The Income Tax Department has officially clarified that Co-operative Societies are also mandated to obtain and use a valid TAN (Tax Deduction and Collection Account Number) if they are involved in transactions that require Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). This clarification addresses a common misconception among smaller co-operatives and rural entities that believed themselves exempt due to their structure or scale of operations. However, as per the Income Tax Act, 1961, the obligation to deduct tax applies based on the nature and volume of payments, not the type of institution.

Co-operative Societies making payments such as salaries, contractor fees, professional charges, rent, or commissions beyond the specified thresholds are required to deduct TDS and file returns using their TAN. This requirement applies uniformly to agricultural co-operatives, credit societies, housing co-operatives, and other registered cooperative bodies. Non-compliance—whether due to ignorance or procedural delays—may result in penalties, interest charges, and disallowance of expenses, as provided under Sections 234E and 271H of the Income Tax Act.

To support compliance, the department has recommended that Co-operative Societies register for TAN via the NSDL e-Gov portal and use the TRACES system for filing quarterly returns, generating TDS certificates, and correcting errors. They are also encouraged to seek guidance from tax consultants or co-operative auditors to ensure proper classification of transactions and timely submissions. This move reaffirms the government’s stance that all entities deducting or collecting tax at source, regardless of their institutional nature, must adhere to the nation’s tax compliance framework.