What is Section 80P of Income Tax? Explained

Under Section 80P of the income tax act, tax deductions are offered for those cooperative societies which are involved in specified agricultural activities. The deductions under Section 80P of the income tax act can be availed only to the cooperative agricultural and real development banks and to primary agricultural credit society. The deductions under Section 80P of the income tax act can be availed when the income that the cooperative society earns from certain activities is also included in the assessee’s total gross income. In this blog, we will discuss in detail the Section 80P of the income tax act and deductions that are available under this section for performing certain agricultural activities.

100% Deduction

A 100% deduction under Section 80P of the income tax act will be offered on the income  that is earned by the profits and gains earned by a cooperative society by performing the activities listed below:

1. Carrying out banking activities and credit providing facilities to the society members.
2. Engaging in the cottage industry.
3. Engaging in availing the agricultural produce grown by its members to the market.
4. Engaging in the buying of those items that are used in agriculture such as seeds, livestock, etc and supplying them to its members.
5. Engaging in the processing of agricultural produce if the members of the cooperative society without the aid of power.
6. Providing collective disposal of the member’s labour.
7. Availing fishing and allied activities (such as catching, curing, processing, storing and marketing of fishes along with the purchase of material and equipment that are related to it) with an aim of providing it to its members.
8. Being a primary society and engaging in the production of products such as milk, oilseeds, fruits and vegetables. These are supplied to the entities listed below:
   1. Federal Cooperative society which is involved in the business of the products that were mentioned above.
   2. Government or the local authorities
   3. Government company which is involved in the supply of the products that are mentioned above.

Other Deductions

1. Deductions for income from any other activities: In this case, a maximum deduction of Rs. 1 lakh for a cooperative society and a maximum deduction of Rs. 50,000 is offered.
2. Deduction for interest income: When a cooperative society earns income either by interest or dividend by making investments in some other cooperative society, then the whole income from interest will be permitted for a deduction.
3. Deductions for specific incomes: Income that is earned by letting godowns and warehouses for the purpose of processing, storage and facilitating commodities to the market, will be permitted as a deduction as per the guidelines of Section 80P of the income tax act.

Conclusion

In this blog, we came across Section 80P of the income tax act, the auctions that are offered under this section. And we also discussed the 100% deductions and other deductions as per the guidelines of Section 80P of the income tax act.