**Executive Summary**
This document outlines the Government's response to requests for GST exemption and other concessions for cooperative societies, as of December 2, 2025. The response details various tax-related benefits and financial assistance initiatives extended to cooperatives. These measures aim to improve their commercial viability and support their success.
**Key Points / Main Content**
* **GST and Tax Benefits for Cooperatives**
* Surcharge on cooperative societies with income between Rs. 1 to 10 Cr reduced from 12% to 7%.
* MAT (Minimum Alternate Tax) reduced for cooperatives from 18.5% to 15%, creating parity with companies.
* Cash transactions of less than Rs. 2 lakhs between a cooperative society and its distributor in a day will be considered separately and not subject to income tax penalty.
* Flat lower tax rate of 15% for new manufacturing Cooperative Societies, compared to the earlier rate of up to 30% plus surcharge, applicable for activities commencing by March 31, 2024.
* GST on molasses reduced from 28% to 5%.
* **Increased Limits for PACS and PCARDBs**
* Limit for Cash Deposits and Payments by PACS and Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) increased from Rs. 20,000 to Rs. 2 lakh per member.
* Limit of Loan and Loan Repayments in Cash by PACS and PCARDBs increased from Rs. 20,000 to Rs. 2 lakh per member.
* **Increased TDS Limit**
* Cash withdrawal limit for cooperative societies without Tax Deducted at Source (TDS) increased from Rs. 1 crore to Rs. 3 crore per year.
* **Income Tax Relief for Sugar Cooperative Mills**
* Relief from Income Tax to Sugar Cooperative Mills via deduction on account of expenditure incurred by a cooperative society engaged in the business of manufacture of sugar.
* Resolution of pending issues related to Income Tax of Sugar Cooperative Mills, allowing sugar co-operatives to claim payments made to sugarcane farmers for prior periods as expenditure.
* **Financial Assistance and Computerization Initiatives**
* Project for Computerization of functional PACS approved with a total financial outlay of ₹2,925.39 Crore.
* Project for computerization of 1,851 units of Agriculture and Rural Development Banks (ARDBs) approved.
* Rs.10,000 crore loan scheme launched for strengthening of Sugar Cooperative Mills.
* NCDC has cumulatively disbursed ₹4,67,455.66 crore for the development of cooperative institutions.
**Impact Analysis**
**Cooperative Societies**
* **Impact:** Benefit from reduced tax burdens, increased financial assistance, streamlined transactions, and enhanced operational efficiency through computerization.
* **Action Required:** Avail themselves of the new tax benefits, participate in the computerization projects, and apply for financial assistance programs offered by NCDC.
**PACS and PCARDBs**
* **Impact:** Increased business and benefit members through increased limits for cash deposits, payments, loan and loan repayments.
* **Action Required:** Facilitate increased transactions within the new limits and streamline processes.
**Sugar Cooperative Mills**
* **Impact:** Benefit from income tax relief and the resolution of pending income tax issues, potentially resolving ₹10,000 crore.
* **Action Required:** Claim payments made to sugarcane farmers as expenditure, and apply the standardized procedure for application to Jurisdictional Assessing Officer.
**Sugarcane Farmers**
* **Impact:** Benefit from payments being made to sugarcane farmers for the period prior to assessment year 2016-17 as expenditure.
* **Action Required:** N/A
**NABARD**
* **Impact:** NABARD is the implementing agency for the project for computerization of 1,851 units of Agriculture and Rural Development Banks (ARDBs)
* **Action Required:** N/A
Key Entities Referenced
Goods and Services Tax (GST): The tax regime for which cooperatives are seeking exemptions and adjustments as discussed in the document.
Ministry of Cooperation: The primary ministry responsible for the subject matter of the question and answer regarding cooperatives.
National Cooperative Development Corporation (NCDC): A key statutory corporation involved in providing financial assistance and development programs to cooperative societies.
Income Tax Act: The law under which relief in cash transactions and other tax benefits are discussed for cooperative societies.
