What is Finance Bill ? – Know Everything about Union Budget

We all know that the Finance Bill is proposed every year with some amendments and changes required for the country’s taxation policy. As per Article 110 of the Indian Constitution of India Finance Bill is a money bill introduced every year by the Finance Minister of India.

Our Finance Minister, Mrs. Nirmala Sitharaman, will be presenting the Finance Bill on 1st February 2022. Firstly, the Finance Bill had to be approved by the Lok Sabha to become Finance Act.

In this article, we will discuss the features and highlights of the Finance Bill and the expectations from the upcoming Bill.

How was the Finance Bill introduced?

Mrs. Nirmala Sitharaman, Finance Minister of India, will be presenting the Bill for this year. It introduces a part of the Union budget of India, presented in the Lok Sabha, where it has to receive approval from the majority of Lok Sabha members.

After getting approval from Lok Sabha, it is passed to the Rajya Sabha and returned to the Lok Sabha for recommendation and changes.

Once the bill gets approved by the President of India and Lok Sabha, it becomes an act, and all the amendments become valid after the approval. 

Features

• The finance business is categorized into three heads Finance Bill Category I, Category II, and the Money Bill.
• In Finance Bill Category I and Category II, it is all related to a country’s expenditure and taxation with the involvement of major matters covering all the aspects for the country.
• The money will define payment and the changes related to the borrowing taxation system, policies at the Union and State level, agencies’ usage, consolidated points, and others.
• The Finance Minister introduces a Finance Bill in the lower house of Parliament Lok Sabha.
• After getting approval, the Finance Bill is sent back to Rajya Sabha for the recommendation and changes in the Finance Bill. Therefore, Rajya Sabha has to return the bill with the recommendation within 14 days.
• Thus recommendations given by the Rajya Sabha may not be accepted. The Finance Bill gets passed by both houses.
• After getting passed by both Sabha Rajya Sabha and Lok Sabha bills, the bill is presented to the President of India for approval, and after it becomes a Finance Act.

That’s it about the features of the Finance Bill, and later we will be discussing the expectations from this year’s Finance Bill.

Why is the Finance Bill introduced?

Bill is a customary part of the set of budgets of the country; it serves the main purpose of the country. It makes legal amendments and changes in the existing laws and taxation structure of the government for its benefit. It took approved proposals to continue ongoing tax practices and other present tax structures.

A bill is to be presented to the Parliament for one physical year.

If any of its introduced laws on the structure have to be continued for more than 1 fiscal year, it should be mentioned in next year’s bill.

Finance Bill 2021:Overview & Highlights

So, let us give you a short description and overview of the bill 2021. Many amendments were proposed to the existing law and taxation structure.

The Finance Bill at that time was presented by Mrs. Nirmala Sitharaman, the Finance Minister of India.

We will discuss all of them in just a few pointers. Let’s go ahead and give you a brief about what Finance Bill was introduced in 2021 and what is the expected for 2022

• The bill exempted leave travel allowances that employees receive for ongoing vacation with their families from taxation.
• The maximum contribution made by employees to their PF Account was increased up to 2.5 lakh to 5 lakh if the employer does not contribute to the fund.
• The threshold limit of tax audit was increased from 5 crores to 10 crores for a business purpose if at least 95% of the business transaction happens digitally.
• The maturity proceeds from a unit-linked insurance policy with a yearly premium of at least 2.5 lakh and not issued before 01-02-2021 are exempted from the taxation.
• Section 54GB was introduced for the exemption on capital gains included by the transfer of house property and land.
• Changes were made to the TDS system on different payments, dividends, purchases, etc.

These are some of the major pointers that have been covered in the Bill 2021. There are many more changes that happened in that year, leaving behind all the pointers and changes.

Let’s move ahead with the expectations from the Finance Bill 2022.

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Expectation from the Finance Bill 2022

I guess a lot is meant to happen from the finance bill, to there are a lot more expectations from Finance Bill 2022. It will be introduced with the Budget 2022-23. So, let’s talk about the major expectations from this Bill 2022 in some pointers.

Cryptocurrencies and Taxation

The government will introduce a Finance Bill for the regulations from Crypto acid. It also brings a huge clarity on Crypto taxation related to Crypto trading transactions and gains made from the transfer of crypto assets.

Employee Allowances Work from home.

The Finance Bill 2022 is also expected to offer an exemption on work from home allowances given to salaried employees by their employees.

Standard Deduction Limit

The current standard deduction is Rs 50000, which was much uploaded by the salaried invoice when it was raised earlier.

However, the government is planning to raise the standard deduction limit further.

Introducing the new tax regime

System tax Regime is not very popular among salaried employees. The major part of this section is still filing ITR with the old tax regime only.

The government may reform the tax regime and increase the higher tax slab.

80C Deduction

You might see changes in the 80C for the investment made under equity-linked savings schemes. The government might also consider increasing the detection limit provided under this section; a new limit can be defined separately for financial instruments to promote investment in mutual fund schemes.

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Expectations Ahead!

Apart from the direct taxation system changes, it is likely expected that the Finance Bill 2022 will bring change to indirect taxes. We can expect a reduction in e-invoicing applicability limit under the GST system, introduction to the RCM, revised annual GST Returns.

A Finance Bill is a necessary component of the Union budget of India, also known as the Annual Financial Statement. The bill contains all the details related to the proposals made to the Union Budget and the amendments of existing tax laws and changes required to happen if tax structure. So stay tuned for further expectations from the Finance Bill 2022.