different regular or composition scheme

In brief

Regular assesse is one who collects the taxes on supply and can avail the credit on his input or input services

Composition scheme assesse is one who has pay taxes out of his pocket at lower rate and can't avail the credit on his input or input services

In composition scheme, there are some restrictions.
1) You can't collect output tax.
2) You can't claim input tax credit.
3) You can't make interstate supply.
4) You can't make supply through e-commerce operators.
5) It is not for supply of services except restaurant services.

The tax rates are 1%, 2%, 5% for traders, manufacturers and restaurant services respectively.

If you are a B2B supplier and you opt for composition scheme then your business will be affected adversely because the recipient can't take input tax credit on such supply. He will always prefer to buy from regular dealers. Therefore, opt for regular scheme in case you are B2B supplier.

If you are a B2C supplier then you can opt for composition scheme as the recipient will not take ITC. However, if your turnover is likely to exceed 50 lakhs then it will be beneficial for you to opt for regular scheme for certain benefits.