The composition scheme is a method of tax provided for small taxpayers whose turnover is up to Rs. 75 lakhs (Rs. 50 lakhs in case of few States). It is optional and the eligible person opting this scheme can pay tax at a prescribed percentage of his turnover on quarterly basis, instead of paying tax at usual rates.
Manufacturers, other than manufacturers of goods notified by the Government – Tax at the rate of 2% on turnover, Restaurant Services – Tax at the rate of 5% on turnover, Traders or any other supplier eligible for composition Scheme – 1% of the turnover.