Proposed New Tax Regime for Resident Co-operative societies by Budget 2020
A Co-Operative Societies can pay tax @ 22% (effective tax rate is 25.17%) under section 115BAD only if it fulfils the following conditions:
a) The total income of the company has been computed without claiming specified deduction, exemption or incentives;
b) The option to avail of the benefit of section 115BAD must be exercised on or before the due date specified under Section 139(1) for furnishing of first return of income in the prescribed manner. This option once exercised cannot be withdrawn subsequently;
c) There is no time limit to exercise option u/s 115BAD for the benefit of lower tax rate;
d) The Co-Operative Societies shall also not be allowed to claim brought forward MAT Credit for an assessment year for which the option has been exercised and for any subsequent assessment years.
The various deduction and exemptions which a Co-operative Society opting for section 115BAD cannot claim are as follows:
| Section | Deduction |
| Section 10AA | Deduction for units established in Special Economic Zones (SEZ) |
| 32(1)(iia) | Additional Depreciation |
| Section 32AD | Deduction for investment in new plant and machinery in notified backward areas |
| Section 33AB | Deduction in respect of tea, coffee or rubber business |
| Section 33ABA | Deduction in respect of business consisting of prospecting or extraction or production of petroleum or natural gas in India |
| Section 35(1)(ii) | Deduction for donation made to approved scientific research association, university college or other institutes for doing scientific research which may or may not be related to business |
| Section 35(1)(iia) | Deduction for payment made to an Indian company for doing scientific research which may or may not be related to business |
| Section 35(1)(iii) | Deduction for donation made to university, college, or other institution for doing research in social science or statistical research |
| Section 35(2AA) | Deduction for donation made to National Laboratory or IITs, etc. for doing scientific research which may or may not be related to business |
| Section 35AD | Deduction in respect of capital expenditure incurred in respect of certain specified businesses, i.e., cold chain facility, warehousing facility, etc. |
| Section 35CCC | Deduction for expenditure on agriculture extension project |
| Any Provision of Chapter VI-A | Deduction in respect of certain incomes other than specified under Section 80JJAA |
However, if a Co-Operative Societies having brought forward losses on account of addition depreciation or credit of MAT, if it so desire, may exercise the option after setting of the brought forwarded losses so accumulated or after utilising the said MAT credit against the regular tax payable after analyzing the best tax saving scenario.
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The Co-Operative Societies shall also not be allowed to claim brought forward MAT Credit for an assessment year for which the option has been exercised and for any subsequent assessment years.
In fact there is no MAT chargeable to Cooperative Societies