Interest on deposits taxable in co-op society

SC Vasudeva

Please clarify on the following points:

a) Whether a primary co-operative society should deduct income tax on source on interest amount exceeding Rs 10,000 in a financial year.

b) Whether interest earned by individual from the primary co-operative society is taxable or not.

c) Whether the primary co-operative society should take PAN from Income-tax authorities for filing income-tax returns.

d) What returns a primary co-operative society should file which is having deposit?

— Gurdip Singh

Your queries are replied as under:

(a) Tax is required to be deducted at source in respect of interest paid by a primary co-operative society, if the amount of interest exceeds Rs 5,000. However, no tax is required to be deducted, if the interest is paid by a co-operative society to a member thereof or to another co-operative society.

(b) Interest earned by an individual from a primary co-operative society on the deposits is taxable in the hands of an individual.

(c) A primary co-operative society should obtain Permanent Account Number for filing its income-tax returns.

(d) The income-tax return will be filed by a co-operative society in ITR 5.

I am a government employee and taxpayer. My younger brother, who is also a government employee, had booked a residential plot through a land developer in January, 2015. On his request for financial help, I lent him Rs 1.5 lakh as financial help (without interest) through a DD of a nationalised bank. This amount consisted a maturity of FD of Rs 50,000 during December 2014 and its proceeds of Rs 30,000 with the same bank, personal savings of Rs 20,000 lying in my same savings account, wife’s and minor son’s savings of Rs 25,000 each lying in their respective savings accounts with the same bank. I have also submitted a signed declaration regarding extending this financial help to the department, in which my brother is serving, stating that this is a financial help to a brother in need and lent out amount is without any interest and will be returned as and when it is feasible to him.

The savings account from which I have transferred the amount is my salaried account and am dutifully mentioning this account number and bank branch concerned in the income tax return, being filed by me. Please advise whether I am supposed to complete any other formality with the Income Tax Department in this regard.

— Surinder Singh

I hope you have retained copies of the following documents:

(a) Bank statement/pass book for the relevant period reflecting

• the proceeds of fixed deposit made out of your savings account;
• cheque payment to your brother;

(b) the cheque counter foils for the cheque issued to your brother; and

(c) a copy of the declaration filed with the government department about which a reference has been made in the query.

In case of any inquiry from the Income Tax Department, you can produce the aforesaid evidence to the tax department. No further action is required at your end with regard to the amount advanced as a loan to your brother.

I am an LIC agent. There is Samwardhan pension scheme for LIC agents in which we contribute till the age of 60 years. Like other plans, we will receive pension at the age of 60 years. Please clarify whether we can get rebate under Section 80CCD introduced from FY 2015-16? The scheme is solely for LIC agents only.

— Girja Shankar Dwivedi

According to the provisions of Section 80CCD of the Income-tax Act, 1961 (The Act), deduction is admissible for an amount, not exceeding Rs 1 lakh deposited under a pension scheme notified by the Government of India. At present, the government has notified New Pension System under Notification No. F. No. 5/7/2003-ECB & PR dated 22.12.2003. No such notification has been issued so far for the scheme mentioned in the query. A deduction would be admissible in respect of the said scheme only if the same is notified by the Government of India under the aforesaid section.