Complete Guide to GST Composition Scheme for Small Businesses#
What is Composition Scheme?#
The composition scheme allows small taxpayers to pay GST at a fixed rate on turnover. It's simpler with fewer compliance requirements.
Eligibility Criteria#
- Turnover up to Rs 1.5 crore (Rs 75 lakh for special states)
- Not supplying goods interstate
- Not e-commerce operator
- Not in reverse charge cases
Tax Rates under Composition#
| Business Type | Tax Rate |
|---|---|
| Manufacturers | 1% |
| Restaurants (non-AC) | 5% |
| Other suppliers | 1% |
Benefits#
- Simple tax payment (quarterly)
- Less paperwork
- Lower tax rates
- Easy compliance
Limitations#
- Cannot claim input tax credit
- Cannot issue tax invoices
- Cannot supply interstate
- Cannot e-commerce supplies
How to Opt?#
- Log on to GST portal
- Go to 'Services' > 'Registration'
- Select 'Application to Opt In'
- Submit Form GST CMP-02
- File intimation in FORM GST REG-01
Withdrawal#
- Can withdraw anytime
- Cannot re-opt for 3 years