Chapter VIII - Deductions to be Made in Computing Total Income
Section 150
Section 150: deduction for a federal co-operative's dividend income
Section 150 is a narrow, time-bound relief for a "federal co-operative" (as defined under the Multi-State Co-operative Societies Act, 2002, and notified by the Central Government). It lets such a body deduct dividend income from its investments in companies, but only for dividends arising from investments recorded on or before 31 January 2026 and distributed to members within the time the section sets, and only for tax years beginning before 1 April 2029.
On this page
Need advice on Section 150?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) If the gross total income of an assessee being a federal co-operative, in any tax year, includes any income by way of dividends received from its investment with any company, a deduction shall be allowed from such income, to the extent of the amount which,— (a) has arisen from such investment as recorded in its books of account on or before the 31st January, 2026; and (b) has been distributed by it to its members at least one month before the due date for filing the return of income under section 263(1).
(2) The provisions of this section shall not apply to any tax year beginning on or after the 1st April, 2029.
(3) For the purposes of this section, “federal co-operative” means a “federal co-operative” as defined in section 3(k) of the Multi-State Co-operative Societies Act, 2002 (39 of 2002) and notified as such by the Central Government.
Introduction
The Finance Act, 2026 version of Section 150 gives a narrowly timed dividend deduction to a notified federal co-operative. It depends on an investment recorded by 31 January 2026, a timely distribution to members, and a tax year before the 2029 sunset.
Key takeaways
Federal co-operative dividend
A notified federal co-operative may deduct qualifying company dividends arising from investments recorded by 31 January 2026 to the extent it redistributes them to members at least one month before its return due date.
Sunset
The Finance Act, 2026 provision does not apply to a tax year beginning on or after 1 April 2029.
The deduction
Where the gross total income of an assessee, being a federal co-operative, in any tax year includes income by way of dividends received from its investment with any company, a deduction is allowed from such income, to the extent of the amount which:
- Has arisen from such investment as recorded in its books of account on or before 31 January 2026; and
- Has been distributed by it to its members at least one month before the due date for filing the return of income under section 263(1).
Sunset date
The provisions of this section do not apply to any tax year beginning on or after 1 April 2029.
Definition
"Federal co-operative" means a "federal co-operative" as defined in section 3(k) of the Multi-State Co-operative Societies Act, 2002, and notified as such by the Central Government.
Step-by-step flow for applying Section 150
- 1
Is the assessee a federal co-operative defined in section 3(k) of the Multi-State Co-operative Societies Act, 2002 and notified by the Central Government?
- No: Section 150 does not apply.
- Yes: Go to the next step.
- 2
Does the tax year begin before 1 April 2029?
- No: Section 150(2): the section does not apply.
- Yes: Go to the next step.
- 3
Does gross total income include dividends from an investment with a company?
- No: Nothing to deduct under Section 150.
- Yes: Go to the next step.
- 4
Has the dividend arisen from an investment recorded in the books on or before 31 January 2026?
Only that part of the dividend qualifies.
- 5
Was that amount distributed to members at least one month before the return due date under section 263(1)?
The deduction is limited to the amount that satisfies both conditions; any other dividend remains taxable.
Practical checklist
Do
- Verify federal co-operative notification and the investment's book-entry date.
- Match company dividend received with member distribution made at least one month before the return due date.
Avoid
- Do not apply the old pre-amendment interpretation text as current Section 150.
- Do not claim for tax years beginning on or after 1 April 2029.
Illustrative example
Worked example: partly qualifying dividends
Hypothetical facts (illustration only, not a real taxpayer): A notified federal co-operative receives company dividends of ₹10,00,000 in a tax year beginning before 1 April 2029. Of this, ₹7,00,000 arises from investments recorded in its books on or before 31 January 2026 and ₹3,00,000 from an investment recorded later. It distributes ₹5,00,000 out of the qualifying dividends to its members more than one month before its return due date under section 263(1).
Book-entry test
Only ₹7,00,000 arises from investments recorded on or before 31 January 2026. The ₹3,00,000 fails clause (a).
Distribution test
Of the qualifying ₹7,00,000, only ₹5,00,000 was distributed within the time in clause (b).
Deduction
Deduction is allowed to the extent of the amount meeting both tests: ₹5,00,000.
Outcome
- Section 150 deduction: ₹5,00,000.
- Dividend remaining in income: ₹10,00,000 - ₹5,00,000 = ₹5,00,000.
- Keep the investment ledger showing the recording date and evidence of the date and amount of the member distribution.
Glossary
- Federal co-operative
- The notified body defined under Section 3(k) of the Multi-State Co-operative Societies Act, 2002.
- Sunset date
- The first tax-year start, 1 April 2029, from which Section 150 no longer applies.
Frequently asked questions
Which dividend income qualifies under Section 150?
Only dividend income from investments in a company that was recorded in the federal co-operative's books of account on or before 31 January 2026.
Is there a condition on distributing the dividend to members?
Yes - the deductible amount must have been distributed by the federal co-operative to its members at least one month before the due date for filing the return of income under section 263(1).
Until when is this deduction available?
The section does not apply to any tax year beginning on or after 1 April 2029.
Who counts as a "federal co-operative" for this section?
A body defined as a "federal co-operative" under section 3(k) of the Multi-State Co-operative Societies Act, 2002, and notified as such by the Central Government.
Need help applying this provision to your situation?
Talk to our tax team about co-operative society tax deductionsLast updated 9 October 2026