Taxing cooperative banks is not a good step, says taxation expert

Surat Mar 2 (UNI) Central government decision to impose tax on co-operative banks will ultimately destroy the very foundation of principles on which they were found, says Ahemadabad-based taxation expert Mukesh Patel.

Speaking of hte Central budget in a debate, organised by South Gujarat Regional Committee of All Gujarat Federation of Tax Consultants, Mr Patel said that co-operative socities are found to provide credits to farmers and local traders and imposing tax on them would ultimately affect their basic philosophy.

Political considerations might have played some role to take such a decision, he said.

Co-operative banks are operating mainly in Gujarat, Maharashtra, Kerala and Tamilnadu and in that sense the new tax proposal was something like a 'tsunami' hitting those states, he added.

Mr Patel cautioned the government's decision to continue with the Fringe Benefit Tax there would be a 'reverse spin' impact in the long run.

''Chances are that employers may provide wages to their employees in the form of fringe benefits which helps them to avoid direct taxation on salary. In a win-win situation both will share money by just paying six percent FBT'', Mr Patel added.

UNI MS MJ AG2030