Taxation of Cooperative Societies

taxation on cooperative housing societies

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A co-operative society is a society registered under the Co-operative Societies Act, 1912, or any other law in the State which requires the registration of co-operative societies.

A co-operative society will have to obtain

PAN – Permanent Account Number,
TAN – Tax Deduction Account Number and/or
GSTIN – Goods and Services Tax Identification Number (if applicable)

Income tax rates on Co-operative Societies

Income Slabs	Tax rate
Upto Rs. 10,000	10%
Rs. 10,000 to Rs. 20,000	20%
Above Rs. 20,000	30%

Note: As per section 115BAD, a resident co-operative societies can opt to pay tax at the rate of 22% from AY 2021-22. But the total income will be computed without allowing exemptions or deductions available to co-operative societies.

Surcharge on Co-operative Societies

The surcharge is a tax on tax applicable only if the total taxable income exceeds a certain prescribed limit. It is calculated on tax payable and not total income. The rate of the surcharge is determined based on total income but the calculation of surcharge is done based on tax payable.

The surcharge will be applicable only if the total income exceeds Rs. 1 Crore.

If the total income is up to Rs. 1 Crore there will no surcharge.
If the total income exceeds Rs 1 Crore then the surcharge will be 12% on applicable income tax.

Note: Surcharge will be subject to marginal relief.

Marginal Relief on Co-operative Societies

The surcharge levied is subject to marginal relief to ensure the payable amount does not exceed the income which is in excess of the threshold

So, the maximum increase in tax payable due to surcharge will be lower from the following

Income above Rs. 1 Crore.
Total amount payable as income-tax and surcharge less the Total amount payable as income-tax on total income of Rs. 1 Crore.

Note: A co-operative society is not eligible to claim rebate u/s 87A.

Health & Education cess on Co-operative Societies

Health and Education Cess is charged over and above income tax. It is collected by the Government for addressing the educational and healthcare needs of the country.

Health and Education Cess is calculated at the rate of 4% on the amount of income-tax and the applicable surcharge.

Advance Tax Installments

Co-operative Societies are also required to pay different installments of the advance tax within the prescribed due dates like it is applicable to other assessees.

Tax Liability	Due Date
15%	By 15^th Jun
45%	By 15^th Sep
75%	By 15^th Dec
100%	By 15^th Mar

Due Date of Income-tax Return & ITR Form

The due date to file the return of income for co-operative societies under the Income-tax Act is 30th September. (Note: the due date for AY 2020-21 is extended to 30th November 2020.)

The return of income by a co-operative society needs to be furnished in ITR 5 as per the provisions of Section 2(3)(vii) read with section 139.

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