Union budget 2025: What you need to know about the finance bill

The Finance Bill plays a vital role in outlining the government's financial plans and tax changes in the Union Budget 2025. Learn about its importance, types, and approval process.

On February 1, 2025, Finance Minister Nirmala Sitharaman will present the Union Budget, a roadmap outlining the government’s financial and economic plans for the coming year. One of the most important documents related to the Budget is the Finance Bill.

What is the Finance bill?

The Finance Bill is an essential part of the Union Budget. It details the government's financial strategies, including taxation, revenue collection, expenditure plans, and borrowings for the upcoming year. Essentially, it gives legal backing to the government's proposed tax changes and adjustments in the Union Budget.

In simpler terms, the Finance Bill sets out the government's proposed modifications to tax rates, tax slabs, exemptions, and other financial matters. It is introduced in Parliament after the Union Budget is presented.

Types of Finance bills

There are different types of Finance Bills, but the most important is the Money Bill. According to Article 110 of the Indian Constitution, a bill is considered a Money Bill if it only deals with the following matters:

• Changes in tax rates or tax slabs
• Government borrowing or the use of the Consolidated Fund of India
• Regulations regarding the appropriation of funds from the country's reserves
• The Finance Bill is also accompanied by a memorandum that explains the provisions within it. This ensures that the public and lawmakers have a clear understanding of the proposed changes.

Presentation and approval process

The Finance Bill is presented only in the Lok Sabha (the lower house of Parliament). The Rajya Sabha (the upper house) can suggest amendments, but the Lok Sabha has the final say on whether to accept or reject them.

The Parliament must pass the Finance Bill within 75 days of its introduction. After the Lok Sabha approves it, the Rajya Sabha has 14 days to return the bill with or without recommendations. If there are any changes, the Lok Sabha will decide whether to accept or reject them.

Money bill vs Finance bill

Although the Finance Bill and Money Bill may sound similar, they are not the same. A Money Bill, as defined by the Constitution, deals specifically with matters such as tax changes, government borrowing, and the use of funds from the government’s reserves. The Finance Bill includes a broader range of financial changes, such as updating existing laws and regulations.

In the end, the decision on whether a bill is a Finance Bill or a Money Bill is made by the Speaker of the Lok Sabha. If there’s any disagreement, the Speaker’s decision is final.

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