Tag: cooperative societies

The Winners and the Losers of Union Budget 2022

The budget outlines policy goals that benefit a number of business segments as well as regions.

The Union Budget for financial year 2022-23 comes at the tail end of the COVID-19 third wave driven by the Omicron variant, and more importantly, at a time when India’s consumption appetite is being wrecked by high inflation as well as rampant unemployment.

Given the larger macro-economic picture, finance minister Nirmala Sitharaman has presented a Union Budget that ratchets up India’s total spending kitty to Rs 39.5 lakh crore, stressing that the budget is looking to lay the foundation for an ‘Amrit Kaal’ of 25 years that is to follow. Whether the ‘Amrit Kaal’ does arrive or not, one major caveat to bear in mind while accepting budgetary figures at face value is that many are often dramatically revised in subsequent years indicating that funds promised in the budget often remain unallocated and consequently, schemes and policies remain unimplemented.

Meanwhile, the budget outlines policy goals that benefit a number of business segments as well as regions. These include: 

Gems and Jewellery

Customs duty on cut and polished diamonds and gemstones will be reduced to 5%. Simply sawn diamond would attract nil customs duty. To facilitate the export of jewellery through e-commerce, a simplified regulatory framework will be implemented by June this year. To disincentivise the import of undervalued imitation jewellery, the customs duty on imitation jewellery is being prescribed in a manner that a duty of at least Rs 400 per kg is paid on its import.

Tax incentives to IFSC

Income of a non-resident from offshore derivative instruments, or over the counter derivatives issued by an offshore banking unit, income from royalty and interest on account of lease of ship and income received from portfolio management services in IFSC shall be exempt from tax.

Start-ups

Eligible start-ups, established before March 31, 2022, had been provided with a tax incentive for three consecutive years out of ten years from incorporation. The tax incentive from the period of incorporation has been extended by one more year, that is, those established by March 31, 2023, will also be able to receive this incentive.

Reduced alternate minimum tax rate and surcharge for cooperatives

Currently, cooperative societies are required to pay an alternate minimum tax at the rate of 18.5%. However, companies pay the same tax at the rate of 15%. The budget has levelled the playing field between cooperative societies and companies by reducing this rate for the cooperative societies to 15%.

Also read: Snapshot in Eight Charts: Key Sector Allocation in Union Budget 2022

Hospitality and related services

Over 13 million medium- and small-sized enterprises (MSMEs) have received some aid from the Emergency Credit Line Guarantee Scheme (ECLGS). Micro and small enterprises in the hospitality and related services – given that they are yet to recover fully – will be extended the ECLGS up to March 2023 and its guarantee cover will be expanded by Rs 50,000 crore to a total cover of Rs 5 lakh crore, with the additional amount being earmarked exclusively for the hospitality sector.

Cement and construction companies

The government has earmarked Rs 48,000 crore for the allocation to the PM Awas Yojana. The finance minister said that around 80 lakh houses will be completed in FY23.

The Northeastern states

An initial allocation of Rs 1,500 crore will be made to the Prime Minister’s Development Initiative for North East Region (PM-DevINE).  The scheme will be implemented through the North Eastern Council. The scheme aims to enable “livelihood activities for youth and women”.

At the same time, there are other sections whose interests have been actively hurt or alternatively no positive action has been chalked out in their favour.

Cryptocurrency investors

Cryptocurrency investors got the rough end of the stick as all their profits will be taxed at 30%. While this does rule out the possibility of a complete ban on digital assets, it will still sour investors’ appetite and erode their speculative earnings.

No action against inflation

The budget disappoints as it failed to address inflation. The word did not even figure in the finance minister’s speech and no roadmap or blueprint has been laid out as far as dealing with massive price rise of everyday products is concerned.

Income tax payers

No changes or concessions have been made in the existing income tax slabs.

SC Majority Verdict Quashes Part of 97th Constitutional Amendment on Cooperatives

The apex court struck down part IX B of the constitution related to cooperative societies.

New Delhi: The Supreme Court on Tuesday in a 2:1 majority verdict upheld the validity of the 97th constitutional amendment that deals with issues related to effective management of cooperative societies but struck down a part related to their setting up and functioning.

A bench of Justices R.F. Nariman, K.M. Joseph and B.R. Gavai said, “We have struck down part IX B of the Constitution related to cooperative societies but we have saved the amendment.”

Justice Nariman said, “Justice Joseph has given a partly dissenting verdict and has struck down the entire 97th constitutional amendment.”

The 97th constitutional amendment, which dealt with issues related to effective management of cooperative societies in the country, was passed by parliament in December 2011 and had come into effect from February 15, 2012.

The change in the constitution has amended Article 19(1)(c) to give protection to the cooperatives and inserted Article 43 B and Part IX B, relating to them.

While Article 19(1)(c) guarantees freedom to form association or unions or cooperative societies subject to certain restrictions, Article 43 B says that states shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies.

The Part IX B of the constitution inserted by the 97th amendment deals with incorporation, terms of members of the board and its office bearers and effective management of cooperative societies.

The Centre has contended that the provision does not denude states of their power to enact laws with regard to cooperatives.

The apex court’s verdict came on the Centre’s plea challenging the Gujarat high court’s 2013 decision striking down certain provisions of the 97th constitutional amendment while holding that Parliament cannot enact laws with regard to cooperative societies as it is a state subject.

The top court also examined the question of whether the provision denuded states of their exclusive power to enact laws to deal with the management of cooperative societies.

Attorney General K.K. Venugopal, appearing for the Centre, said the 97th Constitution amendment is not a direct or substantial attack on states’ powers to enact a law with regard to cooperatives.

Several intervenors have contended that the amendment made a direct in-road into the exclusive domain of states to enact laws with regard to cooperatives.

The Centre has stated that the amendment was enacted to bring uniformity in the management of cooperative societies and it did not take away the powers of states.

The top court had said if the Centre wanted to achieve uniformity then the only way available was to take the recourse under Article 252 of the Constitution which deals with the power of Parliament to legislate for two or more states by consent.

It said that in effect what the government had done was that the power of States to enact laws with respect to cooperative society has been made no longer exclusive.

On April 22, 2013, the high court, while striking down certain provisions of the 97th constitutional amendment, held that Parliament cannot enact laws or issue notification with regard to cooperative societies as it is a state subject.

The high court verdict came on a PIL challenging the legality of the 97th constitutional amendment on the ground that the Centre had no legislative competence to enact law for cooperative societies which is exclusively a state subject under the scheme of the Constitution.

The high court had held that certain provisions of the amendment pertaining to cooperative societies violated the basic structure of federalism.

The PIL petitioner contended that as per the provisions of Article 368 of the Constitution, if Parliament intends to amend or delete any of the lists in the seventh schedule, such Amendment shall require to be ratified by the legislature of not less than one-half of the states by resolution to the effect passed by those legislatures before the bill making provisions for such amendment is presented to the President for Assent.

(With PTI inputs)