.
Origination and President’s Recommendation:
- Money Bill: Must be introduced only in the Lok Sabha, and only the Presidential recommendation
- Financial Bill: An ordinary bill can originate in either house, and the President’s recommendation is not required for tax-related amendments.