How unjustly co-operatives of scale are being affected by the govt move to lower corporate tax for producing the same product, has once again been brought to the fore by a letter written by IFFCO to the govt.
Under the subject “Request for correcting the anomaly between Income Tax Rates for Corporates and Cooperatives” IFFCO letter written by its MD Dr U S Awasthi is both polite and dignified.
Awasthi writes “In the Taxation Laws (Amendment) Ordinance No.15 of 2019, it seems that an unintended anomaly has set in, since the option of reduced tax rates has been given only to Domestic Companies and New Domestic Manufacturing Companies under Section 115BAA and 115BAB respectively, while leaving out Domestic Cooperative Societies, which play an equally important role in certain sectors of the Indian Economy.”
Reminding the govt of the contributions of co-op bodies like IFFCO and Kribhco to the tune of 30% of domestic production, the letter highlights the fact that the reduction in taxes for Domestic Cooperative Societies would obviously spur investment in the Sector besides generating employment.
The letter also says prior to the cut both domestic companies and domestic cooperative Societies (On Income above Rs.20,000 p.a.) attracted the same base Tax Rate of 30%.
“Hence in all fairness and to ensure a level playing field, the tax rate on Cooperative Society should at least be at par with that of Domestic Companies given the constitutionally mandated need to encourage the Cooperative Sector”, writes the MD who is regarded as the legend in the fertilizer sector not only in India but also abroad.
IFFCO MD does not, however, forget to congratulate the Government for the bold measures on Corporate Tax Rates announced on 20 September, 2019 to promote Growth and Investment in the Indian Economy.
Addressed to Agriculture Secretary Sanjay Agarwal, the letter requests him to take up the issue with the Finance Minister for correcting the anomaly at the earliest.
Earlier, Nafcub President who is spearheading the movement on the issue by bringing all affected co-op bodies on board lambasted the govt for the blatant discrimination.
Talking to Indian Cooperative Mehta said “Is it a crime to do business within a cooperative frame-work, Mehta asked giving example of IFFCO which has to pay 33% tax while another company say Dipak fertilizer has to pay only 22% for producing the same fertilizer.”
Taking the comparison to co-op banks Mehta said while HDFC has to pay just 22% corporate tax, small co-op banks and UCBs having a turnover of 15-20 crore or so have to pay 33%.