Co-operative Society – Taxation

1. Meaning

Co-operative society means a society registered under Co-operative Societies Act, 1912 or any other law in force in any State for the registration of co-operative societies.
Regional rural bank is deemed as co-operative society (Circular 319 dated 11-1-1982)

2. Rate of Tax

Income up to ₹ 10,000 = 10%
Income ₹ 10,001 up to ₹ 20,000 = 20% of income exceeding 10,000 + 1,000
Income ₹ 20,001 onwards = 30% of income exceeding 20,000 + 3,000

In case the taxable income is above ₹ 1 crore a surcharge of 12% would be applicable for income earned during 1st April, 2014 to 31st March, 2015 and onwards

The above rates to be increased by 2% education cess on income tax & 1% secondary & higher education cess on income tax.

Alternative Minimum Tax :- Tax payable by a co-operative cannot be less than 18.5% (surcharge + education cess + SHEC) of “adjusted total income” as per see 115 JC Since A.Y. 2013-14.

3. Filing of return & due date & PAN/TAN

Since there is no threshold limit for taxability of income in case of a co-operative society, it implies that if a society has any taxable income, it has to file a return of income. Consequently, it is imperative to apply for PAN by each income earning Co-operative Society.
Since accounts of all co-operative societies are subject to statutory audit provisions under respective governing laws, therefore due date for filing return of income under the Income-tax Act, 1961 is September 30.
If the society has to deduct income tax it must obtain TAN number. The society is also bound by provisions of TAN and filing of return of TDS.

4. Principle of Mutuality

Income of the co-operative society to which the Doctrine of Mutuality applies is not taxable.
A co-operative society is a mutual association. A mutual association is one in which the members of the group come together for a common objective, make contributions for achieving that objective and participate in the surplus arising out of it. It is not necessary that all the members have to contribute to common fund and all the members have to take benefit of the resultant surplus. It is sufficient even if some members may contribute and some members may only take benefit, concept of mutuality will still apply if all members are covered by the same conditions and have the same entitlements. If a society carries on some activities which are mutual and some activities which are not, then the concept would apply to only those activities which are mutual.
In respect of contributions from members concept of mutuality would be applicable. Surplus arising out of contributions would be covered by concept of mutuality and therefore not considered as an income at all.

5. Tax Audit

Tax audit is compulsory if turnover of society (engaged in business) is more than ₹ 1 crore (w.e.f. A.Y. 2013-14) [₹ 60 lakhs for A.Ys. 2011-12 & 2012-13]. Tax Audit provisions is generally not applicable to societies which do not carry on any business. For example, housing societies in years of construction of building premises and redevelopments of their properties, provisions of section 44AB would not apply as there is no business activity.

