The ₹1.5 Crore Composition Threshold and the Eight ₹75 Lakh States

5 Crore Composition Threshold explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

The number in the statute is fifty lakh. The number in practice is one crore fifty lakh — except in eight States, where it is seventy-five lakh. All three figures are live at once, and each governs a different question.

Section 10(1) sets the gate at fifty lakh rupees of aggregate turnover in the preceding financial year, and its first proviso lets the Government raise it to not more than one crore fifty lakh. That power was exercised by Notification No. 14/2019-CT dated 07.03.2019, which fixed ₹1.5 crore generally and ₹75 lakh for Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand. The statutory fifty lakh continues to govern s.10(2A), where the proviso power does not exist.

Three figures, three jobs

₹50 lakh — the figure printed in s.10(1), and the operative limit for the s.10(2A) service-provider and mixed-supplier scheme, which contains no power to raise it.

₹1.5 crore — the operative limit for the goods composition scheme in most of India, set under the first proviso by Notification No. 14/2019-CT.

₹75 lakh — the operative limit under the same notification for eight named States.

And the outer bound in the proviso is itself amended law. The words "one crore and fifty lakh rupees" were substituted for "one crore rupees" by section 5 of the CGST (Amendment) Act, 2018, notified through Notification No. 02/2019-CT dated 29.01.2019 with effect from 01.02.2019. The notification raising the limit followed five weeks later.

The eight States, and the two that people get wrong

The ₹75 lakh limit applies to: Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand.

Two habitual errors follow from treating this as "the special category States" list.

Assam, Himachal Pradesh and Jammu and Kashmir are not on it. A dealer in those States tests against ₹1.5 crore, like the rest of India.

And this list is not the same as the registration-threshold list. The ₹40 lakh registration exemption for exclusive suppliers of goods under Notification No. 10/2019-CT dated 07.03.2019 is denied to Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura and Uttarakhand — ten names, including Puducherry and Telangana, which do not appear in the composition list at all. Two notifications of the same date, two different lists. Registration thresholds →

What the threshold is measured on

The limit is tested on aggregate turnover in the preceding financial year, and aggregate turnover in s.2(6) is a PAN-wide, all-India figure — the aggregate value of all taxable supplies, exempt supplies, exports and inter-State supplies of persons having the same PAN, excluding central, State, Union territory, integrated tax and cess.

So the branch arithmetic runs the wrong way from most people's intuition. A person with three State registrations on one PAN, each doing ₹60 lakh, has aggregate turnover of ₹1.8 crore and is out, even though no single registration is anywhere near ₹1.5 crore.

Two adjustments are written into the section itself. Explanation 1 to s.10 requires aggregate turnover, for eligibility, to include supplies made from 1 April of the year up to the date the person became liable to register — so a pre-registration period is not free turnover. The same Explanation excludes the value of exempt supply of services by way of extending deposits, loans or advances where the consideration is interest or discount.

Which matters for anyone who parks money. Interest earned on a fixed deposit or on a loan to a related party is an exempt supply of service; without the exclusion it would inflate aggregate turnover and could push an otherwise eligible dealer past the gate.

Two situations at the edge

A person with no turnover in the preceding year. A new business simply has nil preceding-year turnover, which does not exceed the limit, so it is eligible. The option is exercised in Part B of FORM GST REG-01 at the time of registration under Rule 3(2). Rule 3 and Rule 4 →

A person dealing exclusively in exempt supplies in the preceding year. Such a person was not required to register, but they still had turnover. The ICAI Handbook takes the position that eligibility turns on the quantum of that exempt turnover — under the limit, eligible; over it, not — because s.2(6) counts exempt supplies in aggregate turnover and the section does not require the preceding-year turnover to have been registered turnover.

The PAN-wide election, not just the PAN-wide test

The proviso to s.10(2) goes further than the threshold: "where more than one registered persons are having the same Permanent Account Number… the registered person shall not be eligible to opt for the scheme under sub-section (1) unless all such registered persons opt to pay tax under that sub-section."

So composition is an all-or-nothing election across the PAN. A trader cannot run Maharashtra on composition and Gujarat on the regular scheme. Rule 3(5) completes the mechanism from the other end: an intimation filed for one place of business is deemed to be an intimation for every other place of business on the same PAN.

And s.10(2A) carries the identical proviso for the service-provider scheme.

What crossing the limit does

Entry is tested on the preceding year. Exit is governed by s.10(3): the option lapses with effect from the day on which aggregate turnover during a financial year exceeds the limit — again a PAN-wide, all-India figure.

Lapse is automatic, not discretionary. Rule 6(2) then requires tax under s.9(1) from that day, a tax invoice for every taxable supply made thereafter, and FORM GST CMP-04 within seven days of the event. Rule 6 and the CMP-04 chain →

Key takeaways

• ₹1.5 crore is the goods composition limit; ₹75 lakh applies in eight named States; ₹50 lakh is the statutory figure and governs s.10(2A).
• Assam, Himachal Pradesh and Jammu and Kashmir take the ₹1.5 crore limit.
• The composition ₹75 lakh list is not the registration-exemption list — that one adds Puducherry and Telangana.
• The test is aggregate turnover, PAN-wide and all-India, so branches aggregate.
• Interest and discount on deposits, loans and advances are excluded by Explanation 1.
• The election binds every registration on the PAN, and Rule 3(5) deems one intimation to cover all.

Read next

• Section 10(1) Clause by Clause
• Aggregate Turnover vs Turnover in State
• Rule 6: Lapse, Withdrawal and the CMP-04 to CMP-07 Chain
• Section 10(2A): The 3% Scheme for Service Providers and Mixed Suppliers

Disclaimer: Positions stated as on 5 September 2026, based on section 10 of the CGST Act, 2017, Notification No. 14/2019-CT dated 07.03.2019 and Notification No. 10/2019-CT dated 07.03.2019 as recorded in the ICAI Bare Law (12th edition, amended to 31 March 2026), and the ICAI Handbook on Composition Scheme under GST (February 2026, 3rd edition).