Primary Agricultural Credit Society (PACS): Referenced through its computerization project
GOVERNMENT OF INDIA
MINISTRY OF COOPERATION
LOK SABHA
UNSTARRED QUESTION NO. 333
TO BE ANSWERED ON 02nd DECEMBER, 2025
EXEMPTION OF COOPERATIVES FROM GST
333. DR. NISHIKANT DUBEY:
Will the Minister of COOPERATION (सहकारिता मंत्री) be pleased to state:
(a) whether the States and Cooperative Societies are demanding exemption of articles
manufactured by Cooperative Societies from GST and other concessions to improve their
commercial viability;
(b) if so, the details thereof along with the decision of the Government thereon; and
(c) the details of the financial assistance extended by the Central Government to support the
success of Cooperative institutions?
ANSWER
THE MINISTER OF COOPERATION
सहकारिता मंत्री (SHRI AMIT SHAH)
(a) to (b): A request was received for exemption from GST on products and services of cooperative
societies. The proposal related to GST are examined by GST Council (a constitutional body), the
Government has so far extended following tax related benefits to the cooperatives:
i. Surcharge reduced from 12% to 7% for co-operative societies having income between
Rs. 1 to 10 Cr.: This will reduce the burden of Income Tax on Cooperative Societies and
more capital will be available with them to work for the benefit of their members.
ii. MAT reduced for cooperatives from 18.5% to 15%: With this provision, now there is
parity between Cooperative Societies and Companies in this regard.
iii. Relief in cash transactions under section 269ST of the Income Tax Act: In order to
remove difficulties in cash transactions by cooperatives under Section 269ST of IT Act,
Government has issued a clarification that cash transaction of less than Rs. 2 lakhs done by
a cooperative society with its distributor in a day will be considered separately, and will
not be charged with income tax penalty.
iv. Tax cut for new manufacturing Cooperative societies: Government has decided that a
flat lower tax rate of 15% will be charged, compared to an earlier rate of up to 30% plussurcharge, for new cooperatives commencing manufacturing activities by March 31, 2024.
This will encourage the formation of new cooperative societies in the manufacturing sector.
v. Increase in limit of Cash Deposits and Payments by PACS and PCARDBs:
Government has enhanced the limit for Cash Deposits and Payments by PACS and Primary
Cooperative Agriculture and Rural Development Banks (PCARDBs) from Rs. 20,000 to
Rs. 2 lakh per member. This provision will facilitate their activities, increase their business
and benefit members of their societies.
vi. Increase in limit of Loan and Loan Repayments in Cash by PACS and PCARDBs:
Government has enhanced the limit for Loan and Loan Repayments in Cash by PACS and
Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) from Rs.
20,000 to Rs. 2 lakh per member. This provision will facilitate their activities, increase their
business and benefit members of their societies.
vii. Increase in the limit of Tax Deducted at Source (TDS) in Cash Withdrawal:
Government has increased the cash withdrawal limit of cooperative societies without
deduction of tax at source from Rs.1 crore to Rs.3 crore per year. This provision will save
Tax Deducted at Source (TDS) for cooperative societies, which will enhance their liquidity.
viii. Relief from Income Tax to Sugar Cooperative Mills: Through Finance Act, 2015 Section
36(1)(xvii) was inserted in Income Tax Act 1961 to provide for deduction on account of
the amount of expenditure incurred by a cooperative society engaged in the business of
manufacture of sugar i.e Cooperative Sugar Mills (CSMs). The measure came into force
w.e.f. 1.4.2016 i.e. assessment year 2016-17. However, the issue of treatment of additional
payment for sugarcane price by CSMs as an income distribution to farmer members and
resultant tax liabilities remained uncovered which was clarified by Central Board of Direct
Taxes vide Circular No 18/2021 dated 25.10.2021. Accordingly, resultant tax liabilities on
CSMs on additional payment for sugarcane price by them were mitigated w.e.f. 1.4.2016.
ix. Resolution of decades old pending issues related to Income Tax of Sugar Cooperative
Mills: An opportunity has been provided to sugar co-operatives to claim payments made to
sugarcane farmers for the period prior to assessment year 2016-17 as expenditure.
