Urban co-operative banks ask for tax exemptions

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: National Federation of Urban Cooperative Banks and Credit Societies (NAFCUB), an apex level promotional body of urban cooperative banks and credit societies in India, has asked finance minister Pranab Mukherjee to restore deductions available under section 80 (P1) of the Indian income tax act while assessing the tax liabilities of its member banks and societies.

For the purpose, the representation was made to the finance ministry by an 8-member delegation of NAFCUB headed by Rahman Khan, deputy chairman of Rajya Sabha. Such an exemption in the income tax to urban cooperative banks and credit societies was allowed by the government till 2006. NAFCUB has also asked the government to include deposits with non-scheduled co-operative banks for eligibility under section 80 (C) of the income tax act.

KD Vora, member, executive committee, NAFCUB said, “Our body’s assessment is that the proposed income tax relief is expected to enhance the CRAR of each urban cooperative bank in the country by around 4%. It will also help the banks to consolidate among themselves and penetrate the rural parts of the country.” He said that at present, 18 countries including the US offer such a tax rebate facility to the urban cooperative banks.