A co-operative housing society is required to file income tax returns before September 30th each year if they have taxable income. They must obtain a PAN number and file ITR-5 as an Association of Persons. Failure to file can result in penalties of Rs. 5,000. Rental income from setting up mobile towers on society premises is taxable, but a 30% standard deduction can be claimed. Transfer premium up to Rs. 25,000 collected from members for flat transfers is not taxable under the concept of mutuality.

1. Whether a co-operative housing society is liable
to income tax and required to file its Income tax
return ?
Ans :- Yes
Co-operative housing society is liable to
income tax and it is mandatory to obtain
PAN No and file regular return of income in
ITR-5 as status- AOP every year before 30th
Sept and should also obtain TAN for TDS
payments if applicable.
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2. What are the consequences and penalty for not
filing income tax returns?
Ans:-
Non filing of return of income attracts penalty of
Rs. 5,000/- u/s. 271F
If the society has taxable income then not only
income tax but interest and penalty also is
attracted.
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3.  Under the Income tax, Status of the Co-OP
Hsg. Soc. will be Association of Persons (
AOP) Ex: XXXAJ1234P
 Rates as well as slabs for income tax .
 Upto Rs. 10,000/- 10%
 Between 10,000 and 20,000 Rs. 1000/-
+20% in
excess of 10,000
 Income exceeding Rs. 20,000 Rs. 3000/-
+ 30% in excess
of 20,000
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4. From financial year 2015-16 co-operative
Banks are required to deduct income tax on
the deposits kept by the shareholder
members, which was earlier not required to
do so.
Advise:-
Hence to avoid TDS being deducted society
should have PAN otherwise TDS rate
applicable will be 20%
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5. A co-operative society is a voluntary
association democratically owned and
controlled for the benefit of members to
pursue economic activities. Co-operative
housing societies in our country are playing a
very special and prominent role in catering to
the housing needs of our people. The society
is a voluntary association, created for mutual
help without profit motive, no tax is being
charged on the income of such society on the
concept of mutuality.
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6.  A co-operative housing society is a mutual
concern and income of any mutual concern,
except those covered under Section 2(24)(vii)
of the Income Tax Act, is outside the purview
of the levy of income-tax.
 Chelmsford Club Ltd. Vs. CIT [2000] 243 ITR 89 (SC).
 DIT Vs. All India Oriental Bank of Commerce Welfare Society
[2003]130 Taxman 575(Del.).
 CIT Vs. Apsara Co-operative Housing Society Ltd.[1993] 204
ITR 662 (Cal.)
 Walkeshwar Triveni Co-op. Hsg. Society Ltd. Vs. ITO [2003]
80 TTJ 673 (Mumbai) (SB)
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7. Yes :- Any rental income from the set up of
mobile tower on the society premises is
taxable under the head “Income from house
property”.
However, the society will get standard
deduction of 30% of rent/compensation
received u/s. 24(a)
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8.  No :- Transfer premium collected from the
member is not taxable up to the limits prescribed
in the buy-laws under the concept of mutuality.
 Transfer Premium is collected by the co-
operative housing societies from their members
for Transfer of flats and the current limit for such
transfer premium as set by the 79(A) directives
under MSC Act,1960 and as per Bye laws is
Rs.25,000/- maximum.
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9.  Taxability of Transfer premium of Rs.25,000/-
and any other collection over and above this
amount in the form of donations or contributions
to various other the funds etc. is always a subject
matter of dispute since the Income Tax
Department wants to tax on excess amount
collected over and above Rs. 25,000/-.
 Bombay HC Judgment in case of CIT V/s.
Darbhanga Mansion CHS Ltd. transfer premium in
excess of Rs. 25,000/- is not taxable.
(Debatable issue in courts)
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10.  Bank Interest income derived by the co-
operative society on deposits made out of
contributions from members of the society,
was held not taxable in the hands of the
society.
However, Sec. 80P(2)(d) any income by way of
interest or dividend derived by the co-op
society from its investments with any other
co-operative society, the whole of such
income is deductible. (Co-Operative Bank is a
co-op society engaged in banking)
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11.  If society is having commercial parking space and
parking charges are collected from outsiders, the
same are taxable as income.
 If the society collects non-occupancy charges the
same are not taxable on the concept of
mutuality. ( Mittal Court Premises Co-op Soc. Ltd.
V/s. ITO Bombay High Court).
 Corpus or capital receipt on redevelopment or
sale of TDR is not taxable as capital gains since
there is no cost of acquisition. ( Bombay High
Court in the case of ITO V/s. Sambhaji Nagar CHS
Ltd. )
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12. Threshold limits for TDS on the following
payments made :-
1. Salaries u/s. 192 up to Rs. 3,00,000/-p.a. per
employee
2. Labour Contracts payments or Works contracts
including AMCs u/s. 194C upto Rs. 1,00,000/-
aggregate for the year per payee.
3. Brokerage / Commission paid to agents u/s.
194 H upto Rs. 15,000/- per payee @ 5%
4. Rent / Compensation paid u/s. 194 I upto Rs.
1,80,000/- p.a. per payee
5. Professional or Technical Fees paid u/s. 194 J
upto Rs. 30,000/- per payee
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13. SECTION TYPE OF PAYMENT Threshold limit
UP TO
Change in rates
192 Salaries Rs. 3,00,000/-
PA per employee
NO Change
194 C Labour Contracts
payments or Works
contracts including
AMCs
upto Rs.
50,000/- per
payment or
1,00,000/-
aggregate P.A.
NO Change
194 H Brokerage /
Commission paid to
agents
Rs. 15,000/-
per payee
TDS has been
reduced from
10% to 5%
194 J Professional and
technical fees paid
Upto Rs.
30,000/- P.A.
TDS has been
reduced from
10% to 5%
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15.  HITESH SHAH & ASSOCIATES
CHARTERED ACCOUNTANTS
208, 2ND FLOOR, PLOT NO : 26,
SHALIMAR MIRACLE, NEAR SARADAR PATEL HALL,
OPP. CITI CENTRE, ABOVE McDONALD,
JAWAHAR NAGAR, GOREGAON (WEST),
MUMBAI-400062.
 TEL : 9821140636 / 28745501 / 28744782
 Email:- ca.hsa1988@gmail.com
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