Accordingly, section 155 of the IT Act has also been amended to insert a new sub-section
(19) vide Finance Act, 2023, w.e.f. 1st April 2023. In order to standardize the manner of
filing application to the Jurisdictional Assessing Officer under sub-section (19) of section
155 of the Act and its disposal by the Jurisdictional Assessing Officer under the said section,
CBDT vide Circular No. 14 of 2023 dated 27.07.2023 has issued Standard Operating
Procedure for making application by the concerned Cooperative Sugar Mills. This has
resolved the income tax issues in this matter pending for decades. This is expected to provide
relief of almost ₹10,000 crore.
x. Reduction in GST on molasses from 28% to 5%: Government has decided to reduce the
GST on molasses from 28% to 5% which will enable cooperative sugar mills to earn more
profits for its members by selling molasses to distilleries with higher margins.(c): Government has taken following initiatives to extended financial assistance to support the
success of cooperative institutions are as:-
I. Strengthening of PACS through Computerization- To strengthen PACS, project for
Computerization of functional PACS with a total financial outlay of ₹2,925.39 Crore
has been approved by the Government of India, which entails bringing all functional
PACS in the Country onto a common ERP based national software, linking them with
NABARD through StCBs and DCCBs. A total of 79,630 PACS from 31 States/ UTs
have been sanctioned under the project. A total of 60,494 PACS have been onboarded
on ERP Software and hardware has been procured by 30 States/UTs. The state-wise
details of PACS approved and released amount under this project is at ANNEXURE-
I.
II. Computerization of Agriculture and Rural Development Banks (ARDBs): To
strengthen the long-term cooperative credit structure, the project of computerization of
1,851 units of Agriculture and Rural Development Banks (ARDBs) spread across 13
States/ Union Territories has been approved by the Government. NABARD is the
implementing agency for the project. So far, proposals from 10 States/UTs have been
received and sanctioned. Further, GoI share amounting to Rs 9.84 crore has been
released to 10 States/UTs in FY 2023-24, FY 2024-25 and FY 2025-26 for procurement
of hardware, digitization and setting up of support system. The State-wise details of
ARDBs approved and released amount under the project Computerization of
Agriculture and Rural Development Banks (ARDBs) is at ANNEXURE II.
III. Rs.10,000 crore loan scheme launched for strengthening of Sugar Cooperative
Mills: Government has launched a scheme through NCDC for setting up ethanol plants
or cogeneration plants or for working capital or for all three purposes. So far, Ministry
has assigned ₹ 1000 crore to NCDC during 2022-23 and 2024-25. Under the scheme,
NCDC has released ₹ 10,005 crore to 56 CSMs.
IV. National Cooperative Development Corporation (NCDC), a statutory Corporation
under the Ministry of Cooperation, Government of India was established on 14.03.1963
under an Act of Parliament (NCDC Act of 1962) for economic development through
cooperative societies. The major objective of the NCDC is to promote, strengthen and
develop cooperatives for increasing production and productivity and instituting post
harvest facilities. NCDC provides assistance either through State Governments or
directly to eligible cooperative societies, in accordance with the prescribed terms and
conditions. The financial support is extended in the form of short-term and long-term
loans, and subsidy wherever available under Government of India schemes.
As on 25.11.2025, NCDC has cumulatively disbursed ₹4,67,455.66 crore for the
development of cooperative institutions across the country. Activity-wise disbursement
during the last five years is placed at Annexure-III.Since its inception, NCDC has been providing financial assistance under its
Corporation-sponsored schemes as well as Central Sector Schemes of various
Ministries, covering a wide spectrum of notified commodities and services.
