Incentive Scheme for MSMEs in Powerloom Sector - Subsidy for State Goods and Services Tax

Incentive Scheme for MSMEs in Powerloom Sector: Subsidy for State Goods and Services Tax (SGST) is a West Bengal government scheme that gives a refund of the net SGST paid by eligible micro, small and medium enterprises in the powerloom sector for their approved projects. Launched on 1 January 2022 by the Department of Micro, Small & Medium Enterprises and Textiles, it supports powerloom units by returning a part of the state goods and services tax they pay, with the aim of improving fabric quality and creating jobs in the textile sector.

Scheme has been closed or it was a one time scheme which has been closed by the government.

The core idea behind this scheme was to push the use of new-age shuttleless powerlooms in the textile sector. By helping MSMEs cut their running costs, the state wanted to raise fabric quality, make better use of resources and widen the area of operation, so that West Bengal could grow as a leading powerloom hub in the country.

Incentive Scheme for MSMEs in Powerloom Sector - Subsidy for State Goods and Services Tax - Introduction

Under this scheme, an eligible enterprise in the powerloom sector got a refund of the net SGST paid to the Government of West Bengal for 8 years from the date commercial production began. The exact refund depended on the zone in which the project was located, with higher support given to units in the less developed zones.

Important to note is that the scheme was open only for projects that started production between 1 January 2022 and 31 December 2024. Once that window closed, no new unit could come under the scheme, which is why the incentive is no longer open for new applicants.

Key Information

Benefits

The subsidy helped an enterprise based on the location zone of its project, and it continued for 8 years from the date commercial operations started. The benefit structure was as follows:

A refund from all years combined was not allowed to go beyond 75% of the total fixed capital investment made in the approved project.

Eligibility

An enterprise could apply for this incentive only if it met all the conditions listed below:

• It should have been a micro, small or medium enterprise running in the powerloom sector.
• Commercial production should have started between 1 January 2022 and 31 December 2024.
• A four-party agreement had to be signed involving the Directorate of Textiles, a financial institution, the enterprise and Tantuja.
• The unit could be from the private, cooperative or joint sector, including units owned and managed by the State Government or Industrial Self Help Groups.
• The project should have been covered by a detailed project report or feasibility study.
• The project had to be approved and sanctioned by a Central Financial Institution, a Commercial Bank or a State Financial Institution.

Exclusions

The scheme did not apply in the following cases:

• Enterprises that had already received an eligibility certificate or had been sanctioned and paid incentives under another state incentive scheme.
• Enterprises that received an eligibility certificate under another state scheme, even if no money had been paid yet.
• Enterprises that started production before 31 December 2021 and applied for benefits under an earlier state incentive scheme.

Application Process

Applications were accepted offline only. An eligible enterprise had to fill the prescribed FORM-E and submit it to the Commissioner of Commercial Taxes, West Bengal.

STEP 1 - Fill the prescribed FORM-E completely with all project and financial details.

STEP 2 - Attach all required documents and submit the form to the Commissioner of Commercial Taxes, West Bengal before the deadline.

STEP 3 - The Commissioner certified the total net SGST paid, excluding input tax credit, on goods manufactured and sold during the year of the application.

Submission Deadline: The first application had to be submitted within 12 months of the start of commercial production.

Address: THE COMMISSIONER, COMMERCIAL TAXES, DIRECTORATE OF COMMERCIAL TAXES, 14, BELIAGHATA ROAD, KOLKATA-700015.

Documents

Applicants needed to keep the following documents ready when submitting FORM-E:

1. Memorandum and Articles of Association or partnership deed.
2. Statement of names and addresses of directors, partners or owners.
3. Copy of the approved project report.
4. Loan sanction and disbursement letters from the financial institution.
5. Copy of the signed four-party agreement.
6. Audited balance sheets for the last 2 years.
7. Records of existing manufacturing activity, capacity and production history for the last 3 years.
8. Land or building deeds or rent and lease agreements.
9. Mutation and land conversion certificates.
10. Valid consent to operate issued by the WBPCB.
11. SGST payment records.
12. Trade license.
13. First electricity bill.
14. Acknowledgement of Udyam Registration.
15. SC or ST certificate, if applicable.
16. Self-declaration as per the official scheme rules.
17. Receipt of the application submitted to the Commissioner of Commercial Taxes.

Definitions

Zone A

Zone A included the Kolkata Municipal Corporation Area and all municipal areas of North 24-Parganas, South 24-Parganas and Howrah.

Zone B

Zone B covered the Hooghly district, some parts of North 24-Parganas and South 24-Parganas, parts of Howrah, the Siliguri Municipal Corporation, and municipal areas of Paschim Medinipur, Purba Medinipur, Purba Bardhaman, Paschim Bardhaman and Nadia.

Zone C

Zone C included districts such as Malda, Jalpaiguri, Murshidabad, Darjeeling, Kalimpong and Alipurduar, along with the rural zones of Paschim Bardhaman, Purba Medinipur and Nadia.

Zone D

Zone D covered Birbhum, Purulia, Bankura, Uttar Dinajpur, Dakshin Dinajpur and Jhargram, plus the Sundarban areas of South and North 24-Parganas.

References

For the official scheme details and the download of FORM-E, the main department website is the MSME & Textiles Department of West Bengal. The full details of the scheme can also be checked on the Directorate of MSME, Government of West Bengal website.

Official website of MSME & Textiles Department: MSME & Textiles Department, West Bengal

Directorate of MSME, Government of West Bengal: MSME Directorate, West Bengal

FAQ's

Is this scheme still open in 2026?

No. The scheme was open only for projects that started production between 1 January 2022 and 31 December 2024, and it has not been reopened since.

What locations were classified as Zone A?

Zone A included the Kolkata Municipal Corporation Area plus all municipal areas of North 24-Parganas, South 24-Parganas and Howrah.

Which districts were included in Zone B?

Zone B covered the Hooghly district, parts of North and South 24-Parganas, parts of Howrah, the Siliguri Municipal Corporation, and municipal areas across Paschim Medinipur, Purba Medinipur, Purba and Paschim Bardhaman and Nadia.

What was the basic eligibility?

The enterprise had to be in the powerloom sector, start production on or after 1 January 2022, and sign a four-party agreement between the business, Tantuja, the Directorate of Textiles and the financial institution.

How were the SGST refund accounts maintained?

Records had to clearly state the net SGST paid, excluding input tax credit, on the specific items manufactured under the approved project.