Composition scheme at a glance
| Feature | Composition | Regular |
|---|---|---|
| Turnover limit | ₹1.5 crore (₹75 lakh in some states); ₹50 lakh for services | None |
| Tax rate | 1% / 5% / 6% of turnover | Rate on each supply |
| Input tax credit | Not available | Available |
| Charge GST on invoice | No — issue a bill of supply | Yes |
| Inter-state outward sales | Not allowed | Allowed |
| Returns | CMP-08 quarterly; GSTR-4 annually | GSTR-1 and GSTR-3B (monthly or QRMP) |
Who can't opt for composition
- Suppliers of most services above ₹50 lakh
- Manufacturers of ice cream, pan masala and tobacco products
- Inter-state suppliers and casual or non-resident taxable persons
- Suppliers through e-commerce operators who collect TCS, except under the relief for small intra-state goods sellers
Worked example: retail trader with ₹80 lakh turnover
- 1Composition: 1% of ₹80 lakh = ₹80,000 a year, no ITC.
- 2Regular: output GST at 18% on a ₹10 lakh margin over purchases ≈ ₹1.8 lakh net after ITC (if all sales are at 18%).
- 3But under the regular scheme B2B buyers can claim ITC, and prices can be quoted plus GST.
Composition is cheaper for this B2C trader; a B2B trader would usually prefer the regular scheme.
