Section 10(27) Income Tax Exemption for Co-operative Societies Supporting SC and ST Communities
Section 10(27) of the Income-tax Act, 1961 exempted the income of certain co-operative societies formed to promote the interests of Scheduled Caste or Scheduled Tribe members. The exemption was available only when strict membership and financing requirements were satisfied. Under the Income-tax Act, 2025, the corresponding category appears in Schedule VII, Table, serial number 32.
Meaning and purpose of section 10(27)
Under the 1961 Act, section 10(27) provided an income-tax exemption for a qualifying co-operative society formed to promote the interests of members of the Scheduled Castes, Scheduled Tribes or both, as referred to in section 10(26B). Its purpose was to support co-operative institutions working for the benefit of these communities.
The terms Scheduled Castes and Scheduled Tribes are constitutionally recognised categories, respectively addressed in Articles 366(24) and 366(25), read with Articles 341 and 342 of the Constitution of India. The exemption is for the qualifying co-operative society, not an automatic personal exemption for each member.
Who is eligible?
The assessee must be a co-operative society that satisfies all of the following conditions:
- Specified object: It is formed to promote the interests of members of the Scheduled Castes or Scheduled Tribes, or both.
- Restricted membership: Its members consist only of other co-operative societies formed for similar purposes. An ordinary society with individual members does not satisfy this particular membership condition.
- Qualifying finance: Its finances are provided by the Government and those other qualifying co-operative societies.
The society's registered objects, actual membership and sources of finance should support its claim. Being registered as a co-operative society, by itself, is insufficient.
Nature of income and amount exempt
| Requirement | Position under section 10(27) of the 1961 Act |
|---|---|
| Eligible assessee | Specified co-operative society promoting Scheduled Caste or Scheduled Tribe interests |
| Income covered | Any income of the society, provided the statutory eligibility conditions are met |
| Exemption amount | The entire qualifying income, without a separate monetary ceiling in the clause |
| Membership | Only other co-operative societies formed for similar purposes |
| Financing | Government and those other qualifying co-operative societies |
| Current legislation | Income-tax Act, 2025, Schedule VII, Table, serial number 32, for tax years governed by that Act |
Income not qualifying for the statutory exemption is subject to the otherwise applicable tax rules. Exemption from income tax does not automatically dispense with every reporting, audit, withholding or other legal obligation.
Treatment under the Income-tax Act, 2025
The Income-tax Act, 2025, as amended by the Finance Act, 2026 lists the specified co-operative society at serial number 32 in the Table in Schedule VII. The description and conditions retain the central requirements: promotion of Scheduled Caste or Scheduled Tribe interests, membership confined to similarly constituted co-operative societies, and finances provided by the Government and those societies.
When preparing a return, identify the correct tax year and confirm the current text, amendments, return forms and reporting instructions. The former section 10(27) citation remains useful for historical assessments and research into the 1961 Act.
Records supporting the exemption
- Registration certificate, bye-laws and objects of the co-operative society.
- Up-to-date membership register showing that all members are qualifying co-operative societies.
- Constitutional documents or registration details of each member society establishing its similar purpose.
- Government grant or funding documents and records of contributions from member societies.
- Audited accounts, income records, bank statements and relevant resolutions.
- Income-tax return disclosures and other records required for the applicable tax year.
How this differs from other co-operative society tax relief
Section 10(27) was a specific income exemption, not a general exemption for every co-operative society. Other societies may need to consider separate provisions, including deductions historically available under section 80P of the 1961 Act, subject to their own conditions and exclusions. The eligibility test for a deduction should not be confused with the narrower requirements of section 10(27).
Official legislation and useful links
- Income Tax Department: section 10 of the Income-tax Act, 1961
- Income-tax Act, 2025, updated for Finance Act, 2026 (official text)
- India Code: central laws and Constitution of India
- Income Tax Department: e-Filing portal
- Guide to section 10 exemptions
- Chapter VI-A deductions guide
Frequently asked questions
Is every co-operative society exempt under section 10(27)?
No. Only a society formed for the specified SC/ST purposes, with membership and financing satisfying the statutory requirements, qualified.
Can individuals be direct members of a society claiming this exemption?
The statutory condition requires its membership to consist only of other co-operative societies formed for similar purposes. Direct individual membership would not meet that condition.
Is all income exempt if the conditions are fulfilled?
Under the former section 10(27), the exemption covered any income of the qualifying society, without a monetary cap stated in that clause.
Where is the equivalent exemption in the 2025 Act?
It is listed in the Table in Schedule VII, serial number 32, of the Income-tax Act, 2025. Review the latest amended legislation for the relevant tax year.
This article provides general legal and tax information. Specific claims should be checked against the law applicable to the relevant tax year and the society's records.