Net SGST reimbursement to Micro, Small and Medium Manufacturing Enterprise (MSMEs)
You as an MSME in Gujarat can benefit from this scheme run by the Industries & Mines Department, Government of Gujarat under the state’s industrial policy (“Aatmanirbhar Gujarat” package). The purpose of the scheme is to boost manufacturing in MSMEs in Gujarat by reimbursing part of the SGST paid thereby reducing tax cost and improving competitiveness. The benefit for your business is that you will receive reimbursements of “net SGST” (State Goods & Services Tax) paid on eligible manufacturing output, subject to certain ceilings, over a 10-year period.
Key Features
- Reimbursement of Net SGST paid: “Net SGST reimbursement” means that your unit will be eligible to claim reimbursement of the SGST amount paid through the cash ledger after you have availed and used your eligible input tax credit.
- Ceiling based on Taluka category & eFCI: The scheme divides talukas into categories (Category 1 = backward areas; Category 3 = more urban/established zones). Based on this you get differing reimbursement percentages (100%, 90%, 80%) and differing ceilings (e.g., up to 7.5%, 6.5%, 5% of eFCI per annum).
- 10-year incentive period: The reimbursement is available for 10 years from your date of commercial production (DoCP) - meaning for each of the next 10 years you can claim, subject to other conditions.
- Eligible for new manufacturing units or expansions: The scheme targets manufacturing MSMEs that commence production in the scheme period or undertake eligible expansion/diversification; you cannot claim if you simply continue the old activity without meeting expansion or new production conditions.
- Must first utilise eligible ITC: The definition of “Net SGST” explicitly states that you must utilise the Input Tax Credit (ITC) before the SGST paid in cash ledger is considered for reimbursement. If you haven’t done that, your reimbursement claim may not be valid.
Financial Assistance
Eligibility Criteria
Who Can Apply:
- MSME units in Gujarat (Micro, Small or Medium classification as per investment in plant & machinery) that begin commercial production (or expansion) during the scheme’s operative period.
- The unit must manufacture eligible goods (as per the scheme definition) and have commercial production commence within the period defined.
- Located in Gujarat; the taluka where the project is located determines the category (Category 1/2/3) which affects the reimbursement quantum.
- Must maintain separate books/accounts for eligible manufacturing activity if same premises involves trading/services.
Who Cannot Apply:
- Units that have already availed overlapping incentives for the same investment under another scheme for the same product/investment component.
- Entities where the manufacturing activity is not eligible (e.g., solely trading or non-eligible product).
- Units failing to maintain production or shut down during the incentive period may face recovery of the incentive.
Documents Required
- Udyam/MSME registration certificate or acknowledgement.
- GST registration certificate (manufacturing unit).
- Provisional or Final Eligibility Certificate (PEC/FEC) issued under scheme for net SGST reimbursement.
- Certificate from Chartered Accountant showing eligible Fixed Capital Investment (eFCI) and commencement of commercial production date.
- Statement of GST outward and inward supplies for manufacturing units, separate books if also engaged in other activities.
- Copy of invoices/tax payment proof, evidence of SGST paid in cash ledger after ITC utilisation.
- Any other statutory approvals like GPCB consent for manufacturing activity.
- Undertaking of remaining in operation for the tenure of incentive period.
Application Process for the Scheme
Option 1: Apply with Bullit (Recommended)
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Option 2: Government Online Portal
- Visit the official portal of the MSME/Industries & Mines Department of Gujarat.
- Register your enterprise / obtain Udyam or other requisite registrations.
- Apply for the “Net SGST Reimbursement” component under the Aatmanirbhar Gujarat scheme, selecting the right taluka category and investment details.
- Upload required documents (see next section).
- On approval of the Provisional or Final Eligibility Certificate, claim quarterly/annual reimbursements of net SGST paid.
- The incentive is disbursed as per scheme guidelines after verification of claims.
Option 3: District Industries Centre (DIC) / MSME Facilitation Desk
- Visit your local DIC or MSME facilitation desk in your district.
- Get assistance in identifying taluka category, checking eligibility, preparing form and documents.
- Submit application via DIC or get help to upload to the portal.
- Track sanction and reimbursements through the local office and portal.
Frequently asked questions
What is the Net SGST reimbursement scheme for MSMEs in Gujarat?
It is an incentive under the Aatmanirbhar Gujarat industrial policy that reimburses the net SGST paid by eligible MSME manufacturing enterprises on their manufacturing output.
Who can apply for the scheme?
Micro, Small and Medium manufacturing enterprises located in Gujarat and registered under GST and Udyam can apply.
How long is the reimbursement available?
Eligible enterprises may receive SGST reimbursement benefits for up to 10 years from the commencement of production.
Are new MSME manufacturing units eligible?
Yes, new manufacturing units established in Gujarat can apply for SGST reimbursement under the scheme.
Can existing MSMEs claim reimbursement?
Yes, existing MSMEs expanding production capacity or undertaking new investment may also be eligible.
What taxes are reimbursed under this scheme?
The scheme reimburses the net State GST (SGST) paid on eligible manufactured goods.