Composition Scheme

Composition Scheme is a big relief for small traders and simple scheme for small taxpayer.

How Composition Scheme is beneficial for small taxpayer?

  • Small taxpayer can get rid of GST formalities and pay tax at a fixed rate on turnover after GST Registration.
  • Under this Scheme a payer is required to file summarized returns on Quarterly Basis instead of three-monthly returns.
  • We required to file only 2 Returns on a quarterly Basis and annual return.
  • No need to maintain detailed records as in case of normal taxpayer, so there is additional benefit.
  • A registered Taxpayer, who is registered under the Composition Scheme Will pay tax at a rate of:
  • 1% for manufacturers
  • 1% for other suppliers of turnover.
  • 5% for Restaurant Sector.

Eligibility Criteria

  • Applicant who come under composition scheme must have GST registration.
  • A registered taxpayer whose aggregate turnover is less than 1.5 crore or 75 lakhs in some states.
  • Business dealing only in goods not in services but except restaurant services.

Taxable persons excluded from the scheme

  • People making supply of goods interstate. So, if someone is making interstate supply, then he has to get registered under regular scheme.
  • Supply through E-commerce operation.
  • Not to manufacture tobacco.
  • Not a Casual taxable persons or non-resident taxable persons.

If a taxable person has different business segment having same PAN so, he/she must be registered all such business under the scheme.


  • We cannot make interstate supply under composition scheme.
  • Under this scheme registered persons cannot avail the benefit of Input Tax Credit, so it would become part of cost.
  • Issue bill of supply instead of Tax invoice.
  • Person under composition scheme should have their own business in their own state.

ITC provisions

  • Under composition scheme, option to pay tax lapses from the day on which his total turnover exceeds the specified limit.
  • If an applicant withdrawal from the scheme he has to file GST return within seven days when their threshold limit has been crossed.

Email your query at and know more about company registration. WhatsApp or Call us @ 7900 567 567, so that you can get your gst registration online done.

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