The document provides an overview of the legal framework for entrepreneurship in India, covering topics like taxation, concessions/exemptions/subsidies, and incentives. It discusses taxation for individuals, small scale industries, and corporates. Key points covered include income tax, exemptions for small scale industries, service tax, TDS, and VAT. Concessions for small scale industries are also summarized, such as deductions for profits, excise concessions, and service tax exemptions. The document then outlines various central and state government incentives to promote entrepreneurship.

1. Entrepreneurship
Legal Framework
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2. Taxes
Concessions/exemptions/subsidies
Incentives
2
Legal Framework

3. Taxes
3

4. 4
 Individuals are subject to income tax
 Income tax is a direct tax levied by central govt. on
income earned by individuals as well as firms
Taxation of Individuals

5. 5
 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. 1 Crore
 Small Entrepreneurs are normally not required to
obtain a licence
 *Registration of small scale unit is not compulsory
Taxation of Small Scale Industries

6. 6
 registration with the State Directorate or
Commissioner of Industries
 Unit becomes eligible for Govt. assistance like:
 financial assistance from Dept. of Industries
 medium & long term loans from State Financial
Corporations and other commercial banks
 m/c on hire-purchase basis from N.S.I.C.
*Registration
Taxation of Small Scale Industries

7. 7
 Unit can get benefits of special schemes for:
 promotion of SSI viz. Credit guarantee Scheme,
 Capital subsidy,
 Reduced custom duty on selected items,
 ISO-9000 Certification reimbursement, etc.
*Registration
Taxation of Small Scale Industries

8. 8
 The Ministry of MSME acts as the nodal agency for
growth and development of SSIs in the country
 The ministry formulates and implements policies
and programmes in order to promote small scale
industries and enhance their competitiveness
Ministry of MSME
Taxation of Small Scale Industries

9. 9
 Corporate tax : tax levied on the incomes of
registered companies and corporations
Excise Duty
 Central Excise duty is an indirect tax levied on
those goods which are manufactured in India and
are meant for home consumption
Taxation of Corporates

10. 10
 Service tax is a tax levied on services rendered by a
person and the responsibility of payment of the tax
is cast on the service provider
 Individuals/Proprietary Concerns/Partnership Firm
- service tax s.b. paid quarterly, 5th of next month
 any other category of service provider – monthly,
by 5th of next month
Service Tax
Taxation of Corporates

11. 11
 Tax returns – s.b. filed half yearly
 Service tax is payable @ 12% of the ‘gross amount'
charged by the service provider for providing such
taxable service
 The Education Cess is payable @ 2% of the service
tax payable
Service Tax
Taxation of Corporates

12. 12
 Tax deduction at source means the tax required to
be paid by the assessee, is deducted by the person
paying the income to him
 Thus, the tax is deducted at the source of income
itself
Tax Deduction at Source (TDS)
Taxation of Corporates

13. 13
 VAT is a multi-point destination based system of
taxation, with tax being levied on value addition at
each stage of transaction in the production/
distribution chain.
Value Added Tax (VAT)
Taxation of Corporates

14. Concessions/
Exemptions/
Subsidies
14

15. 15
w.e.f. F.Y.2005-06, SSI’s can claim deductions in
respect of profits and gains at the following rates:-
 If SSI unit is owned by a company, the deduction
available is 30% for first 10 years. If SSI unit is
owned by a co-operative society, the deduction
available is 25% for first 10 years.
 If any other person owns SSI unit, the deduction
to be claimed is 25% for first 10 years.
Concessions/Exemptions

16. 16
SSI unit can avail this tax exemption after fulfilling
following conditions:
 They should have commenced business
 They should employ at least 10 workers in a
manufacturing process carried out with aid of
power or at least 20 workers without aid of
power.
Concessions/Exemptions

17. 17
 Eligibility : turnover < Rs. 4 crores
 SSI units producing goods upto Rs. 100 lakhs are
exempted from payment of excise duties.
 Quarterly Return: quarterly returns s.b. submitted
by 20th of the following month
 Payment of Duty : duty s.b. paid by 15th of
following month
Excise Concessions for SSI’s

18. 18
 Small service providers with turnover < Rs.4L per
annum are exempt from service tax
 There is no service tax on export of services
 No service tax on services provided to UN and
International Agencies and supplies to SEZ
 Service tax is not payable on value of goods and
material supplied while providing services
Service Tax Exemptions

19. 19
 aims at facilitating Technology Upgradation of
Micro and Small Enterprises by providing 15%
capital subsidy on institutional finance availed by
them for induction of well established and
improved technology in approved sub-
sectors/products. Maximum limit of eligible loan
(to purchase price of Plant and M/c) for
calculation of subsidy is Rs. 1 Cr.
Credit Linked Capital Subsidy
Scheme for Tech-Up

20. 20
 ISO 9000/ISO 14001 Certification
Reimbursement Scheme – reimbursement of
expenses incurred towards acquiring ISO 9000
certification to the extent of 75% or Rs.75,000/-
whichever is lower
Certification Reimbursement
Scheme

