Budget spells doom for co-op banks
THE PROPOSAL in Union Budget to tax cooperative banks? profit is likely to spell doom for the already messy cooperative sector in the State. Surprisingly, the Cooperatives Department was blissfully ignorant about financial implications of the measure, even as Maharashtra cooperatives lobby has already started lobbying to get the move withdrawn.india Updated: Mar 08, 2006 16:42 IST
THE PROPOSAL in Union Budget to tax cooperative banks’ profit is likely to spell doom for the already messy cooperative sector in the State. Surprisingly, the Cooperatives Department was blissfully ignorant about financial implications of the measure, even as Maharashtra cooperatives lobby has already started lobbying to get the move withdrawn.
Under the provision, the cooperative institutions, barring primary agricultural credit societies and primary cooperative agricultural and rural development banks, would come under income tax net from April 1 next. The budget has withdrawn tax exemption on cooperative banks’ profits under the Section 80P of the Income Tax Act.
When informed about implications of the budget proposal, Agriculture and Cooperative Minister Gopal Bhargava said he would take up the matter with the Union Finance Minister P Chidambaram and Agriculture Minister Sharad Pawar. “It is surprising that such an anti-cooperative decision should come when person like Sharad Pawar is heading the Agriculture Ministry”, he remarked.
Senior officers of the Cooperatives Department are still unaware of the measure. Anticipating adverse impact of the proposal, Maharashtra has already registered its protest with cooperative banks planning to seek the Union Agriculture Minister’s intervention to stall it.
Cooperative sector experts here told the Hindustan Times that the move to tax cooperative banks is a retrograde step and would harm their already shaky financial position.
The State Government should strongly raise the issue with the Centre, as many cooperative institutions would be hit badly, they advise.
L D Pandit, Advisor, Apex Bank and many other urban cooperative banks, said that in the wake of the withdrawal of tax exemption to cooperative banks, it is high time that such institutions introduced innovations, launch new products and embrace latest technologies.
“If cooperative banks would not change themselves according to the present time, their woes would aggravate further,” he warned.