In Maharashtra, Hindu new year (Gudi Padawa) is celebrated by raising gudhi (much like a flag). When did this custom started? The popular explanation is that Gudi is the symbol of 'Brahm dhwaj' or 'Indradhwaj', flag of Indra raised to celebrate the day of creation. Another belief is that it's celebration of Rama's victory over Ravana. I didn't find any reference to when this custom started. Is there any mention of this custom in any of Hindu scriptures or historical texts?
The mention of such a pole decked with finery and dedicated to Indra comes from the Adivansavatarana Parva of Mahabharata though it doesn't really connect it with Yugadi. However, it does mention it being used for annual celebrations so that could be the connection.
It is related to the Puru king Vasu Uparichar and how Indra was so pleased with him that he gifted him the pole besides other exotic gifts. I am sharing the relevant portion from the episode here:
And Indra said, 'O king, protect virtue on earth attentively and rigidly. Being virtuous, thou shalt, for all time, behold (in after life) many sacred regions. And though I am of Heaven, and thou art of earth, yet art thou my friend and dear to me. And, O king of men, dwell thou in that region on earth which is delightful, and aboundeth in animals, is sacred, full of wealth and corn, is well-protected like heaven, which is of agreeable climate, graced with every object of enjoyment, and blessed with fertility. And, O monarch of Chedi, this thy dominion is full of riches, of gems and precious stones, and containeth, besides, much mineral wealth. The cities and towns of this region are all devoted to virtue; the people are honest and contented; they never lie even in jest. Sons never divide their wealth with their fathers and are ever mindful of the welfare of their parents. Lean cattle are never yoked to the plough or the cart or engaged in carrying merchandise; on the other hand, they are well-fed and fattened. In Chedi the four orders are always engaged in their respective vocations. Let nothing be unknown to thee that happens in the three worlds. I shall give thee a crystal car such as the celestials alone are capable of carrying the car through mid air. Thou alone, of all mortals on earth, riding on that best of cars, shall course through mid-air like a celestial endued with a physical frame. I shall also give thee a triumphal garland of unfading lotuses, with which on, in battle, thou shall not be wounded by weapons. And, O king, this blessed and incomparable garland, widely known on earth as Indra's garland, shall be thy distinctive badge.
Next comes the pole or dhwaja that was worshiped by Vasu Uparichar after the passage of one full year:
"The slayer of Vritra (Indra) also gave the king, for his gratification, a bamboo pole for protecting the honest and the peaceful. After the expiry of a year, the king planted it in the ground for the purpose of worshipping the giver thereof, viz., Sakra.
The tradition was followed by other kings also to get blessings from Indra:
From that time forth, O monarch, all kings, following Vasu's example, began to plant a pole for the celebration of Indra's worship. After erecting the pole they decked it with golden cloth and scents and garlands and various ornaments. And the god Vasava is worshipped in due form with such garlands and ornaments.
And the god, for the gratification of the illustrious Vasu, assuming the form of a swan, came himself to accept the worship thus offered. And the god, beholding the auspicious worship thus made by Vasu, that first of monarchs, was delighted, and said unto him, 'Those men, and kings also, who will worship me and joyously observe this festival of mine like the king of Chedi, shall have glory and victory for their countries and kingdom. Their cities also shall expand and be ever in joy.'
As Wikipedia Gudi Padwa page details:
A notable sight during Gudhi Padwa are the numerous Gudhi arrangements at every household. It is a bright colorful silk scarf-like cloth tied at the top of a long bamboo. On top of it, one or more boughs of neem leaves and mango leaves are attached along with a garland of flowers. This arrangement is capped with a silver, bronze or copper pot (handi or kalash) signifying victory or achievement.
This could be the celebration that is continuing even today as evidenced by the decoration of the bamboo pole on Gudi Padwa that is even today referred to as the Indra Dhwaja.