The Hindu : CII favours rationalisation of duty structure for SSIs

Online edition of India's National Newspaper
Tuesday, Jan 07, 2003

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Business

CII favours rationalisation of duty structure for SSIs

By Our Special Correspondent

NEW DELHI JAN. 6. In order to achieve a 12 per cent rate of growth (as targeted by the Tenth Five Year Plan) in real terms, the small scale sector requires both resources and commitment. However, these should not be mistaken for any incentives or subsidies, instead growth oriented and long term plans are the need of the hour.

According to the Confederation of Indian Industry's pre-budget memorandum submitted to the Government relief, if necessary, should be provided through transparent budgetary support, when exemptions are removed.

Welcoming the recommendations of the Kelkar Task Force for gradual reduction in the excise exemption limit (from Rs. 1 crore) to Rs. 50 lakhs by 2005-2006 for the small industry, to avail itself of the excise duty concessions, the memorandum has also supported the option for the SSIs to pay 4 per cent excise duty without CENVAT credit above the revised exemption limits, up to Rs. 1 crore.

Besides, the memorandum has also suggested a rationalisation (three rates) of the excise duty structure as well as discontinuance of the additional excise duty (AED) from April 1, 2003, when value added tax (VAT) would be implemented, across the country. All these measures would go a long way in reducing the procedural hassles and simplify the existing tax net.

On the indirect tax front the memorandum has also suggested a changeover to 8-digit classification code (from the present 6-digit classification code), to reduce the classification disputes, both in Central Excise and Customs.

Among the other issues addressed in the report of the Kelkar task force and welcomed by the CII, include drawing a negative list for SSI excise exemption; lowering of the excise registration limit to Rs. 50 lakhs; establishing tax clinics for the SSI sector in each Commissionerates; measures for simplification of procedures both relating to customs and excise; and no exemption from countervailing duty (CVD).

Highlighting the need for a reduction in the rate of corporate tax, the memorandum has suggested a 5 per cent point decrease that would allow the industry to generate more internal resources for further deployment. It has also been suggested that the procedures for deduction of TDS should be simplified and the limit for compulsory audit should be enhanced to Rs.1 crore (now Rs. 40 lakhs). However, the memorandum makes a strong case against aligning depreciation for income tax with the rates permitted under the Companies Act, as the average tax liability would be increased to 30 per cent (at present it is 22 per cent).

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