Co-operative institutions are keen that they be exempted from income tax under the proposed direct taxes code (DTC). Indications are that the Government may bring changes to the DTC Bill in the upcoming monsoon session.
“Co-operatives are engaged in the welfare of people associated with the agriculture sector with the sole objective of improving their economic condition, but on the other hand, co-operatives are being put under the DTC,” said Chandra Pal Singh Yadav, President of the National Co-operative Union of India (NCUI).
“This tax will be an additional burden on the co-operatives, which will directly affect not only their working but also member participation in the co-operatives,” Yadav said at the 16th Indian Co-operative Congress on Tuesday.
Highlighting the economic contribution made by institutions, Yadav said 43 per cent of the credit disbursed to farmers in the country was through co-operative credit and banking institutions. About half the sugar produced in the country was by the co-operative sector, which also distributes 38 per cent of the fertiliser in the country.
In his inaugural address, President Pranab Mukherjee said the need for co-operatives was greater in the current context than it has ever been before. “The recent global financial crisis has shown the merits of low-risk customer-owned cooperative banking over excessive risk-taking investor-owned global financial institutions,” Mukherjee said.
With a network of six lakh cooperatives and a membership base of 24 crore, the Indian cooperative movement has proved to be an effective economic instrument for ensuring growth with equity and inclusiveness, the President said.
Stating that co-operatives faced many challenges and problems, Mukherjee said they need to re-orient themselves by improving their efficiency. “They have to develop themselves professionally to meet the requirement of their core clientele — farmers, growers, artisans, producers and women,” he added.
Co-operatives must receive recognition as an important sector of our economy that serves the marginalised and weaker sections. They must be made commercially viable and used effectively in areas where cooperatives can make an impact, such as rural health, education, credit, water-harvesting, precision farming, tourism, communication and hospitality, Mukherjee said.