The correct answer is: A. Rs.75 lacs
The composition scheme is a simplified tax regime for small businesses. Under this scheme, businesses can pay a fixed tax rate on their turnover, instead of having to calculate and pay tax on their profits. The threshold limit of turnover in the preceding financial year for opting to pay tax under composition scheme is Rs.75 lacs.
The composition scheme is available to businesses that are engaged in the following activities:
- Sale of goods
- Supply of services
- Works contract
Businesses that are eligible for the composition scheme must file an annual return with the Income Tax Department. The annual return must be filed on or before the 31st of March of the following financial year.
The composition scheme is a beneficial option for small businesses as it allows them to save time and money on compliance. However, businesses should carefully consider whether the composition scheme is right for them, as there are some restrictions on the activities that businesses can undertake under the scheme.
Here is a brief explanation of each option:
- Option A: Rs.75 lacs. This is the correct answer. The threshold limit of turnover in the preceding financial year for opting to pay tax under composition scheme is Rs.75 lacs.
- Option B: Rs.1 crore. This is incorrect. The threshold limit of turnover in the preceding financial year for opting to pay tax under composition scheme is Rs.75 lacs.
- Option C: Rs.1.5 crore. This is incorrect. The threshold limit of turnover in the preceding financial year for opting to pay tax under composition scheme is Rs.75 lacs.
- Option D: None of the above. This is incorrect. The correct answer is Option A.