Part V: The Union

Definition of “Money Bills”

Article 110: Definition of “Money Bills”

Overview of Article 110: Definition of “Money Bills”

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(1) For the purposes of this Chapter, a Bill shall be deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters, namely:—

  • (a) the imposition, abolition, remission, alteration or regulation of any tax;
  • (b) the regulation of the borrowing of money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;
  • (c) the custody of the Consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund;
  • (d) the appropriation of moneys out of the Consolidated Fund of India;
  • (e) the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;
  • (f) the receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a State; or
  • (g) any matter incidental to any of the matters specified in sub-clauses (a) to (f).

(2) A Bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences 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) If any question arises whether a Bill is a Money Bill or not, the decision of the Speaker of the House of the People thereon shall be final.

(4) There shall be endorsed on every Money Bill when it is transmitted to the Council of States under article 109, and when it is presented to the President for assent under article 111, the certificate of the Speaker of the House of the People signed by him that it is a Money Bill.

Explanations

Article 110 of the Constitution of India defines what constitutes a "Money Bill," laying out specific financial provisions. This article is crucial because it delineates the scope of a Money Bill, which is subject to special procedures for introduction and passage in the Parliament. The unique feature of Money Bills is that the Rajya Sabha has limited authority over them, ensuring that financial matters remain predominantly under the control of the directly elected Lok Sabha.

Clause-by-Clause Explanation

Clause (1): Definition of a Money Bill

This clause lists the provisions that qualify a bill as a Money Bill, focusing on financial matters. These include:

  • Subclause (a): Imposition, abolition, remission, alteration, or regulation of any tax – The ability of the government to levy or modify taxes is one of the primary reasons a bill may be classified as a Money Bill.
  • Subclause (b): Borrowing or guarantees by the Government of India – This provision pertains to the regulation of government borrowings and financial obligations, ensuring that such matters are governed by Money Bills.
  • Subclause (c): Custody of Consolidated or Contingency Fund of India – Matters related to these crucial funds, including deposits and withdrawals, are considered financial in nature.
  • Subclause (d): Appropriation of money from the Consolidated Fund – This deals with the allocation of government funds for various purposes and requires proper legislative approval through a Money Bill.
  • Subclause (e): Expenditure charged on the Consolidated Fund – This provision addresses declaring certain expenses as charged expenditures that must be drawn from the Consolidated Fund without regular voting by the Parliament.
  • Subclause (f): Receipt, custody, and audit of public accounts – Money Bill provisions also extend to the management and audit of government funds and accounts, ensuring financial transparency.
  • Subclause (g): Incidental matters – This catch-all clause ensures that incidental issues connected with the above provisions are also covered under a Money Bill.

Clause (2): Exclusions from the Definition of a Money Bill

This clause clarifies that certain financial provisions, such as those related to fines, fees for services, or local taxation, do not automatically make a bill a Money Bill. This clause ensures that the definition remains strictly limited to major financial concerns of the Union Government.

Clause (3): Speaker’s Final Authority

This clause grants the Speaker of the Lok Sabha the final authority to decide whether a bill qualifies as a Money Bill. This power ensures that any disputes over classification are resolved internally within the legislative framework, avoiding external judicial interference.

Clause (4): Certification of Money Bills

This clause mandates that every Money Bill carries an endorsement from the Speaker when transmitted to the Rajya Sabha or the President for assent. This certification provides formal confirmation that the bill in question falls under the definition outlined in Article 110.

Real-Life Examples

  • In 2017, the Finance Act was passed as a Money Bill, which included provisions for the reorganization of tribunals. The classification raised concerns that non-financial provisions were being included in Money Bills to bypass the Rajya Sabha's approval. The incident illustrates the broad interpretation of Article 110 and its potential implications for legislative checks and balances.
  • A prominent example of a Money Bill was the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016. Despite controversy over whether the bill should be classified as a Money Bill, the Speaker of the Lok Sabha exercised her authority under Article 110(3) to certify it as a Money Bill, limiting the Rajya Sabha's role.

Historical Significance

The historical importance of Article 110 lies in its role in preserving the primacy of the Lok Sabha over financial matters, a principle borrowed from the British parliamentary system. The article ensures that decisions involving government spending, taxation, and borrowing remain under the control of the elected representatives of the people.

Legislative History

Article 110 of the Indian Constitution, primarily defined and debated as article 90 of the Draft Constitution, was consequently included into the Indian Constitution.

Debates and Amendments

During the debate on Article 90, Shri Ghanshyam Singh Gupta proposed removing the word "only" from clause (1) on November 8, 1948, arguing that it could restrict Bills with multiple provisions, including taxation or borrowing, from being considered Money Bills. He compared this clause to Section 37 of the Government of India Act, which required the Governor-General's recommendation for such Bills.

Prof. K. T. Shah proposed amendments to broaden the definition of a Money Bill by including various forms of government revenue and expenditure to prevent narrow interpretations of "tax," ensuring the House of the People's financial control. He also proposed empowering the Lower House to modify financial contracts, citing precedents from England and the U.S., stressing the importance of clear constitutional definitions to avoid legal ambiguities.

Shri H. V. Kamath suggested amending sub-clause (e) to replace the phrase "increasing the amount of" with "varying the amount of, abolishing," arguing that the current wording only allowed for increases in expenditure without considering reductions or abolition. Kamath highlighted that while the President’s emoluments were protected from reduction, this protection did not explicitly extend to other officials.

Shri M. Ananthasayanam Ayyangar opposed this amendment, clarifying that increases in expenditure required the President’s recommendation, whereas reductions could be introduced in either House. Prof. Shibban Lal Saksena supported Prof. Shah’s amendment, proposing the inclusion of duties, charges, rates, and levies.

On June 8, 1949, Dr. Ambedkar introduced amendments to enhance financial procedures, including the principle of Taxation by Law, the establishment of Consolidated and Contingency Funds modeled after the British parliamentary system, and the introduction of the Appropriation Act and Vote on Account to promote transparency and accountability.

Dr. P. S. Deshmukh critiqued these amendments, questioning the necessity of adopting British terms like "Consolidated Fund of India" and "Vote on Account," while Shri R. K. Sindwa supported the changes for stronger legislative oversight.

These debates reflected the importance of ensuring robust financial governance, with every member contributing key points to one of the longest discussions on Money Bills before adopting the legislation to the final draft.

References

  • The Constitution of India - Article 110, Definition of Money Bills.
  • Constituent Assembly Debates - Debates surrounding Article 90 (Draft Article 90) on Money Bills.
  • The Finance Act, 2017 - Case example of a controversial Money Bill.
  • The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 - Case example of a Money Bill with extensive debate over its classification.
  • The Government of India Act, 1935 - Predecessor legislation that influenced financial provisions in the Indian Constitution.
Article 109 Article 111