Aatmanirbhar Gujarat Scheme for Assistance to Mega Industries: Reimbursement of SGST Paid on Capital Goods

What is the Aatmanirbhar Gujarat Scheme reimbursement of SGST on capital goods?

The Aatmanirbhar Gujarat Scheme for assistance to Mega Industries is an incentive package notified by the Industries and Mines Department, Government of Gujarat, through Government Resolution No. MIS-102022-1271(3)-I dated 5 October 2022. The "Reimbursement of SGST Paid on Capital Goods" component of that scheme returns to a mega industrial unit the State GST it pays while buying the plant, machinery and other capital goods that make up its project.

According to the scheme guideline issued by the Office of the Industries Commissioner (approval letter No. PRCH-102022-1271-I dated 25 July 2023), an eligible mega industrial unit is entitled to 100% reimbursement of input SGST paid on capital goods within the investment period, to the extent input tax credit is admissible under the Gujarat GST Act 2017. The reimbursement is paid after one year from the commencement of commercial production, in twenty equal annual instalments.

Two points make this component unusual. First, capital goods for this purpose are the components already defined as eligible Fixed Capital Investment under the scheme, so the definition is tied to the project's approved asset base rather than to a separate list. Second, the guideline confirms the unit can claim this reimbursement over and above the input tax credit of SGST and/or depreciation it is otherwise entitled to.

The scheme is operative from 5 October 2022 to 4 October 2032. A ten-year window, longer than the five-year windows used for the parallel Large Industries and MSME schemes.

Who is eligible for the Mega Industries SGST reimbursement?

A unit can claim if:

• It is a mega industrial unit. An industrial undertaking in a thrust sector with investment in plant and machinery of at least Rs 2,500 crore that provides direct employment to at least 2,500 persons.
• The employment count is met. For eligibility, the 2,500-person test includes both employees on the unit's direct payroll and direct contractual employees engaged through contracting agencies registered with the labour and employment department.
• It holds a Registration Certificate under the scheme and then a Provisional or Final Eligibility Certificate issued by the Industries Commissionerate.
• The capital goods were acquired and paid for during the eligible investment period defined in para 3 of the Government Resolution.
• Commercial production has started; claims can only be submitted after the date of commencement of commercial production (DoCP).

Who cannot apply:

• Individuals, proprietorships, MSMEs and ordinary large industries are not eligible. This is not a citizen benefit and there is no personal payout; the applicant must be an industrial undertaking crossing both the Rs 2,500 crore investment test and the 2,500-employee test.
• Units that have already availed the same incentive under another Gujarat government scheme cannot double-claim. A notarised affidavit of non-availment under any other state government scheme is part of the registration checklist.
• Units in the chemicals, pharmaceuticals or API sectors that cannot show a captive effluent treatment plant or access to a common effluent treatment plant do not clear the registration checklist.
• Trading activity is outside the scheme. Where trading and manufacturing run from the same premises, the undertaking must maintain separate CA-certified books for the manufacturing unit.

What counts as eligible capital goods and investment?

The guideline widens eligible Fixed Capital Investment in three practical ways. Desalination plants and renewable power plants set up within Gujarat exclusively for the mega unit's captive use count as eligible FCI, whether or not they sit inside the factory premises. All components of eligible FCI are counted at final invoice value including all taxes. Where up to 10% of a contract value is withheld as a performance guarantee and released after the investment period closes, that part payment still counts, provided the guarantee was executed within the eligible incentive period.

Payments made under a Letter of Credit are treated as payments made, so long as the assets were acquired and used in production before the last date of the eligible investment period.

How to apply for the Mega Industries SGST reimbursement

1. Register on the Investor Facilitation Portal at ifp.gujarat.gov.in and file the Registration application in the prescribed format with the Annexure-A checklist — constitution documents, IEM Part A, GST registration, land possession and NA permission, the Detailed Project Report and the affidavit of non-availment.
2. File within the time limit. The application for registration must be made within one year of the date of first disbursement of the term loan, within one year of the date of commencement of commercial production, or within one year of 5 October 2022, whichever is later. A unit may also apply before either event.
3. Apply for the Provisional Eligibility Certificate (PEC) with the Annexure-B checklist, addressed to the Joint Commissioner of Industries, Large-INC Branch, Office of the Industries Commissioner, Udyog Bhavan, Gandhinagar. Include the CA-certified statement of input SGST on capital goods acquired and paid up to the date of commercial production. A team appointed by the Industries Commissioner then physically verifies the assets.
4. Apply for the Final Eligibility Certificate (FEC) with the Annexure-C checklist, including a CA-certified statement of input SGST on capital goods for the whole eligible investment period, the project completion certificate, the audited balance sheet and the employment statement. If the entire investment is complete by the date of commercial production, a unit may go straight to FEC without a PEC.
5. File the yearly SGST-on-capital-goods claim in the prescribed format with the Annexure-F documents, once the PEC or FEC is in hand and commercial production has started.

Registration alone confers nothing. The guideline states plainly that by merely getting a Registration Certificate an industrial undertaking is not entitled to incentives automatically, each incentive has its own claim route.

How is the money actually released?

Reimbursement begins one year after commercial production and runs in twenty equal annual instalments. Because the scheme's incentive period for large projects is long, the guideline allows the PEC to be revised as investment continues: one revision for projects up to Rs 5,000 crore of gross fixed capital investment (24-month investment period from DoCP), two for projects up to Rs 10,000 crore (36 months), and three revisions for larger projects, with investment periods stretching to 96 months from DoCP for projects above Rs 1,50,000 crore. Arrears created by each revision are spread in equal instalments over the remaining eligible incentive period.

The Final Eligibility Certificate is mandatory. If a unit draws incentives on a provisional certificate and does not apply for final eligibility within the prescribed time, the guideline provides that incentives are temporarily stopped until the final eligibility application is received.

Why claims get delayed or reduced

• Late application, the delayed period is deducted from the eligible incentive period, and a deduction made at the PEC stage carries into the FEC even if the FEC application itself was on time.
• Missing CA certification in the prescribed format for input SGST on capital goods.
• Assets not paid for within the eligible investment period, or vendor payments withheld beyond 10% of contract value.
• No separate accounting where trading and manufacturing share premises.
• Physical verification failure at the PEC inspection stage.
• Not meeting the employment test of 2,500 direct and direct-contractual persons.

Where to get help

• Investor Facilitation Portal helpline: 1800 233 1847, 10:30 AM to 6:10 PM on working days.
• Joint Commissioner of Industries, Large-INC Branch, Office of the Industries Commissioner, Udyog Bhavan, Gandhinagar 382 010.
• Scheme text, guideline and taluka classification notification are published on ic.gujarat.gov.in under Aatmanirbhar Gujarat Schemes.

The Government Resolution prevails over the guideline. The guideline itself states it is issued only to make application processing understandable, and that for legal interpretation the provisions of the Government Resolution apply.