21. 21
 The scheme offers funding upto 75% in respect
of to and fro air fare for participation by MSME
Entrepreneurs in overseas fairs/trade delegations
 The scheme also provides for funding for
producing publicity material (upto 25% of costs),
Sector specific studies (upto Rs. 2 lakhs)
MSME

22. 22
 Participation in the International Exhibitions/
Fairs - for registered Small & Micro
manufacturing enterprises
 Financial Assistance for using Global Standards
(GS1) in Barcoding - Recognized the importance
of barcoding and avail financial assistance
through Office of DC(MSME)
MSME MDA

23. 23
 administered through NSIC
 358 items are reserved for exclusive purchase
from MSME by Central Government
 tender documents are F.O.C., exemption from
earnest money and security deposit and 15%
price preference in Central Government
purchases - for individual MSMEs
Purchase & Price Preference Policy

24. 24
 many awards which have been constituted by
GOI for excellent performance in various areas of
production
 tremendous growth
 quality production
 Exports
 Innovation
 product development and import substitution
Scheme of National Award

25. Incentives
25

26. 26
 Land at subsidized prices or Industrial sheds to
set up small scale industrial units.
 Tax concessions for a number of years. These
may include exemption from sales tax, etc. for a
set period of time
 Electric power supply at a reduced tariff
 Loans/subsidies at low interest rates
State Governments - Incentives

27. 27
 GOI/State Govt. jointly provide several benefits
and incentives to promote industrialization of
backward areas for
(a) Development of backward areas
(b) increased local employment
Incentives for Setting Up Biz. in
Backward Areas

28. 28
 Some of the incentives offered are:
 Transportation subsidies (50% to 90%) to
promote industries in remote hilly areas
 capital investment subsidy scheme - plant and
machinery - 15%
 new industrial units in some areas - subsidy for
interest relief - 3%
Incentives for Setting Up Biz. in
Backward Areas

29. Factories Act, 1948
29

30. INTRODUCTION
1881 - first Factories Act
Act designed to protect children and to provide
few measures for health and safety of the workers
applicable to factories with more than 100
workers
1891 – new factories act – applicable to the
factories employing 50 or more workers

31. Definition of a Factory
“Factory” is defined in Section 2(m) of the Act. It
means any premises including the precincts
thereof-
i. Whereon 10 or more workers are working, or
were working on any day of the preceding 12
months, and in any part of which a
manufacturing process is being carried on
with the aid of power, or is ordinarily so
carried on; or

32. Definition of a Factory
ii. Whereon 20 or more workers are working, or
were working on any day of the preceding 12
months, and in any part of which a
manufacturing process is being carried on
without the aid of power, or is ordinarily so
carried on;

33. Definition of a Factory
iii. But does NOT include a MINE subject to the
operation of the Mines Act,1952 or a mobile
unit belonging to the Armed forces of the
Union, a railway running shed or a hotel,
restaurant or eating place.

34. following are held to be a factory:-
1. Salt works
2. A shed for ginning and pressing of cotton
3. A Bidi making shed
4. A Railway Workshop
5. Composing work for Letter Press Printing
6. Saw Mills
7. Place for preparation of foodstuff and other
eatables

35. Highlights
The Factories Act, came into force on the 1/4/49
extends to whole of India
Act has been enacted primarily with the object
of protecting workers employed in factories
against industrial and occupational hazards

36. Highlights
it seeks to impose upon the owner or the
occupier certain obligations to protect the workers
and to secure for them employment in conditions
conducive to their health and safety.

37. Some of the crucial Sections:
Sec. 6 : Registration & Renewal of Factories
To be granted by Chief Inspector of Factories on
submission of prescribed form, fee and plan

38. Cleanliness, Disposal of wastes and effluents -
Sec. 12
Ventilation and temperature dust and fume -
Sec. 13
Overcrowding, Artificial humidification, Lighting
– Sec. 14
Drinking water, Spittoons - Sec. 18
Employer to ensure health of
workers pertaining to

39.  Fencing of machinery – Sec. 21
 Work on near machinery in motion – Sec. 22
 Employment prohibition of young persons on
dangerous machines – Sec. 23
 Striking gear and devices for cutting off power
– Sec. 24
Safety Measures

40.  Self-acting machines.- Sec 25
 Casing of new machinery.- Sec 26
 Prohibition of employment of women and
children near cotton-openers.- Sec 27
 hoist and lifts.- Sec 28
Safety Measures

41.  Washing facilities – Sec 42
 Facilities for storing and drying clothing – Sec
43
 Facilities for sitting – Sec 44
 First-aid appliances – one first aid box not less
than one for every 150 workers– Sec 45
 Canteens when there are 250 or more
workers. – Sec 46
Welfare Measures

