Deduction in Respect of Income of Co-operative Societies [Section 80P]
• Every co-operative society is eligible to claim deduction under this section except:
Co-operative banks (other than primary agricultural credit societies or primary co-operative agricultural and rural development banks)
Regional rural banks
• Amount of deduction to a co-operative society engaged in specified activities: A co-operative society engaged in the following activities is allowed deduction for 100% of its income:
Business of banking or providing credit facilities to its members;
Marketing of agricultural produce grown by its members;
Purchase and supply of agricultural implements, seeds, livestock, or other articles intended for agriculture to its members;
Processing of agricultural produce of its members without the aid of power;
Collective disposal of the labour of its members;
Fishing or allied activities, including the purchase of material and equipment for supplies to members;
Cottage industry fulfilling prescribed conditions (Circular No. 722, dated 19-09-1995).
• A co-operative society engaged in the activities of collective disposal of labour or fishing or allied activities is eligible to claim deduction only if rules and bye-laws of the society restrict voting rights to individuals contributing labour or carry on the fishing or allied activities, co-operative societies providing financial assistance to the society, or the State Government.
• Amount of deduction to a primary society: A primary society is allowed to claim a deduction for the whole of the profits or gains arising from a business if it is engaged in supplying milk, oilseeds, fruits or vegetables grown by its members to the following:
Federal co-operative societies, engaged in the business of supplying milk, oilseeds, fruits, or vegetables; or
The Government/local authorities, or
Government companies/corporations established by or under a Central, State or Provincial Act which is engaged in the supplying of milk, oilseeds, fruits or vegetables to the public.
• Amount of deduction to any other co-operative society: Any other co-operative society engaged in any activities, other than those specified above, is allowed to claim a deduction for profit and gains attributable to such activities. However, the maximum amount that can be claimed as a deduction is Rs. 1,00,000 for consumer co-operative societies and Rs. 50,000 for other co-operative societies.
• Amount of deduction for interest or dividends – Deduction allowed for the entire interest or dividend income from investments in other co-operative societies.
• Amount of deduction for rental income – Deduction allowed for the entire amount of income from letting out godowns or warehouses used for storage, processing, or marketing of commodities.
• Amount of deduction for interest on securities or income from house property – Deduction allowed for the entire amount of income if the gross total income is up to Rs. 20,000. However, this deduction is not available to the housing societies, urban consumer societies, societies carrying on a transport business, or societies engaged in manufacturing operations with the aid of power.
• If the assessee is eligible to claim deduction under other provisions also, the deduction under this section is allowed after reducing the amount claimed elsewhere.