Co- operative Society Act A cooperative is an autonomous association of persons who voluntarily cooperate for their mutual social,

economic, and cultural benefit. Cooperatives include non-profit community organizations and businesses that are owned and managed by the people who use its services (a consumer cooperative) and/or by the people who work there (a worker cooperative) or by the people who live there (a housing cooperative). A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations. Human societies are characterized by patterns of relationships (social relations) between individuals who share a distinctive culture and institutions; a given society may be described as the sum total of such relationships among its constituent members. In the social sciences, a larger society often evinces stratification and/or dominance patterns in subgroups. Insofar as it is collaborative, a society can enable its members to benefit in ways that would not otherwise be possible on an individual basis; both individual and social (common) benefits can thus be distinguished, or in many cases found to overlap. A society can also consist of likeminded people governed by their own norms and values within a dominant, larger society. This is sometimes referred to as a subculture, a term used extensively within criminology. More broadly, a society may be described as an economic, social, or industrial infrastructure, made up of a varied collection of individuals. Members of a society may be from different ethnic groups. A society can be a particular ethnic group, such as the Saxons; a nation state, such as Bhutan; or a broader cultural group, such as a Western society. The word society may also refer to an organized voluntary association of people for religious, benevolent, cultural, scientific, political, patriotic, or other purposes. A "society" may even, though more by means of metaphor, refer to a social organism such as an ant colony or any cooperative aggregate such as, for example, in some formulations of artificial intelligence. A Co-operative (External website that opens in a new window) is an organisation which focuses on the promotion of the interests of its members in accordance with the principles of cooperation. It is a voluntary association of ten or more members residing or working in the same locality, who join together on the basis of equality for the fulfillment of their economic or business interest. The basic feature which differentiates co-operatives from other forms of business ownership is that its primary motive is service to the members rather than making profits. But the objectives of a co-operative are primarily economic. It could be seen as a private business organisation that is jointly owned and controlled by its members, who also use its services. A co-operative is a legally established association which is owned and democratically controlled by its members. Co-operatives are based on the values of mutual help, self responsibility, democracy, equality, equity and solidarity. Co-operatives promote honesty, openness, social responsibility and caring for others.

The activities of co-operatives in various States are regulated through respective Co-operative Societies Act and Co-operative Societies Rules administered by the Registrar of Co-operative Societies appointed by the Government. Axation of Cooperative Societies A cooperative society means, a society registered or deemed to be registered under any law relating to cooperative societies for the time being in force in any State or under the Central act. Cooperative societies may be governed by the respective State cooperative societies Act or by the Multi-State Cooperative Societies Act, 2002. The societies, whose main objective is to serve the interests of its members in a particular State, are governed by the Cooperative Societies Act of that particular State. While, a Society whose main objectives is to serve the interests of its members in more than one State, are governed by the Multi-State Cooperative Societies Act, 2002. According to the Cooperative Societies Act of each State, a cooperative society registered within any State under the law of that State is not allowed to operate in other States without the permission of the Government or Registrar of Cooperative Societies of that State. In case of multi-State cooperative society, it can operate in more than one State as a matter of right, under the Act and no permission of any State is required to do its business. Provisions for Taxation of a Cooperative Society A Cooperative Society is a taxable entity under the Income Tax Act, 1961. A Cooperative Society under the Act is to be treated as an association of persons (AOP), which is included in the definition of 'person' under the Income Tax Act, 1961. Even though, for taxation purposes, the status of a cooperative society is to be taken as an Association of Persons, the section 67A and section 86 of the Act have been excluded from application to the members of society. A Cooperative Society is taxed at rates, which are different from those applicable to an AOP. Under the annual Finance Act , though individuals, Hindu undivided family, AOP or body of individuals, whether incorporated or not, or every artificial juridical person referred to in the Income Tax Act, are chargeable at rates prescribed in paragraph A, of the Finance act. A Cooperative society is chargeable to tax as per rates prescribed under paragraph B of Part1 of the first schedule to the annual Finance Act. The amount of income tax computed in accordance with the provisions of paragraph B , shall in the case of every cooperative society, be increased by a surcharge. The rate of surcharge is prescribed in each of the Finance Acts. The Cooperative Societies are entitled to several concessions, in the computation of their taxable income. Besides, they also enjoy the benefit of concessional rate of tax on their chargeable income under the annual Finance Act. As per Wealth Tax Act [Section 3(1)], only individuals, Hindu undivided families and companies are liable to wealth tax. Thus, no wealth tax is charged in the case of cooperative society.
2

