Milma, Kerala’s largest milk cooperative, has petitioned the Union government to exclude primary dairy cooperatives from income tax after the government stated that cooperatives with more than 50 lakh in turnover shall be subject to tax deduction at source (TDS) for the amount in excess of 50 lakh.
The Amul model milk cooperatives in the state do not operate on a profit basis, and there is no profit capitalization. Cooperative profits are invested in various funds that support dairy producers, according to K.S. Mani from the milk co-op. He went on to say that approximately a million dairy farmers were directly connected to the milk cooperative and that the implementation of income tax would have an impact on them.
Dairy farmers are one of the most marginalized parts of the agricultural industry, and encouraging them is a strategy to increase dairy production. The new direct tax imposition will not help the process, he said, adding that cooperative auditing accounts had lagged and that fines imposed under the new regulations on cooperatives for failing to file returns on time would have a negative influence on their operations.
He further stated that the profits made by primary dairy cooperatives were returned to dairy farmers in the form of various subsidies and incentives.
According to John Theruvath, chairman of the Ernakulam Regional Cooperative Milk Producers Union, Kerala has achieved significant milk output throughout the years, thanks to cooperatives. The daily procurement volume is approximately 14 liters.
Milk production has reached self-sufficiency in both the Ernakulam and Malabar regions. Following the COVID 19 lockout, more young people will enter the dairy industry, increasing productivity.
He stated that the dairy cooperative has asked the state government to intercede and look into the possibility of withdrawing the new direct tax laws.