UNION BUDGET 2026-27 PROPOSES SEVERAL INCENTIVES FOR COOPERATIVES

SUPPLY OF CATTLE FEED AND COTTON SEED PRODUCED BY A PRIMARY COOPERATIVE SOCIETY ALLOWED FOR DEDUCTION

INTER-COOPERATIVE SOCIETY DIVIDEND INCOME ALLOWED AS DEDUCTION UNDER THE NEW TAXATION REGIME

Union Budget 2026-27 has proposed several incentives for primary cooperative societies. Presenting the Budget in  Parliament today, Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman proposed to extend the deduction allowed to a primary cooperative society for  supply of cattle feed and cotton seed produced by its members. Presently, deduction  is allowed to a primary cooperative society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members. 

The  Finance Minister also proposed to allow inter-cooperative society dividend income as 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, Smt. Nirmala Sitharaman further proposed to allow 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 31.1.2026. This exemption would be allowed only for dividends further distributed to its member co-operatives.

Union Budget incentives for cooperatives allow deductions for cattle feed and cotton seed and limited dividend exemptions. The Budget extends the deduction for primary cooperative societies to include supply of cattle feed and cotton seed produced by members, allows inter-cooperative society dividend income to be deducted to the extent it is further distributed to members under the new tax regime, and grants a three-year exemption for dividend income received by notified national cooperative federations on qualifying investments provided those dividends are distributed to member cooperatives.