Co-operative Societies Here Are Your Chances of Claiming Deductions!
The world of taxation has brought an aid to the co-operative societies by allowing deductions on their income too. Such deduction shall be given only to a co-operative society but such deduction is only applicable where certain specified conditions are satisfied by the co-operative, which is laid on by the taxation authority.
Following are the specified conditions on which such claim of deduction depends upon:
The whole of the amount of profits and gains of business of a co-operative society is allowed as deduction when such society is engaged in any one or more of the following activities :
Carrying on the business of banking or providing credit facilities to its members (deduction will not be available to any co-operative bank from the assessment year 2007-08) ;
A cottage industry ;
The marketing of agricultural produce grown by its members ;
The purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members ;
The processing of the agricultural produce of its members without the aid of power ;
The collective disposal of the labour of its members ;
Fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members.
However, this deduction is allowed in case of a co-operative society mentioned in point (f) or (g) above, if the rules and bye-law of the society restrict the voting rights to the following classes of members, namely—
(1) the individuals who contribute their labour or carry on the fishing or allied activities,
(2) the co-operative credit societies which provide financial assistance to the society and
(3) the State Government.
1. The whole of the amount of profits and gains of the business of a primary society is allowed as deduction when such society is engaged in supplying milk, oilseeds, fruits or vegetable raised or grown by its members to—
2. A federal co-operative society being a society engaged in the business of supplying milk, oilseeds, fruits or vegetables, as the case may be ; or
3. The Government or a local authority ;
4. A Government company or a corporation engaged in supplying milk, oilseeds, fruits or vegetables, as the case may be, to the public.
5. In the case of co-operative society engaged in activities other than those specified in (A) and (B) above (either independently of or in addition to all or any of the activities so specified), the amount of deduction are as follows :
6. Where such co-operative society is a consumers’ co-operative society : Profits and gains attributable to such activities or Rs. 1,00,000, whichever is less, will be allowed as deduction ;
7. In any other case: Profits and gains are attributable to such activities or Rs. 50,000, whichever is less, will be allowed as deduction.
Thus, we find how the taxability system of India has made various provisions forproviding taxation relief to various organizations including a co-operative society and the next time you file your return make sure you claim your deductions!