Compute the taxable income for Cooperative Society

First compute the total income under the different heads i.e. income from house property, profits or gains of business or profession, capital gains, and income from other sources, ignoring the prescribed income exemptions. Thus, "gross total income" is obtained. Now, from the amount, the permissible deductions under the Income Tax Act are made. To the 'net income' so arrived at, the 'rates of tax' as per the Finance Act for the respective year is applicable to cooperative societies.

Now to the amount of tax, percent of income tax as surcharge prescribed in the Finance Act is added. As per Finance bill 2006 no surcharge is applicable for the year 2006-2007. From the tax liability so determined, the amount of 'rebate' in the Act is deducted.

Exemptions and Deductions granted to the Cooperatives under the Income Tax Act There are various types of exemptions and deductions available to cooperative societies.

Exemptions: - It includes certain classes of income which do not form part of total income and are exempted from income-tax. These are excluded from the computation of gross total income of an assesses. A return of income is also not to be filled for them. Such types of income fall under Chapter III of the Income Tax Act. Some of the permissible exemptions provided are:

Exemption of profits and gains from a new industrial undertaking in a free trade zone for ten years[Section 10A]. Exemption of the profits and gains for ten years from a 100% export oriented undertaking [Section 10B],etc.

Deductions :- It includes certain classes of income which are included in computing the total income of an assesses but are exempted from income-tax as they are basically deductions to be made in computing total income. A return of income is required to be filled for them. Such types of income fall under Chapter VI-A (Sections 80A to 80U) of the Income Tax Act. Some of the permissible deductions provided are:

As per Section 80A, in computing the total income of an assesses, the deductions specified in Section 80C to 80U shall be allowed from his gross total income. Section 80AB deals with deductions that need to be made with reference to the gross total income. Deduction of any amount under Section 80G in respect of donations given to certain funds, charitable institutions, etc. Deduction of 50% of profits and gains of projects implemented outside India [Section 80HHB]. Deduction of the entire profits from income from export business [Section 80HHC], etc.
3

Relevance of Section 80P The deductions in respect of income provided under Section 80P of the Income Tax Act are applicable to the cooperative societies alone. The provision has been incorporated in the Act for growth of cooperative societies. There are different heads of deductions enumerated in the section such that each is distinct and independent of other. To decide whether a particular category of income of a cooperative society is to be exempted from tax, it shall have to be seen whether it falls under the said heads or not. The deductions allowable under this section are in respect of net incomes from the activities or businesses, specified in the various clauses of the section. If a cooperative society carries on such activities, income from which is exempt and also carries on such activities, income from which is not exempt, then profits/gains attributable to former activity shall enjoy exemption and those attributable to latter one shall be taxed. Where a cooperative society earns income, which is partly taxed and partly entitled to special deduction, proportionate share of the expenses attributable to the earning of income, entitled to deduction, should be deducted in computing such income. List of co-operative departments:
1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 18) 19) 20) 21) 22) 23) 24)

Department of Registrar Co-operative Society, Delhi Office of Registrar of Co-operative Societies, Goa Registrar of Co-operative Societies, Gujarat Department of Co-operation, Andhra Pradesh Department of Co-operation, Meghalaya Sahakaar, Maharashtra Sahakara Sindhu, Department of Co-operation, Karnataka Co-operative Department, Tamil Nadu Department of Co-operation, Kerala Co-operatives Department, Rajasthan Department of Co-operation, Chhattisgarh Registrar of Co-operative Societies, Odisha Co-operative Department, Bihar Department of Co-operatives, Jharkhand Co-operatives Department, Uttar Pradesh Department of Co-operation, Madhya Pradesh Department of Co-operation, Punjab Co-operative Department, Himachal Pradesh Department of Co-operation, West Bengal Co-operative Department, Jammu & Kashmir Co-operation Department, Mizoram Co-operatives Department, Puducherry Department of Co-operation, Lakshadweep Co-operative Department, Tripura

