Supreme Court reaffirms: Cooperative societies qualify for tax exemption on income.

In a recent ruling, the Supreme Court has clarified that cooperative societies are eligible for exemption from income tax. The court referred to previous orders and examined the definition given under the Banking Regulation Act and a circular issued by the Central Board of Direct Taxes. Justices M R Shah and C T Ravikumar stated that “cooperative societies would be eligible for income tax exemption under all circumstances.” This ruling will be a relief for cooperative societies, including those in Kerala, and was made in the course of considering the case of Mumbai Income Tax Commissioner versus Anna Saheb Patil Mathadi Kamgar Sahakari Patpedhi Limited.

The court emphasized the difference between cooperative institutions and banks that extend loans and other facilities to the public. “The cooperative institutions should not be considered as banks only on the ground that they give loans to their members,” the court said. The Supreme Court also referred to a 2021 verdict in the case between the Mavilayi Service Cooperative Bank in Kerala and the Income Tax Commissioner, Kozhikode, where it was held that cooperative institutions were eligible for income tax exemption.