INVESTMENT SUBSIDY IN LIEU OF NET SGST

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INVESTMENT SUBSIDY IN LIEU OF NET SGST

Introduction

The Government of Haryana, under the Haryana Enterprises & Employment Policy (HEEP), 2020, has introduced the Investment Subsidy in Lieu of Net SGST scheme to make the state a preferred destination for industrial and business investments. Notified by the Governor on 29 July 2021, this scheme offers a range of fiscal incentives aimed at reducing the cost of doing business and promoting equitable, sustainable regional development powered by dynamic governance.

Objectives

  • Enhance Investment Climate: Encourage investors to set up units in Haryana by reducing operational costs.
  • Promote Balanced Regional Development: Drive industrialization in backward regions through higher subsidies.
  • Strengthen Competitiveness and Sustainability: Lower the effective tax burden to foster sustainable economic growth.

Applicability and Definitions

  • Commencement: The scheme applies to units commencing commercial production on or after 1 January 2021.
  • Effective Steps Clause: Units that take “effective steps” (e.g., acquiring land, sanction for finance, applications for CLU/NOC) by 31 December 2025 will also be eligible—provided they start commercial production within two years post such steps (i.e., by 31 December 2027), or by 31 December 2028 for mega-projects.
  • Categories:
    • New Industrial Unit: Units commencing after 1 Jan 2021.
    • Expansion/Diversification: Defined as additional investment equal to at least 50% of existing plant and machinery in a single tranche.

Incentive Structure: Quantum of Assistance

1. Ultra-Mega Projects

  • Tailor-made incentive packages are offered by the Haryana Enterprises Promotion Board (HEPB). The quantum and duration of subsidies are determined case-by-case
  • Clusters of at least 10 enterprises relocating or establishing in Haryana may be classified as Mega Projects and considered for such special packages.
  • 2. Mega Projects

Standard benefits include:

  • D-category Blocks: 75% of Net SGST for the first 5 years + 35% for the next 3 years, capped at 125% of Fixed Capital Investment (FCI).
  • C-category: 50% for 5 years + 25% for 3 years, capped at 100% of FCI.
  • B-category: 30% for 5 years + 15% for 3 years, capped at 100% of FCI.
  • Additional provisions: For projects with inverted duties or those depositing Net SGST below 5% of FCI, the subsidy may be limited to 5% of FCI over 8 years (annual ceiling of ₹5 crore per project)

3. Large Enterprises

Benefits vary by block category:

  • D-category: 75% SGST for 7 years + 35% for 3 years, capped at 125% of FCI.
  • C-category: 50% for 5 years + 25% for 3 years, capped at 100%.
  • B-category: 30% for 5 years + 15% for 3 years, capped at 100%.

4. MSMEs (Micro, Small & Medium Enterprises)

  • D-Blocks: 75% Net SGST for 10 years followed by 35% for 3 years; cap at 150% of FCI.
  • C-Blocks: 75% for 7 years + 35% for 3 years; cap at 125%.
  • B-Blocks: 50% for 5 years + 25% for 3 years; cap at 100%.
  • Special provision: New micro-units led by women / SC / ST in B, C, or D blocks receive 75% for 7 years + 35% for 3 years (D-block-like benefits), capped at 150%.

5. Thrust Sectors (e.g., Auto, Pharma, Textiles, Agro-processing, ESDM, Import Substitution)

These sectors are given premium incentives:

  • D-Blocks: 100% SGST for 10 years; cap at 150% of FCI.
  • C-Blocks: 75% for 8 years; cap at 125%.
  • B-Blocks: 50% for 7 years; cap at 100%.

How to Apply

While the Advice Consultant page lists a “Documents Required” section, detailed guidance isn't provided there. Broadly, applications are submitted via the MSME Directorate portal with:

  • Udyam Registration Certificate (URC) or Haryana Udhyam Memorandum (HUM)
  • Relevant project documentation and SGST filings
  • Claimed FCI details validated by Chartered Accountant
    These must be submitted within three months of the fiscal year end or scheme notification, whichever is later.

 

Why This Scheme Matters

  • Cost Reduction: A significant portion of SGST is refunded, freeing up critical capital for operational or expansion purposes.
  • Regional Equality: Higher benefits in D-blocks help reduce developmental disparities across the state.
  • Strategic Focus: Enhanced incentives for thrust sectors, startups, and underrepresented entrepreneurs (women, SC/ST) reflect inclusive growth aims.

Conclusion & CTA

The Investment Subsidy in Lieu of Net SGST scheme under HEEP 2020 offers a structured, incentive-driven framework to attract and sustain investment across Haryana. With clear eligibility norms, substantial fiscal benefits, and focused support for key sectors and entrepreneurs, it holds immense potential to drive industrial growth and job creation.

Next Steps:

  • Review eligibility and locate your block category.
  • Prepare documentation: URC/HUM, SGST returns, FCI details.
  • Apply promptly through the official MSME / Industries & Commerce portal.
  • Consult with authorized advisors if you aim for evaluation of cap applicability or special packages (e.g., for Mega/Ultra-Mega Projects).

 

 

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