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TAX BENEFITS TO SSI SECTOR

The various tax benefits given to SSI are as below


1 TAX HOLIDAY
Under section 80 of the income tax act 1961 , new
industrial undertaking including the SSI are
exempted from the payment of income tax on their
profits subject to a maximum of 6% per annum of
their capital employed .
This exemption in tax is allowed for a period of 5
years from the commencement of production.
A SSI has to satisfy the following 2 conditions to
avail of this tax exemption facility
1.The unit should not have been formed by the
splitting or reconstruction of an existing unit
2.The unit should employ 10 or more workers in
a manufacturing process with power or at least
20 workers without power.
2 DEPRECIATIONS
Under section 32 of the INCOME TAX ACT 1961, A
SSI is entitled to a deduction on depreciation on
block of the asset at the prescribed rate. In the

case of SSI Deduction from the actual cost of plant


and machinery is not allowed subject to
a
maximum of rs 20 lakhs . The amount of
depreciation is calculated on the diminishing
balance method.
For plant and machinery used in manufacturing
that are used in manufacturing in double or triple
shift an additional allowance called Extra shift
allowance is available.
An SSI must satisfy the following conditions before
it become eligible for deduction in depreciations
1.The asses must be owned by the assesses
2.The asset must be actually used for the
purpose of the assesses business or profession
3.Depreciation allowance or deduction is only
allowed on fixed assets .i.e. building ,
machinery plant and furniture
4.All prescribed particulars must be furnished to
INCOME TAX OFFICER AS REQUIRED UNDER
SECTION
34(1)
OF
INCOMETAXACT1961
From assessment year 1991-92 in the case of a
company, depreciation will be limited to rs 7590
of the amount calculated at the specific

percentages on the written down value of the


block of assets.
REHABILITATION ALLOWANCE
A rehabilitation Allowance is granted to SSI under
section 33B of the income tax at 1961 , whose
business is discontinued on account of following
reasons
1.Flood, cyclone, earthquake, natural calamity
2.Riot or civil disturbances
3.Accidental fire or explosion
4.Action by enemy or action taken in combating
an enemy
The rehabilitation allowance should be used for
business purposes within 3 years of the units
re-establishment , reconstruction or revival .
The rehabilitation allowance is allowed to the
unit equvilvelant of 60 % of the amount of the
deduction allowable to the unit.
Discuss the case of overseas organizations how
they follow up unfair trade practices
investment allowance

The investment allowance was introduced way


back in 1976 to replace the initial depreciation
allowance .
The investment allowance under section 31A of
the income tax 1961, is allowed at the rate of 25%
of the cost of acquisition of
new plant or
machinery installed.
As per the eleventh schedule of the Income tax act
1961, a special dispensation has been provided for
the plant and machinery installed in SSI.
An SSI can avail investment allowance provided it
has put to use machinery or plant either in the year
or installations or in the immediate following year
failing which the benefit will be forfeited.
Expenditure on scientific research
Under section 35 of the Income tax act 1961, the
following deductions in respect of the expenditure
on scientific research is allowed
Any sum paid to the scientific research
associations or a university or colleges , institutions
or to a public company which has its objective of
undertaking scientific research
Example UDCT MUMBAI

TAX CONCESION TO SSI IN RURAL RAEAS


Under section 80-HHA in the income tax act 1961ARE ENTILTED TO A DEDUCTION OF 20% OF THE
PROFIT AND GAINS DERVIEVED BY RUNING A SSI IN
RURAL AREA- The deduction is allowed for a period
of 10 years from the year of commencement of
the manufacturing activity after 30th sept 1977
MODVAT EXEMPTIONS AND CONTROLS FOR THE
SSITHE MODVAT SCHEME INTENDS TO GREATLY AND
GRADUALLY EXPANDS ITS HORIZONS SO AS TO SET
OFF EXCISE AND OTHER COUNTERVAILING DUTIES
PAID ON VARIOUS INPUTS OF FINAL PRODUCTS.

Small Scale Enterprises have been given


an
important place in the frame work of Indian
planning for both ideological and economic
reasons.
Following are the objectives for development of the
SSE
1.Generation of the immediate employment
opportunities with relatively low investments
2.Effective mobilization of untapped capital and
human skills
3.Dispersal of manufacturing activities all over
the country, leading to growth of villages, small
towns and economically lagging regions
It is therefore the Indian govt has started various
programs for development of small scale sector
in india .

