Government Initiatives for Income Tax Relief to Cooperative Societies
The Government of India has introduced several measures to provide income tax relief to cooperative societies. Below are the key initiatives:
- Reduction in Surcharge for Cooperative Societies
Surcharge rate reduced from 12% to 7% for income exceeding ₹1 crore but up to ₹10 crores.
This aims to boost the income of cooperative societies and their rural and farming community members.
- Reduced Alternate Minimum Tax (AMT) Rate
AMT for cooperative societies reduced from 18.5% to 15%, aligning with the rate applicable to companies.
Provides a level playing field between cooperatives and companies.
- Relief in Cash Transactions under Section 269ST
Clarification issued via CBDT Circular No. 25/2022:
For Milk Cooperative Societies, dealership contracts will not be treated as a single event or occasion under Section 269ST.
This allows cash receipts exceeding ₹2 lakhs across multiple days without penalties.
- Concessional Tax Rate for New Manufacturing Cooperatives
New cooperatives commencing manufacturing activities by March 31, 2024, can avail a lower tax rate of 15%, similar to new manufacturing companies.
- Relief for Cash Loans and Transactions by Primary Cooperatives
Section 269SS amendment:
No penalty for cash deposits or loans under ₹2 lakhs by Primary Agricultural Credit Societies (PACS) or Primary Cooperative Agricultural and Rural Development Banks (PCARDB).
Previous limit was ₹20,000.
Section 269T amendment:
No penalty for cash repayment of loans under ₹2 lakhs by PACS/PCARDB.
- Increased Cash Withdrawal Threshold Without TDS
TDS threshold for cash withdrawal by cooperatives increased from ₹1 crore to ₹3 crores, benefiting cooperatives operating in rural areas, particularly dairy cooperatives.
- Income Tax Relief for Sugar Cooperative Mills (CSMs)
Finance Act, 2015 allowed deductions for additional sugarcane price payments under Section 36(1)(xvii).
CBDT Circular No. 18/2021 clarified tax treatment for additional payments to farmers, mitigating tax liabilities.
Finance Act, 2023 amendment under Section 155(19) enabled CSMs to claim pre-2016 payments as expenditures, resolving long-pending tax disputes.
Estimated relief: ₹10,000 crore.
Impact
These initiatives aim to support cooperative societies by reducing their tax burden, encouraging growth, and addressing long-standing issues. They benefit members, especially in rural and farming communities, by improving income and operational flexibility.
This information was shared by Minister of Cooperation, Shri Amit Shah, in a written reply in the Rajya Sabha on December 11, 2024.
