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Union Budget 2026-27 - Finance Bill, 2026
D. COOPERATIVES
The provisions of section 149(2)(d) of the Act provide for deduction on the income of a cooperative society that is received as interest or dividend from any other co-operative society. This deduction is allowed only in the old tax regime. The dividends received by a cooperative society from a company are taxed in the hands of the cooperative society.
It is proposed to allow deduction on dividends received by cooperative societies from other cooperative societies, to the extent such dividends are distributed to its members, in the new tax regime.
It is also proposed to allow deduction for dividends received by notified federal cooperatives from companies for 3 years, i.e. till tax year 2028-29 under both the old and new tax regimes. This deduction is proposed to be allowed only to the dividends arising out of investments made by the federal cooperative till 31.01.2026 and which are further distributed by it to its members.
This amendment is proposed to take effect from 1 st April, 2026 and will, accordingly, apply in relation to the tax year 2026-27 and subsequent tax years.
[Clauses 39, 40, 48 and 49]
Full Text:
Cooperative societies: deduction allowed on dividends from other cooperatives in new tax regime; limited federal cooperative relief. Deduction is extended to dividends received by cooperative societies from other cooperative societies in the new tax regime, limited to amounts distributed to members. Notified federal cooperatives may claim a temporary deduction for dividends from companies for three years, restricted to investments made by the federal cooperative on or before 31.01.2026 and distributed to members. The amendment is effective from 1 April 2026 and applies to the tax year 2026-27 and subsequent years. of Press 'Enter' after typing page number.
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