Finance Bill 2021

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The Union Cabinet gave ex-post facto approval to the official amendments to the Finance Bill, 2021.

• The bill has already been enacted as Finance Act 2021.

Major Points of the Amendments

• The Government amendments to the Finance Bill, 2021 are tax proposals that shall generate timely revenue for the Government and streamline existing provisions by addressing grievances of the taxpayers.

• The Finance Bill, which gives effect to tax proposals for FY22, was passed in Parliament in March with 127 amendments.
  • Among other changes, it has provided for a 10-year income tax exemption to the National Bank for Financing Infrastructure and Development.
  • Private development finance institutions were provided with a five-year tax exemption, which can be extended by another five years.

• The amendment also clarified that the equalization levy would not be applicable on consideration of the sale of goods or services which are owned by persons resident in India or by a permanent establishment of a non-resident in India.
  • Equalisation Levy is a direct tax, which is withheld at the time of payment by the service recipient.
    • It was first introduced by Finance Act, 2016, at the rate of 6 per cent on payments for digital advertising services received by non-resident companies without a permanent establishment (PE) in India, if these exceeded Rs 1 lakh a year.

Why is the Finance bill Needed?

• The Finance Bill seeks to insert amendments into several existing laws concerned, without bringing out a separate amendment law for each of those Acts.
  • For instance, a Union Budget’s proposed tax changes may require amending the various sections of the Income Tax law, Stamp Act, Money Laundering law, etc.
  • The Finance Bill overrides and makes changes in the existing laws wherever required.

What is a Finance Bill?

• It is a Bill that contains some provisions related to taxation and expenditure, and additionally contains provisions related to any other matter is called a Financial Bill.
• Rule 219 of the Rules of Procedure of Lok Sabha states:
  • ‘Finance Bill’ means the Bill ordinarily introduced each year to give effect to the financial proposals of the Government of India for the following financial year and includes a Bill to give effect to supplementary financial proposals for any period.
• It is a part of the Union Budget, stipulating all the legal amendments required for the changes in taxation proposed by the Finance Minister.
• There are different kinds of Finance Bills — the most important of them is the Money Bill. The Money Bill is concretely defined in Article 110.
• The Speaker of the Lok Sabha is authorised to decide whether the Bill is a Money Bill or not. Also, the Speaker’s decision shall be deemed to be final.
• The Finance Bill, as a Money Bill, needs to be passed by the Lok Sabha — the lower house of the Parliament. Post the Lok Sabha’s approval, the Finance Bill becomes Finance Act.

Difference between a Money Bill and the Finance Bill

All Money Bills are Financial Bills, all Financial Bills are not Money Bills. 

Source :IE