Chennai: Tamil Nadu Chief Minister J Jayalalithaa on Tuesday urged Prime Minister Manmohan Singh to amend the Finance Bill 2013.
In a letter to the prime minister, Jayalalithaa asked him to remove "extremely retrograde, anti-federal provision in Clause 7 of the Bill" that seeks to make levies paid by state government undertakings to the state as non-deductible while computing income tax.
She wrote: "This clause seeks to amend Section 40 of the Income Tax Act and make any levy by a state government by way of privilege fee, license fee, royalty etc., on state public sector undertakings not deductible for the purpose of computation of income."
According to her, the finance bill seeks to boost the central government`s income at the cost of legitimate tax and non-tax revenue of the state government amounting to indirect tax on state governments.
She also said the provision was discriminatory as it is applicable only to state-owned units and not central government-owned units.
"The clause gives a very wide discretion to income tax authorities to determine which levies will not be permitted for deduction and these powers can be exercised in an arbitrary manner which will lead to needless litigation," Jayalalithaa said.