Section 149 — Deduction in respect of income of co-operative societies

(1) If the gross total income of an assessee, being a co-operative society,
includes any income referred to in sub-section (2), the sums specified in
the said sub-section shall, in accordance with and subject to the provisions of this
section, be allowed as deduction in computing the total income of such assessee.
(2) The sums referred to in sub-section (1) shall be the following:—
( a) in the case of a co-operative society engaged in—
( i) carrying on the business of banking or providing credit facilities
to its members; or
( ii) a cottage industry; or
( iii) the marketing of agricultural produce grown by its members; or
( iv) the purchase of agricultural implements, seeds, livestock or other
articles intended for agriculture for the purpose of supplying them
to its members; or
( v) the processing, without the aid of power, of the agricultural produce
of its members; or
( vi) the collective disposal of the labour of its members; or
( vii) fishing or allied activities, that is to say, the catching, curing, pro-
cessing, preserving, storing or marketing of fish or the purchase of
materials and equipment in connection therewith for the purpose
of supplying them to its members,
the whole of the amount of profits and gains of business attributable to
any one or more of such activities;
( b) in the case of a co-operative society, being a primary society engaged in
supplying milk, oilseeds, 15[cotton seed, cattle feed,] fruits, or vegetables
raised or grown by its members to—
( i) a federal co-operative society, being a society, engaged in the busi-
ness of supplying milk, oilseeds, 15[cotton seed, cattle feed, ] fruits
or vegetables; or
( ii) the Government or a local authority; or
( iii) a Government company, as defined in section 2( 45) of the
Companies Act, 2013 (18 of 2013), or a corporation established by
or under a Central Act or State Act or Provincial Act, engaged in
supplying milk, oilseeds, 15[cotton seed, cattle feed,] fruits or vege-
tables, as the case may be, to the public,
the whole of the amount of profits and gains of such business;
( c) in the case of a co-operative society engaged in activities other than those
specified in clause (a) or (b), (either independently of, or in addition to,
all or any of the activities so specified), that amount of profits and gains
attributable to such activities as does not exceed—
( i) ` 100000, if the society is a consumers’ co-operative society; and
( ii) ` 50000, in any other case;
16[(d) in respect of any income derived by the co-operative society from its invest-
ments with any other co-operative society by way of—
15. Inserted by the Finance Act, 2026, w.e.f. 1-4-2026.
16. Substituted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its substitution, clause ( d)
read as under :
“( d) in respect of any income by way of interest or dividends derived by the co-operative
society from its investments with any other co-operative society, the whole of such
income;”
( i) interest; or
( ii) dividends,
the whole of such income;]
( e) in respect of any income derived by the co-operative society from the
letting of godowns or warehouses for storage, processing, or facilitating
the marketing of commodities, the whole of such income;
( f) in the case of a co-operative society, not being—
( i) a housing society; or
( ii) an urban consumers’ society (being a society for the benefit of the
consumers within the limits of a municipal corporation, munici -
pality, municipal committee, notified area committee, town area,
or cantonment); or
( iii) a society carrying on transport business; or
( iv) a society engaged in performing manufacturing operations with
the aid of power,
where the gross total income does not exceed ` 20000, the amount
of income by way of interest on securities; any income from house
property chargeable under section 20.
(3) In the case of a co-operative society as referred to in sub-section (2)( a)(vi) or
(vii), provisions of sub-section (1) shall only apply when the rules and bye-laws of
the society restrict the voting rights to the following classes of its members:—
( i) the individuals who contribute their labour or carry on fishing or
allied activities;
( ii) the co-operative credit societies which provide financial assistance to
the society;
( iii) the State Government.
(4) The deduction under sub-section (1) in relation to the sums specified in sub-
section (2)(a) or (b) or (c) or sub-section (3), shall be allowed with reference to the
income referred to in those sub-sections included in the gross total income after
reducing the deduction under section 138, if the assessee is also entitled to such
deduction.
(5) The provision of this section shall not apply to any co-operative bank which is
not a primary agricultural credit society or a primary co-operative agricultural and
rural development bank.
17[(6) For the purposes of this section,––
( a) “consumers’ co-operative society” means a society for the benefit of the
consumers;
( b) “primary agricultural credit society” has the same meaning as assigned to
it in Part V of the Banking Regulation Act, 1949 (10 of 1949); and
17. Inserted by the Finance Act, 2026, w.e.f. 1-4-2026.
( c) “primary co-operative agricultural and rural development bank” means a
society having an area of operation confined to a taluk, the principal object
of which is to provide long-term credit for agricultural and rural develop -
ment activities.]