Lok Sabha Question No. 3036 (UNSTARRED), answered on 2023-08-08
Subject: Issues of Cooperative Sugar Mills
Ministry: COOPERATION
Asked by: Parvesh Sahib Singh

## GOVERNMENT OF INDIA MINISTRY OF COOPERATION

## LOK SABHA UNSTARRED QUESTION NO. 3036 TO BE ANSWERED ON 08/08/2023

## Issues of Cooperative Sugar Mills

## 3036 . SHRI PARVESH SAHIB SINGH VERMA:

Will the Minister of Cooperation be pleased to state the steps taken by the Government to resolve  various  pending  issues  of  Cooperative  Sugar  Mills  including  income  tax  related issues?

## ANSWER

## THE MINISTER OF COOPERATION सहकाįरता मंũी (SHRI AMIT SHAH)

To  realize  the  vision  of  'Sahakar  se  Samriddhi'  through  expanding  business  and increasing the profit of Cooperative Sugar Mills (CSMs), the Government has taken several steps to resolve various pending issues of CSMs including those related to income tax. They are as under:

## 1.  Relief  to  sugar  cooperatives  by  providing  deduction  on  account  of  the  amount incurred for purchase of sugarcane.

Through Finance Act, 2015 Section 36(1)(xvii) was inserted in Income Tax Act 1961 to provide  for  deduction  on  account  of  the  amount  of  expenditure  incurred  by  a  cooperative society engaged in the business of manufacture of sugar. The measure came into force w.e.f. 1.4.2016 i.e. assessment year 2016-17. However, the issue of treatment of additional payment for sugarcane price by CSMs as an income distribution to farmer members and resultant tax liabilities  remained  uncovered  which  was  clarified  by  Central  Board  of  Direct  Taxes  vide Circular  No  18/2021  dated  25.10.2021.  Accordingly,  resultant  tax  liabilities  on  CSMs  on additional payment for sugarcane price by them were mitigated w.e.f. 1.4.2016.

## 2.  Resolving  decades  old  pending  issues  related  to  income  tax  of  Cooperative  Sugar Mills

An  opportunity  has  been  provided  to  sugar  co-operatives  to  claim  payments  made  to sugarcane farmers for the period prior to assessment year 2016-17  as expenditure. Accordingly,  section 155 of the IT Act  has also  been amended to insert  a  new  sub-section (19) vide Finance Act, 2023, w.e.f. 1st April 2023. In order to standardize the manner of filing application  to  the  Jurisdictional Assessing  Officer  under  sub-section  (19)  of  section  155 of the Act and its disposal by the Jurisdictional Assessing Officer under the said section, CBDT vide Circular No. 14 of 2023 dated 27.07.2023 has issued Standard Operating Procedure for making application by the concerned Cooperative Sugar Mills. This has resolved the income tax issues in  this  matter  pending  for  decades. This  is  expected  to  provide  relief  of almost ₹10,000 crore.

## 3. ₹10,000 Crore loan scheme through National Cooperative Development Corporation (NCDC) for strengthening of Cooperative Sugar Mills

Ministry  of  Cooperation  has  launched  a  new  central  sector  scheme  named  'Grant-in-aid  to NCDC for  Strengthening  of  Cooperative  Sugar  Mills'  for  implementation  during  financial year  2022-23  and  2023-24  with  total  outlay  of  ₹1,000  crore.  The  NCDC  is  implementing agency of the scheme. Under this scheme grant of ₹1000 Cr. will be provided to NCDC, who will leverage the grant up to 10 times to provide loans up to ₹10,000 crore to Cooperative Sugar Mills for purpose of setting up ethanol plants or setting up cogeneration plants or for working capital or for all three purposes.

## 4. Preference in purchase of ethanol to Cooperative Sugar Mills

Cooperative Sugar Mills will be put at par with private companies for ethanol procurement by the Ministry of Petroleum under the Ethanol Blending Programme (EBP).

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