INTRODUCTION AND CAPITAL REQUIREMENTS:
SSI stands for Small Scale Industries. A small scale industry (SSI) is an industrial undertaking in which the investment in fixed assets in plant & machinery, whether held on ownership term or on lease or hire purchase, does not exceed Rs. 1Crore. However, this investment limit is varied by the Government from time to time. Objectives of the Registration Scheme
i. To enumerate and maintain a roll of small industries to which the package of incentives and support are targeted.
ii. To provide a certificate enabling the units to avail statutory benefits mainly in terms of protection.
iii. To serve the purpose of collection of statistics.
iv. To create nodal centres at the Centre, State and District levels to promote SSI.
Features of the Scheme
i. Registration is voluntary and not compulsory.
ii. Two types of registration is done in all States. First a provisional registration certificate is given. And after commencement of production, a permanent registration certificate is given.
iii. PRC is normally valid for 5 years and permanent registration is given in perpetuity.
COMPULSORY/ VOLUNTARY REGISTRATION:
Registration of a small scale unit is not compulsory. But, its registration with the State Directorate or Commissioner of Industries or DIC’s makes the unit eligible for availing different types of Government assistance like financial assistance from the Department of Industries, medium and long term loans from State Financial Corporations and other commercial banks, machinery on hire-purchase basis from the National Small Industries Corporation etc.
Benefits under the Small Scale Industries Schemes:-
Since the company is registered as a SSI, it avails the following benefits:-
1. Cheap Bank Finance
2. Under the government’s Focus Scheme, the company is funded by 50% for buying the machines.
3. Duty Drawbacks
4. Exempt from Sales Tax
5.Exempt from Excise Duty
6. Its even easier to get licenses and permissions
7. credit guarantee scheme
8. priority sector lending
9. capital subsidy
10. reduced customs duty
11. power tariff subsidies
12. ISO-9000 Certification reimbursement
13. Exemptions under tax laws etc.
14. and several other benefits provided by the State Government
The registration certificate so issued by the concerned authority is seen as a proof of the unit being a small scale unit. It enables the unit to get several concessions like :-
TYPES OF REGISTRATION
PROVISIONAL REGISTRATION: A small scale unit is generally subjected to two types of registration. Initially, a provisional registration is granted for the proposed enterprise. It is termed provisional because the enterprise is yet to come into existence. It is granted for a specified period of time during which the unit is expected to be setup.
A ‘Provisional Registration Certificate (PRC)’ enables the unit to obtain :-
(i) term loans and working capital from financial institutions, banks under priority sector lending;
(ii) facilities for accommodation, land and other approvals;
(iii) no objection certificates (NOCs) and clearances from regulatory bodies such as pollution control board, labour regulations, etc.
Though, provisional registration is not compulsory for getting a permanent registration. But, a provisional certificate enables the unit to apply to the various departments and agencies for assistance in setting up of the enterprise.
PERMANENT REGISTRATION: Once the unit has commenced commercial production, it is granted permanent registration. It is a life time registration given after physical inspection of the enterprise and scrutiny of certain documents.
PROCEDURE OF REGISTRATION FOR SSI
The State Directorate or Commissioner of Industries or District Industries Centres (DIC’s) are the concerned authorities for registration of small scale units. This registration is both location specific and product specific. Like in certain State capitals and metropolitan cities, it is granted to only those units which are located in the designated industrial areas/estates.
Such a registration procedures is generally uniform across the States. However, there may be some modifications done by individual States.
DOCUMENTS REQUIRED PROVISIONAL REGISTRATION:
1. Form Part I to be filled in by the applicant in detail which include, name of Proprietor, Name of Firm, Location of Firm, Communication Address, Main Item to be Manufactured/, Total Investment, Total Value of Plant and Machinery to be installed etc.
2. Self Attested PAN Card copy of the Proprietor/ Partners/ Directors
3. Self Attested Address Proof of the Proprietor/ Partners/ Directors
4. PAN Card Copy of the Partnership Firm/ Company
5. Partnership Deed/ MOA-AOA of the Company
6. Proof of Land i.e. Rent Deed in case the land is taken on rent and Lease Deed, if it is owned by the Proprietor or any Partner
DOCUMENTS REQUIRED PERMANENT REGISTRATION:
Some of the formalities required to be completed for seeking permanent registration are :-
Whatever be the registration scheme, the main purpose is to maintain statistics and a roll of such units for providing incentives as well as to create nodal centres at the Centre, State and District levels to promote SSIs. It gives recognition to the industrial unit and helps in generating a database for policy planning.
Taxation Provisions relating to Small Scale Industries
In a developing country like India, Small Scale Industries play a significant role in economic development of the country. They are a vital segment of Indian economy in terms of their contribution towards country’s industrial production, exports, employment and creation of an entrepreneurial base. These industries by and large represent a stage in economic transition from traditional to modern technology. Small industry plays a very important role in widening the base of entrepreneurship. The development of small industries offers an easy and effective means of achieving broad based ownership of industry, the diffusion of enterprise and initiative in the industrial field.
Given their importance, the Government policy framework right from the First plan has highlighted the need for the development of SSI sector keeping in view its strategic importance in the overall economic development of India. Accordingly, the policy support from the Government towards Small Scale Industries has tended to be conducive and favourable to the development of small entrepreneurial class. Government accords the highest preference to development of SSI by framing and implementing suitable policies and promotional schemes.
A Small Scale Unit can violate the regulations in the following ways which will make it liable for de-registration:
i. It crosses the investment limits.
ii. It starts manufacturing any new item or items that require an industrial license or other kind of statutory license.
iii. It does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.
CS Mohit Saluja
Practicing Whole Time Company Secretary
2nd Floor, Malhotra Complex, Sehdev Market,
Ph. No. 9914558709