Composiation scheme

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Querist : Anonymous

Querist : Anonymous (Querist)

04 June 2014 what is rate of composition scheme in Maharashtra?

Querist : Anonymous

Querist : Anonymous (Querist)

08 June 2014 dear experts........plz revert

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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20 July 2024 As of my last update, the rate of composition scheme under the Maharashtra Value Added Tax (MVAT) Act, 2002, varies depending on the type of business and turnover. The composition scheme is designed for small businesses to simplify their tax compliance.

Here are some key points related to the composition scheme in Maharashtra:

1. **Threshold Turnover**: Businesses with an annual turnover of up to Rs. 50 lakhs (Rs. 5 million) are eligible to opt for the composition scheme.

2. **Tax Rate**: The composition tax rate under MVAT in Maharashtra is typically 1% or 2% of the turnover, depending on the type of goods sold or manufactured.

3. **Types of Composition Scheme**:
- **1% Composition Scheme**: Generally applicable to traders and retailers selling goods that fall under Schedule C (like declared goods).
- **2% Composition Scheme**: Generally applicable to other traders, dealers, and manufacturers not covered under the 1% scheme.

4. **Benefits**:
- Simplified compliance: Less frequent filings and lower compliance requirements.
- Fixed tax liability: Businesses pay tax based on turnover, rather than on profit margins.

5. **Limitations**:
- Businesses under composition scheme cannot claim input tax credit (ITC) on purchases.
- Certain types of transactions or goods may not be eligible for composition scheme benefits.

Since tax laws and rates can change over time, it's important to verify the current composition scheme rates and eligibility criteria with the Maharashtra Sales Tax Department or a qualified tax consultant. They can provide specific guidance tailored to your business activities and turnover.

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