India Grants Tax Relief for Manufacturing Co-Ops, Eases Cash Transaction Limit for Milk Payments

India 12.12.2024

Source: DairyNews.today

Union Home and Cooperation Minister Amit Shah announced significant tax and transaction policy adjustments aimed at supporting India's cooperative sector, particularly in manufacturing and dairy. Speaking in the Rajya Sabha, Shah confirmed that newly established cooperative societies engaging in manufacturing activities will now benefit from a reduced corporate tax rate of 15%, aligning them with new manufacturing firms under the existing tax framework.

India Grants Tax Relief for Manufacturing Co-Ops, Eases Cash Transaction Limit for Milk Payments

Addressing the operational needs of India’s dairy cooperatives, Shah highlighted a crucial exemption fr om Section 269ST of the Income Tax Act, which restricts cash receipts exceeding ₹2 lakh per day for a single transaction or event. Milk cooperatives can now exceed this cash lim it on bank holidays to facilitate prompt payments to dairy farmers, predominantly from rural and farming communities.

"This measure ensures cooperatives can continue to pay their members on bank holidays without incurring penalties or triggering tax investigations," Shah stated.

The cooperative sector forms the backbone of India’s rural economy, especially in the dairy industry. The new policies aim to enhance liquidity for farmers, streamline cooperative operations, and incentivize the establishment of manufacturing units by cooperatives.