Gandhinagar: The Gujarat government has approved the sugarcane prices paid by cooperative sugar societies to farmers between 2007-08 and 2014-15, a move expected to provide an estimated financial relief of Rs 1,500 crore to the state’s sugar cooperatives and directly benefit over two lakh farmers, Agriculture and Cooperation Minister Jitubhai Vaghani said on Tuesday.

The decision comes as a major relief for cooperative sugar mills that had been facing potential tax liabilities after the Income Tax Department treated payments made above the Centre’s Fair and Remunerative Price (FRP) as profits and issued tax demand notices.

Providing the background of the decision, the minister said sugar societies across the country generally pay sugarcane farmers prices based on the Fair and Remunerative Price (FRP) fixed by the Government of India. He added that Gujarat’s cooperative sugar societies have ensured farmers receive maximum benefits not only from sugar production but also from income generated through by-products such as molasses, ethanol and power generation through co-generation. As a result, sugarcane farmers in Gujarat have consistently received higher prices than farmers in several other states.

The tax issue stemmed from payments made during 2007-08 to 2014-15, exposing sugar cooperative societies to an estimated financial burden of nearly Rs 1,500 crore.

However, the issue was addressed after amendments to the Income Tax Act in 2023, introduced through the efforts of the Union Ministry of Cooperation. The amendment created a legal provision recognising sugarcane prices approved by state governments for income tax purposes.

Following the amendment, Chief Minister Bhupendra Patel constituted a high-level committee to examine the matter. Based on the panel’s recommendations, the state government decided to formally approve the sugarcane prices paid by cooperative societies during the disputed period.

The approval is expected to significantly reduce the financial burden on sugar cooperatives while providing indirect relief to farmers linked to the sector. DeshGujarat