Section 115BAD lets a co-operative society resident in India opt to pay tax at twenty-two per cent for any previous year relevant to the assessment year beginning on or after 1 April 2021. Total income must be computed without deductions under s. 10AA, s. 32(1)(iia), s. 32AD, s. 33AB, s. 33ABA, s. 35(1)(ii), (iia) and (iii), s. 35(2AA), s. 35AD, s. 35CCC and any provision of Chapter VI-A other than s. 80JJAA.
Losses and depreciation brought forward that are attributable to those deductions cannot be set off, and depreciation under s. 32 is claimed in the prescribed manner. Since the note "Ins. by Act No. 08 of 2023, w.e.f. 1-4-2024", the section applies subject to the Chapter other than s. 115BAE.
Operative consequences
If the society fails the conditions in any previous year, the option becomes invalid for that and later assessment years, and the other provisions of the Act apply.
Loss and depreciation attributable to forgone deductions are deemed given full effect. Unabsorbed depreciation on a block not given full effect before AY 2021-22 is adjusted in the written down value as on 1 April 2020.
The option is exercised in the prescribed manner by the due date under s. 139(1) and cannot be withdrawn.
Status
Section 115BAD is operative for AY 2026-27. The Finance Act, 2026 does not amend it.
The 2025 counterpart is s. 203. The Finance Act, 2026 amended that section by inserting "or 150" in sub-section (1)(a)(i) and adding sub-section (7). Sub-section (7) allows the deduction under s. 149(2)(d)(ii) up to the dividend distributed to members at least one month before the return due date. s. 536(2)(f) carries an existing option forward.
The 1961 Act governs AY 2026-27 and earlier assessment years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject the 2025 Act provision is s. 203.
Case Laws & Commentary
SECTION 115BAD — TAX ON INCOME OF CERTAIN RESIDENT CO-OPERATIVE SOCIETIES
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
A. SECTION COMMENTARY
A.1 Structural position & legislative purpose
Section 115BAD, inserted by the Finance Act, 2020 with effect from assessment year 2021-22, is the co-operative-society counterpart of section 115BAA. It offers a resident co-operative society the option to be taxed at a concessional rate of twenty-two per cent (effective rate 25.17% with surcharge of 10% and cess of 4%), in place of the normal co-operative-society rates, provided it computes its total income without the specified incentive deductions and additional/accelerated depreciation and without the related loss set-off. The Alternate Minimum Tax (section 115JC) does not apply to a society that opts in. The option is exercised by filing Form 10-IF on or before the due date for the return and is irrevocable.
The provision extends the September-2019 corporate rate-cut philosophy to the co-operative sector, which had historically borne higher marginal rates, and is to be read alongside the deduction in section 80P (co-operative societies) - a society claiming section 80P must weigh that benefit against the 22% concession, since the prohibited-deduction conditions interact with its 80P claim.
A.2 Sub-section / clause taxonomy
Sub-section (1): the 22% charge at the society's option, subject to the conditions. Sub-section (2): conditions - total income computed without the specified deductions (mirroring section 115BAA's list, adapted for co-operatives) and without the related loss/depreciation set-off. Sub-section (3): no carry-forward of the disallowed losses/depreciation. Sub-section (4): special-business adjustment. Sub-section (5): exercise of the option (Form 10-IF) by the return due date, irrevocable.
A.3 Core doctrinal themes
Theme (1) - Co-operative parity with corporates: 22% brings resident co-operative societies broadly in line with the section 115BAA corporate rate, on the same incentives-forgone basis; AMT (section 115JC) ceases to apply.
Theme (2) - Interaction with section 80P: a society must compare the value of its section 80P deduction (and other forgone incentives) against the 22% rate before opting; the prohibited-deduction conditions shape that calculus.
Theme (3) - Procedural option and irrevocability: Form 10-IF by the return due date is the gateway and is irrevocable, mirroring the 115BAA/Form 10-IC discipline and its condonation jurisprudence.
Inserted by the Finance Act, 2020 (w.e.f. AY 2021-22). The Finance Act, 2023 subsequently introduced section 115BAE (15% for new manufacturing co-operative societies), completing the co-operative concessional architecture. The Form 10-IF timeliness context tracks the cognate Form 10-IC condonation line under section 115BAA.
Finance Act 2026: no amendment to section 115BAD. The optional 22% regime for resident co-operative societies continues for AY 2026-27 onward.
