This document summarizes Section 80P of the Indian Income Tax Act, which provides for deductions in respect of income earned by cooperative societies. It discusses the definitions, activities eligible for deduction and their corresponding deduction amounts. Key points include that a cooperative society is treated as an Association of Persons under the tax law. Section 80P allows for full deductions of income from specified activities like banking, agriculture, and certain other businesses. The deduction is calculated after reducing any deductions under other tax sections. Cooperative banks regulated by the RBI are excluded from the Section 80P deduction.

1. Made By :- Roopam Ambekar
PRN No. :- 20180302001
Stream :- B.COM Second Year

2. Income tax act
Section 80P
Deduction in respect to
Co-operative Society

3. Contents:-
– Sub Sections:-
1) Definition.
2) Activities and amount eligible for deduction under Section 80P.
a) Activities Covered V/s Quantum of Deduction Table of different
Clauses.
b) Some of the Terms.
3) Co-operative Society entitled to the deduction under other
Sections.
4) In case of Co-operative Bank.
– Key points to be noted:-

4. Subsection 1. :- Definition
– A Co-operative Society is a taxable entity under the Income Tax Act,
1961. a Cooperative Society under Act is to be treated as an
Association Of Persons (AOP), which is included in the definition of
‘Persons’ under the Income Tax Act, 1961.
– Under this section, a certain specified income of as a co-operative
society engaged in specific activities is considered deduction if such
income is included in the gross total income of the society.

5. Subsection 2. :- Activities and amount eligible for
deduction under Section 80P.
– Subsection 2 basically deals with the activities that a cooperative
society carries out and how the deduction is applied to the total
profits and gains.
– This section deals with 6 Clauses and every Clause contains Sub
Clauses
– Sub Clauses deal with different activities by which co-operative
society earn their Gross Income and how the deduction will be
granted.

6. Clause A
• Activities Covered • Quantum of Deduction
• The business of banking or providing credit facilities to
its members.
• 100% of profit and gains
attributable to these activities.
• A Cottage Industry. • 100% of profit and gains
attributable to these activities.
• The Marketing of agricultural produce grown by its
members.
• 100% of profit and gains
attributable to these activities.
• The purchase of agricultural implements, seeds, live
stocks or other articles intended to agriculture for the
purpose of supplying them to its members.
• 100% of profit and gains
attributable to these activities.
• The processing without the aid of power, of the
agricultural produce of its members*Terms
• 100% of profit and gains
attributable to these activities.
• Collective disposal of the labor of its members or fishing
activities.
• 100% of profit and gains
attributable to these activities.

7. Activities Covered Quantum of Deduction
A Co-operative society which is primarily
engaged in supplying milk , oilseeds, fruits or
vegetables raised or grown its members to:
• A federal co- operative society , a society
engaged in the business of supplying milk,
oilseeds, fruits, or vegetables.
• The Government or Local authority.
• Either a Govt. Company as per the company
law.
100% gains of such Business.
Clause B

8. Clause C, D, E
Activities Covered Quantum of Deduction
A Co-Operative Society engaged in any other
activities.(Clause C)
• For Consumers’ Co-operative
Society** Upto RS 1 Lakh Terms
• Others – Upto Rs. 50 Thousands
A Co-operative Society earning interest or dividend
from its investment with any other Co-operative
society.(Clause D)
100% of such Income.
A Co-operative Society earning income from letting
of godowns or4 warehouses for storage ,
processing or facilitating the marketing of
commodities.(Clause E)
100% of such Income.

9. Clause F
Activities Covered Quantum of Deduction
Interest on securities or income from the
house property of a Co-operative society
other than a housing society or
• Urban Consumers’ Society***Terms
• Society Carrying on a transport
Business
• Society engaged in Manufacturing
Operations with the aid of power.
Whose gross total income is not more
than Rs 20,000
100% of Such Income

10. Some of the Terms in these Clauses
– Rules and By Laws which restrict voting rights:-
1. Members who are individuals who contribute with their labor.
2. Is a Co-operative society which provides financial assistance to the
society.
3. Is a State Government,
– **Consumers’ Co-operative society means a society for the benefit of its
members.
– ***Urban Consumers’ Co-operative society means a society for the
benefit of the consumers within the limits of a municipal corporation,
municipality, Municipal Committee, notified area committee, town area

11. Subsection 3. :- Co-operative Society entitled to the deduction
under other Sections.
– If a Co-operative Society is also eligible for profit linked deduction under
Section 80HH, 80HHA, 80HHB, 80HHC, 80HHD, 80-I, 80-IA, 80J, the
deduction allowed under section 80P is from the gross total income after
reducing the deduction under these sections.

12. Subsection 4:- in case of cooperative bank
– The provisions of this sections shall not apply in relation to any co-
operative bank other than a primary agricultural credit society or a
primary co-operative agricultural and rural development bank.
• “Co-operative Bank” and “Primary Agricultural Credit Society“ shall
have the meanings respectively assigned to them in Part V of the
Banking Regulation Act, 1949.
• “Primary Co-Operative agricultural and rural development bank”
means a society having its area of operation confined to taluka and
the principal object of which is to provide for the long term credit for
agricultural and rural development activities.

13. Key points to be noted.
– Section 80 P uses many different terms in purpose of deduction like
“profit and gains of business attributable to such activities”, “profits and
gains of such business”, “income derived” etc. These terms have different
meanings in Income Tax and Case Laws.
– Various High Courts have held that all Co-operative societies other than
those coming under the control of RBI are eligible for a deduction.
– A Co-operative society conducting banking activities is not a Co-
operative bank licensed by the Reserve Bank of India . It can, therefore ,
claim deduction under Section 80P.

14. Thank You
ALL THE DATA IS BEEN COLLECTED
FROM
www.incometaxindia.gov.in