Details of the activities supported and schemes implemented are furnished at
Annexure-IV.ANNEXURE I
State-wise details of PACS approved and released amount under the project Strengthening of
PACS through Computerization-
S.No States/UTs PACS Sanctioned Total amount released
(Cr)
1. Maharashtra 12,178 130.73
2. Rajasthan 8,525 84.83
3. Gujarat 6,216 93.97
4. Uttar Pradesh 6,257 67.10
5. Karnataka 5,894 67.83
6. Madhya Pradesh 5,455 66.43
7. Tamil Nadu 4,561 51.73
8. Bihar 4,495 51.76
9. West Bengal 4,187 45.79
10. Punjab 3,482 32.94
11. Andhra Pradesh 2,037 35.31
12. Chhattisgarh 2,028 28.35
13. Himachal Pradesh 1,885 26.74
14. Jharkhand 2,797 34.30
15. Haryana 710 8.79
16. Uttarakhand 1,216 3.69
17. Assam 850 17.02
18. J&K 708 10.37
19. Tripura 475 7.11
20. Manipur 308 3.14
21. Nagaland 231 4.43
22. Meghalaya 330 2.34
23. Sikkim 131 3.28
24. Goa 86 1.19
25. ANI 46 0.69
26. Puducherry 45 0.67
27. Mizoram 99 1.27
28. Arunachal Pradesh 139 0.36
29. Ladakh 10 0.12
30. Odisha 4,240 18.07
31. DNH&DD 9 0.12
Total 79,630 900.49ANNEXURE II
State-wise details of ARDBs approved and released amount under the project Computerization of
Agriculture and Rural Development Banks (ARDBs)-
S. States/UTs ARDB Approved Total Amount released (Cr)
No.
1. Puducherry 2 0.11
2. Punjab 113 0.94
3. Tripura 6 0.04
4. Uttar Pradesh 342 1.75
5. Karnataka 207 1.28
6. Tamil Nadu 216 1.96
7. Haryana 90 0.76
8. Himachal Pradesh 88 1.04
9. Gujarat 195 0.82
10. Rajasthan 163 1.14
Total 1,422 9.84
Note: J&K has opted out from this project.Annexure III
NCDC Activity wise Assistance in last 5 years
Rs. in Crore
2025-26
S.
Activity 2020-21 2021-22 2022-23 2023-24 2024-25 (as on
No
25.11.2025)
1 Marketing & 19605.79 26779.65 28031.70 52919.63 77,945.72
Inputs 52,503.93
2 Processing 1643.91 1343.84 800.03 2223.71 8,101.01
290.08
3 Storage & Cold 7.29 7.72 4.84 19.14 59.73
Chain 4.41
4 Weaker Section 288.58 870.38 600.96 345.14 75.17
Prog. 21.80
5 Computerisation of 30.87 25.06 45.02 0.42
Coop. 4.58 0.23
6 Consumer Coop. 0.89 2.69 1.40 4.13 -
7 ICDP 152.61 283.06 177.87 23.26
1.62
8 C,IC&SC 2996.23 4894.2 11322.3 5000.77 8,874.83
6,121.30
9 Yuva Sahakar 0.27 0.10 0.84
0.13 0.10
10 P&D 4.48 6.44 6.15 6.75 -
11 FPO 2.32 8.04 38.25 48.33 71.97
61.37
12 FFPO 2.78 26.35 48.12
21.45
13 Agri Export &
Export Promotion 50.00
GRAND TOTAL 24,733.24 34,221.08 41,031.40 60,618.47 95,182.88
59,074.67Annexure IV
PART A: NCDC SPONSORED SCHEME
ACTIVITIES ASSISTED:
NCDC provides financial assistance in the form of loans (both Term Loans and Investment Loans)
and subsidy to the cooperative societies for their development. The loan component is provided
from out of NCDC’s own funds while the eligible subsidy is provided after dovetailing from other
Central Sector Schemes. The list of activities assisted by NCDC is as under:-
a) Marketing;
b) Processing;
c) Storage;
d) Cold Chain;
e) Industrial;
f) Distribution of essential consumer articles through cooperatives;
g) Credit & Service Cooperatives/ Notified Services;
h) Cooperative Banking Unit;
i) Agricultural Services;
j) District Plan Schemes;
k) Weaker Section Cooperatives;
l) Assistance for Computerization of Cooperatives;
m) Promotional and Developmental programmes.
