Move to impose direct taxes on cooperative sectors opposed
May, 12th 2011
The Sahakara Bharathi in the state has staunchly a opposed move by the Centre to impose direct taxes on the incomes earned by cooperative sector on par with similar levy on the corporate sector.
The Centre has adopted a proposal to this effect in the Union budget 2011-12 and will come into force with effect from April 1, 2012, when the Direct Tax Code mooted by it becomes a reality, said Purushottam Bhat, convener, credit cell (Sahakara Bharathi) said.
Purushottam told reporters here on Monday the cooperative societies are financial lifelines for rural and semi-urban areas of the country.
Bringing the cooperative sector under the ambit of direct tax code will stymie the flow of funds to the agriculture sector and inflict a body blow on the members of the societies, he said. Sahakara Bharathi will hold a protest in front of the offices of the deputy commissioners in the state on Thursday at 10.30 am.
As per the DTC proposal adopted in the Union budget, the cooperative sector will have to shell out 33% of their income in the form of taxes, he said, adding that this is on par with taxes that the corporate sector pays.
Cooperative institutions will lose their financial stability with this move, he said, while expressing apprehension over another proposal in the DTC which seeks to impose service charges on every financial transaction carried out by these institutions.
The corporate sector disburses its profit to shareholders in the form of dividend and bonus shares. However, cooperative institutions have to set aside a part of their profit towards reserves, he said, adding that it would be difficult for them to announce dividend for shareholders.
Proposal exempts primary agriculture credit cooperative societies and labour societies at taluk level from purview of DTC, he said, adding this should be extended to all cooperative institutions.