Deduction in respect of income of co-operative societies
[Section-149 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 149(1) of Income Tax Act 2025
149(1) If the gross total income of an assessee, being a co-operative society, includes any income referred to in sub-section (2), the sums specified in the said sub-section shall, in accordance with and subject to the provisions of this section, be allowed as deduction in computing the total income of such assessee.
Section 149(2) of Income Tax Act 2025
149(2) The sums referred to in sub-section (1) shall be the following:—
- (a) in the case of a co-operative society engaged in—
- (i) carrying on the business of banking or providing credit facilities to its members; or
- (ii) a cottage industry; or
- (iii) the marketing of agricultural produce grown by its members; or
- (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members; or
- (v) the processing, without the aid of power, of the agricultural produce of its members; or
- (vi) the collective disposal of the labour of its members; or
- (vii) 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,
- the whole of the amount of profits and gains of business attributable to any one or more of such activities;
- (b) in the case of a co-operative society, being a primary society engaged in supplying milk, oilseeds, fruits, or vegetables raised or grown by its members to––
- (i) a federal co-operative society, engaged in the business of supplying milk, oilseeds, fruits or vegetables; or
- (ii) the Government or a local authority; or
- (iii) a Government company, as defined in section 2(45) of the Companies Act, 2013, or a corporation established by or under a Central Act or State Act or Provincial Act, engaged in supplying milk, oilseeds, fruits or vegetables, as the case may be, to the public,
- the whole of the amount of profits and gains of such business;
- (c) in the case of a co-operative society engaged in activities not specified in clause (a) or (b), (either independently of, or in addition to, all or any of the activities so specified), that amount of profits and gains attributable to such activities as does not exceed––
- (i) one lakh rupees, if the society is a consumers’ co-operative society; and
- (ii) fifty thousand rupees, in any other case;
- (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income;
- (e) in respect of any income by derived by the co-operative society from the letting of godowns or warehouses for storage, processing, or facilitating the marketing of commodities, the whole of such income;
- (f) in the case of a co-operative society, not being––
- (i) a housing society; or
- (ii) an urban consumers’ society (being a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area, or cantonment); or
- (iii) a society carrying on transport business; or
- (iv) a society engaged in performing manufacturing operations with the aid of power,
- where the gross total income does not exceed twenty thousand rupees, the amount of income––
- (i) by way of interest on securities; or
- (ii) any income from house property chargeable under section 20.
Section 149(3) of Income Tax Act 2025
149(3) In the case of a co-operative society as referred to in sub-section (2)(a)(vi) or (vii), provisions of sub-section (2) shall apply when the rules and bye-laws of the society restrict the voting rights to the following classes of members:—
- (i) the individuals who contribute their labour or carry on fishing or allied activities; or
- (ii) the co-operative credit societies which provide financial assistance to the society; or
- (iii) the State Government.
Section 149(4) of Income Tax Act 2025
149(4) The deduction under sub-section (1) in relation to the sums specified in sub-section (2)(a)or (b) or (c) or sub-section (3), shall be allowed with reference to the income referred to in those sub-sections included in the gross total income after reducing the deduction under section 80-IA of the Income-tax Act, 1961, if the assessee is also entitled to such deduction.
Section 149(5) of Income Tax Act 2025
149(5) The provision of this section shall not apply to any co-operative bank which is not a primary agricultural co-operative society or a primary co-operative agricultural and rural development bank.
Section 149(6) of Income Tax Act 2025
149(6) In this section,––
- (a) “consumers’ co-operative society” means a society for the benefit of the consumers;
- (b) “co-operative bank” and “primary agricultural credit society” have the same meanings as respectively assigned to them in Part V of the Banking Regulation Act, 1949; and
- (c) “primary co-operative agricultural and rural development bank” means a society having an area of operation confined to a taluk, the principal object of which is to provide long-term credit for agricultural and rural development activities.
FAQs on Section 149 of Income Tax Act 2025
What is the objective of Section 149 of the Income Tax Act, 2025?
The objective of Section 149 is to provide specific income-based deductions to co-operative societies while computing their total income, subject to conditions.
Who is eligible to claim deduction under Section 149?
Only co-operative societies whose gross total income includes eligible income specified under Section 149(2) are eligible for deduction under this section.
What types of co-operative societies are covered under Section 149(2)(a)?
Section 149(2)(a) covers societies engaged in banking, providing credit to members, cottage industries, agricultural marketing, supplying agricultural inputs, processing without power, collective labour disposal, and fishing or allied activities.
