Before 2018, there was no need to file Income Tax Return for small housing societies as their income was tax-free as per the Indian Income Tax Act. However, it all changed when the recent Union Budget amended Section 80AC to include a clause in Chapter VIA under ‘C- Deduction in respect of certain incomes’. It says there will be no deduction for those group/society who doesn’t file the returns by the due date.
For section 80AC of the Income-tax Act, the following section shall be substituted, namely:—
‘80AC. Deduction not to be allowed unless return furnished – Where in computing the total income of an assessee of any previous year relevant to the assessment year commencing on or after—
(i) the 1st day of April 2006 but before the 1st day of April 2018, any deduction is admissible under section 80-IA or section 80-IAB or section 80-IB or section 80-IC or section 80-ID or section 80-IE;
(ii) the 1st day of April 2018, any deduction is admissible under any provision of this Chapter under the heading “C.—Deductions in respect of certain incomes”,
no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.’
The Section reiterates that Deduction u/s 80P is permitted only if the Society files ITR by the due date.
- Section 80P 2(d) speaks about the deduction on interest income from Co-operative Society.
- Section 80P 2(C) allows Standard Deduction of up to Rs 50,000 if the Society has any Business Income (like those from billboards and other advertisements).
All housing societies will have a bank account as well as an FD in a nationalised or co-operative bank. The interest earned from these accounts is subject to taxation (‘Income from Other Sources’), making ITR filing mandatory. However, Section 80P allows you to claim a deduction on this interest. Please see the particulars in the table below.
|Total Income (Rs.)||Income Tax Slab/ Rate|
|Till Rs. 10,000||10% of Overall Income|
|Between Rs. 10,001 and Rs. 20,000||Rs. 1000 + 20% Income|
|Exceeding Rs. 20,000||Rs. 3000 + 30% Income|
|Please note: Apply Education Cess and Higher Education cess of 3% to the above.
In a nutshell, Budget 2018 has made it compulsory for all Co-operative Housing Societies to file ITR as per the latest 80AC amendment.