Government of IndiaMinistry of Finance Budget 97-98




Budget Speech - PART B

Small Scale Sector

  1. The small scale sector makes an important contribution to our overall production, provides gainful employment and also contributes to our export effort. It is the declared policy of this Government to free the small scale industry from the rigours of cumbersome procedures. In line with this objective, I have radically simplified the scheme of excise duty concessions for the small scale units. I intend to continue the full exemption from duty on clearances upto Rs.30 lakhs in a financial year. Thereafter, a small scale unit would be required to pay a flat rate of excise duty on clearances beyond Rs.30 lakhs and upto Rs.100 lakhs, if the small scale unit does not avail of any modvat credit on duty paid inputs. The flat rate of duty will be 3% ad-valorem on clearances between Rs.30 to Rs.50 lakhs and 5% ad-valorem on clearances between Rs.50 to Rs.100 lakhs. The flat rate will apply for all specified goods to which the small scale exemption scheme is applicable. In the revised scheme of exemption, the small scale units will not be required to maintain complicated records for availing modvat. They will also not be required to determine the classification of goods.

  2. In order to curb avoidance from payment of duty, I have decided to exclude a few items like cotton yarn and texturised man-made yarn from the purview of the SSI exemption scheme.

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