The Gujarat government on Tuesday, 26 May granted formal approval to sugarcane prices paid by cooperative sugar mills to farmers during 2007-08 to 2014-15, providing financial relief of around ₹1,500 crore to the state's cooperative sugar sector. The decision simultaneously unlocks online registration for farmers to sell summer moong at the Minimum Support Price (MSP), with combined measures expected to benefit more than two lakh farmers and cooperative institutions across Gujarat.

The Tax Dispute Behind the Relief

The relief addresses a long-standing tax liability that had hung over cooperative sugar mills for years. The Income Tax Department had treated payments made above the Fair and Remunerative Price (FRP) — the floor price fixed by the Centre — as profit, and subsequently issued tax demand notices to several mills. This created a potential liability estimated at ₹1,500 crore for the sector.

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.' He added that the approval 'provides formal recognition to these payments, which were made as part of revenue-sharing practices in the cooperative model.'

How Gujarat's Sugar Cooperatives Function

Minister Vaghani explained that Gujarat's sugar cooperatives have consistently distributed earnings from by-products — including molasses, ethanol, and co-generated electricity — directly to farmers, resulting in better returns for sugarcane growers compared with several other states. It is this above-FRP distribution that the tax authorities had classified as taxable profit, triggering the dispute.

The resolution follows national-level legislative changes. According to officials, amendments were made in 2023 to the Income Tax Act under the Ministry of Cooperation, allowing state-approved sugarcane pricing structures to be recognised for tax purposes. A high-level committee constituted by the state government subsequently recommended formal approval of the payments made during the disputed period.

MSP Registration for Summer Moong Opens May 27

Alongside the sugarcane decision, the Agriculture Department announced the opening of online registration for summer moong procurement under the MSP scheme for the 2025-26 season. Registration begins on 27 May and runs through 10 June, conducted at e-Gram centres across Gujarat via biometric fingerprint or face authentication.

The Centre has fixed the MSP for summer moong at ₹8,768 per quintal for 2025-26. Given that prevailing market prices are reportedly below this level, procurement has been planned under the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan to ensure farmers receive the guaranteed floor price. Only land parcels registered under the applicant's survey numbers will be eligible, and farmers have been advised to update all land records before applying.

Registration is also accessible through the 'Farmer Registry Gujarat' mobile application, the government portal, CSC centres, VCE operators, or village-level agriculture staff.

What Happens Next

With formal state approval now in place, cooperative sugar mills can seek resolution of outstanding tax demand notices, potentially freeing up significant working capital. For moong farmers, the procurement window closes on 10 June, making timely registration critical to accessing MSP benefits this season.