The GST composition scheme is a simplified tax compliance scheme for small businesses, with a turnover limit of up to ₹1.5 crore (₹75 lakhs for special category states, verify the current figure). Under this scheme, businesses can pay tax at a fixed rate, ranging from 1% to 6%, depending on the type of business.
Who can opt for the GST Composition Scheme?
The GST composition scheme is available to businesses with an annual turnover of up to ₹1.5 crore (₹75 lakhs for special category states, verify the current figure). However, not all businesses are eligible for this scheme. The following businesses are not eligible: suppliers of goods that are not taxable under GST, interstate suppliers, e-commerce operators, and businesses that supply goods through an e-commerce operator.
| Business Type | Tax Rate |
|---|---|
| Manufacturers (other than those notified by the government) | 1% |
| Suppliers of food and beverages (other than those notified by the government) | 2.5% |
| Suppliers of goods (other than those notified by the government) | 1% |
| Other suppliers | 0.5% |
Restrictions under the GST Composition Scheme
Businesses that opt for the GST composition scheme are subject to certain restrictions, including not being able to claim input tax credit, not being able to supply goods that are not taxable under GST, and not being able to supply goods through an e-commerce operator.
- No input tax credit can be claimed
- No tax invoices can be issued
- No supply of goods that are not taxable under GST can be made
Return Filing under the GST Composition Scheme
Businesses that opt for the GST composition scheme are required to file a quarterly return, known as CMP-08, and an annual return, known as GSTR-4.
- CMP-08: Quarterly return to be filed by the 18th of the month following the quarter
- GSTR-4: Annual return to be filed by the 30th of April of the following financial year
The GST composition scheme is a simplified tax compliance scheme for small businesses, but it has its own set of restrictions and requirements, and businesses should carefully consider their eligibility and the implications of opting for this scheme before making a decision.
Frequently Asked Questions
What is the turnover limit for the GST composition scheme?
The turnover limit for the GST composition scheme is up to ₹1.5 crore (₹75 lakhs for special category states, verify the current figure).
Can businesses that supply goods through an e-commerce operator opt for the GST composition scheme?
No, businesses that supply goods through an e-commerce operator are not eligible for the GST composition scheme.
What is the tax rate for manufacturers under the GST composition scheme?
The tax rate for manufacturers under the GST composition scheme is 1%.
The bottom line
The GST composition scheme is a simplified tax compliance scheme for small businesses, with a turnover limit of up to ₹1.5 crore (₹75 lakhs for special category states, verify the current figure). Businesses should carefully consider their eligibility and the implications of opting for this scheme before making a decision.
This is general information, not professional advice — confirm the current position for your specific case before acting.
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