Tax on Bank Interest of Co-Op Society, Club or Mutual Association

• August 8, 2020
• CA Chandan Agarwal's Office

1. Interest earned from investment in Co-operative & other banks:

It is known fact that societies are earning interest income from investments such as F.D., etc. with co-operative & other banks. In the computation of total income, the assesses wrongly claim the said interest income as deduction u/s. 80P(2)(d) of the Income tax Act, 1961.

2. In this regard, the provisions with regard to allowing deduction in respect of interest income earned by a co-operative society are contained in section 80P(2)(d) of the Income tax Act, 1961, which read as under :

“in respect of any income by way of interest or dividends derived by the co­operative society from its investments with any other co-operative society, the whole of such income”

As quoted above, the provisions of I.T. Act does not extend the deduction further i.e. interest received from the investments made with co-operative banks.

Read more on: https://taxguru.in/income-tax/taxability-interest-earned-bank-type-cooperative-society.html