Composition Scheme
A simplified, lower-compliance Goods and Services Tax (GST) regime for small businesses, under Section 10 of the CGST Act.
The Composition Scheme lets eligible small businesses with aggregate turnover up to ₹1.5 crore (₹75 lakh in specified special category states) pay Goods and Services Tax (GST) at a flat, low rate — typically 1% for traders and manufacturers, and 5% for restaurants not serving alcohol — instead of the regular rate structure. A separate composition scheme for service providers is available up to ₹50 lakh turnover at 6%. Composition taxpayers file a simplified quarterly statement (CMP-08) and an annual return (GSTR-4), but cannot claim Input Tax Credit or make inter-state outward supplies.
What our Composition Scheme advisory covers
The scheme trades Input Tax Credit for simplicity and a lower rate — the right choice depends on your business's specific cost and supply structure.
- Assessing eligibility based on turnover and nature of supply
- Comparing tax outcomes under composition versus regular GST
- Filing Form GST CMP-02 to opt into the scheme
- Preparing quarterly CMP-08 statements and annual GSTR-4 returns
- Advising on restrictions — no inter-state supply, no Input Tax Credit
- Handling transition in or out of the scheme during the year
What this service includes
Helping you decide if this simplified route suits your business, and managing it if it does.
Eligibility Check
Confirming your turnover and business type qualify for the Composition Scheme.
Regime Comparison
Comparing the flat composition rate against regular GST after accounting for Input Tax Credit.
Simplified Filing
Preparing the quarterly CMP-08 statement and annual GSTR-4 return.
Scheme Transition
Managing the switch into or out of composition, including any stock adjustments required.
Our process
From initial consultation to completion.
Eligibility Assessment
Reviewing turnover, business type, and supply pattern against the scheme's conditions.
Cost-Benefit Comparison
Modelling tax outcomes under composition versus the regular scheme to check which suits you.
Opting In
Filing Form GST CMP-02 before the start of the relevant financial year.
Ongoing Compliance
Preparing quarterly CMP-08 statements and the annual GSTR-4 return.
Why the Composition Scheme isn't automatically the best option
What sets our approach apart.
No Input Tax Credit changes the real cost
Since composition taxpayers can't claim credit for GST paid on purchases, the effective cost can be higher than it first appears, especially for input-heavy businesses.
It restricts how you can sell
Composition taxpayers cannot make inter-state outward supplies or sell through e-commerce operators required to collect tax at source, which limits growth options.
It suits specific business profiles best
The scheme tends to work best for small, local businesses with limited input costs and no need for inter-state sales.
Composition Scheme questions answered
What people ask before engaging us.
Wondering if the Composition Scheme suits your business?
We'll model the numbers and help you decide.
