GST Composition Scheme: Eligibility, Rates & Is It Right for You?
A flat 1% to 6% tax with quarterly filing sounds attractive — but you cannot claim ITC or bill B2B customers effectively. Weigh the trade-offs.
Eligibility
Turnover up to ₹1.5 crore (₹75 lakh in special-category states) for goods traders and manufacturers; up to ₹50 lakh for service providers under the 6% scheme.
Rates
1% for traders and manufacturers, 5% for restaurants (not serving alcohol) and 6% for other services — paid on total turnover, from your own pocket.
Restrictions
No ITC, no tax collection from customers, no inter-state outward supplies, no e-commerce sales through operators collecting TCS. You must issue a 'Bill of Supply' not a tax invoice.
Returns
CMP-08 quarterly by the 18th of the month after the quarter, and annual GSTR-4 by 30 April.
Decision rule
If most customers are registered businesses who want ITC, stay regular. If you sell to consumers with low margins on inputs, composition can save compliance cost.
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Create a free accountKeywords: composition scheme gst limit · composition scheme rate. This article is general information, not professional tax advice.
