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Chidambaram stands his ground on service tax
March, 10th 2013

Finance minister P. Chidamabram has ruled out rollback of the budgetary proposal that aims to empower taxmen to arrest those guilty of not paying service tax exceeding Rs 50 lakh arguing that it is a step not against the consumer but the tax evader.

Briefing 100 party MPs from Lok Sabha and Rajya Sabha on Budget proposals which are expected to come up for debate in Parliament next week here on Friday, Chidambaram said that service tax is collected from the consumer but not deposited with the government.

Some Bharatiya Janata Party MPs are strongly opposed to this provision on the ground that it could lead to harassment of assessees and bring back memories of the bad old days of 'inspector raj'. Sources said only a couple of Congress MPs raised the issue asking if the government could have a relook at it.

Chidambaram told the lawmakers that some tough steps are required. "We have to control the fiscal deficit. We do not have much resources at this time. So, whatever we have to, we will have to do within limited resources," he said.

However, amid concerns in Congress, Chidambaram assured party MPs that funds will not be a constraint in implementing the ambitious Food Security Act, direct transfer of benefits and MNREGA. The finance minister said that despite the financial constraints before the government in a scenario of global economic slow-down, the government has not compromised anywhere so far in funding of flagship schemes. He added that funds would not be a problem as the MPs wondered why only a sum of Rs 10,000 crore has been earmarked for the food scheme in the Budget.

Chidambaram said that as and when the food ministry fine-tunes the Food Security Bill, the government will know the quantum of subsidy. The government will not be found wanting and the money will be given, he said.

Chidambaram advised the MPs to educate people about the flagship programmes and leverage them for electoral benefits ahead of 2014 Lok Sabha polls.

The name of Narendra Modi also cropped up during the oneand-half-hour interaction over the Gujarat chief minister's claims on the issue of development. Some MPs said that his development claims are not right. As part of the government's efforts to kick-start the growth engine, Chidambaram told concerned ministries to get early approval for their plans so that they could go cracking in the year ahead. The issue of the fiscal incentives given to business communities in the last three years was also briefly mentioned in the meeting.

At the outset, the finance minister told the lawmakers that they could raise doubts, ask any questions and seek explanation. The MPs expressed concern over the slowdown in the economic growth rate and wanted to know the measures being taken to arrest the slide.

The meeting also saw a number of MPs questioning why the gap between the rich and the poor is widening. Some members also raised the problems faced by industrialists. Some MPs told Chidambaram that they would defend his proposals in Parliament. "But what will we tell the people (on the criticism of the Budget),"' they sought to know. Chidambaram said that these are difficult times, but "we have to bring economy back on the high growth path".

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