GST Composition Scheme Limit —
Turnover, Rates & Rules
The composition scheme turnover limits, the 1%–6% flat rates by business type, who is eligible, and the CMP-08 & GSTR-4 returns a composition dealer must file.
The GST composition scheme lets small businesses pay a flat rate on turnover instead of regular GST. The turnover limit is ₹1.5 crore for goods (₹75 lakh in special-category states) and ₹50 lakh for service providers. Flat rates: 1% for traders & manufacturers, 5% for restaurants, 6% for other services. No ITC, no inter-state supply — file CMP-08 quarterly and GSTR-4 annually.
Composition Limit & Rate by Business Type
The composition turnover limit and flat GST rate for every category of business, with ITC availability. See the wider composition scheme guide for the full picture.
| Business Type | Turnover Limit | Flat Rate | ITC |
|---|---|---|---|
| Traders / retailers (goods) | ₹1.5 crore | 1% | No |
| Manufacturers (non-restricted) | ₹1.5 crore | 1% | No |
| Restaurants (no alcohol) | ₹1.5 crore | 5% | No |
| Service providers (other) | ₹50 lakh | 6% | No |
| Mixed — goods + services (up to 10% or ₹5L) | ₹1.5 crore | 1% | No |
| Special-category states (goods) | ₹75 lakh | 1% | No |
1% = 0.5% CGST + 0.5% SGST; 6% = 3% CGST + 3% SGST. Composition limits and rates were not changed by the GST 2.0 rationalisation (effective 22 September 2025). Verify on the GST portal.
The ₹1.5 crore / ₹50 lakh limit is measured on aggregate turnover across all GSTINs under the same PAN — taxable + exempt + exports — in the preceding financial year. If any one business under the PAN opts for composition, all of them must. Cross the limit mid-year and you must switch to regular GST from that point.
Composition Scheme Eligibility
The scheme is meant for small, local, intra-state businesses. Several categories are barred entirely — even below the turnover limit.
Eligible if
- Turnover within ₹1.5cr (goods) / ₹50L (services)
- You supply only within your state (intra-state)
- Local retailers, small manufacturers, restaurants
- You don't need Input Tax Credit
- Service providers under the ₹50L special scheme
Not eligible if
- You make inter-state outward supplies
- You sell through an e-commerce operator (Amazon, etc.)
- Manufacturer of ice cream, pan masala, tobacco, aerated water
- Non-resident / casual taxable person or ISD
- You supply goods that are not taxable (e.g. petroleum)
Not sure if your business qualifies for the composition scheme?
Check My Eligibility →Composition vs Regular Scheme
Composition trades lower rates and simpler filing for no ITC and no tax invoice. The dealer pays from its own pocket and issues a Bill of Supply, not a tax invoice.
Composition — flat on turnover
- Flat 1%–6% on turnover, no slabs
- No Input Tax Credit
- Bill of Supply — cannot charge GST
- Intra-state supply only
- CMP-08 quarterly + GSTR-4 annual
Regular — GST on value
- 5% or 18% (GST 2.0 two slabs) on value
- Full Input Tax Credit available
- Tax invoice — GST charged to customer
- Inter-state & e-commerce allowed
- GSTR-1 + GSTR-3B monthly / quarterly
Composition Tax on ₹40 Lakh Turnover
1% Trader / manufacturer
6% Service provider
The composition dealer pays this from its own funds and cannot pass it on — so a low margin business benefits most from the 1% goods rate, while the 6% service rate is only worthwhile where compliance simplicity outweighs the higher cost.
Because composition blocks ITC, a business with heavy input GST (rent, machinery, stock) may pay less overall under regular GST after credits — despite the higher headline rate. Model both before opting; the 1% flat rate is not automatically cheaper.
Composition Returns — CMP-08 & GSTR-4
A composition dealer does not file the monthly GSTR-1 / GSTR-3B. Instead it pays tax quarterly and files one annual return.
| Return | What it is | Frequency | Due Date |
|---|---|---|---|
| CMP-08 | Self-assessed tax payment statement | Quarterly | 18th of month after each quarter |
| GSTR-4 | Annual composition return | Annual | 30 June of next FY |
| CMP-02 | Intimation to opt into scheme | Once | Before start of FY |
| GSTR-9A | Annual return (waived recently) | Annual | As notified |
Late fee for GSTR-4 is ₹50/day (₹20/day for nil), capped; interest on delayed tax is 18% p.a. under Section 50. Confirm current due dates on the GST portal.
- File CMP-02 to opt in before FY
- Pay tax via CMP-08 every quarter (18th)
- File GSTR-4 annual return by 30 June
- Issue Bill of Supply, not tax invoice
- Do not collect GST from customers
- Do not claim Input Tax Credit
- Display "composition taxable person" on signage
- Stay within the ₹1.5cr / ₹50L limit
Want us to file your CMP-08 and GSTR-4 on time?
Get Composition Filing →Frequently Asked Questions
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