GST Composition Scheme: Eligibility, Tax Rates and Rules

What is the Composition Scheme?

The Composition Scheme is a simplified GST option for small taxpayers. Instead of paying GST at the standard rates and filing detailed monthly returns, you pay a small flat percentage of your turnover and file simplified returns.

Who is Eligible?

• Goods (traders and manufacturers): aggregate turnover up to ₹1.5 crore (₹75 lakh for special category states).
• Service providers: a separate composition option is available for those with turnover up to ₹50 lakh.

Tax Rates

• Manufacturers and traders: 1% (0.5% CGST + 0.5% SGST).
• Restaurants (not serving alcohol): 5%.
• Other service providers (₹50 lakh scheme): 6%.

Key Restrictions

• You cannot collect GST from your customers, and you cannot claim Input Tax Credit.
• You cannot make inter-state outward supplies or sell through e-commerce operators that collect TCS.
• You must issue a Bill of Supply (not a tax invoice) and mention "composition taxable person" on it.

Return Filing

Composition taxpayers pay tax quarterly using form CMP-08 and file an annual return in GSTR-4.

Note: Turnover limits and rates are subject to change. Confirm current figures on the official GST portal.