Composition Scheme vs Regular Registration: Which One to Choose

Composition is for small taxpayers with aggregate turnover up to Rs 1.5 crore (Rs 75 lakh for services in most states, with different limits for special category states). Tax is paid as a percentage of turnover: 1 percent for traders and manufacturers, 5 percent for restaurants, 6 percent for other services. No ITC is available and no input tax credit can be claimed. Regular registration suits any taxpayer wanting ITC, making inter-state supplies, running e-commerce, or in notified categories. The compliance cost is higher but the input tax credit benefit typically outweighs the simplification.