The composition scheme lets small businesses pay GST at a flat percentage of turnover with simpler returns — in exchange for giving up input tax credit and charging no tax on bills.
Manufacturers and traders with aggregate turnover up to ₹1.5 crore in the previous year (₹75 lakh in special category states), and restaurants that do not serve alcohol. Service providers can use a separate composition option up to ₹50 lakh.
You cannot opt in if you make inter-state outward supplies, sell through e-commerce operators that collect tax at source (with limited exceptions), or manufacture notified goods such as ice cream, pan masala, and tobacco.
1% of turnover for manufacturers and traders, 5% for restaurants, and 6% for service providers under the separate option (each split equally between CGST and SGST).
Issue a bill of supply, not a tax invoice, and write “composition taxable person, not eligible to collect tax on supplies” on it. Display the same words on a board at your place of business.
Pay tax quarterly with CMP-08 by the 18th of the month after each quarter, and file the annual return GSTR-4 by 30 April after the financial year.
Billing, purchases, stock, party ledgers, and GST reports on proper double-entry books. Free, in your browser.