The co-operative sugar industry of Maharashtra had been fighting a case with the income tax department about the categorisation of the payment made to the sugarcane farmers over and above the fair and remunerative price (FRP) fixed by the central government.
The income tax authorities had claimed to tax this cane payment over and above the FRP categorising it as income of the sugar mills, while the mills had claimed it to be their expenditure.
“I propose to provide an opportunity to sugar co-operatives to claim payments made to sugarcane farmers for the period prior to assessment year 2016-17 as expenditure. This is expected to provide them with a relief of almost ₹ 10,000 crore,” said finance minister Nirmala Sitharaman in her budget speech today.
Prakash Naiknavare, managing director, National Cooperative Sugar Factories Federation said: “The Finance Minister has announced to allow payment of additional cane price over and above FRP as and when it occurs as valid business expenditure. Thus, a total of Rs 9500 crores of income tax dues stand exempted, which is a big relief for relief the sugar cooperatives.”
The budget document says: “It is proposed that for sugar co-operatives, for years prior to A.Y. 2016-17, if any deduction claimed for expenditure made on purchase of sugar has been disallowed, an application may be made to the Assessing Officer, who shall recompute the income of the relevant previous year after allowing such deduction up to the price fixed or approved by the Government for such previous year.“