Thursday, October 20 2005 15:08 Hrs (IST) - World Time -

Chennai: Tamil Nadu Chief Minister Jayalalithaa today (Oct 20, 2005) demanded exemption of State Governments, Public Sector Undertakings (PSUS) and local bodies from the purview of Banking Cash Transaction Act (BCTA).

In a letter to the Prime Minister Dr Manmohan Singh, she said the reason for introduction of the tax was to unearth black money. The levy of tax on cash withdrawals by State Governments and its entities did not have any connection with the stated objective of banking transaction act.

Any withdrawal from the consolidated fund and public account by state governments and also by PSUs and local bodies were purely administrative in nature and tax on such withdrawals was totally 'regressive' and would only cause further stress on the finances of the states, she said.

Though the Central Government offices and establishments were 'liable' to pay this tax, it only amounted to collecting revenue from one pocket and putting it in another pocket, she said.

She also pointed out that such exemption had been given for inter-bank transactions and sought immediate amendment to the banking cash transaction act exempting State Governments and PSUs from its purview.