Introduction: In a bid to bolster the dairy cooperative sector, the Ministry of Fisheries, Animal Husbandry & Dairying has introduced several measures, including income tax exemptions for cooperative societies. This article provides an in-depth analysis of these initiatives and their implications.
1. Income Tax Exemptions: The Income Tax Act now allows primary cooperative societies supplying milk to Federal Cooperative Societies to claim deductions under Section 80P for profits related to milk supply. Additionally, surcharges on cooperative societies earning between ₹1 crore and ₹10 crores have been reduced from 12% to 7%.
2. Alternate Minimum Tax Reduction: The rate of Alternate Minimum Tax for cooperative societies has been decreased from 18.5% to 15%, aligning them with corporate entities.
3. Amendments to Section 269T: Changes to Section 269T ensure no penal consequences for cash repayments under ₹2 lakh by Primary Agricultural Credit Societies or Agricultural and Rural Development Banks.
4. TDS Threshold Increase: Cooperative societies now have a higher threshold of ₹3 crore for TDS on cash withdrawals, offering relief compared to the standard ₹1 crore threshold.
5. Interest Subvention for Farmers: The government provides interest subvention on short-term crop loans up to ₹3 lakh, reducing the interest rate to 7%. Prompt repayment earns an additional 3% subvention, effectively reducing the interest rate to 4%.
6. Kisan Credit Card Scheme: Introduced in 2018-19, the Kisan Credit Card scheme extends short-term working capital loans (up to ₹2 lakh per beneficiary) to farmers in the animal husbandry and fisheries sectors.
Conclusion: The initiatives undertaken by the Ministry of Fisheries, Animal Husbandry & Dairying signify a concerted effort to support dairy cooperative societies and farmers. The tax exemptions, reduced surcharges, and other relief measures aim to foster growth and sustainability in the dairy sector, ultimately benefiting stakeholders and contributing to agricultural prosperity.
Ministry of Fisheries, Animal Husbandry & Dairying
Exemption of Income Tax for Dairy Cooperative Society
Posted On: 07 FEB 2024 5:13PM by PIB Delhi
The Government has taken the following steps to provide relief to the Cooperative Societies under Income Tax Act:
i. A primary cooperative society engaged in supplying of milk to the Federal Cooperative Society is eligible to claim deduction in respect of its entire profit relating to supply of milk to Unions society u/s 80P of the Income Tax Act, 1961.
ii. The surcharge on co-operative societies has been reduced from 12% to 7% on income of more than ₹1 crore and up to ₹10 crores.
iii. The rate of Alternate Minimum Tax for the cooperative societies have also been reduced from 18.5% to 15% for cooperative societies at par with companies.
iv. Section 269T of the Income Tax Act has been amended to provide that where a deposit is repaid by a Primary Agricultural Credit Society (PACS) or an Agricultural and Rural Development Bank (PCARDB) to its member or such loan is repaid to a PACS or a PCARDB by its member in cash, no penal consequence shall arise, if the amount of such loan or deposit including their outstanding balance is less than ₹2 lakh. Earlier this limit was ₹20,000 per member.
v. A higher limit of ₹ 3 crore for TDS on cash withdrawal has been provided for co- operative societies as against Rs 1 crore threshold for applicability of TDS u/s 194N for other recipients.
The Government provide interest subvention to make short-term crop loans up to ₹3 lakh available to farmers at the interest rate of 7% per annum and in case of prompt repayment, additional 3% interest subvention is given and effective rate of interest gets reduced to 4%. From the year 2018-19, Government of India has introduced Kisan Credit Card (KCC) scheme for Animal Husbandry and Fisheries in order to provide short term working capital loans (upto ₹2 lakh/beneficiary) at par with short-term crop loan. There is no such proposal under consideration.
This information was given by the Union Minister of Fisheries, Animal Husbandry & Dairying, Shri Parshottam Rupala in a written reply in Lok Sabha Yesterday.