The Ministry of Cooperation has announced a series of measures aimed at strengthening the cooperative sector, combining digital transformation initiatives with substantial tax and compliance reliefs.
A centrally sponsored project for computerizing the offices of Registrars of Cooperative Societies (RCS) across States and Union Territories was launched on January 30, 2024, with a budgetary outlay of Rs 94.59 crore for three years starting from 2023-24.
The scheme seeks to enhance the ease of doing business for cooperative societies and create a transparent, paperless digital ecosystem for their dealings with RCS offices.
As of June 30, 2025, 35 States and UTs have submitted proposals, and Rs 19.73 crore has been released as the Government of India’s share. This project is part of the broader initiative “Strengthening Cooperatives Through IT Interventions.”
Alongside the digital drive, the Government has provided significant relief under the Income Tax Act over the past three years. The surcharge for cooperative societies earning between Rs 1 crore and Rs 10 crore has been reduced from 12% to 7%, easing their tax burden and freeing up working capital.
The Minimum Alternate Tax (MAT) rate has been cut from 18.5% to 15%, ensuring parity with companies. Clarifications under Section 269ST now allow cooperative societies to make cash transactions below Rs 2 lakh per day with distributors without penalty, removing a hurdle in cash-based dealings.
To encourage manufacturing activity, a lower flat tax rate of 15% has been introduced for new manufacturing cooperatives commencing operations before March 31, 2024, compared to the earlier rate of up to 30% plus surcharge.
In a move to support Primary Agricultural Credit Societies (PACS) and Primary Cooperative Agriculture and Rural Development Banks (PCARDBs), the limit for cash deposits, payments, loans, and loan repayments per member has been increased from Rs 20,000 to Rs 2 lakh.
The annual cash withdrawal threshold without tax deduction at source has also been raised from Rs 1 crore to Rs 3 crore, improving liquidity. Sugar cooperatives have been exempted from additional income tax on payments to farmers at government-notified prices, and a provision in the Union Budget 2023-24 has allowed them to claim past payments as expenditure, bringing relief of over Rs 46,000 crore.
GST on molasses has been slashed from 28% to 5%, boosting profitability for sugar mills.
The Government has also resolved a long-standing issue for milk cooperatives by clarifying that dealership or distributorship contracts do not constitute a single “event” under Section 269ST, enabling them to accept cash receipts on bank holidays without penalty.
Union Cooperation Minister Amit Shah, in a written reply to the Lok Sabha, said these steps aim to modernize cooperatives, improve their financial viability, and ensure sustained benefits for rural and farming communities.
