Prime minister Manmohan Singh has promised to consider the demand of some cooperative banks for removal of the 33% income tax on their profits, a measure that was imposed in current year's budget.
He gave this assurance to a delegation of representatives of nine cooperative banks from Karnataka led by CPI(M) MP Basudeb Acharia. The delegation brought to his notice that the tax exemption enjoyed by the cooperative banks was withdrawn in the current year's budget which they said hit hard at the foundations of the cooperative sector that catered mainly to the needs of the poor, middle and the salaried class and other marginalised sections.
The representatives of the small banks told Singh that it was wrong to equate the cooperative sector with the huge commercial banks that made profits in crores of rupees every year.
They said the rationale given by FM P Chidambaram that the tax on profits would bring about discipline in their audited and filing of tax returns would improve the standards of accountability and governance did not not hold any water because these banks already functioned under the strict RBI norms.
In the memorandum given to the PM, the cooperative bankers welcomed the income tax rebate given under Section 80C on five-year deposits but pleaded for extension of the facility to the cooperative banks.