Key Tax Benefits for Cooperative Societies Announced by Amit Shah
The recent announcements in the Rajya Sabha by Amit Shah have provided significant tax benefits and relief measures for cooperative societies. These changes are designed to support rural communities, particularly those engaged in farming, dairy, and manufacturing activities. Here’s a detailed breakdown of these key benefits.
1. Reduction in Surcharge on Cooperative Societies
- New Surcharge Rate: Reduced from 12% to 7% on incomes between ₹1 crore and ₹10 crore.
- Benefit: Increases disposable income for cooperative societies, particularly benefiting rural and farming communities.
2. Reduced Alternate Minimum Tax (AMT) Rate
- Previous AMT Rate: 18.5%
- Revised AMT Rate: Now 15%, aligning with the rate for companies.
- Benefit: Ensures a level playing field between cooperative societies and companies.
3. Relief in Cash Transactions Under Section 269ST
- Limit: Transactions above ₹2 lakh were restricted under Section 269ST.
- Clarification: Payments received by Milk Cooperative Societies from distributors can now be aggregated across multiple days without penalties.
- Benefit: Enables seamless payments during bank holidays, benefiting rural farmers.
4. Concessional Tax Rate for New Manufacturing Cooperatives
- Tax Rate: New cooperatives commencing operations by 31st March 2024 will benefit from a 15% tax rate.
- Benefit: Encourages the formation of new manufacturing cooperatives, boosting rural industrialisation.
5. Relief for Cash Loans/Transactions by Primary Cooperatives
- Previous Limit: ₹20,000
- Revised Limit: Now ₹2 lakh under Section 269SS.
- Benefit: Facilitates cash deposits or loans without penalties, supporting rural credit needs.
6. Relief for Loan Repayments in Cash
- Previous Limit: ₹20,000
- Revised Limit: Now ₹2 lakh under Section 269T.
- Benefit: Allows cooperative members to repay loans in cash up to ₹2 lakh without penalties.
7. Increased Threshold for Cash Withdrawal Without TDS
- Previous Limit: ₹1 crore
- Revised Limit: Now ₹3 crore for cooperative societies.
- Benefit: Reduces the TDS burden on large cash withdrawals for dairy and rural cooperatives.
8. Relief for Sugar Cooperative Mills
- Deduction: Section 36(1)(xvii) allows deductions on additional payments to farmers for sugarcane.
- Clarification: Tax liabilities on such payments mitigated from 1st April 2016.
- Benefit: Reduces tax burdens on sugar cooperative mills, benefiting farmer members.
9. Resolution of Decades-Old Issues for Sugar Cooperatives
- Issue: Long-pending tax claims for payments to sugarcane farmers before AY 2016-17.
- Solution: Section 155 amended to allow claims under a new sub-section (19).
- Benefit: Provides relief of up to ₹10,000 crore, resolving historical disputes.
These tax benefits are a significant step towards supporting cooperative societies, particularly in rural and farming sectors. The measures reduce financial burdens, encourage growth, and promote a fair tax environment, helping cooperatives thrive.