The GST composition scheme simplifies compliance for small businesses — but it's not for everyone.
Eligibility
Turnover up to ₹1.5 Cr (goods), ₹50L (services). Not available for inter-state sellers, e-commerce sellers, manufacturers of ice cream/tobacco/pan masala.
Tax Rates
Manufacturers/traders: 1%. Restaurants: 5%. Service providers: 6%. Compare this with regular GST rates of 5-28%. See our [GST Composition vs Regular comparison](/compare/gst-composition-vs-regular).
Key Trade-Off: No Input Tax Credit
This is the biggest disadvantage. If you buy ₹50L raw materials with ₹9L GST (18%), you can't claim this ₹9L as credit. Under regular scheme, you'd pay GST on output minus input = much lower net tax.
When Composition Makes Sense
B2C businesses (selling to consumers). Low input GST (services-based businesses). Businesses wanting minimal compliance. When output GST at regular rates would be lower than composition rate + lost ITC.
Compliance
Quarterly return (CMP-08) instead of monthly GSTR-1 and GSTR-3B. Annual return GSTR-4. Bill of Supply instead of Tax Invoice. Use our [GST Calculator](/calculators/gst-calculator) for calculations.