While making the announcement, Union Finance Minister Nirmala Sitharaman highlighted the important role played by cooperatives, along with MSMEs and farmers, in driving India’s economy
-1774431003068_d.png "Government grants 3-year tax relief to cooperative federations, check details here")
Sitharaman announces dividend tax exemption for cooperatives. Representational Image
The government on Wednesday announced a major relief for cooperative federations by granting a three-year tax exemption on dividend income. Finance Minister Nirmala Sitharaman shared about the development in the Lok Sabha during discussions on the Finance Bill 2026.
She said the decision aims to benefit small members and strengthen the cooperative sector. “This will help boost incomes of small cooperative members and encourage greater participation,” she noted.
Focus on inclusive growth
The finance minister highlighted the important role played by cooperatives, along with MSMEs and farmers, in driving India’s economy. She said these sectors are key to job creation and economic growth, especially in rural areas.
“These sectors form the backbone of India’s economy, especially in rural areas, and help generate employment across industries and regions,” Sitharaman said. She stressed that empowering these groups is essential for inclusive development as per IANS.
New rules for data centre services
The government has also introduced a new provision related to data centre services. Under a “safe harbour” rule, Indian companies offering such services to related foreign entities will be allowed a fixed 15 percent margin on costs.
According to the minister, this move will ensure that businesses operating in India remain genuine and profitable. It will also discourage the creation of shell companies with no real business activity.
Steps to improve business environment
To make compliance easier for businesses, the government has decided to convert penalties for technical defaults into fixed fees. “This step is expected to reduce uncertainty for businesses and make compliance simpler,” FM Sitharaman stated.
In addition, passenger allowances at airports have been rationalised to reduce disputes and make travel smoother for passengers.
Government spending and welfare
Addressing concerns about government finances, Sitharaman said that in some cases, the Centre has spent more than it collected through cess and surcharges. This, she explained, shows that funds are being directed towards public welfare.
Overall, the measures announced in the Finance Bill are aimed at strengthening key sectors, improving ease of doing business, and ensuring that economic growth benefits a wider section of society.
(With IANS Inputs)
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