6. Deduction available to co-operative society – Section 80P

Sr. No.	Society engaged in business of Nature of Income	Amount deductible	Applicability & Conditions
1)	Providing credit facility to members	Entire profit from such business	W.e.f. A.Y. 2007-08 deduction not available to co-operative bank. Primary co-operative agricultural & rural development bank & chit funds can claim deduction. Providing credit facility means providing loans & other credit facilities. Does not include selling goods on credit/hire purchase.
2)	Cottage Industry	Entire profit from such business	For qualifying as cottage industry – Business is to be carried on in a small scale, with limited capital, workers & turnover. Business is carried on by members of society (share holders) & their families. Business must involve activity of manufacture, production or processing and not merely in trade. It is not required to be registered under Factories Act.
3)	Marketing of Agricultural Produce	Entire profit from such business	Grown by its members
4)	Purchase of Agricul-tural Implements, seeds, livestock, other articles intended for agriculture	Entire profit from such business	It is for the purpose of supplying them to its members.
5)	Processing Agricultural Produce of Members (without aid of power)	Entire profit from such business	—
6)	Collective Disposal of labour of its members	Entire profit from such business	Deduction is available only when earning of society is through the utilisation of the actual labour of its members o Deduction is available provided the rules & bye laws of the society restrict the voting rights to following class of members – Individuals who contribute their labour o Co-op. credit societies which provide financial assistance to the society o State Government
7)	Fishing & Allied Activities	Entire profit from such business	It includes catching, curing, processing, preserving, storing or marketing of fish or purchase of materials & equipment in connection therewith for supplying them to its members Deduction is available provided the rules & bye-laws of the society restrict the voting rights to following class of members – o Individuals who carry on fishing or allied activities o Co-op. credit societies which provide financial assistance to the society o State Government
8)	Primary society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members	Entire profit from such business	Milk, oil seeds, fruits or vegetables are grown or raised by its members Milk, oilseeds, fruits or vegetables are supplied to a federal co-op. society (engaged in similar business), Government or local authority, Government company or a statutory corporation (engaged in similar business)
9)	Engaged in any other activity	₹ 1,00,000 for consumer co-operative society ₹ 50,000 for others
10)	Interest income/Dividend income	Entire amount of such income	Such income is received from investment in any other co-operative society
11)	Letting of godowns/warehouses	Entire amount of income derived from such business	Godowns/warehouses are let for storage, processing or facilitating the marketing of commodities
12)	Interest on securities & property income	Entire amount of such income	Benefit not available to housing society, urban consumers society, society carrying on transport business, society engaged in manufacturing operations with aid of power Gross total income of such society does not exceed ₹ 20,000.

Note: As per the amendment made by Finance Act, 2015 interest paid by co-operative banks on time deposits including recurring deposits to its members above ₹ 10,000/- as prescribed, TDS provisions will apply.

WARDWISE JURISDICTIONAL ALLOCATION IN MUMBAI

For the purpose of registration and regulation of the societies, the City of Mumbai has been divided as per the Municipal Wards. There is a Deputy or Assistant Registrar of Co-operative Societies for each Ward who is the registering and regulatory authority for the co-operative societies in that Ward. In respect of special classes of societies, for example, Slum Dwellers, MHADA etc. separate Deputy/Assistant Registrars have been appointed.

