Detailed Analysis
Small businesses under GST must choose between composition and regular schemes — the right choice impacts both cost and compliance burden.
Composition scheme offers a simplified flat-rate tax (1% for manufacturers, 5% for restaurants, 6% for service providers) with quarterly returns. The trade-off: no input tax credit and no inter-state sales. Best for local businesses selling to consumers.
Regular scheme charges standard GST rates but allows input tax credit on purchases. If your inputs have significant GST (raw materials, services), the net tax may actually be lower than composition rate. Monthly filing is more work but essential for B2B operations.