No 'clash of interests'over service tax

By Our Special Correspondent

CHENNAI, MARCH 3.There is `no clash of interests' between the Central and State governments arising from the levy of service tax on financial services in the Union Budget for 2001-02, according to Mr. Gingee N. Ramachandran, Union Minister of State for Finance.

Asked at a press conference whether the levy of sales tax on hire purchase and leasing by the states under the concept of `deemed sales' and the levy of service tax on these activities by the Centre would not lead to a conflict, he said, the matter had been considered and there was no conflict with the states.

He said in cases where there was a need for clarification on the taxable amount with reference to financial services, these would be issued by the Central Board of Excise and Customs.

The Minister said the reduction of interest rates on long-term savings was aimed at reducing government expenditure and also encouraging the flow of funds to the industrial and business sectors and would not erode the savings rate in the economy. In case there was a tendency for people to put their money in fly-by-night finance companies offering attractive interest rates, the government would monitor the situation, he said.

Mr. Ramachandran said the Prime Minister, Mr. Vajpayee, had clarified that there was no reference to the Sethusamudram project in the budget speech because a feasibility study was already being carried out on the project at a cost of Rs. 5 crores. The requirement of financial allocation for the project would be known only after the study was over, he pointed out.

The Minister said his party, the MDMK, had identified 60 constituencies in Tamil Nadu where it had good chances of victory as a partner in the DMK-led NDA front in the Assembly elections. Negotiations would be held on the basis of this list for finalising the allotment of seats for his party.

He said the MDMK was prepared to support a government formed by the DMK on its own.

Mr. Ramachandran said the MDMK did not approve of `violence or terrorism' being indulged in by anybody but it stuck to its belief that the LTTE was the sole representative of Eelam Tamils and was fighting for their rights and interests.

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Section  : Southern States
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