What is composition scheme and when should a business opt for it?
Small businesses having an annual turnover Rs. 1.5 crore** (
Rs. 75 Lac for NE States) can opt for Composition scheme.
Composition dealers will pay nominal tax rates based on the
type of business:
1. Composition dealers are required to file only
one quarterly return (instead of three monthly returns filed by normal
taxpayers).
2. They cannot issue taxable invoices, i.e., can't collect
tax from customers and are required to pay the tax out of their own pocket.
3. Businesses that have opted for Composition
Scheme cannot claim any Input Tax Credit.
Composition scheme is not applicable to:
1. Service providers
2. Inter-state sellers
3. E-commerce sellers
4. Supplier of non-taxable goods
5. Manufacturer of Notified goods
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