FOCUSSED PRODUCTS OF NCDC
a) YUVA SAHAKAR - Cooperative Enterprise Support and Innovation Scheme: The
scheme aims at encouraging newly formed cooperative societies with new and/ or
innovative ideas.
b) AYUSHMAN SAHAKAR: The scheme has a comprehensive approach to cover
hospitals, healthcare, medical education, nursing education, paramedical education,
health insurance and holistic health systems such as AYUSH.
c) NANDINI SAHAKAR: The scheme aims to improve the socio-economic status of
women and supports the entrepreneurial dynamism of women through women’s
cooperatives. It will converge critical inputs of women’s enterprise, business plan
formulation, capacity development, credit and subsidy, and/ or interest subvention of
other schemes.
d) DAIRY SAHAKAR: It is a cooperative dairy business focused framework of financial
assistance for encouraging cooperatives to achieve higher outcomes in ESG
(environmental, social, governance) linked activities. It includes the creation of
infrastructure by cooperatives for new projects and modernization and/or expansion of
existing projects.e) DIGITAL SAHAKAR: Aligned with the principles of Digital India, NCDC has
conceived a focused financial assistance framework for Digitally Empowered
Cooperatives for handholding and credit linkage by NCDC, dovetailed with grant,
subsidy, incentives, etc. from the Government of India / State / UT / agencies with the
objective of cooperatives actively partaking in Digital India.
f) SWAYAM SHAKTI SAHAKAR YOJNA: - Scheme for providing NCDC's financial
assistance to Agricultural Credit Cooperatives for providing loan/advances to Women
Self Help Groups (SHGs).
g) DEERGHAVADHI KRISHAK PUNJI SAHAKAR YOJNA: Scheme for extending
NCDC's long-term financial assistance to Agricultural Credit Cooperatives towards their
onward lending of long-term loans/advances for activities/commodities/services under
the purview of NCDC .
PART B: SCHEMES OF MOC and OTHER MINISTRIES / DEPARTMENTS BEING
IMPLEMENTED BY NCDC
a) Grant in aid to NCDC for strengthening of the Cooperative Sugar Mills- Ministry of
Cooperation.
b) Agricultural Marketing Infrastructure (AMI) sub-scheme of Central Sector Integrated
Scheme on Agriculture Marketing (CSISAM)for Storage and other than Storage
Infrastructure - Ministry of Agriculture & Farmer’s Welfare.
c) Mission for Integrated Development of Horticulture (MIDH) – Integrated Post
Harvest Management - Ministry of Agriculture & Farmer’s Welfare.
d) Interest Subvention & Credit Guarantee through Financing Facility under
Agriculture Infrastructure Fund scheme - Ministry of Agriculture & Farmers’ Welfare.
e) Assistance for Boosting the Seed Production component under the Sub-Mission for Seed
and Planting Material (SMSP) of the National Mission on Agricultural Extension and
Technology (NMAET).
f) PM Matsya Sampada Yojana (PMMSY) – Department of Fisheries, Ministry of
Fisheries, Animal Husbandry and Dairying.
g) PM Formalisation of Micro Food Processing Enterprises (PMFME) - Ministry of Food
Processing Industries.
h) Scheme for Formation and Promotion of 10,000 Farmer Producer Organizations
(FPOs) – Ministry of Agriculture & Farmer’s Welfare.
i) (i) Pradhan Mantri Kisan Sampada Yojna (PMKSY) – Scheme for Food Processing
and Value Addition - Ministry of Food Processing Industries.
(ii) Pradhan Mantri Kisan Sampada Yojna (PMKSY) - Integrated Cold Chain and
Value Addition Infrastructure Scheme - Ministry of Food Processing Industries.
j) National Scheduled Tribes Finance and Development Corporation (NSTFDC) -
Ministry of Tribal Affairs.
k) National Livestock Mission (NLM) and Rashtriya Gokul Mission (RGM) - Department
of Animal Husbandry and Dairying, Ministry of Fisheries, Animal Husbandry & Dairying.l) Re-aligned Animal Husbandry Infrastructure Development Fund (AHIDF), Ministry
of Fisheries, Animal Husbandry & Dairying
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