A.5 CA practitioner pointers
(1) Compare the 22% rate against the society's section 80P deduction and other forgone incentives before opting - for many primary agricultural credit/marketing societies, the 80P deduction may outweigh the rate cut. (2) File Form 10-IF by the return due date; the option is irrevocable. (3) For a new manufacturing co-operative, consider section 115BAE (15%) instead. (4) Note that AMT (section 115JC) ceases on opting. (5) Where Form 10-IF was filed late, invoke the condonation approach developed for the cognate Form 10-IC.
B. FINANCE ACT, 2026 - IMPACT NOTE
Section 115BAD is NOT amended by the Finance Act, 2026. The optional 22% concessional regime for resident co-operative societies, with the Form 10-IF condition and the exclusion from AMT, continues for AY 2026-27 onward.
C. CASE LAW - CLUSTERED BY ISSUE
Cluster C-1 : The section 80P trade-off and the procedural option
Section 115BAD read with section 80P (the deduction trade-off) and the Form 10-IF timeliness condition.
Principle: A resident co-operative society opting under section 115BAD forgoes the specified incentive deductions; where it is entitled to a substantial section 80P deduction (the subject of a rich, settled jurisprudence - e.g. the Mavilayi line on primary agricultural credit societies), the value of that deduction must be weighed against the 22% concession before the option is exercised. The option itself is gated by a timely Form 10-IF, delay in which is condonable on the analogy of the Form 10-IC jurisprudence.
Relevance: Frames the real decision under section 115BAD - it is an economic trade-off against section 80P, not a free rate cut - and supplies the procedural relief route for a late Form 10-IF.
Candid note on the case-law field: Section 115BAD is recent and has a thin dedicated reported case-law field; the live jurisprudence is (i) the section 80P deduction line (relevant to the opt-in decision) and (ii) the cognate Form 10-IC condonation line (relevant to the procedural option). The position is stated candidly; no decision has been invented under section 115BAD.
D. PRACTITIONER'S NOTE
For a co-operative society, section 115BAD is a calculation, not a default: weigh the 22% rate against the section 80P deduction and other forgone incentives, and opt in only where the net effect is beneficial. The procedural risk is the Form 10-IF timing (relievable by the Form 10-IC condonation analogy); a new manufacturing co-operative should consider section 115BAE (15%) instead.
E. SOURCES & CITATIONS
Caveat: Treatise-style commentary for practitioners and academic use; not legal opinion. The 80P trade-off is fact-sensitive; verify the current statutory text, the prescribed form and the latest CBDT/appellate position before relying on any proposition.
Function in the statutory architecture
Section 115BAD lets a co-operative society resident in India opt to pay tax at twenty-two per cent for any previous year relevant to the assessment year beginning on or after 1 April 2021. Total income must be computed without deductions under s. 10AA, s. 32(1)(iia), s. 32AD, s. 33AB, s. 33ABA, s. 35(1)(ii), (iia) and (iii), s. 35(2AA), s. 35AD, s. 35CCC and any provision of Chapter VI-A other than s. 80JJAA.
Losses and depreciation brought forward that are attributable to those deductions cannot be set off, and depreciation under s. 32 is claimed in the prescribed manner. Since the note "Ins. by Act No. 08 of 2023, w.e.f. 1-4-2024", the section applies subject to the Chapter other than s. 115BAE.
Operative consequences
Status
Section 115BAD is operative for AY 2026-27. The Finance Act, 2026 does not amend it.
The 2025 counterpart is s. 203. The Finance Act, 2026 amended that section by inserting "or 150" in sub-section (1)(a)(i) and adding sub-section (7). Sub-section (7) allows the deduction under s. 149(2)(d)(ii) up to the dividend distributed to members at least one month before the return due date. s. 536(2)(f) carries an existing option forward.
The 1961 Act governs AY 2026-27 and earlier assessment years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject the 2025 Act provision is s. 203.
Case Laws & Commentary
SECTION 115BAD — TAX ON INCOME OF CERTAIN RESIDENT CO-OPERATIVE SOCIETIES
Case Laws & Commentary (Income-tax Act, 1961 as amended by Finance Act, 2026)
A. SECTION COMMENTARY
A.1 Structural position & legislative purpose
Section 115BAD, inserted by the Finance Act, 2020 with effect from assessment year 2021-22, is the co-operative-society counterpart of section 115BAA. It offers a resident co-operative society the option to be taxed at a concessional rate of twenty-two per cent (effective rate 25.17% with surcharge of 10% and cess of 4%), in place of the normal co-operative-society rates, provided it computes its total income without the specified incentive deductions and additional/accelerated depreciation and without the related loss set-off. The Alternate Minimum Tax (section 115JC) does not apply to a society that opts in. The option is exercised by filing Form 10-IF on or before the due date for the return and is irrevocable.
