Section 80P: Deduction for Co-operative Societies, Activities and Limits
CA Meet Dhrangadhariya 
April 21, 2025
CA Meet Dhrangadhariya April 21, 2025
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Last updated: 07 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP
Quick summary
Co-operative societies serve their members rather than outside shareholders, and the Income-tax law gives them a deduction on the profits from the activities that serve those members. From Tax Year 2026-27 the provision is section 149 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80P of the 1961 Act.
For the Act a co-operative society is one registered under the Co-operative Societies Act, 1912 or any State law on co-operative societies. Section 80P applies to a co-operative society that includes income from the activities below in its gross total income.
| Activity | Deduction |
|---|---|
| Banking or providing credit facilities to members | Whole of the profits attributable |
| Cottage industry | Whole of the profits attributable |
| Marketing agricultural produce grown by members | Whole of the profits attributable |
| Buying agricultural implements, seeds, livestock or other farm articles to supply to members | Whole of the profits attributable |
| Processing members’ agricultural produce without the aid of power | Whole of the profits attributable |
| Collective disposal of members’ labour | Whole of the profits attributable |
| Fishing and allied activities (catching, curing, processing, storing or marketing fish, or buying materials for members) | Whole of the profits attributable |
| Primary society supplying milk, oilseeds, cotton seed, cattle feed, fruits or vegetables grown by its members to a federal co-operative, the Government or local authority, or a Government company or statutory corporation | Whole of the profits of that business |
| Any other activity | Profits up to ₹1,00,000 for a consumers’ society, ₹50,000 for any other society |
| Interest or dividend on investments with another co-operative society | Whole of that income |
| Letting of godowns or warehouses for storage, processing or marketing of commodities | Whole of that income |
| Interest on securities and income from house property, for a society (other than a housing society, urban consumers’ society, transport society or a society doing power-aided manufacturing) whose gross total income is not more than ₹20,000 | Whole of that income |
Two points on this table:
The limit for the last row is ₹20,000 under the Act. Some older write-ups say ₹25,000; the Act says ₹20,000.
The section does not apply to a co-operative bank unless it is a primary agricultural credit society or a primary co-operative agricultural and rural development bank (a society whose area is confined to a taluk and whose main object is long-term credit for agriculture and rural development). Whether a co-operative credit society is really a “co-operative bank” is a question of fact that has reached the courts, and a society that gives credit to its members only is in a different position from one that functions as a bank. Check your society’s position with a professional before claiming.
If the society also claims the profit-linked deduction for infrastructure and other undertakings (section 80-IA, section 138 of the 2025 Act), the section 80P deduction is worked out on the income left after that deduction.
A co-operative society that is not a consumers’ society has the following profits for the year:
| Source | Profit in ₹ | Deduction in ₹ |
|---|---|---|
| Marketing of members’ agricultural produce | 4,00,000 | 4,00,000 |
| Other activity (not listed in the section) | 1,50,000 | 50,000 |
| Total | 5,50,000 | 4,50,000 |
The society’s taxable income is ₹1,00,000, before any other adjustments.
A resident co-operative society can opt to pay tax at 22% under section 115BAD of the 1961 Act (section 203 of the 2025 Act). Under that option the society gives up Chapter VIII deductions, so section 80P (section 149) is not available. The 2025 Act keeps only section 146 (additional employee cost) and section 150 for such societies. The same applies to the 15% option for new manufacturing co-operatives (section 115BAE, section 204 of the 2025 Act). A society that does not opt in continues to claim section 149.
Section 150 of the 2025 Act (inserted by the Finance Act, 2026) lets a federal co-operative deduct dividends from its investment in any company, to the extent that the amount arose from an investment recorded in its books on or before 31 January 2026 and was distributed to its members at least one month before the due date for filing the return. It does not apply to any tax year beginning on or after 1 April 2029.
A co-operative society whose income includes profits from the activities listed in the section, such as credit to members, cottage industry, marketing members’ produce and fishing.
No. The section does not apply to a co-operative bank unless it is a primary agricultural credit society or a primary co-operative agricultural and rural development bank.
Profits from activities not specifically listed are deductible up to ₹1,00,000 for a consumers’ co-operative society and ₹50,000 for any other society.
No. The concessional regime for co-operative societies (section 115BAD of the 1961 Act, section 203 of the 2025 Act) bars Chapter VIII deductions other than additional employee cost (section 146) and the new section 150.
Section 149 of the Income-tax Act, 2025.
This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.
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