NewKerala.com

Budget 2026-27 Boosts Cooperatives with New Tax Breaks and Incentives

Finance Minister Nirmala Sitharaman's Budget 2026-27 introduces key tax incentives to strengthen primary cooperative societies. The proposals extend deductions for the supply of products like cattle feed and cotton seed, and allow deductions for certain dividend income. Simultaneously, the National Cooperative Development Corporation reports robust financial disbursements, highlighting significant growth in funding to the sector. These measures aim to expand the reach and reduce the tax burden on India's cooperative ecosystem.

Key Points: Budget 2026-27 Tax Incentives for Cooperative Societies

  • New tax deduction for cattle feed & cotton seed supply
  • Deduction for inter-cooperative society dividends
  • 3-year tax exemption for national co-op federations
  • NCDC disbursed Rs 49,799 cr Apr-Oct 2025
2 min read

Budget 2026-27 rolls out tax incentives for cooperatives

FM Nirmala Sitharaman announces tax deductions for cooperative societies on cattle feed, cotton seed & dividends in Budget 2026-27 proposals.

"extension in this deduction will now cover a wider number of cooperative societies - Budget Proposals"

New Delhi, Feb 1

Finance Minister Nirmala Sitharaman announced several incentives for primary cooperative societies in the Budget proposals for 2026-27 presented in the Parliament on Sunday.

These include allowing a deduction to primary cooperative societies for the supply of cattle feed and cotton seed produced by their members, which will result in reducing the tax burden. Presently, the deduction is allowed to a primary cooperative society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members, and the extension in this deduction will now cover a wider number of cooperative societies.

The Finance Minister also proposed to allow inter-cooperative society dividend income as a deduction under the new tax regime to the extent it is further distributed to its members.

As an additional measure to support National Cooperative Federations, she further proposed to allow tax exemption, for a period of 3 years, to dividend income received by a notified national co-operative federation, on their investments made in companies up to January 31, 2026. This exemption would be allowed only for dividends further distributed to its member co-operatives.

Meanwhile, the National Cooperative Development Corporation (NCDC) has maintained its strong growth trend by disbursing a robust amount of Rs 49,799.06 crore to various co-operatives nationwide from April to October 2025 during the current financial year.

A statutory organisation under the Ministry of Cooperation, it has, over the years, demonstrated a strong and sustained commitment to strengthening India's cooperative ecosystem through continuous financial support.

The Corporation's disbursements have grown impressively from Rs.5,735.51 crore in 2014-15 to Rs.95,182.88 crore in 2024-25, reflecting its expanding outreach across sectors.

A total of Rs 4823.68 crore was disbursed to women cooperatives between FY 2021-22 to FY 2024-25, strengthening women's participation in the cooperative sector.

Cumulatively, as of March 2025, the NCDC extended Rs 33,311.79 crore financial assistance to cooperative sugar mills across India.

The NCDC has played a key role in the success of Gujarat State Cooperative Marketing Federation Limited, the Lahoul Potato Growers Cooperative Society in Himachal Pradesh, the Jharkhand Women's Self-Supporting Poultry Cooperative Federation, and the Vitthalrao Shinde Sahakari Sakhar Karkhana in Maharashtra - these cooperative models exemplify the strength and reach of India's cooperative movement.

- IANS

Share this article:

Reader Comments

S
Sarah B
The numbers on NCDC disbursements are impressive, especially the growth from ~5,700 crore to over 95,000 crore in a decade. It shows a real institutional push. Hoping these tax incentives translate to better prices for the actual producer, not just the society's balance sheet.
P
Priyanka N
Good to see the mention of women's cooperatives getting over 4800 crore. When women have financial agency through collectives, it transforms families and communities. The poultry federation in Jharkhand is a great example. More power to them!
A
Aman W
While the intent is good, the success depends entirely on implementation at the ground level. In many states, cooperative societies are plagued by politics and mismanagement. The benefits must reach the small member, not just the office-bearers. That's the real challenge.
V
Vikram M
The cooperative model is India's hidden strength, from Amul to sugar mills. Extending tax deductions to more sectors is a logical move. Hope they also simplify the compliance process for these societies. The paperwork can be a nightmare for volunteers running them.
K
Kiran H
Solid, practical budget measure. Not flashy, but it strengthens the backbone of our agrarian economy. The three-year tax exemption for national federations should help them reinvest. Now, state governments need to ensure transparent governance in these societies.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50