How to Feed Deduction u/s 80P

Income Tax || How to Feed Deduction u/s 80P

How to Enter Deduction u/s 80P :

Section 80P of the Income Tax Act, 1961, provides deductions to cooperative societies in India. It allows certain cooperative societies to claim a deduction on their income from various activities, promoting the cooperative movement. The primary goal is to incentivize these societies, especially in sectors like agriculture, rural development, and mutual benefits.

Key Points of Section 80P Deduction:
1. Eligible Entities: Only cooperative societies, not individuals, firms, or companies, are eligible for deductions under Section 80P.
2. Extent of Deduction:
  1. 100% deduction for income derived from certain activities, such as providing credit facilities to members or marketing agricultural produce.
  2. Partial deductions are allowed for other types of income, such as income from investments in other cooperative societies or specific non-agricultural activities.
3. Exclusion for Certain Cooperative Banks: With the introduction of Section 80P(4) in 2006, cooperative banks, which function more like commercial banks, are excluded from claiming the 80P deduction. This is to differentiate between cooperative societies serving members and cooperative banks acting more as financial institutions.

This deduction plays a crucial role in supporting rural and cooperative development in India, providing tax relief to societies that serve specific community or member-based objectives.
Process to Enter the deduction in the Software:
Step 1:
Go to Transaction >> Filing Information >> Nature Of Business >> and Select Here Co-operative Society Nature of Business Codes (23001 to 23014):


Note: Ensure that the Nature of Business codes are the same in both places: first, under Transaction >> Filing Information >> Nature of Business, and second, under Transaction >> Deduction >> Part C Deduction >> 80P Deduction >> Nature of Business Code.
Step 2:
Go to Transaction >> Deduction >> Part C >> 80P >> click on Details: 


Step 3:
Select the Description "Interest/Dividend from Investment in other co-operative society" (Which is applicable) and then Select the Nature of Business (Same as Step 1) and then Enter the Deduction amount:


Note: When you select the description, the software automatically shows the applicability of which heads of income are allowed for the deduction.
Step 4:
Go to Transaction >> General Information/ BS/ P&L:


Step 5:
Go to Profit and Loss >> Point Number 14 Other Income >> Dividend or Interest :


Step 6:
Now, Go to Transaction >> Business and Profession >> add New Business and then Click on  From Gen. Info P&L (54) and then click on Save button:


Step 7:
Go to Expenses Under Business and profession head and then Select Description from drop- down "Income Taxable Under Other heads of Income" and then click on Sub-Details button:


Step 8:
Select the Drop-Down "Income chargeable under the head Other Sources" and "Income chargeable under the head Other Sources-Dividend" and then Enter the Amount (Same as per P&L Point Number 14):

Step 9:
Go to Transaction >> Other Sources >> enter the amount in dividend and Saving Bank Account /FDR interest (The Amount is Not Less Than Step 6):


Note: Ensure that "Other Interest" is not considered when claiming the 80P deduction.


Hope this Helps.