Sl. No.	Ward	Office address	Jurisdiction
1	A	Sixth Floor, Malhotra House, Opp. G.P.O., Mumbai 400 001 (Tel. No. 2261 8671)	Colaba, Cuffe Parade, Navy Nagar, Fort, Crawford Market, D.N. Road, Azad Maidan, Nariman Point, Sachivalaya, Fort Market, Colaba Market and Ballard Pier. Pin code numbers 400 001, 005, 020, 023, 032, 038 and 039.
2	B	— do —	Masjid and adjacent market area, Mohamadali Road and Dongri Pin code numbers : 400 003, 009
3	C	— do —	Kalbadevi, C.P.Tank, Bhuleshwar and adjacent market area Pin code number: 400 002
4	D	— do —	Girgaum, Malbar Hill, Grant Road, Mumbai Central, Bhulabhai Desai Road,Tardeo, Kemps Corner and Dabholkar Road.Pin code numbers : 400 004, 006, 007, 008, 026, 034, 036.
5	E	— do —	Mazgaon Dock, Nagpada, Byculla, Reay Road and Cotton Green. Pin code numbers : 400 088, 027, 033.
6	F NORTH	— do —	Sion, Koliwada, Wadala, Matunga (E) and Dadar (E).
			Pin code numbers: 400 022, 030, 031, 019, 014.
7	F SOUTH	— do —	Parel, Lalbaug, Sewri, Abhyudaynagar and Nigaum. Pin code numbers : 400 012, 015, 013, 014.
8	G NORTH	— do —	Mahim, Dadar (W), Dharavi and Matunga (W) Pin code numbers: 400 016, 017, 019.
9	G SOUTH	— do —	Worli, Nehru Centre and Worli Dairy.Pin code number: 400 018.
10	H EAST	Above Bhandari Co-operative Bank Ltd. Bhavan Hetkari Mahajan Wadi, Ranade Road, Near D’silva High School, Kohinoor Cinema, Dadar (West), Mumbai 400 028	Bandra (E), Santacruz (E), Vakola, Kalina and University Campus, Khar (E) Sahakari Bhandar Building, Opp. Bandra (W) Railway Station, Mumbai-400 051.Pin code numbers : 400 029, 051, 055, 098.
11	H WEST	— do —	Khar (W), Santacruz (W), Bandra (W), Pin code numbers : 400 051, 054, 050.
12	K WEST	GROUND FLOOR, ROOM NO. 69, MHADA BLDG., BANDRA (E), MUMBAI 400051	Vile Parle (W), Juhu, Andheri (W), Jogeshwari (E) and (W) Ground Floor, and Versova, MHADA Building, Pin code numbers : 400 056, 060, 049, 102,
13	K EAST	315-316, A/1 Building, 3^rd Floor, truck Terminal, Near R.T.O Office Wadala (East), MUMBAI 400037	J.B.Nagar, Andheri (E) Chakala and M.I.D.C. Pin code numbers: 400 0051, 057, 059, 069, 093, 096.
14	P	2^nd Floor, C Wing, Municipal Godown Bldg., 90 Ft. Road, Sanskruti Complex, Kandivli (E), Mumbai 400101	Goregaon (E) and (W), Malad (E) and (W), Aarey Milk Colony, Bangur Nagar, Malwani and Marve.Pin code numbers : 400 054, 062, 063, 064, 065, 090, 104.
15	R	— do —	Borivali (E) and (W), Kandivli (E) and (W),Dahisar (E) and (W). Pin code numbers: 400 066, 067, 068, 092, 103
16	S	Konkan Bhuwan,C.B.D Belapur,Navi Mumbai.	Vikhroli, Kanjurmarg, Bhandup Pin code numbers: 400 076, 078, 087
17	T	A.C.C Compound, Near Mulund College, Mulund (W), Mumbai 400 080.	Mulund (E) and (W) Pin code number : 400 080 and 081.
18	L	Konkan Bhuwan,C.B.D Belapur,Navi Mumbai.	Nehru Nagar, Kurla and Saki Naka.Pin code numbers: 400 024, 070, 072.
19	M	— do —	Chembur, RCF, BARC, Deonar, Govandi, Mankhurd and Anushakti Nagar.Pin code Numbers : 400 071, 074, 085, 088, 094.
20	N	— do —	Rajwadi, Tilak Road, Pant Nagar, Kirol, Bhatt Wadi, Agra Road, Ghatkopar (E) and (W). PIN CODE NUMBERS: 400 075, 076, 077, 079, 083, 086.
21	Thane City	Vardhavat Mansion, 2^nd Floor, Station Road, Thane West – Thane -400 601	Thane City – Pincode Nos 400601 to 400610
22	Thane Taluka	Vardhavat Mansion, 2^nd Floor, Station Road, Thane West – Thane -400 601	Mira Road and Bhayander
23	Dombivili	Tarte Plaza, Annex Sheetal, Gandhi Nagar, Dombivili East	Dombivli
24	Kalyan	Malhar Complex Bldg, A, Type B Wing, 1^st Floor,Near Mohinder Singh Kabul Singh High School, Agra Road, Ghode Khot, AAli Kalyan (W)	421 301
25	Ulhasnagar	2^nd Floor, Sai Vihar Bldg, 217/218, Gurudev Hotel, Shivaji Path, Station Road, Kalyan (W) 421 301	Muncipal limits of Ulhasnagar
26	Ambernath Taluka	Satyam Towers, 2^nd Floor, Shiv Mandir Road, Shivaji Chowk,, Ambernath 421 501	Ambernath Badlapur Towns and surrounding rural areas.
27	Vasai & Virar	Jony Cross Lane, Sutar Ali, Tamtalao M.G. Road, Vasai (W)	Muncipal limits of entire Virar & Vasai.
28	Dy. Registrar ,for SRA projects of Mumbai at 5th Floor, Mhada Bldg., Bandra (E), Mumbai.
29	Dy. Registrar for Mhada Societies for entire Mumbai, on 2nd Floor, Mhada Bldg., Kalanagar, Bandra (E).