The Karnataka government Monday sought to exempt the cooperative sector from the proposed Direct Tax Code (DTC) purview as it offers credit to poor farmers.

"As cooperatives operate in semi-urban and rural areas across the state offering credit to poor farmers not serviced by state-run and commercial banks, they should be exempted from DTC purview," Chief Minister D.V. Sadananda Gowda said in a letter to President Pratibha Patil, with a copy to the prime minister and the finance minister.

Noting that the cooperative sector provided bargaining power to the rural poor against profit-centric organisations, Gowda said credit from its societies have been saving farmers from clutches of money lenders in the absence of their financial inclusion.

"Hence, the Direct Tax Bill 2010 should be reviewed to exempt the cooperative sector from DTC in the interest of farmers who are the lifeline of the rural economy," Gowda asserted.

As deposits and withdrawals are maintained by members of cooperative societies, which are subject to cash limits, they should not be burdened with additional tax liability, the letter pointed out.