Cooperatives demand IT exemption

Facing resource crunch, cooperatives have asked Finance Minister (FM) Pranab Mukherjee to restore income tax exemption for them in the Union Budget to help strengthen their capital base.

"The government should review and restore the exemption for the cooperatives," National Cooperative Union of Inida (NCUI) President G H Amin told Mukherjee at a pre-Budget meeting held here recently.

NCUI is the apex body of the Indian cooperative movement. Mukherjee will announce the Budget on February 26.

"This will give a major incentive to the cooperatives to plug back a substantial portion of their surplus in the form of reserve that would strengthen their capital base to serve the poorer section of the society," Amin said.

The government withdrew income tax exemption for the cooperatives in 2006. "The cooperative movement in India with about 6 lakh societies, widely spread from villages to national level, will immensely benefit from the withdrawal of the income tax," he said.

Amin said that since the capital augmenting sources were limited for cooperatives, retaining the earnings could be a sound alternative to cater to the 23 crore society members.

For strengthening the cooperative education and training support, the NCUI President urged the FM to double the grant-in-aid to Rs 50 crore a year for the next two years of the current plan period ending March 2012.