Lok Sabha Question No. 333 (UNSTARRED), answered on 2025-12-02
Subject: Exemption of Cooperatives from GST
Ministry: COOPERATION
Asked by: Dr. Nishikant Dubey

## GOVERNMENT OF INDIA MINISTRY OF COOPERATION

## LOK SABHA UNSTARRED QUESTION NO. 333 TO BE ANSWERED ON  02 nd  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% plus

surcharge, 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 ComputerizationTo 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 ANNEXUREI.
- 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             |                        67.1  |
| 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             |                        34.3  |
| 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            |                       900.49 |

## ANNEXURE II

State-wise details of ARDBs approved and released amount under the project Computerization of Agriculture and Rural Development Banks (ARDBs)-

| S. No.   | States/UTs       | ARDB Approved   |   Total Amount released (Cr) |
|----------|------------------|-----------------|------------------------------|
| 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.

## NCDC Activity wise Assistance in last 5 years

## Annexure III

Rs. in Crore

| S. No   | Activity                      | 2020-21   | 2021-22   | 2022-23   | 2023-24   | 2024-25   | 2025-26 (as on 25.11.2025)   |
|---------|-------------------------------|-----------|-----------|-----------|-----------|-----------|------------------------------|
| 1       | Marketing& Inputs             | 19605.79  | 26779.65  | 28031.70  | 52919.63  | 77,945.72 | 52,503.93                    |
| 2       | Processing                    | 1643.91   | 1343.84   | 800.03    | 2223.71   | 8,101.01  | 290.08                       |
| 3       | Storage &Cold Chain           | 7.29      | 7.72      | 4.84      | 19.14     | 59.73     | 4.41                         |
| 4       | Weaker Section Prog.          | 288.58    | 870.38    | 600.96    | 345.14    | 75.17     | 21.80                        |
| 5       | Computerisation of Coop.      | 30.87     | 25.06     | 45.02     | 0.42      | 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                        |
|         | GRANDTOTAL                    | 24,733.24 | 34,221.08 | 41,031.40 | 60,618.47 | 95,182.88 | 59,074.67                    |

## 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 MillsMinistry 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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