Budget 2026-27 rolls out tax incentives for cooperatives

New Delhi, Feb 1: Several benefits for primary cooperative societies were unveiled by Finance Minister Nirmala Sitharaman during Sunday’s parliamentary presentation of the 2026-27 Budget proposals.

Key measures include tax deductions for cooperatives supplying member-produced cattle feed and cotton seed, lowering their fiscal burden. This expansion builds upon existing deductions for societies providing milk, oilseeds, fruits, or vegetables grown by members, broadening eligibility across the cooperative sector.

Additional provisions enable cooperatives to deduct inter-society dividend income distributed to members when operating under the new tax framework. National Cooperative Federations will receive three years of tax exemption on dividend income from investments made before January 31, 2026, provided these earnings are passed to member cooperatives.

Concurrently, the National Cooperative Development Corporation (NCDC) reported disbursing ₹49,799.06 crore to cooperatives between April and October 2025. As the Ministry of Cooperation’s statutory body, NCDC has escalated financial support from ₹5,735.51 crore in 2014-15 to ₹95,182.88 crore in 2024–25.

Notably, women’s cooperatives received ₹4,823.68 crore from FY 2021-22 to FY 2024-25, while cooperative sugar mills secured ₹33,311.79 crore cumulatively through March 2025. Successful cooperative models supported by NCDC include Gujarat’s state marketing federation, Lahoul’s potato growers in Himachal Pradesh, Jharkhand’s women poultry federations, and Maharashtra’s Vitthalrao Shinde sugar factory.

–IANS