GST Composition Scheme

A simplified scheme for eligible small businesses to pay GST at a low flat rate on turnover with quarterly payment (CMP-08) and one annual return (GSTR-4), but without input tax credit.

It depends which of the two routes you are on, and they are different by a factor of three. Under section 10(1) — manufacturers, traders and restaurant service — the base limit is ₹50 lakh with a proviso allowing the Government to raise it to not more than ₹1.5 crore, and Notification 14/2019-Central Tax sets it at ₹1.5 crore, reduced to ₹75 lakh for Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand. Under section 10(2A) — the route for service providers who are not eligible under section 10(1) — the limit is ₹50 lakh of aggregate turnover in the preceding financial year, and Notification 14/2019 does not raise it. So a consultant is working to ₹50 lakh while a trader in the same State works to ₹1.5 crore. Both are tested on the preceding financial year.

Rule 7 sets them, and every figure here is the combined CGST plus SGST amount — the rule states the CGST leg and an identical State provision mirrors it. Manufacturers (other than of notified goods): 1% of turnover in the State or Union territory. Suppliers of restaurant service under clause (b) of paragraph 6 of Schedule II: 5%. Any other eligible supplier, which in practice means traders: 1% of the turnover of taxable supplies of goods and services in the State or Union territory. Service providers under section 10(2A): 3% CGST, so 6% combined, on the turnover of supplies of goods and services in the State or Union territory. That table was substituted with effect from 1 April 2020 by Notification 50/2020-Central Tax. One detail with real money in it: the trader row is charged on taxable supplies, so exempt supplies drop out of the base, while the manufacturer row is charged on the whole turnover in the State.

Yes, within a ceiling. The second proviso to section 10(1) lets a person paying tax under clause (a), (b) or (c) supply services — other than restaurant service under Schedule II paragraph 6(b) — of value not exceeding 10% of turnover in the State or Union territory in the preceding financial year, or ₹5 lakh, whichever is higher. And the Explanation to that proviso excludes the value of exempt services by way of extending deposits, loans or advances where the consideration is interest or discount, so bank interest does not eat into the allowance. A shop with a small repair or installation line usually fits comfortably; a business where services are a real second revenue stream generally does not.

No. That's the main trade-off — lower rates and simpler filing in exchange for no ITC.

No. You can't supply through an e-commerce operator that collects TCS, nor make inter-state outward supplies.

No. You can't collect GST separately; the flat-rate tax comes out of your margin.

At the time of registration, or at the start of a financial year via CMP-02. We handle the timing.

Two, under Rule 62(1). A quarterly payment statement in FORM GST CMP-08, due by the 18th day of the month succeeding the quarter. And an annual return in FORM GSTR-4 — and its due date is year-dependent, which is where most published calendars go wrong. It was 30 April following the financial year up to FY 2023-24, and is 30 June for a financial year from FY 2024-25 onwards, under a proviso inserted into Rule 62(1) by Notification 12/2024-Central Tax. A flat answer is wrong for one year or the other. Worth noting an oddity in the rule itself: Rule 62(5), which deals with withdrawal from the scheme, still says 30 April and was not amended by that proviso. That is in the rule as drafted, not a transcription slip.

No, and the block runs in both directions, which is the part people underestimate. Section 17(5)(e) disallows input tax credit on goods or services on which tax has been paid under section 10 — so your customer cannot claim credit on what you supply. And a composition taxpayer cannot take credit on their own inward supplies either, so the GST on everything you buy stays permanently in your cost base rather than being recovered. On a business with significant input purchases, that lost credit frequently exceeds the saving from the lower rate. We model both before recommending either — see input tax credit.

You must switch to the regular scheme. We monitor your turnover and manage the transition.

No. For B2B businesses or those with significant input credit, regular GST is often better. We tell you honestly.