There is little bit ambiguity in income tax matter of cooperative society and many of us have different set of questions in this regard. Hence to provide you some clarity we had drafted this write-up. Let’s get clarity on your above questions.

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    Are we liable to pay Income Tax ?

    Yes. Cooperative Society is taxable entity under income tax act, 1961 and Cooperative society is treated as Association of person (AOP) under the act.

    Which of our income are taxable ?

    Let’s see income of housing society one by one to understand better.

    Particulars Taxable Income & Remark Non Taxable Income & Remark
    Contribution from members - Service charge, Non occupancy charges, lift charges, water charges, Interest on member outstanding etc. and any surplus generated after expenses are exempt based on concept of mutuality
    Interest Income From Investment 1. Interest earned from any other non-cooperative entity is taxable
    2. Interest earned from any cooperative entity is taxable and allows for exemption
    Dividend 1. Dividend earned from any other non-cooperative entity is taxable
    2. Dividend earned from any cooperative entity is taxable and allows for exemption
    Income from advertisement Taxable and expenses incurred in relation to this can be claimed against income -
    Rental Income from usage of club house/other area Taxable if received from non-member and eligible for standard deduction of 30% u/s 24(a) Not Taxable if received from member
    Transfer Premium - Not taxable as confirmed by supreme court judgment

    At what rate we get taxed?

    There is no basic exemption limit for cooperative society. Society income are taxed under following slab –

    Particulars Rate
    Income Up to Rs.10000 10%
    Income Up to Rs.20000 20%
    Income Up to Rs.30000 30%

    Income tax liability will be increased by 3% education cess & higher education cess.

    What are exemptions available to us?

    Section 80p (2) (d) is available to housing society. This section allows exemption on interest or dividend earned from investment made in other cooperative society. In definition of other cooperative entity, urban cooperative bank is excluded as per recent updates from income tax department.

    What is the due date for filing income tax return?

    You need to pay income tax liability if any before filing income tax return. Due date for filling income tax return is 30th September and ITR 5 is used in filing income tax return.

    We believe that you found this write-up helpful. If you have any query of require any further information then please connect with us on info@esanchalak.com. We will be glad to help you.