In a debate on the constitutional amendment in the Rajya Sabha on Thursday, the Congress party wanted Finance Minister Arun Jaitley to commit that the subsequent GST legislations would be tabled as financial Bills and not as money Bills. He was non-committal, on the ground that these were yet to be prepared.

1. Debate on GST as Money Bill or Financial Bill
What is a Bill?
According to the constitution, a Bill is a draft statute. It becomes law only after it is passed by
both the Houses of Parliament (Lok Sabha and the Rajya Sabha) and the President gives a
stamp of approval.
Types of Bills:
These bills are of different types: Ordinary Bills, Money Bills and Financial Bills, Constitution
Amendment Bills and Ordinance Replacing Bills.
Money Bills Only those financial bills which contain provisions exclusively on matters listed in
article 110 of the constitution are called Money Bills. On this basis, a bill is money bill if:
 It results in imposition, abolition, remission, alteration or regulation of any tax at union
or state level but not at local level. Thus, money bills exist in Parliament and State
legislature only. If a financial bill results in imposition, abolition, remission, alteration
or regulation at local level by a local body, it is not considered to be a money bill.
 It results in regulation of borrowing of money or results in any guarantee by
Government of India.
 Results in withdrawal of money from Consolidated or Contingency fund.
 Receipt of money in consolidated fund and public account.
Question of whether a financial bill is money bill or not, is decided by Speaker. Such bill needs
to be endorsed by Speaker when passed by Lok Sabha and sent to Rajya Sabha.
Procedure for Passing of the Money Bills
The money bills have special features which make the procedure of their passage in parliament
distinct. These special features are as follows:
 A money bill can be introduced / originated only in Lok Sabha {or in legislative
assembly in case of bicameral legislature in states}.
 A money bill can be introduced only on prior recommendations of the President {or
governor in case of state}
 A money bill can be a government bill only. No private bill can be a money bill.
 Once a money bill is passed in Lok Sabha, it is transmitted to Rajya Sabha for its
consideration. But Rajya Sabha has limited powers in this context. It can neither reject
nor amend the money bill. It can make only recommendations and has to return the bill
with or without recommendations to Lok Sabha in 14 days.
 The Lok Sabha may or may not accept the recommendations of Rajya Sabha. Whether
or not accepted those recommendations, thus returned bill is considered passed in both
houses. If Rajya Sabha does not even return the bill in 14 days, it is considered passed
in both houses.
 President can withhold assent to money bill but cannot return it for reconsideration of
the Lok Sabha.
 There is no question of joint sitting in case of money bills because opinion of Rajya
Sabha is immaterial in their case.
Example of a money bill is Finance Bill which is introduced with Budget in India. Usually
such bill has provisions related to article 110 (1)(a) {imposition, abolition, remission,

2. alteration or regulation of any tax} and is certified as a money bill. It has its endorsement
by speaker as money bill and Rajya Sabha has no power to change its fate.
Financial Bill Category-I and Category-II
Sometimes, a bill apart from being a money bill {i.e. having provisions of article 110}, may
also have other provisions. Example of such bill is Central Road Fund Bill (now Central
Road Fund Act), which proposed to establish a non-lapsable fund to impose cess/tax by the
Union Government on the consumption of Petrol and High Speed Diesel to develop and
maintain National Highways. This bill contained provisions of not only imposition of taxes
but also putting its proceeds in Consolidated Fund and withdrawing the same from it for
development of roads. It has other detailed provisions on how it will be used, what will be
duties of government etc. etc. Thus, apart from being a money bill, it also has other
provisions and thus called Financial Bill of Category-I.
A financial bill of category-I is considered same as Money Bill and introduced in the Lok
Sabha on the recommendation of the President. However once it has been passed by the
Lok Sabha, it is like an ordinary Bill and there is no restriction on the powers of the Rajya
Sabha on such Bills. Rajya Sabha has powers to reject it and also there is a provision of
joint sitting in this case.
A financial bill of category-II is one which although has provisions involving expenditure
from Consolidated Fund of India but does not have anything mentioned in article 110. We
may take the example of “President’s (Emoluments and) Pension Act” to understand this
kind of bill. This bill has provisions that money has to be taken out of the Consolidated
Fund to pay salary to president but there is nothing in the bill as per provisions of article
110.
Such a bill is ordinary in all respects and both Lok Sabha and Rajya Sabha enjoy equal
powers in this bill. However, only special feature of this bill is that recommendation of the
President is essential for consideration and passing of these Bills by either House.
Even as the Goods and Services Tax Bill was tabled in the Rajya Sabha on Wednesday 3rd Aug
2016, the Opposition demanded that the final GST Bill be presented as a Financial Bill and not
as a Money Bill.
So, what is the difference between a Money Bill and a Financial Bill?
What is a Money Bill?
Money Bills are essentially those Bills that contain provisions dealing with all or some issues
specified in the Article 110 (1) of the Constitution.
How is Money Bill Different?
Money Bills can be introduced only in the Lower House or Lok Sabha and the Upper House (or
Rajya Sabha) cannot make any amendments to them. However, RS can suggest amendments,
but it is up to the Lok Sabha to accept them or reject them. The RS has to give
recommendations on Money Bills within 14 days. If it fails to do so, then the Bill is considered
to have been passed by both Houses.

3. Examples, Please
One of the popular Bills that was passed as a Money Bill was the Aadhaar Bill. The likely
reason behind introducing Aadhaar as a Money Bill was that the ruling party -NDA - has a
majority in Lok Sabha and not in Rajya Sabha. If the Bill was considered as a Financial Bill, it
would have gone to Rajya Sabha for consideration after getting passed by the Lok Sabha and
would not have become law if any objection was raised in the Upper House.
What are Financial Bills
Financial Bills can be of two categories - Category I and Category II. These Bills refer to issues
from Article 110 of the constitution.
Category 1 is considered to be the same as a Money Bill and is introduced in the Lok Sabha
on President’s recommendation.
The Financial Bill, unlike the Money Bill, will have to be approved by both the houses in order
to become law. In that sense, it is like an Ordinary Bill. RS can reject these Bills and can also
call for a joint sitting if required.
Category II of Financial Bill includes Bills which have provisions involving expenditure from
the Consolidated Fund of Indiai but which are not specified in the Article 110
This Financial Bill or category II, can be introduced first in either of the Houses. Both the
Houses enjoy equal powers over it.
An example of this Category II Bill would be the ‘President’s (Emoluments) and Pension Act’
that is related to money taken out of the Consolidated Fund of India, but finds no mention in
the Article 110 (1).
This Financial Bill, however, needs the President’s recommendation for consideration and
passing by either House.
In case of the GST Constitution Amendment Bill, the Opposition party agreed to pass the Bill in
RS only if the future Bill is brought to the Upper House for approval. By doing so, the
opposition has ensured that the final GST draft comes back to the Rajya Sabha, where it has a
say in it.
i A Consolidated Fund is actually the expenditures and revenues on the books of the
government.