The section was substituted by Act No. 4 of 2026 with effect from 1 April 2026. As substituted it no longer defines terms for section 149 — the earlier definitions of "consumers' co-operative society", "primary agricultural credit society" and "primary co-operative agricultural and rural development bank" are gone — although the heading it carries is unchanged. What now stands in its place is a deduction.
Sub-section (1) provides that where the gross total income of an assessee being a federal co-operative includes, in any tax year, income by way of dividends received from its investment with any company, a deduction is allowed from that income to the extent of the amount which satisfies both conditions: under clause (a), it has arisen from such investment as recorded in its books of account on or before the 31st January, 2026; and under clause (b), it has been distributed by the federal co-operative to its members at least one month before the due date for filing the return of income under section 263(1).
Sub-section (2) sunsets the section: its provisions do not apply to any tax year beginning on or after the 1st April, 2029. Sub-section (3) defines "federal co-operative" as a federal co-operative as defined in section 3(k) of the Multi-State Co-operative Societies Act, 2002 and notified as such by the Central Government.
Why it is there
A federal co-operative that holds investments in companies is a conduit: the dividend it receives is passed on to its members, who are taxed on it in turn. The deduction removes the tax at the intermediate level, but only for money that actually reaches the members, and only for investments already on the books at a cut-off date. Both fences matter — clause (a) freezes the pool of qualifying investments as at 31 January 2026 so the relief cannot be enlarged by fresh investment, and sub-section (2) ends the relief altogether for tax years beginning on or after 1 April 2029.
Who it applies to
A federal co-operative as defined in section 3(k) of the Multi-State Co-operative Societies Act, 2002 and notified as such by the Central Government
The members of such a federal co-operative, to whom the dividend must be distributed
A company in which the federal co-operative holds an investment recorded in its books on or before 31 January 2026
The figures, and what each one turns on
Read the condition in the same row. A figure quoted without it is a wrong answer with a citation attached.
What
Figure
The condition on it
Where
Cut-off for the investment from which the dividend arises
31 January 2026
The investment must be recorded in the federal co-operative's books of account on or before that date
Sub-section (1)(a)
Deadline for distributing the dividend to members
At least one month before the due date for filing the return of income under section 263(1)
The amount must have been distributed by the federal co-operative to its members by then to qualify
Sub-section (1)(b)
Sunset of the section
Tax years beginning on or after the 1st April, 2029
The section does not apply to any such tax year
Sub-section (2)
What this means in practice
The deduction is measured by the amount that satisfies both clauses, not by the whole dividend, so a federal co-operative that receives dividend on a mix of pre and post 31 January 2026 investments gets relief only on the pre cut-off part, and only so much of that as it actually distributes. The distribution deadline is earlier than the return itself: clause (b) requires distribution at least one month before the section 263(1) due date, so a distribution made in the month running up to the return date, or with the return, is too late even though the return is on time. The status test is two-limbed — a body must both fall within section 3(k) of the Multi-State Co-operative Societies Act, 2002 and be notified as a federal co-operative by the Central Government. Because the earlier definitions for section 149 have been substituted away, section 149 no longer draws its meanings from this section.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
A notified federal co-operative receives Rs 5 crore of dividend in a tax year, of which Rs 4 crore arises from shareholdings recorded in its books before 31 January 2026 and Rs 1 crore from shares bought in June 2026. It distributes Rs 3 crore to its members two months before its section 263(1) due date. The deduction is limited to Rs 3 crore — the distributed amount, and within the Rs 4 crore of qualifying investment income; the Rs 1 crore from the later purchase never qualifies, and any part of the Rs 4 crore retained rather than distributed does not either.
Where you meet this section
In the computation filed by a notified federal co-operative for tax years up to the one beginning before 1 April 2029, where it will need to show both the book entry date of the investment and the date of distribution to members. Anyone still looking to this section for the definitions used by section 149 will not find them here after 1 April 2026.
The words themselves
has arisen from such investment as recorded in its books of account on or before the 31st January, 2026
Section 150(1)(a), Income-tax Act, 2025.
has been distributed by it to its members at least one month before the due date for filing the return of income under section 263(1)
Section 150(1)(b), Income-tax Act, 2025.
The provisions of this section shall not apply to any tax year beginning on or after the 1st April, 2029.
Section 150(2), Income-tax Act, 2025.
What people get wrong
Reading the section as still supplying definitions for section 149. It was substituted by Act No. 4 of 2026 with effect from 1 April 2026, and the substituted text is a deduction provision.
Distributing to members by the return due date. Clause (b) requires distribution at least one month before the due date under section 263(1).
Claiming on dividend from investments made after the cut-off. Clause (a) confines the deduction to income arising from investment recorded in the books of account on or before 31 January 2026.
Claiming the whole dividend received. The deduction runs only to the extent of the amount satisfying both clause (a) and clause (b), so undistributed dividend does not qualify.
Assuming any multi-state co-operative qualifies. Sub-section (3) requires a federal co-operative as defined in section 3(k) of the Multi-State Co-operative Societies Act, 2002 and notified as such by the Central Government.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
80P - Deduction in respect of income of co-operative societies
A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.
Circular No. 13/2023 — Condonation of delay under clause (b) of sub-section (2) of section 119 of the Income-tax Act, 1961 for returns of income claiming 2023-07-26
Circular No. 18/2015 — Interest from non slr securities of banks reg. 2015-11-02
Circular No. 722 — 607. Clarification regarding criteria required to be satisfied by any co-operative society engaged in cottage industry for availin 1995-09-19
Circular No. 319 — Section 80P l Income of Co-operative Societies 1982-01-11
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 150. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
Citizen Co-operative Society Ltd v ACITSupreme CourtHelps departmenttagged s.80P The AO cites Citizen Co-operative Society to deny my 80P claim. How far does it go?
KSCARDB v Assessing OfficerSupreme CourtHelps taxpayertagged s.80P We are a state-level co-operative agricultural and rural development bank. Does 80P(4) block our deduction?
Totgars Co-operative Sale Society Ltd v ITOSupreme CourtHelps departmenttagged s.80P My society invested surplus funds in short-term bank deposits. Is that interest covered by 80P?
Bharat Electronics Employees Co-op Credit Society v CCITHigh CourtHelps taxpayertagged s.80P Our co-operative credit society filed its return late and lost the section 80P deduction under section 80AC. The Chief Commissioner has rejected our…
Kanyakaparameshwari Co-operative Society Ltd v CCITHigh CourtHelps taxpayertagged s.80P My co-operative society filed its return late and lost section 80P because of section 80AC. If the delay is condoned under section 119(2)(b), does…
Kottayam Co-operative Land Mortgage Bank v CITHigh CourtHelps departmenttagged s.80P Our co-operative society has receipts that fall outside the activities named in section 80P(2)(a). Can we fall back on the residual deduction in…
PCIT v Totagars Co-operative Sale SocietyHigh CourtHelps departmenttagged s.80P My society earns interest on deposits with a co-operative bank. Is it deductible under 80P(2)(d)?
Shree Dhamel Seva Sahkari v ADIT (CPC)ITATHelps taxpayertagged s.80P CPC denied my society's 80P in a 143(1) intimation because the return was late. Can it?
Venus Parkland Co-Op Housing Service Society Ltd v ITOITATHelps taxpayertagged s.80P(2)(c)(ii) The Assessing Officer has taxed our society's bank fd interest as income from other sources and refused to allow the maintenance expenditure against…
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.
