Part V: The Union

Procedure in Financial Matters

Article 117: Special Provisions as to Financial Bills

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(1) A Bill or amendment making provision for any of the matters specified in sub-clauses (a) to (f) of clause (1) of article 110 shall not be introduced or moved except on the recommendation of the President and a Bill making such provision shall not be introduced in the Council of States: Provided that no recommendation shall be required under this clause for the moving of an amendment making provision for the reduction or abolition of any tax.

(2) A Bill or amendment shall not be deemed to make provision for any of the matters aforesaid by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licenses or fees for services rendered, or by reason that it provides for the imposition, abolition, remission, alteration, or regulation of any tax by any local authority or body for local purposes.

(3) A Bill which, if enacted and brought into operation, would involve expenditure from the Consolidated Fund of India shall not be passed by either House of Parliament unless the President has recommended to that House the consideration of the Bill.

Explanations

Article 117 of the Constitution of India outlines the specific provisions related to financial bills, including their introduction, movement, and passage within Parliament. This article ensures that certain bills related to financial matters, particularly those impacting taxation and public expenditure, are subject to the recommendation of the President. It further clarifies the distinction between financial bills and bills involving fines, penalties, and local taxes.

Clause-by-Clause Explanation

Clause (1): Introduction and Recommendation of the President

This clause mandates that any bill or amendment involving the matters listed under Article 110(1)(a) to (f), which pertains to Money Bills, cannot be introduced or moved without the prior recommendation of the President. Moreover, such a bill can only be introduced in the House of the People (Lok Sabha) and not in the Council of States (Rajya Sabha).

Clause (2): Definition of Financial Provision

Clause (2) clarifies that a bill will not be considered as making a financial provision merely because it imposes fines, penalties, or fees for services rendered. Bills that deal with local taxes imposed by local authorities are excluded from being classified as financial bills requiring the President’s recommendation.

Clause (3): Presidential Recommendation for Expenditure Bills

Any bill that would involve expenditure from the Consolidated Fund of India cannot be passed by either House of Parliament unless the President has recommended its consideration.

Real-Life Examples

• In 2017, the government introduced the Goods and Services Tax (GST) Bill, a financial bill that required the recommendation of the President before being introduced in Parliament. It was a comprehensive tax reform, involving significant changes in the structure of indirect taxation.

Historical Significance

The provisions of Article 117 stem from the need to balance the financial powers of Parliament with the executive’s role in managing public finances. This article is a legacy of colonial fiscal discipline and reflects the system of checks and balances prevalent in British parliamentary practice.

Legislative History

Article 117 of the Indian Constitution, initially introduced and deliberated as article 97 of the Draft Constitution, was subsequently integrated into the Indian Constitution on June 10, 1949.

Debates and Amendments

Dr. B.R. Ambedkar moved an amendment to clarify Article 97, ensuring that financial bills related to matters under Article 110 could not be introduced without the President’s recommendation. This amendment was accepted.

Shri H.V. Kamath proposed deleting a redundant provision in clause (1), but this amendment was rejected.

Prof. K.T. Shah proposed an amendment to clause (3), advocating for stronger safeguards against misuse of funds. His proposal included the requirement that the President provide written reasons for any such recommendations. This amendment was also rejected.

References

• The Constitution of India - Article 117, Special Provisions as to Financial Bills.
• Constituent Assembly Debates - Discussions on Article 97 (Draft Article 97).
• Basu, D.D. "Commentary on the Constitution of India".
• Jain, M.P., "Indian Constitutional Law," 8th Edition - Financial procedures in Parliament.