Question 1

The Rajya Sabha can amend the Finance Bill if it finds a flaw in the proposed tax rates.

Accepted Answer

The annual Finance Bill is certified as a Money Bill. Under Article 109, the Rajya Sabha can only make recommendations, which the Lok Sabha is free to accept or reject.

Question 2

The President can use a suspensive veto to return the Finance Bill to Parliament for reconsideration.

Accepted Answer

Under Article 111, the President cannot return a Money Bill for reconsideration. They must either give or withhold assent (though withholding is virtually never done as the bill is introduced with prior Presidential recommendation).

Question 3

Consider the following statements regarding financial legislation in the Indian Parliament:
1. The annual Finance Bill is introduced only in the Lok Sabha on the prior recommendation of the President.
2. A Financial Bill (Category I) under Article 117(1) can be amended or rejected by the Rajya Sabha.
3. The Speaker of the Lok Sabha must endorse every Finance Bill as a Money Bill before it is transmitted to the Rajya Sabha.

Accepted Answer

(b) Only two — Statement 1 is correct; the annual Finance Bill is a Money Bill and requires prior recommendation. Statement 2 is correct; while Financial Bill Category I must be introduced in the Lok Sabha, it is treated as an ordinary bill for passage, meaning the Rajya Sabha can amend or reject it. Statement 3 is incorrect; the Speaker endorses a 'Money Bill' under Article 110, but not ALL 'Finance Bills' (like Category I and II) are Money Bills, though the specific annual Budget Finance Bill is.

Question 4

Match List I (Constitutional Articles) with List II (Subject Matter):
List I:
A. Article 110
B. Article 112
C. Article 117
D. Article 265

List II:
1. No tax shall be levied or collected except by authority of law
2. Special provisions as to financial Bills
3. Definition of Money Bills
4. Annual Financial Statement

Accepted Answer

(a) A-3, B-4, C-2, D-1 — Article 110 defines Money Bills (A-3). Article 112 deals with the Annual Financial Statement or Budget (B-4). Article 117 contains special provisions for Financial Bills (C-2). Article 265 mandates that taxes cannot be levied without legal authority, which is why the Finance Bill is passed (D-1).

Question 5

Assertion (A): Treating corporate share buybacks as capital gains rather than taxing them directly at the company level shifts the primary tax incidence to the individual shareholder.
Reason (R): Under the capital gains framework, shareholders cannot deduct the initial cost of acquisition from the buyback proceeds.

Accepted Answer

(c) A is true but R is false. — Assertion (A) is true because moving away from the flat company-level tax under Section 115QA shifts the liability to the shareholder reporting the gains. Reason (R) is false because the primary advantage of the capital gains framework is precisely that it ALLOWS shareholders to deduct the cost of acquisition (indexation/purchase price) from the final proceeds, unlike a flat dividend or buyback tax on the total payout.

Finance Bill 2026 Passed in Lok Sabha

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