Agriculture plays an important role in our national economy and livelihood of more than 55% population of our country is dependent on agriculture and allied activities. However, there weren’t any successful organized business formats that could pass the benefits to farmers due to several reasons. Producer Company format overcome all the structural limitations of Cooperative Societies and enable and provide a good platform to those who can take the leadership to a group of farmers with bona fide business intention and allows to pass the benefits to the farmers while the promoters also enjoy for their time and efforts.
A producer company is a legally recognized body of farmers/ agriculturists with the purpose to improvise the standard of their living, by ensuring a good status of their available support, incomes and profitability. It shall carry on activities as mentioned in section 581B of Companies Act 1956 and shall have the objective of including but not limited to production, harvesting, procurement, grading, pooling, handling, marketing, selling, the export of primary produce of the Members or import of goods or services for their benefit and Financing of procurement, processing, marketing or other activities specified in the Act. A producer company operates under the regulatory framework that applies to companies, which is distinctly different from that of the cooperatives, which was seen as arbitrary and corrupt
The Producer Company Registration is identical to that of a private Limited Company. The first step includes the application for obtaining the Digital Signature (DSC) and Director Identification Number (DIN) .The next step is to file a name reservation application with the Registrar of Companies (ROC). It is mandatory that the company name must end with the words “Producer Limited Company”. Corresponding to the approval of all the above, all the documents in the prescribed format and an application for incorporation is to be filed. Once the Registrar is satisfied with the documentation, the approval shall be granted and a Certificate of Incorporation shall be issued.
A Producer Company can provide financial assistance to its members through: -
The Income Tax Act does not specify any specific tax benefit, which essentially provides special tax benefits or exemptions to producer companies by its definition. But subject to the agricultural activity carried out by the producer company, certain tax benefits and exemption can be availed.
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