The govt objectives and intentions towards the


industry including the SSI were announced thru
the INDUSTRIAL POLICY RESOLUTIONS (IPRs)
These resolutions are announced under IPR 1948,
1956, 1977, 1980 , 1990 and 1991.
Industrial policies for development and promotion
of SSE in the country are as follows

-IPR- 1948
THE IPR -1948 for the first time accepted the
importance of SSI to the over all industrial
development of the country. It was well realized
that small scale industries are particularly suited
for the utilization of local resources and for creation
of employment opportunities . however they have
to face acute problems of raw materials , capital ,
skilled labour , mktg etc.
Therefore emphasis was laid in the IPR 1948 that
these problems of small scale enterprises should
be solved by the central govt with the co-operation
from the state govt.
In a nut shell the main thrust on IPR-1948 Was laid
on the small scale protection .

-IPR- 1956
THE IPR -1956 set in the nature and pattern of the
industrial development in the country
The IDRA 1951 was also introduced to regulate
and control industries in the country. The
parliament had also accepted the socialist pattern
of the society - as the basic aim of social and
economic policy during this period.
Some 128 items were reserved for exclusive
production in the small sector acquires sufficient
vitality to self supporting and development is
integrated with that of large scale industry.
SSIB constituted a work group in 1959 to examine
and formulate a development plan for small scale
industries during this period of 3rd five year plan.
The IPR 1956 for small scale industries was aimed
at protection plus development

IPR-1977
The main thrust in the IPR-1977 was on effective
promotion of cotton and small scale industries
widely dispersed in the rural areas and small towns

It is the policy of the govt that whatever can be


produced by small and cottage industries must
only be so produced
It was classified in the 3 categories
1.Cottage and household
2.Tiny sector
3.Small scale sector industries
1 cottage and household industries which provides
the self employment on a large scale
2 Tiny Sector- tiny sector incorporating investment
units in plants and machinery up to rs 1 lakhs and
situated in towns with a population of less than
50,000 according to the 1971 census.
3 small scale industries- industrial unit with an
investment of up to rs 10 lakhs and in case of
ancillary units with an investment up to rs 15
lakhs.
Measures were suggested to promote the
scale and cotton industries included

small

Proposal of setting up DIC- DISTRICT INDUSTRY


CENTRE

Reservation of 504 items under the


production in SMALL SCALE SECTOR

exclusive

IPR ADDED
PROMOTED AND AS PER THE
RESOLUTION THE SMALL SECTOR MUST BE THUS
PROTECTED, DEVELOPED AND PROMOTED.

IPR 1990
The IPR-1990 Was announced during june 1990 as
to the small scale sector the resolution continued
to give increasing the small scale enterprises to
serve the objectives of employment generation
Elements of IPR-1990
1.

INVESTMENTCEILING
IN
PLANT
AND
MACHINERY FOR SMALL SCALE INDUSTRIES
WAS RAISED FROM 35 LAKHS TO 60 LAKHS
AND ANICALLY UNITS FROM 45 LAKHS TO 75
LAKHS

2.

INVESTMENT CEILING FOR THE TINY UNITS


HAD BEEN INCREASED FROM RS 2 LAKHS TO
RS 5 LAKHS provided the unit was located in
area of population of 50,000 as per 1981
census

3.

As many 836 items were reserved for the


exclusive manufacture in SMALL SCALE
SECTOR

4.

SIDO SMALL INDUSTRIES DEVELOPMENT


ORGANISATION was formed to improve the
competitiveness
of
the
products
manufactured in the SMALL SCALE SECTOR

5.

GRETER STRESS WAS ON TRAINING


YOUTH AND WOEMEN UNDER THE EDP-

TO

INTRAPRENEURS
Intrapreneurs Employees of the organization
who work for the entrepreneurs
In life you work for ur own dream or u have to work
for the dream of others
Intrapreneurs fit the frame of working to complete
the dream of the entrepreneurs
Can u name any of the intrapreneurs who left and
started up their own enterprise

Characteristics of an Entrepreneur

The characteristics of an Entrepreneur that


contributes to the success are the results of
achievement motivations
1.Mental ability
2.Clear objectives
3.Business secrecy
4.Human relations ability
5.Communication ability
6.Motivator
7.Risk taker
8.Self confidence
9.High energy levels
10 Persistent problem solver
11 initiative driven
12 goal setter
13. moderate risk taker

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