Cooperative sector wary of DTC pitfalls on income tax
February, 19th 2013
With Union Budget 2013-14 is less than 10 days away, the sense of expectation among various stakeholders is on the rise. Whose expectations Union finance minister P Chidambaram meets or dashes, one can know only on D-Day. But watching developments in this regard closely is the cooperative sector in India - some six lakh of them across the country- on whether Chidambaram brings them under the ambit of the IT bracket.
Apprehension of the sector is that the budget will bring the cooperative sector under income tax net under the direct taxes code (DTC ) that is likely to be introduced in this budget. This move, the sector feels will directly eat into its profitability. The sector wants any such move to be in line with exemptions granted to it under section 80 P of the Income Tax Act as recommended by the standing committee on finance of the Lok Sabha.
Making a strong pitch in this regard are leaders of two major cooperative institutions in Dakshina Kannada district - known for its long standing dedication to principles of the cooperation movement - namely South Canara District Central Cooperative (SCDCC) Bank and The Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) Limited. They are unanimous in their views that bringing cooperative societies under IT bracket is retrograde.
Konkodi Padmanabha, president, Campco, said imposing income tax on cooperative societies including Campco, a multi-state cooperative, will sound the death knell for the sector. The primary agriculture credit cooperative societies and cooperative societies are the backbone of rural economy. "The standing committee on finance has clearly given its recommendations on the issue and this must be considered," he added.
Advocating the same course of action, MN Rajendra Kumar, president, SCDCC Bank says the exemption granted under above section should be seen as sacrosanct. "We have already represented the matter to Chidambaram through Oscar Fernandes and M Veerappa Moily," he said. Konkodi said a delegation of MPs will meet Union agriculture and commerce minister during the budget session to press for cause of the cooperative sector.