Definition
Finance Bill
The Finance Bill is the legislation introduced with the Budget that gives legal effect to the government's tax proposals for the coming year.
When the Finance Minister announces changes to income tax, GST-related laws, customs or other levies, those changes take effect only once the Finance Bill is passed by Parliament. It is classified as a Money Bill, so the Lok Sabha's will prevails and the Rajya Sabha can only recommend changes.
The Finance Bill is distinct from the appropriation bill, which authorises spending; the Finance Bill is about raising revenue. Amendments to dozens of tax provisions are bundled into it each year, making it one of the most consequential pieces of annual legislation.
Related terms
- Vote on AccountA vote on account is Parliament's approval for the government to draw money for essential expenditure for a few months until the full Budget is passed.
- Appropriation BillThe Appropriation Bill is the law that authorises the government to withdraw money from the Consolidated Fund of India to meet the expenditure approved in the Budget.
- Cess vs SurchargeA cess is a tax levied for a specific earmarked purpose, while a surcharge is an additional tax on tax, usually on higher incomes, that is not earmarked.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.