Benefits to a Co-operative society u/s 115BAD
Benefits to a Co-operative society u/s 115BAD of the Income-tax Act, 1961.
As per the provisions of the Income Tax Act, 1961 and before the introduction of Finance Act 2020, co-operative societies were charged tax at the below mentioned slab rates:-
| Taxable Income | Tax Rate |
| Upto Rs. 10,000 | 10% |
| Above Rs. 10,000 but up to Rs. 20,000 | 20% |
| Above Rs. 20,000 | 30% |
This tax was further increased by a surcharge of 12% if the taxable income exceeded Rs. 1 Crore and Cess of 4%. Further, all the provisions with respect to AMT, maintenance of books of accounts, advance tax etc. as were applicable to the company are applicable to a co-operative society.
W.e.f Finance Act 2020, Section 115BAD has been inserted which states that a co-operative society shall be taxed at the rate of 22% followed by 10% Surcharge and 4% Cess (effective from Assessment Year 2021-22) provided that the following conditions are satisfied:-
- No deduction with respect to section 10AA, section 32(1)(iia), section 32AD, Section 32AB, Section 32ABA, section 35, section 35AD, section 35CCC or with respect to any deduction under chapter VIA except deduction u/s 80JJAA has been claimed;
- There has been no setoff or carry forward of losses or unabsorbed depreciation from earlier years, if such loss or depreciation is attributable to any of the deductions in the previous point.
- Depreciation u/s 32 has been computed and claimed but not depreciation u/s 32(1)(iia).
IMPORTANT NOTES:
- As per point 2 above, if any depreciation or carry forward of loss of previous years related to deductions claimed under sections mentioned in point 1 above, then they shall not be allowed. However, if the depreciation or carry forward of loss relate to any other point, then such depreciation or loss can be claimed.
- Please note that this option needs to be exercised before the due date of filing the income tax return. Further, once this option is exercised, it cannot be subsequently withdrawn.
- There has been no amendment in the Finance bill 2021 with respect to the same.
Practical takeaway: It is advised to compute tax through both the methods and the one where tax liability is less should be considered
Read More on CBDT, Income-tax
Contribution by :
CA. Aastha Singhal
