Sec 44ab applicable to credit society or not ?
This query is : Resolved
06 August 2018
Is Tax Audit Applicable to Co-operative Society which providing credit faciltiy to its members having total sale of services more than 2 Crore and also enjoying deduction u/s 80P(100% profit exempt) ?
If Its applicable then which audit report to file ?
If Its applicable then which audit report to file ?
06 August 2018
Tax audit not applicable.
06 August 2018
but sir ITR 5 is showing error that 44ab applicable as turnover exceeds 1 crore
23 July 2025
The applicability of **Section 44AB** to **Co-operative Societies**, especially those providing credit facilities to their members, is a bit nuanced. Let's break it down:
### **Section 44AB** - Applicability:
Section 44AB mandates the **tax audit** of accounts for businesses if the **total turnover** or **gross receipts** exceeds Rs. **1 crore** (or Rs. 50 lakh for professionals). However, in the case of **cooperative societies**, there are additional considerations.
### **Co-operative Society with Credit Facilities:**
A **cooperative society** providing credit facilities to its members would typically fall under the category of a **cooperative bank** or a **credit cooperative society**. If such a society is **providing credit services**, then:
1. **Tax Audit Applicability**:
* **Tax audit is generally applicable** under **Section 44AB** for cooperative societies if the **total turnover or gross receipts exceed Rs. 1 crore** in a financial year.
* The fact that the cooperative society is enjoying **100% deduction under Section 80P** for profits does **not** exempt it from the tax audit requirements. Section 80P exemption applies to the **income of the cooperative society**, not the **compliance requirement** like tax audits.
2. **ITR Filing**:
* Since the **turnover exceeds Rs. 1 crore**, the **ITR 5** is showing an error because **Section 44AB** is applicable due to turnover crossing the threshold.
* Even though the society enjoys a deduction under **Section 80P**, the tax audit under **Section 44AB** is required as per the **Income Tax Act**, and the correct audit report (Form 3CA/3CB) should be filed.
3. **Filing ITR**:
* The **correct audit report** is typically **Form 3CA/3CB** for **cooperative societies** that are subject to tax audit under **Section 44AB**.
* The fact that the society enjoys an exemption under **Section 80P** does not affect the requirement for the audit under **Section 44AB**.
4. **Section 80P Exemption**:
* The **100% profit exemption** under **Section 80P** applies only to the income of the society (i.e., the income earned from the business activities that are eligible for the exemption), not to the overall **audit requirement**.
* The exemption means the profits are not taxable, but the **audit obligation** still applies due to the **size of the turnover**.
### **What Should Be Done:**
* Even though the cooperative society is **enjoying 100% exemption under Section 80P**, **Section 44AB** will apply if the **turnover exceeds Rs. 1 crore**, and the society needs to conduct a **tax audit**.
* **Form 3CA/3CB** will be required, and the **audit report** should be filed along with **ITR 5**.
* **ITR 5** showing an error indicating the applicability of **Section 44AB** is correct, and the **tax audit** requirement is valid.
### **Conclusion:**
Yes, **tax audit under Section 44AB is applicable to the cooperative society**, even if it enjoys **100% exemption under Section 80P**, **if the turnover exceeds Rs. 1 crore**. The society will need to file **Form 3CA/3CB** along with **ITR 5**.
### **Section 44AB** - Applicability:
Section 44AB mandates the **tax audit** of accounts for businesses if the **total turnover** or **gross receipts** exceeds Rs. **1 crore** (or Rs. 50 lakh for professionals). However, in the case of **cooperative societies**, there are additional considerations.
### **Co-operative Society with Credit Facilities:**
A **cooperative society** providing credit facilities to its members would typically fall under the category of a **cooperative bank** or a **credit cooperative society**. If such a society is **providing credit services**, then:
1. **Tax Audit Applicability**:
* **Tax audit is generally applicable** under **Section 44AB** for cooperative societies if the **total turnover or gross receipts exceed Rs. 1 crore** in a financial year.
* The fact that the cooperative society is enjoying **100% deduction under Section 80P** for profits does **not** exempt it from the tax audit requirements. Section 80P exemption applies to the **income of the cooperative society**, not the **compliance requirement** like tax audits.
2. **ITR Filing**:
* Since the **turnover exceeds Rs. 1 crore**, the **ITR 5** is showing an error because **Section 44AB** is applicable due to turnover crossing the threshold.
* Even though the society enjoys a deduction under **Section 80P**, the tax audit under **Section 44AB** is required as per the **Income Tax Act**, and the correct audit report (Form 3CA/3CB) should be filed.
3. **Filing ITR**:
* The **correct audit report** is typically **Form 3CA/3CB** for **cooperative societies** that are subject to tax audit under **Section 44AB**.
* The fact that the society enjoys an exemption under **Section 80P** does not affect the requirement for the audit under **Section 44AB**.
4. **Section 80P Exemption**:
* The **100% profit exemption** under **Section 80P** applies only to the income of the society (i.e., the income earned from the business activities that are eligible for the exemption), not to the overall **audit requirement**.
* The exemption means the profits are not taxable, but the **audit obligation** still applies due to the **size of the turnover**.
### **What Should Be Done:**
* Even though the cooperative society is **enjoying 100% exemption under Section 80P**, **Section 44AB** will apply if the **turnover exceeds Rs. 1 crore**, and the society needs to conduct a **tax audit**.
* **Form 3CA/3CB** will be required, and the **audit report** should be filed along with **ITR 5**.
* **ITR 5** showing an error indicating the applicability of **Section 44AB** is correct, and the **tax audit** requirement is valid.
### **Conclusion:**
Yes, **tax audit under Section 44AB is applicable to the cooperative society**, even if it enjoys **100% exemption under Section 80P**, **if the turnover exceeds Rs. 1 crore**. The society will need to file **Form 3CA/3CB** along with **ITR 5**.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CG Tax On residential property
- Applicable TDS for Purchase of Flat from NRI
- Claiming exemption of perquisite for employee-owned car under New Tax Regime in ITR-2
- Gift of mutual fund units to daughter
- Under construction property in ITR
- Not able to file ITR
- Building tax payment deduction in rental Income
- Reporting of STCG on Property in ITR
- Upload Level ValidationITR3Category of Defect B/D
- NRI ITR2 account in 2025-26 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.
- PF Taxable Income
- Clarification on Tax Audit Applicability and Reporting of F&O Transactions in ITR-3
- Interest credited in FY2025-2026 & TDS therein by EPFO does not reflect in AIS or Form 26AS
- 44ad eligble money lending interest
- Delisted shares sold in off market/ Rebate u/s87A
- In Exports Sales HSN details where to fill
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- Difference in tax comparison report
- Gst invoice numbering and delivery challan numbering
- Sales amount in Gstr1
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
