Milma resents Centre’s move to tax milk co-operatives

Milma resents Centre’s move to tax milk co-operatives

Kerala Co-operative Milk Marketing Federation (KCMMF), one of country’s leading dairy co-operative networks known by its brand name Milma, has come out strongly against the Union Government’s move to impose Income Tax on the Anand model primary milk co-operative societies with an annual turnover of over Rs 50 lakh.

Demanding roll-back of this move that will break the backbone of the vast majority of dairy co-operatives, Milma has planned a massive protest programme at the Palayam Martyrs Column on September 7 at 10 am. Similar protest programs will also be simultaneously undertaken at all the primary milk cooperative societies across Kerala.

Minister for Animal Husbandry & Dairy Development, Smt Chinchurani will light the ‘protest flame’ at the programme. Shri V D Satheesan, Leader of Opposition in the Kerala State Legislative Assembly, will preside.

Shri K S Mani, Chairman, Milma, Shri John Theruvath, Chairman, Ernakulam Co-operative Milk Producers Union, Sri N Bhasurangan, Convener, Administrative Committee, Thiruvananthapuram Regional Co-operative Milk Producers Union, and Shri V S Padmakumar, Member, Administrative Committee, TRCMPU, will address the protestors

Memorandum will also be submitted to all the MPs from Kerala, urging them to bring pressure on the Centre to give up the move. If implemented, the move to impose tax on the milk co-operatives will deal a crippling blow to millions of dairy farmers across the country as they will have to ultimately bear the burden, Shri K S Mani and Shri N Bhasurangan told a joint press conference here today. TRCMPU Administrative Committee Members Shri V.S. Padmakumar and K.R. Mohanan Pillai were also present.   

As per the circular No 13/2021 of the Board of Direct Taxes dated June 30, 2021, under the guidelines of the Section 194 Q of the Income Tax Act-1964 primary milk co-operatives also come under the purview of income tax. This clause is now being invoked to tax milk co-operatives having an annual turnover of over Rs 50 lakh at the rate 0.1 per cent as TDS.

Apart from procurement and distribution of milk, the income from all allied products including cattle feed sales would be taken into account in calculating the tax. This would bring almost all milk co-operatives under the ambit of Income Tax. Besides casting a huge financial burden, this would also cause a lot of procedural difficulties to their functioning.

Though IT is calculated on the basis of the turnover of co-operatives, ultimately the dairy farmers would have to bear the brunt. Apart from routing milk to the Regional Unions, the Anand model milk co-operatives can also sell the excess yield locally.

The expenses of the co-operatives are met from the profit posted by them after paying the procurement price to the farmers. Part of this surplus is also utilized to meet welfare commitments like member relief fund, professional education fund, cattle development fund and other charitable purposes. They give away 65 per cent of the post-audit surplus to dairy farmers as bonus.

In normal circumstances, there will not be any cash left in the balance sheet of the co-operative societies after meeting all these commitments. The delay in completion of audit in time also affects the timely disbursal of bonus and other payments.

The implementation of the proposal to deduct tax at source from the cooperatives having a total turnover of over Rs 50 lakh will seriously impact their financial position. This would lead to a situation where they would find it very hard to even disburse bonus to farmers. Ultimately, this would endanger the very existence of the co-operatives.

In case the co-operatives fail to file the IT returns in time, the authorities could levy a 5 per cent tax on their turnover above the Rs 50 lakh limit. If they do not have a PAN Card, they will be liable to pay a penal amount of 20 per cent on the turnover above Rs 50 lakhs. Most co-operative societies are now in the initial stages of the process of obtaining PAN Card.

Milma had, earlier last month, set an all-time record in the sale of milk, curd and other dairy products during the Onam Festival from August 20 to 23, marking a sharp increase from last year’s figures.

The total sale of milk during these four days stood at 79,86,916 litres, marking an increase of 6.64 per cent from the same period last year. A record quantity of 32,81,089 litres of milk was sold on Thiruvonam day alone (August 21), showing an increase of 11.85% from last year.

Milma also sold 8,49,717 kgs of curd during this period this year. On Thiruvonam day, 3,31,971 kgs of curd was sold against last year's 3,18m418 kgs, marking an increase of 4.86 per cent.   

Apart from the direct supply of these staple items through its extensive sales network across Kerala, Milma also provided 425 Metric Tons of Ghee to be included in the Onam Kits supplied by the Kerala State Civil Supplies Corporation.

It is significant that Milma, along with its three regional unions, has been able to supply such a large quantity of these items in a time-bound manner despite severe constraints caused by the Covid-19 pandemic, fulfilling its commitment to millions of households who trust the quality and affordability of its products.

The average milk procurement in 2019 - 20 was 12,39,621 litres per day while sales was 13,29,405 litres per day. Milk procurement, in 2020 - 21 saw a hike of 9.04% to 13,51,732 litres per day, but the sales fell by 1.42% to 13,10,421 litres per day, which was primarily due to the Covid induced restrictions and lockdowns, and a general decrease in the purchasing power of the consumer. In the past 5 months, the average milk procurement stands at 15,11,580 litres per day, while sales is around 13,89,841 litres per day, thus achieving the Government's avowed objective of achieving self sufficiency in milk production.

This decision of the Union Govt, to impose Income Tax on milk cooperatives would ultimately push almost all dairy farmers of the state into dire straits. These are the circumstances that have compelled KCMMF and its regional unions to stage a protest by rallying dairy farmers to bring pressure on the Centre to revoke the move to tax the co-operative societies.