A Guide to Tax Deductions U/S 80P for Co-operative Society

Definition of Section 80P for Co-operative Society

A cooperative society is not being found out, particularly for the intention of section 80P. But section 2(19) of the Income Tax Act, 1961, defined the co-operative Societies Act, 1912 or beneath the additional law of controlling the enrollment of the co-operative societies in any state.

Note: “The CBDT has issued a new circular no.14/2024 regarding condonation delay under clause (b) of sub-section (2) of income tax section 119 for returns of income claiming tax deduction u/s 80P for AY 2023-24 Reg. Read More.

Also to mitigate the genuine hardship to the assessees, the Board, in the exercise of its powers conferred under section 119 of the Act, hereby extends the applicability of Circular No.13/2023 dated 26.07.2023 to the AY 2023-24, subject to the conditions stipulated therein.”

Section 80P for Tax Deductions

Section 80P provides a tax deduction towards the cooperative societies that come inside the given agricultural activities. The Section 80P deduction comprises the available only to the main agricultural credit society or primary cooperative agricultural and rural development bank.

Major Points About Section 80P

In this, we would talk towards some validation compliances about Section 80P the same would be provided via the income tax department.

1. The deduction under section 80P is not allowed if the return filed after the due date
   • Note: According to Section 80AC, Chapter VI-A heading “C Deductions in respect of certain incomes”, shall be allowed when the assessee furnishes a return on or before the due date specified under sub-section (1) of section 139 and Deduction under section 80P is covered in Part C Deductions so Deduction under section 80P is not allowed if return filed after the due date
2. Deduction under section 80P(2)(d) “Interest and Dividend from Investment” should not be more than the sum of Sl.No. (1a + 1bii) of Schedule OS i.e. Deduction u/s 80P(2)(d) can not be more than Dividend Amount + Interest from Deposits
3. Deduction under section 80P(2)(a)(i) to (vii) cannot be more than business income
   • Business income: Non-speculative and Non-specified business income and Non-presumptive income
4. Deduction under section 80P(2)(f) Others will be allowed only when Gross total income is less than or equal to Rs 20000 and i.e. Deduction under section 80P(2)(f) is not allowed if Gross total income is more than Rs 20000
5. Deduction under section 80P(2)(f) cannot be more than Interest income (in Schedule OS) and House property income
6. Deduction under section 80P(2)(b) cannot be more than the business income
7. Deduction under section 80P(2)(e) can be claimed if the rental income included in the gross total income
8. Deduction under section 80P(2)(c)(i) “Consumer Cooperative Society Other than specified in 80P(2a) or 80P(2b)” cannot be more than Rs 100000
9. Deduction under section 80P(2)(c)(ii) cannot be more than Rs 50000
10. Deduction under section 80P is allowed only to
    • “Primary Agricultural Credit Society,
    • Primary Co-operative Agricultural and,
    • Rural Development Bank, Other Cooperative Society”

What Will Happen When the Co-operative Society is Indeed Subjected to Profit-linked Deductions Under Other Sections?

When the co-operative society would be subjected to profit-linked deduction under Section 80HH, 80HHA, 80HHB, 80HHC, 80HHD, 80-I, 80-IA, 80J, the deduction permitted beneath section 80P belongs from the gross total income post to diminishing the deductions beneath these sections.

Significant Points to be Notified as

• The Section 80P for various scenarios uses various terms for the intention of the deduction these are the profits and the gains of the business because of these activities profits and gains of such business, ‘profits and gains attributable to such activities’ ‘income derived’ and others these terms are required to find out in-depth acknowledging different commentaries on the income tax and the case laws
• There are several high courts that have ruled that all cooperative societies excluding those who come beneath the regulation of the RBI are subjected to the deduction. A cooperative bank licensed through the RBI. The same would be to claim for the deductions beneath section 80P
• The meaning of different terms like ‘cottage industry, ‘marketing’, ‘members’ ‘industry’, ‘investment’ etc., are truly examined in different decisions
• Section 80P profit would not be acknowledged to surge the adjusted total income towards the Alternate Minimum Tax levy