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Our Bureau

Chennai , Oct. 20

THE Tamil Nadu Government has sought exemption from the Banking Cash Transaction Tax (BCTT) for the State Governments and their entities including public sector undertakings and local bodies.

The Chief Minister, Ms J. Jayalalithaa, in a letter to the Prime Minister, Dr Manmohan Singh, the text of which was released to the press, sought the amendment of the Finance Act 2005 enabling exemption for the State Government and its agencies from BCTT.

The tax, which came into effect from June 1, is envisaged as an anti-tax evasion measure and to unearth black money. But offices and establishment of the Centre and State governments have been brought under the purview of the tax.

Cash withdrawals by such agencies would not be relevant to the objectives of the tax. Withdrawal from the consolidated fund and public account of a State and also by public sector undertakings and local bodies are purely administrative in nature.

The tax is regressive in nature and will cause further stress on the State governments' finances.

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