Govt may raise SSI excise limit

MUMBAI: The government may increase the central excise duty exemption limit for small scale industries (SSIs) from the existing Rs 1 crore to Rs 1.5 crore. If the proposal is accepted, over 40 lakh SSI units in the country with a turnover of up to Rs 1.5 crore will not have to pay excise duty.
Though the Kelkar Committee’s recommendation was to remove the exemption to SSIs, the government, it is reliably learnt, is not in favour of removing exemptions to the small scale industries.
The central government had increased the exemption limit from Rs 50 lakh to Rs 1 crore in ’00. The SSI sector wants the government to raise the exemption limit further on account of higher cost of production, due to the increase in transportation and raw material costs. According to the All-India Industries Association, the exemption available to small scale industries does not amount to much because as they are not paying excise duty, they are also not entitled to modvat credit.
However, the ’00 decision to enhance the exemption limit from Rs 50 lakh to Rs 1 crore, resulted in a loss of revenue of Rs 500 crore by way of excise duty for the government. The government also toyed with the idea of increasing the limit to Rs 2 crore last year, but finally decided not to extend the exemption limit because of the potential revenue loss.