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August 16, 2020

Know all about Deduction for Co-operative Societies under Section 80P

by Mahesh Mara in Compliance Law

Know all about Deduction for Co-operative Societies under Section 80P

The Income tax provisions provide various profit or income linked deductions under chapter VIA in order to encourage investments in certain industries. Some of the chapter VIA deductions include deduction u/s 80TTA for individuals with respect to savings interest earned by individuals or include deduction u/s 80TTB for individuals with respect to interest earned by resident senior citizen on deposits.

One of the deductions available under income linked deduction is deductions with respect to the income of co-operative societies under Section 80P.

Who are eligible for deduction under section 80P?

Co-operative society engaged in specified activities are considered eligible for deduction under section 80P. A co-operative society is not defined specifically for the purpose of Section 80P. However, Section 2(19) of the Income Tax Act, 1961, defines a co-operative society to be an entity registered under the Co-operative Societies Act, 1912 or under any other law governing the registration of co-operative societies in any state.

How much deduction will the assesse gets under 80P?

There are two deduction under section 80P which are as follows:

Part A: 100% deductions allowed on profit from specified activities as follows:

a. Carrying on the business of providing credit facility to its members except cooperative banks

b. Cottage Industry

c. Marketing of agricultural produce grown by its member.

d. Collective disposal of labour of its members.

e. Fishing and allied activities i.e. catching, curing, processing, storing or marketing of fish.

f. Processing without aid of power of agriculture produce of its members.

g. Purchase of agriculture implements, seeds, livestock or other agriculture article for the purpose of supplying them to members.

h. Income interest or dividend from investment with other co-operative societies.

i. Income from letting out of godowns or warehouse

j. Supply of milk, oil seeds, fruits or vegetable by primary society to Federal coop society, Government or Local authority, Government company or statutory corporation, engaged in supplying milk, fruits etc.

Part B: General deductions for other income:

i. In case of consumers coop society = Maximum Rs. 1,00,000

ii. In any other case = Maximum Rs. 50,000

Note: Any income arising to a coop society by way of ‘Interest on securities’ or ’Income from house property’ is fully deductible under this section where the gross total income does not exceed Rs. 20,000 and such society is not a housing society or an urban consumer’s society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power.

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