Patna: Bihar Deputy Chief Minister Sushil Kumar Modi has urged the Centre to reconsider amendment in Income Tax Act to disallow levies imposed by state governments on PSUs for imposition and computation of income tax. "The working of the proposed amendment is such that it would give wide discretionary powers in this regard," Modi, who is also state's Finance minister, said in his letter to Union Finance Minister P Chidambaram.
He said that the state government earns revenues from PSUs and Beverage Corporation (set up by the state government to run wholesale business of liquor) by imposing privilege fee. "The proposed amendment amounts to imposition of tax on state government income and therefore violates Article 289 of the Constitution," he said in his letter dated April 25, 2013.
"You are aware that states are already agitated by some of the actions of the Central government on the issue of compensation for introduction of VAT. The proposed move will further erode confidence of the state governments and delay the introduction of GST," he said. Modi is chairman of empowered group of ministers on GST.
He urged Chidambaram that an official amendment be moved in the current session of Parliament to drop this proposed amendment contained in clause 7 of the Finance Bill, 2013.