The plan of Central government to tax dairy cooperatives receiving more than 400 litres of milk a day is likely to affect the earnings of dairy farmer.

Around 2 lakh dairy farmers will be directly affected if the plan is implemented.

According to the Centre’s notification, all dairy cooperatives which receive more than 400 litres of milk a day will come under the ambit of income tax. The cooperatives will be taxed on the basis of their annual profits. Meanwhile, it is from this annual profit that salary of employees, bonus and day to day operational costs are met.

This in turn will make an individual dairy farmer with the cooperative to compromise their earnings in lieu of cooperative’s tax return. The bonus amount to be received by the farmer from the cooperative’s profit will be used up for the payment of the returns.

Most of the dairy farmers are in crisis and compromising their bonuses would be double whammy for them.

A Supreme Court order states that dairy cooperatives should be given tax exemptions. However, the Centre amended income tax rules and brought dairy cooperatives under the ambit of taxation.

Source : Matrubhumi : Aug 31 2021