The representatives of banks and financial institutions have met Union Finance Minister and his team in the pre-budget consultation exercise. Urban Cooperative Bank President Mr Mukund Abhyankar was also part of the delegation.
Mr Abyankar is said to have strongly demanded abolition of Section 80(P)(4) of the Income Tax Act, 1961 to free urban cooperative banks from payment of income tax and the establishment of a national-level UrbanCooperative Bank (UCB) for all 1600 Primary Cooperative Banks of India.
The banks’ representative called for implementation of recommendations of Naik Committee Report, removal of mismatch between asset liability and banks’ balance sheets and need for revision of definition of priority sector lending among others.
Other suggestions made by them include continuation of interest subvention scheme for the investment lending in agriculture sector, inclusion of joint collaborative group promoted by NABARD in priority sector lending, exemption from service tax for the 72 lakh self-help groups (SHGs) of women promoted by NABARD and an increase in the tax benefit limit for health insurance.
Those who attended the meeting besides Abhyankar included Ms Arundhati Bhattacharya, State Bank of India, Dr. Rajiv B. Lall, IDFC Ltd., Mr M. Narendra, Indian Overseas Bank (IOB), Mr K.R. Kamath, Punjab National Bank (PNB), Mr S.S. Mundra, Bank of Baroda (BOB), Mr Sudhir Kumar Jain, Syndicate Bank, Mr Rajiv Rishi, Central Bank of India, Mr M.S. Raghavan, IDBI, Dr. Harsh Kumar Bhanwala, NABARD, Mr S.K. Roy and many others.
Earlier Dr Dinesh, Chief executive of NCUI had also batted for the abolition of the income tax before the ministerial team.
Welcome Mr.Abyankar’s request for reverting back 80P exemption to Cooperative Banks..Even if it causes substantial revenue loss to Govt exchequer, the Govt may think of reducing the tax rate for coops to 15% atleast and also state clearly in IT Act, on allowed deductions for “provisions” towards accrued liabilities such as gratuity, leave encashment etc., There are ambiguity in this respect and lot of notice, suits, appeals etc in IT dept., causing wastage manpower, energy, besides mental stress.
I fully endorsed the views expressed by Shri Ramaswamy C about the representation made by our leader Shri Abhyankar. Govt . if finds it difficult to abolish present system of imposing IT on UCB at this stage may very easily reduce down the burden of tax by placing another lower IT (between 10% to 15%) slab for Co-operative Bank which later may be in two/three years can be abolished to bring back old days. However , misuse of funds for incurring unnecessary expenditure should be controlled and saving made by the banks on account of non paying of tax must be utilized for building of adequate infrastructure for the development of the bank so as to compete with other commercial banks.