The recent exemption of income tax for dairy cooperative societies has sparked discussions about its potential impact on milk prices. Let’s delve into the details of these measures and their implications.
Deduction Eligibility for Primary Cooperative Societies
Under Section 80P of the Income Tax Act, primary cooperative societies engaged in supplying milk to federal cooperative societies can now claim deductions for their entire profit related to milk supply. This move aims to provide relief to these societies and encourage growth in the dairy sector.
Reduction in Surcharge and Alternate Minimum Tax
To further support cooperative societies, the surcharge on their income has been reduced from 12% to 7% for earnings exceeding ₹1 crore but up to ₹10 crores. Additionally, the alternate minimum tax rate has been lowered from 18.5% to 15%, aligning cooperative societies with corporate tax rates.
Streamlined Repayment Rules
Amendments to Section 269T of the Income Tax Act benefit primary agricultural credit societies (PACS) and agricultural and rural development banks (PCARDB). Now, if a deposit is repaid by a member in cash and the outstanding balance is less than ₹2 lakh, no penal consequences arise. This threshold was previously ₹20,000 per member.
Enhanced TDS Limits
Cooperative societies now enjoy a higher threshold for TDS (tax deducted at source) on cash withdrawals. While other recipients face a ₹1 crore limit under Section 194N, cooperative societies can withdraw up to ₹3 crore without TDS implications.
Interest Subvention for Farmers
The government continues to support farmers by providing interest subvention on short-term crop loans. Farmers can access loans up to ₹3 lakh at an annual interest rate of 7%. Prompt repayment earns an additional 3% interest subvention, effectively reducing the interest rate to 4%. Although the Kisan Credit Card (KCC) scheme covers animal husbandry and fisheries, there are no current proposals for similar benefits in the dairy sector.
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