GST Composition Scheme Limit — Turnover, Rates & Rules

₹50 lakh. Since January 2019 (Notification 2/2019-CT(R)), service providers can opt for a special composition scheme with a ₹50 lakh turnover limit and a 6% flat rate (3% CGST + 3% SGST). This is separate from the ₹1.5 crore limit that applies to goods.

You must exit the scheme from the day your aggregate turnover crosses the limit and switch to regular GST. From that point you charge GST on tax invoices, become eligible for ITC, and file the regular GSTR-1 and GSTR-3B. File Form CMP-04 to intimate withdrawal within seven days of becoming ineligible.

It is based on aggregate turnover across the whole PAN — all GSTINs and states combined — not a single registration. If the combined turnover exceeds ₹1.5 crore (goods) or ₹50 lakh (services), none of the businesses under that PAN can be in the composition scheme.

Traders and manufacturers pay 1% of turnover (0.5% CGST + 0.5% SGST); restaurants not serving alcohol pay 5%; other service providers pay 6% (3% CGST + 3% SGST). The tax is paid on turnover from the dealer's own funds — it is not collected from customers and cannot be shown on the bill.

1% of turnover (0.5% CGST + 0.5% SGST) — the same as a trader. This applies to manufacturers of non-restricted goods; manufacturers of ice cream, pan masala, tobacco and aerated water are barred from the scheme altogether.

No. The GST 2.0 rationalisation effective 22 September 2025 restructured the regular slabs into a two-rate system (5% and 18% with a 40% demerit rate), but it did not change the composition scheme turnover limits or the 1%–6% flat composition rates, which continue under Section 10 of the CGST Act.

Ineligible persons include: suppliers making inter-state outward supplies; anyone selling through an e-commerce operator; manufacturers of ice cream, pan masala, tobacco or aerated water; suppliers of non-taxable goods such as petroleum; casual and non-resident taxable persons; and Input Service Distributors. Also, if any business under a PAN opts for composition, all must.

Yes. Since January 2019, service providers (and mixed suppliers of goods and services) can opt for the special composition scheme if turnover is up to ₹50 lakh, paying a 6% flat rate. This covers consultants, freelancers, repair shops and similar small service businesses. They cannot make inter-state supplies, cannot charge GST, and cannot claim ITC.

No. A composition dealer can only make intra-state outward supplies. Making even one inter-state sale disqualifies the business from the scheme and requires it to move to regular GST registration. Inter-state purchases, however, are allowed.

No. A composition dealer cannot claim ITC on its purchases, and its customers cannot claim ITC on purchases from it either (since no tax invoice is issued). This is the main trade-off for the lower flat rate and simpler compliance.

A composition dealer pays tax quarterly through Form CMP-08 (due the 18th of the month after each quarter) and files one annual return, GSTR-4 (due 30 June of the next financial year). It does not file the monthly GSTR-1 or GSTR-3B. To opt in, file CMP-02 before the financial year begins.

CMP-08 is a quarterly self-assessed statement-cum-challan through which a composition dealer declares turnover and pays its 1%–6% tax. It is due by the 18th of the month following each quarter — 18 July, 18 October, 18 January and 18 April.

The late fee for GSTR-4 is ₹50 per day (₹25 CGST + ₹25 SGST), reduced to ₹20 per day for a nil return, subject to a cap. Tax paid late also attracts interest at 18% per annum under Section 50 of the CGST Act.

No. A composition dealer must issue a Bill of Supply, not a tax invoice, and cannot show GST separately. The bill must carry the words "composition taxable person, not eligible to collect tax on supplies", and the same notice must be displayed at the place of business.