Deduction in respect of income of Co-Operative Societies - Section 80P - Income Tax - Ready Reckoner - Income Tax

Deduction in respect of income of Co-Operative Societies - Section 80P Section 80P deduction is available only to primary agricultural credit society or primary co-operative agricultural and rural development bank. A. Where 100% deduction is allowed. 100% of the profits, included in Gross Total Income, attributable to any one or more of the following activities are deductible: Carrying on the business of providing credit facilities to its members. The exemption shall not be available to a co-operative bank. A cottage industry; or The marketing of the agricultural produce grown by its members; or The purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members; or The processing without the aid of power, of the agricultural produce to its members; or The collective disposal of the labour of its members; or Fishing or allied activities, i.e., the catching, curing, processing, preserving, storing or marketing of fish or purchase of materials and equipments in connection therewith for the purpose of supplying them to its members. However, In case of co-operative societies falling under clause (vi) (vii) above, the deduction, is available subject to the condition that the rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely: The individuals who contribute their labour or, as the case may be, carry on the fishing or allied activities; The co-operative credit societies which provide financial assistance to the society; The state Government. Profits of certain primary co-operative societies 100% of the profits, included in Gross Total income are deductible in the case of a co-operative society, being a primary society engaged in supplying milk, oil seeds, fruits or vegetables raised or grown by its members to: A federal co-operative society, being a society engaged in the business of supplying milk, oil seed, fruits or vegetables, as the case may be ; or The Government or a local authority; or A Government Company or a statutory corporation engaged in supplying milk, oil seeds, fruits or vegetables, as the case may be, to the public. Income from investments with other co-operative societies 100% of the profits, included in Gross Total Income are deductible in respect of any income by way of interest or dividends derived by the co-operative society from its investment with any other co-operative society. Income from letting of godowns or warehouse 100% of the profits, included in Gross total income are deductible in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities. B. Where deduction is allowed to limited extent. 1. For other incomes except referred to in I to IV above, there is a general deductions from income as under from the Gross Total Income: Where such co-operative society is a consumers co-operative society ₹ 1,00,000. In any other case, ₹ 50,000. Key Note: Consumer co-operative society means a society for the benefit of the consumers. 2. In case if entire income by way of interest on securities or income from house property if gross total income of co-operative society does not exceed ₹ 20,000 - 100% deduction is allowed Specific Exclusions: Section 80P is not applicable to any co-operative bank (including Regional Rural Banks) other than a primary agricultural credit society (as defined in the Banking Regulation Act), or a primary co-operative agricultural and rural development bank (a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities). Benefit of deduction is withdrawn with an intention to treat co-operative banks on par with commercial banks who do not enjoy any such tax benefit. Important Notifications Circulars Condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 for returns of income claiming deduction u/s 80P of the Act for various assessment years from AY 2018-19 to AY 2022-23 . [ Circular No. 13/2023 Dated 26.07.2023 ] Condonation of delay under section 119(2)(b) of the Income-tax Act, 1961 for returns of income claiming deduction u/s 80P of the Act for various assessment years of 2023-24. [ Circular No. 14/2024 Dated 30.10.2024 ]