The provision extends the September-2019 corporate rate-cut philosophy to the co-operative sector, which had historically borne higher marginal rates, and is to be read alongside the deduction in section 80P (co-operative societies) - a society claiming section 80P must weigh that benefit against the 22% concession, since the prohibited-deduction conditions interact with its 80P claim.
A.2 Sub-section / clause taxonomy
Sub-section (1): the 22% charge at the society's option, subject to the conditions. Sub-section (2): conditions - total income computed without the specified deductions (mirroring section 115BAA's list, adapted for co-operatives) and without the related loss/depreciation set-off. Sub-section (3): no carry-forward of the disallowed losses/depreciation. Sub-section (4): special-business adjustment. Sub-section (5): exercise of the option (Form 10-IF) by the return due date, irrevocable.
A.3 Core doctrinal themes
Theme (1) - Co-operative parity with corporates: 22% brings resident co-operative societies broadly in line with the section 115BAA corporate rate, on the same incentives-forgone basis; AMT (section 115JC) ceases to apply.
Theme (2) - Interaction with section 80P: a society must compare the value of its section 80P deduction (and other forgone incentives) against the 22% rate before opting; the prohibited-deduction conditions shape that calculus.
Theme (3) - Procedural option and irrevocability: Form 10-IF by the return due date is the gateway and is irrevocable, mirroring the 115BAA/Form 10-IC discipline and its condonation jurisprudence.
A.4 Legislative evolution / Finance Act amendment trail
Inserted by the Finance Act, 2020 (w.e.f. AY 2021-22). The Finance Act, 2023 subsequently introduced section 115BAE (15% for new manufacturing co-operative societies), completing the co-operative concessional architecture. The Form 10-IF timeliness context tracks the cognate Form 10-IC condonation line under section 115BAA.
Finance Act 2026: no amendment to section 115BAD. The optional 22% regime for resident co-operative societies continues for AY 2026-27 onward.
A.5 CA practitioner pointers
(1) Compare the 22% rate against the society's section 80P deduction and other forgone incentives before opting - for many primary agricultural credit/marketing societies, the 80P deduction may outweigh the rate cut. (2) File Form 10-IF by the return due date; the option is irrevocable. (3) For a new manufacturing co-operative, consider section 115BAE (15%) instead. (4) Note that AMT (section 115JC) ceases on opting. (5) Where Form 10-IF was filed late, invoke the condonation approach developed for the cognate Form 10-IC.
B. FINANCE ACT, 2026 - IMPACT NOTE
Section 115BAD is NOT amended by the Finance Act, 2026. The optional 22% concessional regime for resident co-operative societies, with the Form 10-IF condition and the exclusion from AMT, continues for AY 2026-27 onward.
C. CASE LAW - CLUSTERED BY ISSUE
Cluster C-1 : The section 80P trade-off and the procedural option
Section 115BAD read with section 80P (the deduction trade-off) and the Form 10-IF timeliness condition.
Principle: A resident co-operative society opting under section 115BAD forgoes the specified incentive deductions; where it is entitled to a substantial section 80P deduction (the subject of a rich, settled jurisprudence - e.g. the Mavilayi line on primary agricultural credit societies), the value of that deduction must be weighed against the 22% concession before the option is exercised. The option itself is gated by a timely Form 10-IF, delay in which is condonable on the analogy of the Form 10-IC jurisprudence.
Relevance: Frames the real decision under section 115BAD - it is an economic trade-off against section 80P, not a free rate cut - and supplies the procedural relief route for a late Form 10-IF.
Candid note on the case-law field: Section 115BAD is recent and has a thin dedicated reported case-law field; the live jurisprudence is (i) the section 80P deduction line (relevant to the opt-in decision) and (ii) the cognate Form 10-IC condonation line (relevant to the procedural option). The position is stated candidly; no decision has been invented under section 115BAD.
D. PRACTITIONER'S NOTE
For a co-operative society, section 115BAD is a calculation, not a default: weigh the 22% rate against the section 80P deduction and other forgone incentives, and opt in only where the net effect is beneficial. The procedural risk is the Form 10-IF timing (relievable by the Form 10-IC condonation analogy); a new manufacturing co-operative should consider section 115BAE (15%) instead.
E. SOURCES & CITATIONS
Caveat: Treatise-style commentary for practitioners and academic use; not legal opinion. The 80P trade-off is fact-sensitive; verify the current statutory text, the prescribed form and the latest CBDT/appellate position before relying on any proposition.