GST · Registration and basics
Who can opt for the GST composition scheme, and what are its rates and limits?
Short answer
Manufacturers, traders and restaurants with turnover up to ₹1.5 crore in the previous year (₹75 lakh in some special-category states) can pay GST at a flat 1%, or 5% for restaurants. Service providers up to ₹50 lakh can pay 6%. Composition taxpayers cannot charge GST, claim input tax credit, or make inter-state sales. They opt in before the year starts, pay quarterly by CMP-08 and file GSTR-4 once a year.
Rates and limits
| Type | Turnover limit (previous year) | Rate on turnover |
|---|---|---|
| Manufacturers | ₹1.5 crore (₹75 lakh in some special-category states) | 1% (0.5% CGST + 0.5% SGST) |
| Traders | Same | 1% of turnover of taxable supplies |
| Restaurants (not serving alcohol) | Same | 5% |
| Other service providers, or mixed suppliers (section 10(2A)) | ₹50 lakh | 6% |
A goods supplier under section 10(1) can also supply services up to 10% of turnover or ₹5 lakh, whichever is higher.
Who cannot opt
- Anyone making inter-state outward supplies.
- Suppliers of services through e-commerce operators who collect TCS (goods through e-commerce operators within the state are allowed).
- Manufacturers of ice cream, pan masala, tobacco and certain other notified goods.
- Casual and non-resident taxable persons.
What you give up
- You cannot charge GST on your bill. You issue a bill of supply marked "composition taxable person, not eligible to collect tax on supplies".
- No input tax credit on purchases.
- You pay tax at the normal rate on any reverse charge supplies.
- The option covers all registrations under the same PAN.
Compliance
| Task | Form | Due |
|---|---|---|
| Opt in for the year | CMP-02 | Before the start of the financial year |
| Pay tax quarterly | CMP-08 | 18th of the month after the quarter |
| Annual return | GSTR-4 | 30 April after the year |
| Opt out | CMP-04 | When you exit or cross the limit |
When turnover crosses the limit during the year, you move to the normal scheme from that day. File CMP-04 within 7 days and claim credit on stock in ITC-01.
Is it right for you?
Composition suits businesses that sell mostly to consumers and have low input costs. Business buyers often prefer suppliers who charge GST, because they can claim the credit.
Legal basis
- Section 10, Central Goods and Services Tax Act, 2017
- Rules 3 to 7, CGST Rules, 2017
Official sources
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