Hon'ble Minister for Cooperation Thiru Sellur K Raju

TAMIL NADU COOPERATIVE UNION The cooperative movement in Tamilnadu has grown and spread like a banyan tree and taken deep roots since 1904 when the first cooperative societies act was enacted in the country, and is closely linked with the day to day affairs of the people. In order to help the growth of cooperatives and spread the knowledge of its achievements among the people and shape their minds, 20 State Cooperative Unions were established in the country and Tamilnadu Cooperative Union is one among them. Tamilnadu Cooperative Union was started on 4.1.1914. The first President of the Tamilnadu Cooperative Union is Thiru.M.Adhinarayana Ayya.

Objectives

To Develop the Cooperative Movement. To impart Cooperative Education and Training to cooperators, employees and members of Cooperative Societies and general public. To arrange for meetings, seminars, conferences, discussions etc. in connection with the Cooperative Movement. To carry out publicity works through publishing magazines in English and Tamil. To arrange to print pamphlets, statistical statement, telephone hand book etc., relating to Cooperative Movement. To arrange for imparting training to the office bearers, employees and officers of the Cooperative Societies. To assist in the establishment of new cooperative organisations. To act as an Information and Public Relations agency for providing information on Cooperative Movement. To propagate the ideals of Cooperation through short films/slides, video tapes etc. To give wide publicity about the policies, programme and achievements of cooperative movement through posters, stickers, banners and tom tom, etc. To maintain Cooperative Research and Development Fund and Cooperative Education Fund. To arrange for exhibitions depicting the achievements of Cooperative Movement.
5

Advantages of Cooperative Society 1. Easy to form: The formation of a cooperative society is very simple as compared to the formation of any other form of business organisations. Any ten adults can join together and form a cooperative society. The procedure involves in the registration of a cooperative society is very simple and easy. No legal formalities are required for the formation of cooperative society. 2. No obstruction for membership: Unless and otherwise specifically debarred, the membership of cooperative society is open to everybody. Nobody is obstructed to join on the basis of religion, caste, creed, sex and colour etc. A person can become a member of a society at any time he likes and can leave the society when he does not like to continue as ; member. 3. Limited liability: In most cases, the liabilities of the members of the society is limited to the extent of capital contributed by them. Hence, they are relieved from the fear of attachment of their private property, in case of the society suffers financial losses. 4. Service motive: In Cooperative society members are provided with better good and services at reasonable prices. The society also provides financial help to its members the concessional rates. It assists in setting up production units and marketing of produces c small business houses so also small farmers for their agricultural products. 5. Democratic management: The cooperative society is managed by the elected members from and among themselves. Every member has equal rights through its single vote but can take active part in' the formulation of the policies of the society. Thus all members are equally important for the society. 6. Stability and continuity: A cooperative society cannot be dissolved by the death insolvency, lunacy, permanent incapability of the members. Therefore, it has stable life are continues to exist for a longer period. It has got separate legal existence. New members join and old members may quit the society but society continues to function unless are otherwise all members unanimously decided to close the same.

