1% traders/manufacturers, 5% restaurants, 6% services. Up to ₹1.5cr (₹50L services). No ITC, intra-state only. Quarterly CMP-08 + annual GSTR-4. Simpler for small B2C.
GST COMPOSITION SCHEME = simplified GST for SMALL businesses. PAY GST as % of TURNOVER (not transaction-wise). RATES: (1) TRADERS + MANUFACTURERS: 1%. (2) RESTAURANTS (non-alcohol): 5%. (3) SERVICE PROVIDERS: 6%. TURNOVER LIMIT: ₹1.5cr (₹75L for special category states) for goods, ₹50L for services. KEY: (1) NO ITC. (2) NO tax collection from customers (absorb GST). (3) Quarterly payment. (4) Simpler compliance. STRATEGIC: small B2C businesses benefit.
COMPOSITION ELIGIBILITY: (1) Turnover up to ₹1.5cr (goods) / ₹50L (services). (2) INTRA-STATE supplies only. NOT ELIGIBLE: (1) Inter-state sales. (2) E-commerce sellers (Amazon/Flipkart). (3) Manufacturers of ice cream, tobacco, pan masala. (4) Casual/non-resident taxable persons. (5) Service providers (except restaurants) above ₹50L. RESTRICTIONS: (1) No ITC. (2) Can't collect GST from customers. (3) 'Composition taxable person' on invoices. STRATEGIC: ideal for small local retailers + restaurants.
COMPOSITION vs REGULAR: COMPOSITION: (1) 1-6% on turnover. (2) NO ITC. (3) Quarterly CMP-08. (4) Annual GSTR-4. (5) Can't collect GST. (6) Intra-state only. REGULAR: (1) Standard rates (5-28%). (2) ITC available. (3) Monthly GSTR-1 + 3B. (4) Collect GST from customers. (5) Inter-state allowed. STRATEGIC: (a) Small B2C retailer/restaurant: composition (simple + low rate). (b) B2B (customers want ITC): regular. (c) Inter-state/e-commerce: regular mandatory. CHOOSE based on customer type + scale.
COMPOSITION COMPLIANCE: (1) QUARTERLY: CMP-08 (payment statement) by 18th of next quarter month. (2) ANNUAL: GSTR-4 by April 30. (3) PAY tax quarterly. (4) BILL OF SUPPLY (not tax invoice — can't show GST). (5) 'Composition taxable person' displayed. (6) NO ITC claims. SIMPLER than regular (monthly returns). STRATEGIC: minimal compliance burden. Suits small businesses without accounting staff. Opt-in via CMP-02 at FY start.
COMPOSITION STRATEGY: (1) SMALL B2C (retailer/restaurant) under ₹1.5cr: opt composition for simplicity + low rate. (2) RESTAURANTS: 5% composition vs 5% regular (no ITC either way) — composition simpler. (3) B2B customers needing ITC: stay regular. (4) GROWTH beyond ₹1.5cr: must switch to regular. (5) INTER-STATE expansion: composition not allowed. (6) E-COMMERCE: composition barred — regular mandatory. (7) OPT-IN via CMP-02 at FY start. (8) ANNUAL review: composition vs regular based on customer mix. STRATEGIC: composition saves compliance for small local businesses. CONSULT CA for opt-in decision.