In a significant move aimed at boosting India’s cooperative sector, Union Minister Amit Shah announced in Parliament that newly formed manufacturing cooperatives will now enjoy a reduced tax rate of 15%, similar to the benefits offered to new manufacturing firms. This provision was highlighted in his response to a question in the Rajya Sabha on Wednesday.
Shah also discussed the relaxation of cash transaction limits under the Income Tax Act’s Section 269 ST, which typically prohibits cash receipts exceeding Rs.2 lakh in a day for any individual transaction. Notably, milk cooperatives, which play a crucial role in India’s dairy industry, will now be exempt from this restriction. This allows them to make payments exceeding Rs.2 lakh to their members, especially on bank holidays, facilitating smoother transactions without triggering tax penalties.
The announcement also included changes to cash transaction limits for cooperatives. Shah confirmed that primary agricultural cooperatives would be allowed to accept loans or deposits up to Rs.2 lakh, up from the previous Rs.20,000 limit per member, without incurring penalties. This change is expected to ease financial transactions within cooperatives, particularly benefiting rural and farming communities.
India’s cooperative sector, a key part of the country’s economy, includes prominent organizations like Amul and Iffco, which operate on a cooperative model. The sector has long supported millions of livelihoods, especially in agriculture, dairy, and finance, with millions of members benefiting from these cooperative enterprises.