What is the quantum of deduction for co-operative societies covered under Section 149(2)(a)?
Such societies are allowed deduction of the whole of the profits and gains attributable to any of the specified activities.
Are milk supply co-operatives eligible for deduction?
Yes, under Section 149(2)(b), primary societies supplying milk, oilseeds, fruits, or vegetables grown by members to specified entities are eligible for full deduction of profits and gains from such business.
What are the entities to whom milk, oilseeds, fruits or vegetables must be supplied to qualify under Section 149(2)(b)?
The eligible entities include federal co-operative societies, the Government or local authorities, or specified Government companies or corporations.
Is there any deduction for co-operative societies not engaged in the specified activities under clauses (a) or (b)?
Yes, under Section 149(2)(c), limited deduction is allowed — up to ₹1,00,000 for a consumers’ co-operative society and up to ₹50,000 for other societies.
Is there any deduction for interest or dividend income earned from investments with other co-operative societies?
Yes, under Section 149(2)(d), the entire income by way of interest or dividends from investments with other co-operative societies is fully deductible.
Is income from letting godowns or warehouses eligible for deduction?
Yes, under Section 149(2)(e), the whole income from letting of godowns or warehouses for storage, processing, or facilitating marketing of commodities is deductible.
Are there any deductions for small co-operative societies with low gross total income?
Yes, under Section 149(2)(f), societies not engaged in certain specified activities and having gross total income not exceeding ₹20,000 may claim deduction for income from securities interest or income from house property.
Can a housing society or an urban consumers’ society claim deduction under Section 149(2)(f)?
No, housing societies and urban consumers’ societies are excluded from the benefit of deduction under Section 149(2)(f).
Are co-operative societies engaged in manufacturing with the aid of power eligible for deduction under Section 149(2)(f)?
No, societies engaged in manufacturing with the aid of power are excluded from the benefit of clause (f).
What is the condition for claiming deduction under Section 149(2)(a)(vi) or (vii) regarding voting rights?
As per Section 149(3), such societies must restrict voting rights to individual labour contributors, co-operative credit societies providing financial aid, or the State Government.
Does deduction under Section 149 override deductions under other sections like Section 80-IA?
No, as per Section 149(4), deductions under Section 149 must be computed after reducing the deduction allowable under Section 80-IA (if applicable).
Are all co-operative banks eligible for deduction under this section?
No, under Section 149(5), this section does not apply to any co-operative bank except primary agricultural credit societies and primary co-operative agricultural and rural development banks.
What is a consumers’ co-operative society under this section?
As per Section 149(6)(a), it means a society formed for the benefit of consumers.
How is a primary agricultural credit society defined in this section?
It carries the same meaning as in Part V of the Banking Regulation Act, 1949.
What is a primary co-operative agricultural and rural development bank?
It is a society operating within a taluk, primarily providing long-term credit for agriculture and rural development.
Can a co-operative society engaged in multiple activities claim deduction for all of them?
Yes, a society engaged in one or more eligible activities under clause (a) may claim deduction on profits attributable to each such activity.
Is processing of agricultural produce using power eligible for deduction under Section 149(2)(a)?
No, only processing without the aid of power is eligible.
Can urban consumers’ societies claim deduction under any clause of Section 149?
They are specifically excluded under clause (f), but may be eligible under clause (c) if they meet the conditions.
Does a society need to maintain specific bye-laws to claim deduction under clause (a)(vi) or (vii)?
Yes, voting rights must be restricted to eligible classes of members as per Section 149(3).
Is deduction allowed if the co-operative society has only investment income?
Yes, if the income is from investments with other co-operative societies (clause d) or from godowns/warehouses (clause e), full deduction is allowed.
Does Section 149 provide any monetary limit for deductions under clauses (a), (b), (d), or (e)?
No, deductions under these clauses are for the whole amount of profits or income attributable to eligible activities.
Is a co-operative transport society eligible under Section 149?
Transport societies are excluded from clause (f) but may be eligible under clause (c), subject to conditions.
Can a manufacturing co-operative society claim deduction under Section 149?
Only if the manufacturing is without the aid of power. Societies using power are excluded from clause (f) and may only claim under clause (c) if eligible.
What is the impact of having multiple types of income on the deduction eligibility?
Each type of income must be examined separately under the respective clauses. Deductions are allowed only for eligible income as per the clause it falls under.
Refresh Page