Section 149 — Deduction in respect of income of co-operative societies. Successor to s.80P of the 1961 Act.
Section 149 is in Chapter VIII — Deductions to Be Made in Computing Total Income, which runs from section 122 to section 154.
Sub-section (1) allows a co-operative society whose gross total income includes income listed in sub-section (2) a deduction of the sums specified there. Sub-section (2) sets out six categories: clause (a) gives the whole of the profits attributable to banking or providing credit facilities to members, a cottage industry, marketing members' agricultural produce, supplying agricultural implements, seeds, livestock or articles to members, processing members' produce without power, collective disposal of members' labour, and fishing and allied activities; clause (b) gives the whole profits of a primary society supplying milk, oilseeds, cotton seed, cattle feed, fruits or vegetables raised by its members to a federal society, the Government, a local authority, a Government company or a statutory corporation; clause (c) gives other societies a capped amount — Rs. 1,00,000 for a consumers' co-operative society and Rs. 50,000 otherwise; clause (d) gives the whole of interest or dividend income from investments with another co-operative society; clause (e) gives the whole of income from letting godowns or warehouses for storage, processing or marketing of commodities; and clause (f) gives interest on securities and house property income to a small society with gross total income not exceeding Rs. 20,000, excluding housing, urban consumers', transport and power-using manufacturing societies. Sub-section (3) makes clauses (a)(vi) and (vii) conditional on the bye-laws restricting voting rights to labour-contributing or fishing members, financing co-operative credit societies and the State Government. Sub-section (4) computes the clause (a), (b) and (c) deduction after reducing any section 138 deduction, and sub-section (5) shuts the section out for a co-operative bank that is neither a primary agricultural credit society nor a primary co-operative agricultural and rural development bank. Sub-section (6), inserted by Act No. 4 of 2026 with effect from 1 April 2026, defines those three terms; clause (d) was substituted and 'cotton seed, cattle feed' inserted in clause (b) by the same Act from the same date.
It relieves the trading and service income co-operative societies earn from activities carried on with and for their members, treating the society as a vehicle for its members rather than a separate profit-making enterprise. The exclusions in sub-sections (3) and (5) and the small ceilings in clause (c) confine the relief to genuinely member-facing and small societies.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Deduction for a consumers' co-operative society on other activities | Rs. 1,00,000 | Of profits and gains attributable to activities other than those in clause (a) or (b) | Sub-section (2)(c)(i) |
| Deduction for any other society on other activities | Rs. 50,000 | Of profits and gains attributable to activities other than those in clause (a) or (b) | Sub-section (2)(c)(ii) |
| Gross total income ceiling for the interest on securities and house property relief | Rs. 20,000 | And the society must not be a housing society, an urban consumers' society, a transport society, or one performing manufacturing operations with the aid of power | Sub-section (2)(f) |
| Deduction for the member-facing activities in clause (a) and the primary supply society in clause (b) | The whole of the profits and gains attributable to those activities | Reduced by any deduction allowed under section 138, per sub-section (4) | Sub-section (2)(a) and (b) |
| Deduction for interest or dividends from investments with another co-operative society and for godown or warehouse letting | The whole of such income | Clause (d) as substituted by Act No. 4 of 2026 with effect from 1 April 2026 now lists interest and dividends as separate sub-clauses | Sub-section (2)(d) and (e) |
Match the income to a clause before anything else — the whole-amount reliefs in clauses (a), (b), (d) and (e) look generous but each is tied to a described activity or source, and anything outside them falls into clause (c) with a Rs. 1,00,000 or Rs. 50,000 ceiling. A society relying on collective disposal of members' labour or on fishing must also check its own bye-laws, because sub-section (3) denies the deduction unless voting rights are restricted to the three listed classes. A co-operative bank gets nothing here unless it is a primary agricultural credit society or a primary co-operative agricultural and rural development bank, both now defined in sub-section (6) as inserted by Act No. 4 of 2026 from 1 April 2026. Where section 138 also applies, sub-section (4) requires the clause (a), (b) and (c) deduction to be computed on income net of that deduction.
A consumers' co-operative society earns Rs. 30 lakh from providing credit facilities to its members, Rs. 4 lakh of interest on its investments with another co-operative society, and Rs. 3 lakh from a catering activity. The first is deductible in full under clause (2)(a)(i) and the second in full under clause (2)(d), but the catering falls into clause (2)(c) and only Rs. 1,00,000 of it is deductible — Rs. 50,000 had the society not been a consumers' co-operative society — so Rs. 2 lakh is taxed. A society relying instead on clause (2)(a)(vi) or (vii) loses the whole deduction unless its rules and bye-laws restrict voting rights to the three classes listed in sub-section (3), and a co-operative bank gets nothing at all unless it is a primary agricultural credit society or a primary co-operative agricultural and rural development bank.
In the society's return and its assessment, where the deduction is claimed and the department tests which clause each stream of income falls under. No form or authority is named; the documents that decide it are the bye-laws, for the sub-section (3) voting-rights condition, and the society's own character, for the sub-section (5) exclusion of co-operative banks.
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
See the full 1961 to 2025 concordance.
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