Consider the following statements about the Farmer Producer Companies and identify the correct one s...........

Economic Affairs Agricultural Marketing and Prices

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Consider the following statements about the Farmer Producer Companies and identify the correct one/s.

1. These Companies are registered under the Companies Act and the farmers/producers are the shareholders

2. The profits made by these companies have been exempted from taxation by the government.

Select the correct answer using codes given below

1 only

2 only

Both are correct

None is correct

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Explanation:

It is a hybrid between cooperative societies and private limited companies which provides for sharing of profits/benefits among the members.
The important features include:
• It is formed by a group of producers for either farm or non-farm activities;
• It is a registered body and a legal entity (under Companies Act, 1956);
• Producers are shareholders in the organization;
• It deals with business activities related to the primary produce/product;
• A part of the profit is shared amongst the producers and rest of the surplus is added to its owned funds for business expansion.
• It involves collectivization of Producers especially small and marginal farmers to help them collectively address many challenges of agriculture.
• NABARD initiated the Producer Organisation Development Fund (PODF) and Small Farmers Agribusiness Consortium (SFAC) has set up nearly 250 FPOs since 2011.
• To strengthen their capital base, SFAC has launched a new Central Sector Scheme “Equity Grant and Credit Guarantee Fund Scheme for Farmers Producer Companies”.
While the I-T Act exempts cooperatives from paying under the section 35CCC, FPCs are taxed on par with private and public-limited companies. Government exempted the profits of Farmer Producer Companies (FPC) from tax for a period of five years from the next financial year