Gujarat: State grants official approval to sugarcane payments
Gandhinagar, May 26
The Gujarat government on Tuesday cleared a significant financial and policy measure for the cooperative sugar sector while also opening registration for farmers to sell summer moong at the Minimum Support Price, bringing combined relief measures for more than two lakh farmers and cooperative institutions across the state.
Announcing the decision, Agriculture and Cooperation Minister Jitu Vaghani said: "The state government has granted official approval to sugarcane prices paid by cooperative sugar mills to farmers during the period 2007-08 to 2014-15."
The decision is expected to provide financial relief of around Rs 1,500 crore to Gujarat's cooperative sugar mills, effectively removing a long-pending tax-related burden.
The minister said the issue arose after the Income Tax Department treated payments made above the Fair and Remunerative Price (FRP), fixed by the Central government, as profit and issued tax demand notices to several cooperative sugar mills.
This created a potential liability estimated at Rs 1,500 crore for the sector. "The approval now provides formal recognition to these payments, which were made as part of revenue-sharing practices in the cooperative model," he said.
Explaining the sector's functioning, he said: "Gujarat's sugar cooperatives have consistently distributed earnings from by-products such as molasses, ethanol, and co-generated electricity to farmers, resulting in better returns for sugarcane growers compared with several other states."
The development follows legislative and policy changes at the national level after the creation of the Ministry of Cooperation.
"Under the leadership of Narendra Modi and Union Home and Cooperation Minister Amit Shah, amendments were made in 2023 to the Income Tax Act, allowing state-approved sugarcane pricing structures to be recognised for tax purposes," officials said.
Subsequently, the state government constituted a high-level committee, which recommended formal approval of the payments made during the said period.
Alongside this decision, the Agriculture Department has also announced the opening of online registration for the procurement of summer moong under the MSP scheme for the 2025-26 season.
Registration will begin on May 27 and continue until June 10, and will be carried out at e-Gram centres across Gujarat. Farmers will be required to complete registration through biometric fingerprint or face authentication.
Officials stated that farmer registration is mandatory for MSP procurement, and only land parcels included under the registered survey numbers will be considered eligible.
Farmers have been advised to ensure all their land records are updated in the system before applying.
Registration can also be completed through the 'Farmer Registry Gujarat' mobile application or the government portal, as well as through CSC centres, VCE operators, or village-level agriculture staff.
The Central government has fixed the MSP for summer moong at Rs 8,768 per quintal for the 2025-26 season.
Given that prevailing market prices are below this level, procurement under the 'Pradhan Mantri Annadata Aay Sanrakshan Abhiyan' has been planned to ensure farmers receive the minimum support price.
— IANS
Reader Comments
Rs 1,500 crore relief for cooperative mills is huge! But why did it take so long since 2007-08? The Income Tax department seems to have been creating unnecessary hurdles for genuine cooperative practices. At least now the 2023 amendment is being implemented properly.
This is exactly what Modi and Shah's Ministry of Cooperation was meant to do — simplify tax issues for cooperatives. Gujarat's sugar mills were paying farmers above FRP, that's not profit, it's revenue-sharing. Good to see common sense prevailing. Moong at Rs 8,768 per quintal MSP will also help Rabi crop farmers.
Hope the biometric registration process doesn't create issues for elderly farmers in remote villages. Technology is good but ground-level support is needed. Also, why only summer moong? Other pulses should also be covered under MSP more aggressively. Still, a positive move overall.
Great to see the cooperative sector getting its due recognition. Gujarat's farmers deserve better returns, and this approval validates the decades-old practice of sharing by-product profits. The Rs 1,500 crore burden lifting will strengthen these mills. Kudos to the state government and Centre for working together. 🇮🇳
The income tax department treating extra payments to farmers as 'profit' was absurd. Sugar cooperatives are not corporate entities — they're farmer-owned. This decision brings legal clarity. Now, let's hope the MSP procurement for moong is smooth and farmers actually get the price without middlemen siphoning off benefits.
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