Even as FPOs are waiting to get declared a “deemed mandis” by States to help them independently carry out buying and selling activities, some of the representatives have demanded that the farmer collectives should at least be considered as ‘farmer’. This is because the profit is shared among shareholder-farmers unlike a private company, though registered under companies law. Such a national policy will help them from paying mandi fees and income tax.

Though some States have allowed free trading outside mandi premises, a few like Uttar Pradesh charge mandi fee and other levies to the tune of 1.5 per cent on essential items like onion, tomato, potato, lemon, green chilli and ginger in the fruits and vegetable category. The fee is collected even if the trading happens outside the agriculture market yard.

“If FPOs are allowed exemption from mandi fees, they can directly sell outside the state and that will help farmers realise about Rs 150/quintal more on groundnut,” said Sanjay Gupta, CEO of Ramraj FPO, Jhansi (Uttar Pradesh).

Nitin Puri, CEO of KisaanSay, said most of the products his company directly sourcing from partner-FPOs. But, instead of buying raw material in bulk, KisaanSay has turned these FPOs into primary processors through handholding. “We have got them all necessary legal compliances like FSSAI and GST registration as a result we are not worried on mandi fee.”

But, Deepak Kumar of Sambhal Swarnim Potato FPO of Moradabad district of Uttar Pradesh said the government should treat FPOs differently from any private company. Even for any subsidy, it is the same as what any private company receives. “Mandi fees and other levies in Uttar Pradesh should be made zero for FPOs when we directly collect the farmers’ produce and sell it and already some states have allowed this,” Kumar said and wondered why only essential fruits and vegetables in UP are taxed in the F&V category.

Sources said that market fee at 1 per cent and development Cess at 0.5 per cent is levied on potato, onion, tomato, lemon, green chilli and ginger whether traded inside or outside mandis. Besides, 3 per cent charges are collected by commission agents when buying-selling happens in these six items within the agriculture market yard.

West Bengal, Rajasthan, Odisha, Maharashtra, Karnataka, Jharkhand, Gujarat, Chhattisgarh, Assam and Andhra Pradesh do not charge any fee in fruits and vegetables (F&V) when trading happens outside mandi complex. States such as Chhattisgarh, Assam, Jharkhand, Maharashtra, Odisha and West Bengal do not levy any fee or cess on F&V trading even inside mandis.

But Uttarakhand, Uttar Pradesh Telangana, Tamil Nadu, Rajasthan, Punjab, Karnataka, Gujarat, Haryana, Gujarat and Andhra Pradesh levy fee or cess or both upto 2 per cent. In Himachal Pradesh, only apple is taxed at 1 per cent both within and outside mandis. Similarly, in Madhya Pradesh, banana and orange attract mandi fee.

The commission fee charged by commission agents and fixed by the State government varies from state to state – between 2 per cent in Gujarat and Madhya Pradesh and 6 per cent in Maharashtra, Rajasthan and Delhi.

Published on July 17, 2026