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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

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.case of SSI Deduction from the actual cost of plant and machinery is not allowed subject to a maximum of rs 20 lakhs .Depreciation allowance or deduction is only allowed on fixed assets . building . 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.e. 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. The amount of depreciation is calculated on the diminishing balance method.The asset must be actually used for the purpose of the assesses business or profession 3. depreciation will be limited to rs 7590 of the amount calculated at the specific .i.

The rehabilitation allowance is allowed to the unit equvilvelant of 60 % of the amount of the deduction allowable to the unit. earthquake.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 .percentages on the written down value of the block of assets. reconstruction or revival . cyclone. Discuss the case of overseas organizations how they follow up unfair trade practices investment allowance .Riot or civil disturbances 3. REHABILITATION ALLOWANCE A rehabilitation Allowance is granted to SSI under section 33B of the income tax at 1961 . natural calamity 2.Flood. whose business is discontinued on account of following reasons 1.Accidental fire or explosion 4.

Expenditure on scientific research Under section 35 of the Income tax act 1961. 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. The investment allowance under section 31A of the income tax 1961. institutions or to a public company which has its objective of undertaking scientific research Example UDCT MUMBAI . 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.The investment allowance was introduced way back in 1976 to replace the initial depreciation allowance . a special dispensation has been provided for the plant and machinery installed in SSI. 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 .

.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.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.

Generation of the immediate employment opportunities with relatively low investments 2. .Dispersal of manufacturing activities all over the country. small towns and economically lagging regions It is therefore the Indian govt has started various programs for development of small scale sector in india .Effective mobilization of untapped capital and human skills 3.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. leading to growth of villages.

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. It was well realized that small scale industries are particularly suited for the utilization of local resources and for creation of employment opportunities . 1990 and 1991. 1980 . Industrial policies for development and promotion of SSE in the country are as follows -IPR. however they have to face acute problems of raw materials . skilled labour . 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. capital . mktg etc. . 1956. 1977.1948 THE IPR -1948 for the first time accepted the importance of SSI to the over all industrial development of the country. In a nut shell the main thrust on IPR-1948 Was laid on the small scale protection .

-IPR.as the basic aim of social and economic policy during this period. 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 .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. 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. The parliament had also accepted the socialist pattern of the society . 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.

000 according to the 1971 census.Small scale sector industries 1 cottage and household industries which provides the self employment on a large scale 2 Tiny Sector.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.Cottage and household 2.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. Measures were suggested to promote the scale and cotton industries included small Proposal of setting up DIC. 3 small scale industries.Tiny sector 3.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.DISTRICT INDUSTRY CENTRE .

000 as per 1981 census .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. 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. DEVELOPED AND PROMOTED. 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. 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.

As many 836 items were reserved for the exclusive manufacture in SMALL SCALE SECTOR 4. 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 .3. SIDO – SMALL INDUSTRIES DEVELOPMENT ORGANISATION was formed to improve the competitiveness of the products manufactured in the SMALL SCALE SECTOR 5.

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