The new Income Tax Bill 2025 brings benefits for cooperatives across the country. Housing, manufacturing, and agricultural cooperatives particularly stand to gain. The Bill retains Section 149, ensuring that primary agricultural credit societies and producer companies engaged in processing and marketing of agricultural products continue to benefit from tax exemptions.

The aim of this bill is to consolidate and revise existing income tax laws. It includes key provisions related to taxation and deductions applicable to cooperatives.

Building on previous announcements of tax relief for cooperatives, now cooperative housing societies, under Section 202 (excluding those already covered under Section 204), can opt for a concessional income tax rate, provided they have not already availed of this benefit.

Additionally, Section 204 of the Income Tax Bill includes a provision for a 15% incentive tax on the manufacturing income of new manufacturing cooperatives, subject to certain conditions. This provision aims to boost manufacturing cooperatives.

The new bill also provides for tax deductions for agricultural producer companies under Section 150. This will strengthen farmer-led cooperatives and improve their financial stability. These deductions will promote rural cooperative entrepreneurship and strengthen agricultural value chains.

To provide relief to cooperatives, a significant amendment has been made under Section 118 of the Income Tax Bill to support the restructuring and recovery of cooperative banks from losses. Similarly, Section 65 of the bill includes specific provisions for calculating deductions for cooperative banks undergoing restructuring. These initiatives will particularly benefit urban cooperative banks and credit societies, ensuring their financial stability during periods of loss.

Section 63 of the Income Tax Bill also recommends the implementation of stricter tax audits and electronic filing requirements. To claim deductions, cooperatives will be required to maintain detailed financial records. While these measures aim to increase transparency and accountability, they may pose challenges for small cooperatives.