Jaitley: No Tax exemption for cooperative banks; work as commercial

New Delhi, Dec 30: Finance minister Arun Jaitley has denied tax exemption for co-operative banks stating that these banks too provide facilities and function like commercial banks. Jailtley said in Lok Sabha that the cooperative banks functioned like any other commercial bank and the principle of mutuality, which is central to granting exemption under Section 80P of the Income Tax Act, does not apply to them because their area of operations extends even to non-members.

"Income tax is a tax on profits and there is no rationale for exempting profit-making cooperative banks from payment of income tax," he said.

Jaitley said most of these banks provided standard banking facilities like opening of letters of credit, bill discounting and collection, lockers and safe deposit vaults and bank guarantees.

"These banks are thus no different from commercial banks and therefore are required to be treated at par with them," he said.