42. Shelters, rest rooms and lunch rooms when
there are 150 or more workers. – Sec 47
 Creches, when there are 30 or more women
workers. – Sec 48
 Welfare office when there are 500 or more
workers. – Sec 49
Welfare Measures

43.  Weekly hours not more than 48 - Sec: 51
 Daily hours, not more than 9 hours. - Sec: 54
 Intervals for rest at least ½ hour on working for 5
hours. - Sec: 55
 Spread over not more than 10½ hours. - Sec: 56
 Overlapping shifts prohibited. - Sec: 58
Working Hours, Spread Over
& Overtime of Adults

44. Extra wages for overtime double than normal
rate of wages - Sec:59
 Restrictions on employment of women before
6AM and beyond 7 PM. - Sec: 60
Working Hours, Spread Over
& Overtime of Adults

45.  A worker having worked for 240 days @ one
day for every 20 days and for a child one day for
working of 15 days.
 Accumulation of leave for 30 days - Sec. 79
Annual Leave with Wages

46. OFFENCE PENALTIES
 For contravention of the Provisions
of the Act or Rules
 Imprisonment upto 2 years or fine
upto Rs.1,00,000 or both
 On Continuation of contravention  Rs.1000 per day
 On contravention of Chapter IV
pertaining to safety or dangerous
operations.
 Not less than Rs.25000 in case of
death.
 Not less than Rs.5000 in case of
serious injuries.
 Subsequent contravention of some
provisions
 Imprisonment upto 3 years or fine
not less than Rs.10, 000 which may
extend to Rs.2, 00,000.
 Obstructing Inspectors  Imprisonment upto 6 months or
fine upto Rs.10, 000 or both.
 Wrongful disclosing result pertaining
to results of analysis.
 Imprisonment upto 6 months or
fine upto Rs.10, 000 or both.
 For contravention of the provisions
of Sec.41B, 41C and 41H pertaining to
compulsory disclosure of information
by occupier, specific responsibility of
occupier or right of workers to work
imminent danger.
 Imprisonment upto 7 years with
fine upto Rs.2, 00,000 and on
continuation fine @ Rs.5, 000 per day.
Imprisonment of 10 years when
contravention continues for one year.
Sec.92 to 106

47. Shops & Establishment Act
47

48. 48
 retail stores are governed by various Shops and
Establishments Acts as applicable in the states
 These acts regulate the conditions of work and employment in
shops and generally prescribe obligations in respect of inter
alia
registration,
opening and closing hours,
daily and weekly working hours,
holidays, leave,
health and safety measures
wages for overtime work
Shops and Establishment Act

49. The Trade & Merchandise
Marks Act, 1999
49

50. 50
 TRIPS defines Trademarks as any sign, or any combination
of signs that can distinguish the goods and services of one
organization from the other organization.
 TRIPS provides for initial registration and each renewal for a
term of ten years
 The Trade and Merchandise Act 1999 is compatible with
TRIPS and harmonizes it with international systems and
practices
The Trade & Merchandise Marks Act, 1999
*Trade Related Intellectual Property Rights

51. Provident Fund Act
51

52. 52
 A retail organization is governed by the provisions of
the Employees’ Provident Funds Act, 1952.
 this act mandates periodic contributions to the
Employees’ Provident Fund Scheme and the
Employees’ Pension Scheme as applicable
 The firm also has to make contributions under the
Employees’ State Insurance Act, 1948
Laws relating to Employment

53. 53
 applicable to any estt. employing 20 or more persons
 provides for compulsory Provident Fund for the
benefit of employees in factories and other estts.
 Employer’s contribution to be deposited to the EPF is a
specified %age of the employee’s salary
 employee’s contribution = employer’s contribution
Employees Provident Funds Act, 1952

54. 54
 Provides for benefits to employees in case of
sickness, maternity, employment injury, etc.
 Every estt. must register within the specified time
and in the specified manner
 All employees in the estt. to which this act applies
shall be insured
Employees State Insurance Act, 1948

55. 55
 The contribution payable = employer’s +
employee’s @ decided by the Central Government
and payable to the ESIC
 Contribution has to be made for all employees,
whether directly or indirectly employed by the firm
Employees State Insurance Act, 1948

56. Payment of Wages act
56

57. 57
 “every employee has a right to receive
remuneration for the services provided by him
 applies to persons employed in any estt. either
directly or indirectly
 AIM : to ensure that the wages are paid by the
employers within the prescribed time limit w/o any
unauthorized deductions
Payment of Wages Act, 1936

58. 58
 applicable to any person who employs 1 or more
person in any scheduled employment
 The employment can be direct or indirect
 AIM of this act is to prevent exploitation of labour
and to provide sustenance and maintenance of
the worker and his family
Minimum Wages Act, 1948

59. 59
 Objective : distribution of profits earned by the estt.
among the workmen
 applicable to every estt. in which 20 or more persons
are employed on any day during an accounting year
 An employer is bound to pay every employee a
minimum bonus of 8.33% of the salary or wage earned
by the employee.
Payment of Bonus Act, 1965