Giving a big relief to cooperatives involved in dairy business, the Central Board of Direct Taxes (CBDT) has exempted them from Section 269ST of Income Tax act 1961. The CBDT issued a clarification for the purpose of clause (c) of section 269ST of the Income Tax Act, 1961 in respect of dealership/distributorship contract in the case of cooperative societies.
For many years, Sahakar Bharati has also raised its voice against the provision of Section 269ST of Income Tax. Meanwhile, talking to the Indian Cooperative, Sahakar Bharati National General Secretary Uday Joshi said, “With this clarification, our half demand has been fulfilled but there is need to make it applicable for PACCs, fishery co-ops and the credit cooperatives. The right of giving exemption under the said section is with the CBDT”, he added.
The provisions under the Section269 restrict a person to receive RS 2 lakh or more in the modes other than specified in the section. It stipulates that no person shall receive an amount of two lakh rupees or more in aggregate from a person in a day; or in respect of a single transaction; or in respect of transaction relating to one event or occasion from a person.
It is worth mentioning that Co-operative banks are covered in exception in item no. (i)(b) of provision to section 269ST of Income Tax Act but co-operative societies are not included in exceptions. So, inclusion of cooperative society along with co-operative banks should be made and remove undue hardship on credit society by treating them at par with Cooperative Banks.
In their clarification CBDT said, “References have been received in respect of Milk Producers’ Cooperatives as to whether under the provisions of Section 269ST of the Act, receipt(s) in cash in a day of bank holiday/closure of bank day within ‘the prescribed limit’ from a distributor against sale of milk when payments were through bank on all other days is to be considered as a single transaction or whether all such receipts in cash in a previous year would be aggregated in respect of transactions with a distributor to treat it as one event or occasion”.
“With respect to the references above, it is clarified that in respect of Co-operative Societies, a dealership/distributorship contract by itself may not constitute an event or occasion for the purposes of clause (c) of Section 269ST”, it reads.
It further added, “Receipt related to such a dealership/distributorship contract by the Co-operative Society on any day in a previous year, which is within ‘the prescribed limit’ and complies with clause (a) as well as clause (b) of Section 269ST, may not be aggregated across multiple days for purposes of clause (c) of Section 269ST for that previous year”, it concludes.
Readers would recall that the Rajkot District Cooperative Milk Union has made an appeal before all the concerned authorities and the issue was also taken up with Union Home and Cooperation Minister Amit Shah.
We are attaching the CBDT clarification on the issue.