Gujarat govt approves relief of Rs 1,500 crore for sugar cooperative societies

The issue, pending since 2007-08, had created a potential liability of nearly Rs 1,500 crore for the cooperative sugar mills.

In a significant decision aimed at strengthening the cooperative sector, the Gujarat State Government has officially approved the sugarcane prices paid by cooperative sugar societies to farmers during the seasons 2007-08 to 2014-15. Cooperation Minister Jitubhai Vaghani described the move as a major relief for the sugar cooperative societies and sugarcane farmers, saying it will eliminate a long-pending financial burden of approximately Rs 1,500 crore.

The decision will directly benefit more than two lakh sugarcane farmers across the state. Speaking to the media, Minister Vaghani explained that Gujarat’s sugar cooperative societies have consistently paid higher sugarcane prices to farmers than the Fair and Remunerative Price (FRP) fixed by the Central Government.

This was made possible due to additional revenue generated from by-products such as molasses, ethanol, and electricity through cogeneration.

However, the Income Tax Department had earlier treated the amount paid above the FRP as “profit”, resulting in tax demands on the societies.

The issue, pending since 2007-08, had created a potential liability of nearly Rs 1,500 crore for the cooperative sugar mills.

The situation changed after the Union Government, under the leadership of Prime Minister Shri Narendra Modi and Union Cooperation Minister Amit Shah, amended the Income Tax Act in 2023. The amendment allowed State Governments to officially approve sugarcane prices for Income Tax purposes.

Following this amendment, Chief Minister Bhupendra Patel constituted a high-level committee to examine the issue.

Based on the committee’s recommendations, the State Government has now granted retrospective approval to the prices paid during the said period.

Minister Shri Jitubhai Vaghani expressed gratitude to Prime Minister  Narendra Modi, Union Cooperation Minister Amit Shah, and Chief Minister  Bhupendra Patel for their support in resolving this long-standing issue. He reiterated that the State Government remains fully committed to protecting the interests of farmers and strengthening the cooperative movement in Gujarat.