IT RTN of Housing Society

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Sarthak Abhyankar (Querist)
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01 August 2017 Sir, In case of Housing Society surplus from members is exempt under which section of income tax act. Thanks..

Anand

Anand (Expert)
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01 August 2017 claim deduction u/s 80P

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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02 August 2024 In the context of a housing society in India, any surplus or income received from its members is typically exempt from income tax under specific conditions as outlined in the Income Tax Act. Here’s a detailed explanation:

### **Exemption of Surplus Income in Housing Societies**

1. **Section 80P of the Income Tax Act, 1961**

- **Applicable to Cooperatives**: Housing societies that are registered as cooperative societies and operate under the cooperative laws are generally covered under Section 80P of the Income Tax Act.
- **Exemption Details**: Under Section 80P, income derived by a cooperative society from its members is exempt from tax, provided it is derived from activities that are related to the cooperative’s primary purpose. This typically includes:
- **Interest on Deposits**: Interest income from deposits made by the members.
- **Surplus from Activities**: Any surplus or income earned from activities related to the cooperative's primary objectives, such as managing housing and other related activities.

2. **Key Conditions for Exemption**

- **Member Contributions**: The income must be derived from contributions or activities involving the members. If the surplus is generated from activities or transactions outside the scope of its cooperative objectives or with non-members, the exemption might not apply.
- **Compliance with Cooperative Laws**: The housing society must comply with the relevant cooperative laws and regulations applicable to it.

3. **Important Points to Note**

- **Non-Members Income**: Income received from non-members or external sources may not be eligible for the same exemption and may be subject to tax.
- **Filing and Documentation**: Proper documentation and filing are crucial. The housing society must maintain accurate records of income and expenditure and ensure proper compliance with tax regulations.

4. **Recent Amendments**

- **Budget Announcements**: Tax laws and exemptions are subject to periodic amendments, so it’s important to stay updated with the latest tax provisions and budget announcements.

### **Summary**

- **Section 80P** of the Income Tax Act provides exemption to cooperative housing societies for income derived from their members, including any surplus.
- The society must ensure that the income is related to activities fulfilling its cooperative objectives and comply with all relevant regulations.

For specific cases or complex scenarios, consulting with a tax professional or advisor is advisable to ensure compliance and to address any unique aspects of the housing society’s income and activities.

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