Answer

1. F

   Facts

   Composition means lower tax and simpler returns, but no ITC and no GST charged to customers. Regular means charging GST, claiming ITC and more returns. The better choice depends on your margins and customers.

2. P

   Provisions and law

   • Sec 10(1), CGST Act 2017Eligible registered persons with aggregate turnover up to Rs 1.5 crore in the preceding year may opt to pay tax at composition rates
   • Sec 10(4), CGST Act 2017A composition taxpayer cannot collect tax from customers and cannot take ITC
   • Rule 7, CGST Rules 2017Composition rates: 1 percent for manufacturers and traders, 5 percent for restaurant service
3. A

   Analysis

   Example: a trader buys Rs 80 lakh and sells Rs 1 crore of 18 percent goods to consumers. In composition he pays 1 percent, Rs 1 lakh, and cannot pass on or claim GST. In regular he collects Rs 18 lakh and claims Rs 14.4 lakh ITC, paying Rs 3.6 lakh, but his prices to consumers rise. For B2C sellers with thin margins composition often helps; for B2B sellers it usually does not.

4. C

   Conclusion

   1. 1Estimate yearly sales, purchases and margin
   2. 2Compute tax under composition and under regular
   3. 3Consider whether buyers need ITC
   4. 4Consider compliance cost and returns
   5. 5Choose and file CMP-02 if composition wins

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.