Check GST Composition Scheme eligibility and compare your annual tax under composition vs regular GST regime.
Special states: HP, Uttarakhand, all NE states, J&K, Ladakh, Sikkim
Total sales including all GSTINs under same PAN
Total GST paid on all business purchases — for regular scheme ITC comparison
Eligibility & Comparison
Composition Scheme Eligible?
Enter details →
Turnover Limit—
Composition Rate—
Tax under Composition—
Tax under Regular (Net of ITC)—
Recommended Scheme—
Regular GST vs Composition Scheme — Feature Comparison
Feature
Regular GST
Composition Scheme
Turnover limit
No limit
₹1.5 crore (₹75L special states)
ITC on purchases
✓ Eligible
✗ Not allowed
Collect GST from customers
✓ Yes — on every invoice
✗ Cannot collect GST from customers
Returns to file
Monthly GSTR-1 + GSTR-3B (or quarterly)
Quarterly CMP-08 (tax payment) + Annual GSTR-4
Tax rate
Standard rate (5%/12%/18%/28%)
1% or 5% or 6% on turnover
Inter-state supply
✓ Allowed
✗ NOT allowed — local sales only
E-commerce supply
✓ Allowed
✗ NOT allowed
Invoice type
Tax invoice with GST details
Bill of Supply (no GST amount shown)
Compliance burden
High (monthly filings)
Low (quarterly payments, annual return)
Tax on non-GST goods
As per applicable rate
✗ Cannot opt in
Eligible business types
All registered persons
Traders, manufacturers, restaurants only
About GST Composition Scheme
The Composition Scheme under Section 10 of the CGST Act is designed to reduce compliance burden for small businesses. Instead of maintaining detailed records, filing multiple returns, and computing ITC, a composition dealer simply pays a fixed percentage of their turnover as tax.
The key trade-off: Composition dealers cannot claim ITC on purchases and cannot collect GST from their customers. This means their GST liability comes entirely from their margin. If a trader's margin is 10% and the composition rate is 1%, the effective tax on margin is only 10% of 1% — very low. But if purchase prices spike and margins shrink, the composition rate can become disproportionate.
Who should NOT choose composition: Businesses that sell inter-state, sell through e-commerce platforms (Flipkart, Amazon), have large purchase volumes (where ITC benefit under regular scheme would exceed composition tax savings), or have B2B customers who need GST invoices to claim ITC.
Composition scheme rules are governed by Section 10 of the CGST Act and CGST Rules 2017. Rates and thresholds are subject to GST Council revision.
Regular Scheme vs Composition Scheme — Full Comparison
Feature
Regular Scheme
Composition Scheme
Tax on
Each taxable supply (output tax)
Aggregate turnover (flat rate)
ITC on purchases
✓ Available
✗ Not available
Can collect GST from customer
✓ Yes — issue tax invoice
✗ No — issue Bill of Supply only
Interstate supply
✓ Allowed
✗ Not allowed
E-commerce supply
✓ Allowed
✗ Not allowed (some exceptions)
Returns per year
24 (monthly) or 8 (QRMP)
5 (4 CMP-08 + 1 GSTR-4)
Tax rate
5%, 12%, 18%, or 28% on output
1% / 5% / 6% on turnover
Turnover limit
No upper limit
₹1.5 crore (₹50 lakh for services)
Reverse charge
Applicable (buyer pays)
Applicable (buyer pays RCM)
Input tax benefit
Yes — ITC reduces net tax
No — full composition tax from own funds
Compliance burden
Higher — monthly returns
Lower — quarterly CMP-08
Best for
High-margin businesses, exporters, B2B suppliers
Low-margin traders/manufacturers with simple B2C operations
How to Switch to Composition Scheme
Switching from Regular to Composition
File Form CMP-02 on GST portal before 31st March
Effective from 1st April of the new financial year
File Form ITC-03 to reverse ITC on closing stock, capital goods, and semi-finished goods
ITC reversal must be paid via GSTR-3B in the period of switching
After switching: issue only Bill of Supply — no tax invoices
Exiting the Composition Scheme
Mandatory exit: if turnover crosses ₹1.5 crore during the year — file CMP-04 within 7 days
Voluntary exit: file CMP-04 at the beginning of any quarter
After exit: file GSTR-1 and GSTR-3B from that date
Can claim ITC on stock held on the date of exit via ITC-01
All pending CMP-08 must be filed before switching
Calculate Your Composition Tax
Use our dedicated composition calculator to get exact quarterly CMP-08 payments and compare with regular scheme tax.
Service providers (other than restaurants) cannot opt for the standard composition scheme under Section 10(1). However, a special composition scheme under Notification 2/2019 allows service providers with turnover up to ₹50 lakh to pay 6% GST (3% CGST + 3% SGST) on their turnover without ITC.
File Form CMP-02 on the GST portal at the beginning of the financial year (before or by the 31st March of the preceding year). New registrants can opt in at the time of registration. Opting in is for the entire financial year — you cannot switch mid-year.
No. Composition dealers must issue a Bill of Supply instead of a Tax Invoice. A Bill of Supply does not show GST separately. This means your B2B customers cannot claim ITC on their purchases from you.
If your aggregate annual turnover exceeds ₹1.5 crore (or ₹75 lakh for special states) during the year, you must opt out of the composition scheme from the day you exceed the threshold and register as a regular taxpayer. File Form CMP-04 to opt out.