7. Economic operations: The operation carried on by the cooperative society economical due to the eliminations of middlemen. The services of middlemen are provided by the members of the society with the minimum cost. In the case of cooperative society, the recurring and non-recurring expenses are very less. Further, the economies of scale-ma production or purchase, automatically reduces the procurement price of the goods, thereby minimises the selling price. 8. Surplus shared by the members: The society sells goods to its members on a nominal profit. In some cases, the society sells goods to outsiders. This profit is utilised for meeting the day-to-day administration cost of the society. The procedure for distribution of profit that some portion of the surplus is spent for the welfare of the members, some portion kept reserve whereas the balance shared among the members as dividend on the basis of these purchases. 9. State patronage: Government provides special assistance to the societies to enable them to achieve their objectives successfully. Therefore, the societies are given financial at lower rates. Government also extends much type of subsidies to cooperative societies strengthening their financial stability and sustainable growth in future. Disadvantages of Cooperative Society: Despite many an advantages, the cooperative society suffer from certain limitations c drawbacks. Some of these limitations, which a cooperative form of business has, are as follows: 1. Limited resources: Cooperative societys financial strength depends on the cap contributed by its members and loan raising capacity from state cooperative banks. The membership fee is limited for which they are unable to raise large amount of resources as their members belong to the lower and middle class. Thus, cooperative are not suitable for the large scale business which require huge capital. 2. Inefficient management: A cooperative society is managed by the members only. They do not possess any managerial and special skills. This is considered as major drawback of this sector. Inefficiency of management may not bring success to the societies. 3. Lack of secrecy: The cooperative society does not maintain any secrecy in business because the affairs of the society are openly discussed in the meetings. But secrecy is very important for the success of a business organisation. This paved the way for competitors to compete in better manner.
7

4. Cash trading: The cooperative societies sell their products to outsiders only in cash. But, they are usually from the poor sections. These persons require to avail credit facilities which is not possible in the case of cooperatives. Hence, marketing is a shortcoming for the cooperatives. 5. Excessive Government interference: Government put their nominee in the Board of management of cooperative society. They influence the decision of the Board which may or may not be favorable for the interest of the society. Excessive state regulation, interference with the flexibility of its operation affects adversely the efficiency of the management of the society. 6. Absence of motivation: The members may not feel enthusiastic because the law governing the cooperatives put some restriction on the rate of return. Absence of relationship between work and reward discourage the members to put their maximum effort in the society. 7. Disputes and differences: The management of the society constitutes the various types of personnel from different social, economical and academic background. Many a times they strongly differs from each other on many important issues. This becomes detrimental to the interest of the society. The different opinions and disputes may paralyses the effectiveness of the management. Functions of Multi-Purpose Co-operative Society The multipurpose co-operative society has large number of functions to discharge. As the name indicates its responsibility for different purpose for which it has been set up. It can work for arranging credit, improved seeds, agricultural implements, fertilizers, sanitation, health etc. for its members. Normally it discharges the following functions. 1. Making Arrangement for Credit: The main task of these co-operative societies is to arrange for short term credit for its members in order to help them to improve their agriculture and other trade and business. 2. Encouraging the Improved Method of Agriculture: These societies arrange supply of to the members seeds, fertilizers, agriculture implements etc. They also arrange for irrigation facilities so that the members may be able to have higher agricultural yields.

3. Marketing and Business: These societies not only help the farmers to improve their agriculture but also help them for marketing of the goods. Through such facilities they get proper price for the agricultural products and other goods produced by its members. 4. Set up of Subsidiary Cottage and Small Scale Industries: These societies help their members to set up other trades and industries. Though these cottage industries and small-scale industries, the economic condition of the members is improved and they are able to improve their standard of living. 5. Helping Members to Increase Their Standard of Living: These co-operative societies by providing various types of facilities for their members, improve their standard of living. They also carry out the programme of health, education and social education. They make arrangements for health and economic facilities, education and recreation for their members. 6. Encouraging the Member for Saving: These societies act as saving agencies and encourage their members to save a part of their income for their future needs. Through these savings, the members of such co-operative societies are able to get loans and also solve their problems. 7. Other Functions: The multi-purpose Co-operative societies apart from these functions discharge the following functions: a) Purchase various things for their members at a reasonable price and supply them. b) In order to convert the un-economic holding into economic these societies take a consolidation of holdings and co-operative farming. c) Try to solve the disputes between members through arbitration and adjudication. Thus multi-operative society discharge large number of functions for their members. The functions depend upon the interest and the object of the members. If the members are anxious to do more things, the multi-purpose co-operative societies can take to other function also.