Cooperative societies will now have to pay a lower Alternate Minimum Tax, Finance Minister Nirmala Sitharaman announced on Tuesday, in a relief to the groups with members mostly from rural areas and the farming communities.
AMT brings into the tax net companies or groups who, in spite of earning profits, pay “zero tax” due to various concessions under tax laws.
“Currently, cooperative societies are required to pay Alternate Minimum Tax (AMT) at the rate of 18.5 per cent. However, companies pay the same at the rate of 15 per cent. To provide a level playing field between co-operative societies and companies, I propose to reduce this rate for the cooperative societies also to 15 per cent,” Sitharaman said in her budget speech.
For cooperatives with a total income above Rs 1 crore up to Rs 10 crore, the Finance Minister also proposed to reduce the surcharge from the present 12 per cent to 7 per cent. “This would help in enhancing the income of cooperative societies and its members who are mostly from rural and farming communities,” she said.
Welcoming the move, Minister of Cooperation Amit Shah said the tax relief will end the “injustice” with the country’s cooperative sector.
“Today @narendramodi ji has reduced the AMT rate for the cooperative sector from 18.5% to 15% and surcharge from 12% to 7%, ending the injustice which was done to the cooperative sector for decades and bringing it at par with the rest of the sectors. This will ensure Modiji’s resolve of prosperity with the cooperation,” Shah tweeted.
Besides relief to cooperative societies, Sitharaman has allocated Rs 900 crore to the newly created Ministry of Cooperation for 2022-23. Out of this, Rs 624 crore has been earmarked for two centrally sponsored schemes – ‘Digitalization of Primary Agriculture Cooperative Societies’ (Rs 350 crore), and ‘Prosperity through Cooperatives’ (Rs 274 crore).
The Ministry of Cooperation was created in July last year. Its secretary, Devendra Kumar Singh, told The Indian Express Tuesday the budget announcements will boost people’s confidence in cooperative societies.
“This budget has important tax provisions for cooperatives on MAT and Surcharge rationalizations. Removable of such distortion would create confidence of people in the Cooperatives and help them to prosper,” Singh said, adding creation of a separate ministry had helped in focus for betterment of the sector.
