Budget Memorandum
Fiscal benefit for new small scale industries

Under the existing provisions of section 80-IB, the small scale units commencing production between 1st April, 1995, and 31st March, 2000 are allowed a deduction of 25% of the profits (30% for companies) for a period of ten years. In the wake of liberalization, the small scale sector needs fiscal support so that it can face competition. The Bill proposes to amend section 80-IB to provide continuance of existing concessions to small scale units commencing production even after 31st of March, 2000. Units set up on or before 31.3.2002 shall be eligible for the benefit.

This amendment will take effect from 1st April, 2001, and will, accordingly apply in relation to the assessment year 2001-2002 and subsequent years.[Clause 36(a)]