Sections 148-150 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 148, 149 and 150 give three deductions to specific assessees: a domestic company that receives dividends and passes them on, a co-operative society that earns income of the kinds listed in section 149, and a federal co-operative that receives and distributes dividends. This article, as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, sets out each section sub-section by sub-section.
Section 148 allows a domestic company a deduction for dividends received to the extent it distributes dividend at least one month before the due date for the return under section 263(1). Section 149 allows a co-operative society deductions for listed activities and incomes, some in full and some capped at Rs. 100000 or Rs. 50000. Section 150 gives a federal co-operative a deduction for dividends recorded in books on or before 31 January 2026 and distributed to members, and it ceases for tax years beginning on or after 1 April 2029.
Scope of these sections
All three sections sit in Chapter VIII, in the part for deductions in respect of certain incomes. The Act came into force on the 1st April, 2026 (section 1(3)), save as otherwise provided. Section 149 was amended by section 48 of the Finance Act, 2026, and section 150 was substituted by section 49 of that Act, each with effect from 1 April 2026. Later amendments, rules and notifications should be checked.
For the whole Chapter, see Chapter VIII of the Income-tax Act, 2025. If you manage the tax position of a co-operative society, our tax planning advisory team can help with the computation.
Section 148: deduction for certain inter-corporate dividends
Section 148(1)
If the gross total income of a domestic company in any tax year includes income by way of dividends from (a) any other domestic company, (b) a foreign company, or (c) a business trust, the domestic company is allowed a deduction equal to so much of the dividends received from the person mentioned in clause (a), (b) or (c) as does not exceed the amount of dividend distributed by it at least one month before the due date for filing the return of income under section 263(1).
The deduction therefore has a ceiling: the lower of the dividend received and the dividend the company has itself distributed, where the distribution is made at least one month before the return due date.
Section 148(2)
Where a deduction in respect of the amount of dividend distributed by the domestic company has been allowed under sub-section (1) in any tax year, no deduction is allowed in respect of that amount in any other tax year. The same distribution cannot be used twice.
Example
Kaveri Holdings Limited, a domestic company, receives dividends of Rs. 8,00,000 from another domestic company and itself distributes a dividend of Rs. 5,00,000 two months before the due date for the return under section 263(1). The deduction is the lesser amount: Rs. 5,00,000. Since that Rs. 5,00,000 of distribution has been used, it cannot support a deduction in another tax year. (All amounts are invented.)
Section 149: deduction for co-operative societies
Section 149(1) and (2): the sums allowed
Where the gross total income of a co-operative society includes income referred to in sub-section (2), the sums specified there are allowed as deduction in computing total income, in accordance with and subject to the section.
| Clause | Case | Deduction |
|---|---|---|
| (2)(a) | a society engaged in (i) banking or providing credit facilities to members; (ii) a cottage industry; (iii) marketing of agricultural produce grown by members; (iv) purchase of agricultural implements, seeds, livestock or other agricultural articles to supply members; (v) processing, without the aid of power, of members' agricultural produce; (vi) collective disposal of members' labour; (vii) fishing or allied activities | the whole of the amount of profits and gains of business attributable to any one or more of such activities |
| (2)(b) | a primary society supplying milk, oilseeds, cotton seed, cattle feed, fruits or vegetables raised or grown by its members to (i) a federal co-operative society engaged in supplying them, (ii) the Government or a local authority, or (iii) a Government company (as defined in section 2(45) of the Companies Act, 2013) or a corporation established by or under a Central, State or Provincial Act engaged in supplying them to the public | the whole of the amount of profits and gains of such business |
| (2)(c) | a society engaged in activities other than those in clause (a) or (b), independently or in addition | profits and gains attributable to such activities, not exceeding Rs. 100000 if a consumers' co-operative society, and Rs. 50000 in any other case |
| (2)(d) | income derived from investments with any other co-operative society by way of (i) interest or (ii) dividends | the whole of such income |
| (2)(e) | income from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities | the whole of such income |
| (2)(f) | a society that is not a housing society, an urban consumers' society, a society carrying on transport business, or a society performing manufacturing operations with the aid of power, where gross total income does not exceed Rs. 20000 | the amount of income by way of interest on securities; any income from house property chargeable under section 20 |
The words "cotton seed, cattle feed" in clause (b) were inserted by the Finance Act, 2026, and clause (d) was substituted by it, both with effect from 1 April 2026. The wording of clause (f) is printed with a semicolon between the two items of income; this article reproduces it as printed. The Companies Act, 2013 is named in clause (b)(iii) and should be checked for its definition.
