Composition rate and stock difference

If your client's annual sales are less than Rs 1.5 crore, they can opt for the composition scheme and pay 1% tax on their turnover ¹.

However, if their sales exceed Rs 1.5 crore, they will have to pay the regular tax rate applicable to their business category 

 Since the stock difference found is Rs 400000, the tax payable would be 1% of this amount, which is Rs 4000 ¹

. However, please note that the composition scheme is not applicable for businesses that make inter-state supplies.