Union Cooperation Ministry: Wary of hit to co-op sector, Kerala awaits ministry’s functions

Vasavan said the decision to include cooperative institutions in the banking regulations Act would adversely impact Kerala’s cooperative sector. He said the state has petitioned the Union government, demanding exemption to the cooperative sector from the purview of the recently incorporated Section 194N of Income Tax Act, which makes 2 per cent TDS applicable for those withdrawing Rs 1 crore from banks in a year.

The minister said, “The Income Tax department has issued notices to the state’s primary cooperative banks to levy income tax. The issue has been brought to the notice of the Centre. Besides, the (state) government last week decided to seek legal opinion from the Advocate-General about the validity of Section 194N of Income Tax Act.”

After the formation of the Union Cooperation Ministry, the state government is also concerned about the activities of multi-state cooperative societies, which are formed and guided under the Multi-State Cooperative Act, 2002. At present, Kerala has 24 such multi-state cooperative societies and the state cooperative department does not have any control over them, which are governed by the Central Act.

Multi-state cooperative societies offer higher interest for deposits, which the CPI(M) sees as an attempt by the BJP-led Centre to make inroads into these cooperative societies.

Vasavan told the House that the state has written to the Union Agriculture and Farmers Welfare Ministry and asked it to restrict deposit mobilisation activities of these co-op societies.