Section 149(3): voting rights
For a society covered by sub-section (2)(a)(vi) or (vii) (collective disposal of members' labour; fishing or allied activities), the deduction applies only when the society's rules and bye-laws restrict voting rights to:
- individuals who contribute their labour or carry on fishing or allied activities;
- co-operative credit societies that provide financial assistance to the society; and
- the State Government.
Section 149(4) and (5)
The deduction in relation to sub-section (2)(a), (b), (c) or sub-section (3) is allowed with reference to the income included in gross total income after reducing the deduction under section 138, if the assessee is also entitled to that deduction. Section 149 does not apply to any co-operative bank that is not a primary agricultural credit society or a primary co-operative agricultural and rural development bank.
Section 149(6): definitions
Inserted by the Finance Act, 2026:
- "consumers' co-operative society" is a society for the benefit of the consumers;
- "primary agricultural credit society" has the meaning assigned in Part V of the Banking Regulation Act, 1949 (10 of 1949);
- "primary co-operative agricultural and rural development bank" is a society with an area of operation confined to a taluk, whose principal object is to provide long-term credit for agricultural and rural development activities.
The Banking Regulation Act, 1949 should be checked for Part V.
Example
Sahyadri Fishermen's Co-operative Society, with rules restricting voting rights to individuals who carry on fishing, earns profits of Rs. 6,00,000 from catching and marketing fish. Under clause (a)(vii) the whole of that amount is deductible (subject to section 138, if it is also entitled there). If it also had Rs. 70,000 attributable to an activity outside clauses (a) and (b), the deduction on that part is limited to Rs. 50000, because it is not a consumers' co-operative society. (Amounts invented.)
Section 150: deduction for a federal co-operative
Section 150 was substituted by the Finance Act, 2026, with effect from 1 April 2026.
- Section 150(1). If the gross total income of a federal co-operative in any tax year includes dividends received from its investment with any company, a deduction is allowed to the extent of the amount which (a) has arisen from the 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 under section 263(1).
- Section 150(2). The section does not apply to any tax year beginning on or after the 1st April, 2029.
- Section 150(3). "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. What has been notified is not in the text consulted; check that Act and the notification.
Need help with co-operative or dividend deductions?
Distribution dates, the activity classification in section 149(2) and the notified status under section 150(3) all change the outcome. Our tax planning advisory service can check the position before the return is filed.
Key takeaways
- Section 148: the deduction for a domestic company is capped at dividend distributed at least one month before the return due date, and the same amount cannot be used again.
- Section 149: some incomes are deducted in full, others capped at Rs. 100000 (consumers' co-operative society) or Rs. 50000 (any other case).
- Section 149(5): it does not apply to a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank.
- Section 150: federal co-operative dividends recorded in books on or before 31 January 2026 and distributed in time qualify; the section stops for tax years beginning on or after 1 April 2029.
- Sections 149 and 150 were changed by the Finance Act, 2026, with effect from 1 April 2026.
Read next
- Section 147: deduction for Offshore Banking Units and IFSC units
- Sections 151 and 152: royalty income of authors and royalty on patents
- Section 153: deduction for interest on deposits
- Chapter VIII of the Income-tax Act, 2025
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.