Last updated: March 30th, 2020 2:37 AM

Section 80P - Income Tax

Section 80P is a section in the Income Tax Act which offers a tax deduction for co-operative societies which are engaged in the specified agricultural activities. Section 80P deduction is available only to primary agricultural credit society or primary co-operative agricultural and rural development bank. The deduction is available when the income earned by the co-operative society from the specified activities is included in the gross total income of the assessee. This article discusses the quantum of deduction available to a specified co-operative society which is engaged in providing the activities mentioned under Section 80P of Income Tax Act.

100% Deduction

100% deduction is available under Section 80P towards the Profit And Gains attributable to following activities:

1. Co-operative society carrying on the business of banking or providing credit facilities to the members of the society.
2. Co-operative society engaged in cottage industry.
3. Co-operative society engaged in providing marketing of agricultural produce grown by its members.
4. Co-operative society engaged in the purchase of articles intended for agricultural like seeds, livestock etc. which would be supplied to the members of the co-operative society.
5. Co-operative society engaged in the processing of the agricultural produce of its member, where, the process is undertaken without the aid of power.
6. Co-operative society is providing collective disposal of the labour of its members.
7. Co-operative society is providing fishing or allied activities with the intention of supplying it to the members. Example of allied activities are catching, curing, processing, storing, marketing of fish and even purchase of material and equipment connected with it.
8. Co-operative society, being a primary society, who is engaged in supplying products like milk, oilseeds, fruits and / or vegetables. Such products are grown by the members of the co-operative society and the same is supplied to below-mentioned categories of person –

• • • • Federal Co-operative Society engaged in the business of above-mentioned products;
      • Government or local authority;
      • Government Company, a corporation engaged in supplying the above-mentioned products.

Other Deduction 

1. Deduction towards income from any other activity – In case of any other activity, a deduction upto INR 1,00,000 is available in case of consumer co-operative society and deduction upto INR 50,000 is available in any other case.
2. Deduction towards interest income – Deduction is available in respect of income by way of interest or dividend when such interest or dividend is earned by the co-operative society by investment in any other co-operative society. In such a case, whole interest income is allowed as deduction.
3. Deduction towards specific income – Deduction towards income earned by letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities. Income earned for all such activities is allowed as deduction.