Exemption from Income Tax for Dairy Cooperative Society

The Indian Government has implemented several measures to provide relief to Cooperative Societies under the Income Tax Act. Here are some key steps:

1. Deduction under Section 80P:
   • A primary cooperative society engaged in supplying milk to the Federal Cooperative Society is eligible to claim a deduction in respect of its entire profit related to the supply of milk to union societies under Section 80P of the of the income tax act, 1961.
   • This provision aims to support dairy cooperatives by allowing them to reduce their tax liability based on their milk supply activities.
2. Surcharge Reduction:
   • The surcharge on cooperative societies has been reduced from 12% to 7% for income exceeding ₹1 crore and up to ₹10 crores
   • This reduction eases the tax burden on cooperative societies, including those involved in dairy operations.
3. Alternate Minimum Tax (AMT) Reduction:
   • The rate of Alternate Minimum Tax for cooperative societies has also been reduced from 18.5% to 15%, bringing it in line with companies.
   • This change ensures equitable treatment for cooperative societies and promotes their financial stability.
4. Amendment to Section 269T:
   • Section 269T of the Income Tax Act has been amended to provide that when a deposit is repaid by a Primary Agricultural Credit Society (PACS) or an Agricultural and Rural Development Bank (PCARDB) to its member, or when a loan is repaid to a PACS or PCARDB by its member in cash, no penal consequence shall arise if the amount of such loan or deposit (including outstanding balance) is less than ₹2 lakh. Previously, this limit was ₹20,000 per member.
   • This change facilitates smoother financial transactions for cooperative societies.
5. Higher TDS Limit for Cash Withdrawal:
   • A higher limit of ₹3 crore for TDS (Tax Deducted at Source) on cash withdrawal has been provided for cooperative societies, as opposed to the ₹1 crore threshold for other recipients under Section 194N.
   • This measure aims to streamline cash transactions while maintaining transparency.
6. Interest Subvention for Farmers:
   • The government provides interest subvention to make short-term crop loans up to ₹3 lakh available to farmers at an interest rate of 7% per annum. In case of prompt repayment, an additional 3% interest subvention is given, effectively reducing the interest rate to 4%.
   • This initiative supports farmers, including those engaged in dairy farming.
7. Kisan Credit Card (KCC) Scheme for Animal Husbandry and Fisheries:
   • Since 2018-19, the Government of India has introduced the Kisan Credit Card (KCC) scheme for Animal Husbandry and Fisheries. This scheme provides short-term working capital loans (up to ₹2 lakh per beneficiary) at par with short-term crop loans.
   • The KCC scheme benefits dairy farmers and promotes sustainable animal husbandry practices.

In summary, these measures aim to strengthen dairy cooperative societies, enhance financial inclusivity, and support farmers in their agricultural endeavors.