Frequently Asked Questions
What is the GST Composition Scheme? ＋
The Composition Scheme allows eligible small businesses to pay GST at a fixed low rate on turnover instead of collecting GST from customers. The rate is 1% for manufacturers and traders, 5% for restaurants, and 6% for service providers.
Who is eligible for the Composition Scheme? ＋
Businesses with annual turnover up to ₹1.5 Cr (₹75L for special category states) can opt for Composition. Service providers other than restaurants are capped at ₹50L turnover. Inter-state suppliers are NOT eligible.
Can a Composition dealer issue tax invoices? ＋
No. Composition dealers must issue a Bill of Supply instead of a Tax Invoice. They cannot charge GST from customers and cannot claim Input Tax Credit on purchases.
What are the return filing requirements under Composition? ＋
Composition dealers file CMP-08 quarterly (4 times a year) and GSTR-4 annually once a year. This is much simpler than Regular scheme which requires GSTR-1 and GSTR-3B every month.
Can I claim ITC under Composition Scheme? ＋
No. Composition dealers cannot claim Input Tax Credit on goods or services purchased for business. This is a major disadvantage if your input costs are high or if your suppliers charge GST.