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Dividend

devendra (jhjdhj) (6 Points)

28 January 2016

Income of Credit co operative society is exempted from income tax in the hand of society .when such society distribute its profit by way of dividend to its member. Whether such receipts of dividend is also exempted in the hand of individual member or it is taxable in the hand of member

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CA Hariprasad Nayak (Chartered Accountant) (221 Points)
Replied 28 January 2016

Hi Devendra,

As you have rightly understood, income of the co-operative society is eligble for deduction under Section 80P of the Act.

However, dividend income received by the member of the Co-operative society is not exempt from taxation. Because the Section 10(34) which seeks to exempt dividends do cover only dividends referred to in Section 115-O. In other words, only those dividends which are subjected to dividend distribution tax ('DDT') u/s 115-O are given exemption. Co-operative societies do not have any obligation to pay DDT on their dividend declared.

Therefore, dividend income is liable for taxation in the hands of the receipient.

Hope the above calrifies.

Regards,

CA Hariprasad Nayak