Amid mounting concerns over taxation and compliance burdens faced by cooperative credit societies and cooperative banks across the country, the Ministry of Cooperation held a high-level meeting in New Delhi on Thursday to deliberate on long-pending income tax and GST-related issues affecting the sector.
The meeting, held at Atal Akshay Urja Bhawan, was chaired by Pankaj Kumar Bansal, Additional Secretary in the Ministry of Cooperation, in the presence of senior officials including Pankaj Jindal, Joint Secretary, Department of Revenue, Raman Kumar, Joint Secretary, Ministry of Cooperation, Smt. S. Sathiya, Director, Ministry of Cooperation, along with GST officials.
The discussions focused on several key issues, including taxation reforms, GST collection eligibility, capital gains exemptions and extending startup-related benefits to cooperative societies. Officials also reviewed broader tax policy concerns that have been impacting the operational efficiency and ease of doing business for cooperatives and cooperative banks.
The deliberations assume significance at a time when cooperative credit societies in several states have been reporting growing operational and financial stress linked to tax disputes and complex compliance procedures. Sector representatives say smaller societies, especially those operating in rural and semi-urban areas, have been disproportionately affected due to limited administrative and technical resources.
One of the major concerns raised by cooperative institutions relates to the denial or restriction of deductions under Section 80P of the Income Tax Act. Many societies claim that tax authorities have questioned their eligibility for exemptions, particularly in cases where societies undertake activities beyond traditional member-based lending operations. This has led to prolonged litigation and uncertainty over tax liabilities.
Repeated scrutiny notices and delayed assessments have also emerged as a major issue. Several cooperative societies have reportedly received notices seeking detailed financial records spanning multiple years, increasing compliance costs and administrative pressure on smaller institutions.
Another contentious issue pertains to taxation on interest income earned from deposits placed with cooperative banks and nationalised banks. Cooperative bodies argue that varying interpretations by tax authorities and judicial forums have created confusion regarding exemptions and taxable income.
Representatives from the cooperative sector have additionally pointed to penalties for delayed filing of returns, technical glitches in online systems and challenges in adapting to digital compliance mechanisms. Many grassroots societies lack trained accounting staff and digital infrastructure, making compliance increasingly difficult.
Cooperative federations and sector leaders have urged the government to simplify tax procedures and establish a clearer and more sector-specific compliance framework. They argue that resolving these issues is essential for strengthening cooperative credit institutions, which continue to play a critical role in rural credit delivery, financial inclusion and the government’s broader vision of “Sahkar Se Samriddhi.”
