No I-T exemption to cooperative banks: Govt tells Lok Sabha

The government on Friday ruled out giving income tax exemption to profit-making cooperative banks saying they functioned like commercial banks and should be treated on par. Finance Minister Arun Jaitley said in the Lok Sabha that the cooperative banks functioned like any other commercial bank and the principle of mutuality, which is central to granting exemption under Section 80 P of the Income Tax Act, did not apply to them because their area of operations extended even to non-members.“Income tax is a tax on profits and there is no rationale for exempting profit-making cooperative banks from payment of income tax,” he said during Question Hour. Jaitley said most of these banks provided standard banking facilities like opening of letters of credit, bill discounting and collection, lockers and safe deposit vaults and bank guarantees.“These banks are thus no different from commercial banks and, therefore, are required to be treated on par with them,” he said.
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