GST: Why composition levy scheme confounds small business

Any business that makes inter-state supply is outside the ambit of the scheme

The National Capital Region (NCR), one of the biggest markets in the country, spanning three states — Delhi, Haryana, Uttar Pradesh — typifies the challenges for businesses that register under the composition levy scheme.

Applicable to certain categories of small taxpayers — traders, restaurants, and manufacturers/suppliers — whose annual turnover does not exceed Rs 75 lakh (Rs 50 lakh for certain states), the objective of the scheme is to make the new indirect tax regime simple with reduced compliance. The tax rates range from 1 per cent for traders, 2 per cent for manufacturers, and 5 per cent for restaurant services.