Government Initiatives for Income Tax Relief in Cooperative Societies
The Government of India has rolled out several initiatives to provide income tax relief for cooperative societies. These measures aim to empower rural communities, support farmers, and create a fairer tax environment for cooperatives.
Reduced Surcharge on Cooperative Societies
The surcharge on cooperative societies has been reduced from 12% to 7% for incomes exceeding ₹1 crore and up to ₹10 crore. This move boosts the income of cooperative societies and their members, primarily benefiting rural and farming communities.
Alternate Minimum Tax (AMT) Rate Reduction
Previously, cooperative societies paid AMT at 18.5%, while companies paid only 15%. To ensure a level playing field, the AMT rate for cooperatives has been reduced to 15%, aligning it with corporate rates.
Cash Transaction Relief Under Section 269ST
Section 269ST restricts cash receipts exceeding ₹2 lakh in a day or per transaction. Many milk cooperatives faced penalties for cash transactions on bank holidays. To resolve this, CBDT Circular No. 25/2022 clarifies that transactions under dealership contracts won’t be aggregated across multiple days.
Concessional Tax Rate for New Manufacturing Cooperatives
New cooperatives commencing manufacturing activities before 31st March 2024 can benefit from a 15% concessional tax rate, similar to new manufacturing companies.
Relief for Cash Loans by Primary Cooperatives
Under Section 269SS, deposits or loans exceeding ₹20,000 in cash attract penalties. Now, primary agricultural credit societies (PACS) and primary cooperative agricultural and rural development banks (PCARDB) are exempt if the amount is below ₹2 lakh.
Higher Cash Withdrawal Limit Without TDS
To facilitate cash withdrawals, the TDS threshold for cooperatives has been raised from ₹1 crore to ₹3 crore per year. This benefits dairy cooperatives operating in rural areas.
Tax Relief for Sugar Cooperative Mills
Sugar cooperative mills can claim deductions for payments made to farmers for periods before the 2016-17 assessment year. CBDT Circular No. 18/2021 clarifies tax liabilities for additional sugarcane payments, offering relief worth ₹10,000 crore.
Conclusion
These income tax relief measures for cooperative societies ensure fairer taxation, support rural livelihoods, and boost economic growth in farming communities. Stay updated and benefit from these tax incentives to empower your cooperative.