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April 7, 2023

Taxes Applied to Cooperative Societies

Taxes Applied to Cooperative Societies

The following income tax-related benefits are being suggested for cooperative societies in accordance with Budget announcement 2023–2024:

It is suggested that the newly formed cooperative society, which begins manufacturing or production by 31.03.2024 and does not take advantage of any specified incentive or deduction, be given the option to pay tax at a reduced rate of 15%, similar to what is offered to new manufacturing companies. New cooperatives involved in manufacturing and production would gain from this statement.

For sugar co-operatives, for years prior to assessment year 2016-17, if any deduction claimed for expenditure made on purchase of sugarcane has been disallowed, same shall be recomputed after allowing such deduction upto the price fixed or approved by the Government for such previous years. This decision of the Government will provide benefit of approximately ₹10,000 crore of principal amount of Income-Tax to sugar cooperatives. For this purpose, all sugar co-operatives, who are eligible for deduction, are required to approach the assessing officer, suitably.

A higher limit of Rs. 2 lakh per member for cash deposits to and loans in cash by Primary Agricultural Cooperative Societies (PACS) and Primary Cooperative Agricultural and Rural Development Banks (PCARDBs) has been provided.

A higher limit of Rs. 3 Crore for TDS on cash withdrawal has been provided to cooperative societies.

Similar to that, cooperative societies received the following tax advantages during the financial year 2022–2023:

a. The Minimum Alternate Tax (MAT) for unions was lowered from 18.5% to 15%.

b. Reduction in cooperative society surcharge: For cooperative societies with revenue between Rs. 1 and 10 Cr, the surcharge was reduced from 12% to 7%.

This was mentioned in a written response to a question in the Rajya Sabha from the Minister of Cooperation, Shri Amit Shah.

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