1. When the Lok Sabha transmits Finance bill to the Rajya Sabha, it can amend or reject the Bill. 

2. When the Lok Sabha transmits Money Bill to the Rajya Sabha, it cannot amend or reject the Bill; it can only make recommendations.

3. In the case of disagreement between the Lok Sabha and the Rajya Sabha, there is no joint sitting for Money Bill, but a joint sitting becomes necessary for Finance Bill. 

How many of the above statements are correct? 

(a) Only one 

(b) Only two 

(c) All three 

(d) None

Answer- b 

Explanation: 

The Finance Bill, which is introduced in Lok Sabha immediately after the presentation of the Budget by the Minister of Finance, is passed by Lok Sabha and transmitted to Rajya Sabha after the passing of the Appropriation Bill.It is also certified as a Money Bill.  

Since the Finance bill is a money bill, Rajya Sabha has the power to recommend amendments in the Finance Bill but cannot reject the bill. 

However, the Lok Sabha must accept or reject the recommendations. More than one Finance Bill may, however, be introduced during a financial year. 

Rule 219 of the Rules of Procedure of Lok Sabha states: ‘Finance Bill’ means the Bill ordinarily introduced in 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.

Hence, statement 1 is incorrect. 

A Money Bill cannot be introduced in the Rajya Sabha. It can be introduced in the Lok Sabha only on the recommendation of the President. After a Money Bill has been passed by the Lok Sabha, it is passed on to the Rajya Sabha for its recommendations with a certificate by the Speaker that it is a Money Bill. The Rajya Sabha cannot reject a Money Bill nor can it recommend it by virtue of its own powers. 

There is no provision for a joint sitting in case of a Money Bill; since a Finance Bill is a Money Bill, there is no joint sitting for a Finance bill also.

Hence, statement 2 is correct. 

The constitution distinguishes between Money bills and  Financial bills, Article 110 deals with Money bills and Article 117 deals with special provisions as to Financial Bills.

Financial Bills can be categorised into Category-A and Category-B:

Category-A Financial Bill: Those Bills which make provisions for any of the matters specified in Article 110 for the Money Bill. Such bills 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 (Such Bills are nothing but Money Bills). 

Category- A Financial Bills do not solely contain the matters specified in Article 110  (Money bill) but other matters also. Category-A Financial Bills, if not being a Money Bills, the Rajya Sabha is fully empowered to reject or amend like an Ordinary Bill. Subject to the limitation that an amendment other than for reduction and abolition of tax cannot be moved in either House without the President’s recommendations, such a Bill has to go through all the stages in Rajya Sabha as an Ordinary Bill and in the case of disagreement between the two Houses, the provision of joint-sitting is resorted to for resolving the deadlock.

Category-B Financial Bill: A Bill that would involve expenditure from the Consolidated Fund of India

also does not include any matter specified in Article 110, is treated as an Ordinary Bill and hence can be introduced in either House and the Rajya Sabha has full power either to reject or amend it. It does not require the recommendation of the President for its introduction. Such a Bill is governed by the same procedure as an Ordinary Bill, including the provision of a joint sitting in case of disagreement between the two Houses.

Hence, statement 3 is incorrect.

**For statement 3 of the question , UPSC  has taken into consideration the word Financial bill for the actual word Finance bill as printed in the question paper. Accordingly, it has considered Statement 3 as correct. 

According to UPSC, statements 2 & 3 are correct, and hence Option b is correct.

Read: Previous Year UPSC Polity Questions (PYQs) With Explanation 2023