The Government of India has introduced several measures to provide tax relief to cooperative societies, aligning with the vision of ‘Sahakar se Samriddhi.’ These steps include a reduction in tax rates on various activities and an increase in the threshold for Tax Deducted at Source (TDS) on cash withdrawals, said Union Minister of Cooperation, Shri Amit Shah, in a written reply to the Lok Sabha
One significant change is the reduction in the surcharge on cooperative societies’ income, which has been decreased from 12% to 7% for incomes between Rs 1 crore and Rs 10 crore. This reduction aims to enhance the income of cooperative societies and their members, particularly those from rural and farming communities.
Additionally, the Alternate Minimum Tax rate for cooperatives has been lowered from 18.5% to 15%, aligning it with the rate applicable to companies, thus creating a level playing field between the two.
The government has also clarified the application of Section 269ST, which limits cash receipts over Rs 2 lakh. Previously, Milk Cooperative Societies faced penalties when receiving cash from distributors on bank holidays, as the Income Tax Department treated these transactions as a single event. A recent clarification by the Central Board of Direct Taxes (CBDT) now allows these societies to aggregate such receipts across multiple days without incurring penalties.
New manufacturing cooperative societies established by March 31, 2024, will benefit from a lower tax rate of 15%, similar to new manufacturing companies. This concession aims to encourage the establishment and growth of manufacturing cooperatives.
Moreover, Section 269SS of the Income Tax Act, which prohibits cash loans or deposits over Rs 20,000, has been amended for Primary Agricultural Credit Societies (PACS) and Primary Cooperative Agricultural and Rural Development Banks (PCARDB). Now, deposits or loans in cash up to Rs 2 lakh from or to members are exempt from penalties, easing financial transactions for these cooperatives.
Furthermore, the threshold for cash withdrawals without TDS for cooperatives has been raised from Rs 1 crore to Rs 3 crore per year, enhancing liquidity for these entities. Specific relief measures have also been extended to sugar cooperatives.
They can now claim deductions for payments made to sugarcane farmers before the assessment year 2016-17, and the process for filing related applications has been standardized. This change resolves long-standing tax issues, providing a cumulative benefit of approximately Rs 43,407 crore to cooperative sugar mills and sugarcane growers.
Additionally, cooperative societies that missed claiming deductions under Section 80P due to delays in filing income returns for assessment years from 2018-19 to 2022-23 can now seek condonation of these delays. The CBDT has authorized Chief Commissioners and Directors General of Income-tax to address these applications, particularly where delays were beyond the societies’ control or due to statutory audit delays.
These measures, outlined by the Minister of Cooperation, Shri Amit Shah, in a written reply to the Lok Sabha, reflect the government’s commitment to supporting cooperative societies and fostering economic growth within these communities.