Agri Min­istry wants tax ex­emp­tion for FPOs

Women farm­ers face the brunt; GST adds to their woes

The Hindu Business Line - - FRONT PAGE -

The Agri­cul­ture Min­istry has writ­ten to the Fi­nance Min­istry seek­ing in­come-tax ex­emp­tion for farmer pro­duce or­gan­i­sa­tions (FPOs), par­tic­u­larly for those that are reg­is­tered as farmer pro­ducer com­pa­nies (FPO) un­der the Com­pa­nies Act.

“These FPOs were brought in to ne­go­ti­ate the prob­lems that are faced by co­op­er­a­tive so­ci­eties. So they are nat­u­rally el­i­gi­ble for all the ben­e­fits that co­op­er­a­tives are en­joy­ing al­ready,” sources in the Agri­cul­ture Min­istry said on Wed­nes­day.

While the I-T Act ex­empts co­op­er­a­tives from pay­ing un­der the sec­tion 35CCC, FPCs are taxed on par with pri­vate and public-lim­ited com­pa­nies.

Ac­cord­ing to data avail­able with Small Farm­ers’ Agribusi­ness Con­sor­tium, which comes un­der the Agri­cul­ture Min­istry, there are about 750 FPOs in the coun­try at present, with over 7.4-lakh farm­ers un­der them.

The gov­ern­ment has been pro­mot­ing FPOs as col­lec­tives of small and mar­ginal farm­ers, as they would help address the chal­lenges that small farm­ers face, par­tic­u­larly those re­lat­ing to ac­cess to in­vest­ment and tech­nol­ogy. To en­cour­age them, the gov­ern­ment has been giv­ing match­ing grants to the eq­uity raised by recog­nised FPOs.

FPOs reg­is­tered as FPCs, how­ever, have been de­mand­ing in­come-tax ex­emp­tion for a while now. This is­sue came up as one of the key de­mands from women farmer lead­ers, who came to the cap­i­tal for an in­ter­face with dif­fer­ent gov­ern­ment de­part­ments. Suneeta Kashyap, a woman farmer leader with an Utharak­hand-based FPC, Mahila Umang Pro­duc­ers Com­pany Lim­ited, said her or­gan­i­sa­tion has no choice but pay in­come-tax, even though their prod­ucts are from the agri­cul­tural sec­tor, which is ex­empt from tax.

The prob­lem has be­come more griev­ous for them af­ter the im­ple­men­ta­tion of GST regime, she said.

“In­come tax and the new GST regime are deal­ing a se­vere blow to the prof­itabil­ity of col­lec­tives like ours,” Kashyap said.

FPCs should be ex­empted from in­come-tax, said Kur­bur Shan­taku­mar of Raithamithra Farmer Pro­ducer Com­pany Ltd, which is based out of Mysore. The gov­ern­ment, which has been en­cour­ag­ing the con­cept of FPOs/FPCs, should ex­empt such en­ti­ties from pay­ing in­come-tax at least for the first five years, Shan­taku­mar said.

While the I-T Act ex­empts co­op­er­a­tives from pay­ing un­der the sec­tion 35CCC, FPCs are taxed on par with pri­vate and public-lim­ited com­pa­nies

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