Money Bill route to bring in the laws

What’s in today’s article?

• Why in news?
• What is Money Bill?
• Difference between money Bills and financial Bills
• News Summary: Money Bill route to bring in the laws
• Other instances of the govt using the money bill route

Why in news?

• Recently, the five-judge bench of Supreme Court declared the electoral bonds scheme unconstitutional.
• However, it postponed deciding on the government's use of money Bills to enact the laws introducing the electoral bonds.
  • Pleas challenging the use of the money Bill route is pending before a seven-judge bench that is yet to be formed.

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.
• Over the last seven years, the government has introduced multiple legislations through the money Bill route, the most notable of which are the Aadhaar Act, 2016, and the Finance Act, 2017.

Difference between money Bills and financial Bills

• While all Money Bills are Financial Bills, all Financial Bills are not Money Bills.
  • E.g., the Finance Bill which only contains provisions related to tax proposals would be a Money Bill.
  • However, a Bill that contains some provisions related to taxation or expenditure, but also covers other matters would be considered as a Financial Bill.
  • The Compensatory Afforestation Fund Bill, 2015, which establishes funds under the Public Account of India and states, was introduced as a Financial Bill.
• The procedure for the passage of the two bills varies significantly.
  • The Rajya Sabha has no power to reject or amend a Money Bill.
    • After being passed by the Lok Sabha, money Bills are sent to the Rajya Sabha for its recommendations.
    • Within 14 days, the Upper House must submit the Bill back to the Lower House with its non-binding recommendations.
    • If the Lok Sabha rejects the recommendations, the Bill is deemed to have passed by both Houses in the form in which it was passed by the Lok Sabha without the recommendations of the Rajya Sabha.
    • Even if the Rajya Sabha doesn’t respond with its recommendations within 14 days, the same consequences would follow.
  • However, a Financial Bill must be passed by both Houses of Parliament.
• While an ordinary Bill can originate in either house, a money Bill can only be introduced in the Lok Sabha, as laid down in Article 117 (1).
• Additionally, no one can introduce or move money Bills in the Lok Sabha, except on the President’s recommendation.
• Amendments relating to the reduction or abolition of any tax are exempt from the requirement of the President’s recommendation.
• The two prerequisites for any financial Bill to become a money Bill are that
  • It must only be introduced in the Lok Sabha and not the Rajya Sabha.
  • These bills can only be introduced on the President’s recommendation.

News Summary: Money Bill route to bring in the laws

• Recently, a five-judge bench of the Supreme Court struck down the electoral bonds scheme as unconstitutional.
• However, it saved one aspect of the challenge for a larger bench – the issue of the government using the money Bill route to bring in the laws that introduced the electoral bonds.
• The SC declared that:
  • It had not examined the question of introducing these amendments through a money Bill under Article 110 of the Constitution.
  • The scope of Article 110 of the Constitution has been referred to a seven-judge Bench and is sub-judice.

Other instances of the govt using the money bill route

• The government had brought several key legislations using the money Bill route:
  • The Foreign Contribution Regulation Act, 2010 by the Finance Acts of 2016 and 2018;
  • The Tribunals Reforms Act introduced as a money Bill in 2017.
  • Stringent amendments made to the Prevention of Money Laundering Act (PMLA) in 2022 and the passing of Aadhaar Act in 2018.
    • The Supreme Court has upheld the amendments of PMLA and the legality of Aadhar.
      • CJI Chandrachud was the lone dissenter in the five-judge bench that upheld Aadhaar.
      • He had termed the government’s use of money Bill route a subterfuge and fraud on the Constitution.
    • However, these laws could still be struck down if the court decides that they were enacted through improper procedure (using the money bill route).

Q1) What is Aadhar?

Aadhaar is a 12-digit number issued by the Unique Identification Authority of India (UIDAI) to residents of India. It is a unique identity number that can be obtained based on demographic and biometric data. Aadhaar can be used as proof of identity and address anywhere in India.

Q2) What is article 117 of Indian constitution?

Article 117 of the Indian Constitution deals with special provisions related to financial bills. It states that a bill that involves expenditure from the Consolidated Fund of India cannot be passed without the President's recommendation.

Source: Key aspect in poll bond case still alive: Money Bill route

PRS | Legal Service India | Economic Times