Composition scheme: eligibility, rates and returns

Composition lets small taxpayers pay tax at a flat rate on turnover with simpler returns (CMP-08 quarterly, GSTR-4 annually), but with no ITC and no tax collected from customers.

Eligibility (Section 10)

• Aggregate turnover in the preceding year up to ₹1.5 crore (lower limit of ₹75 lakh in certain special category States) for manufacturers, traders and restaurants.
• Service providers (and mixed suppliers not eligible under 10(1)) may opt under Section 10(2A) with a limit of ₹50 lakh.
• Not available to, among others, those making inter-state outward supplies, supplying through e-commerce operators that collect TCS (subject to recent relaxations; check current notifications), or manufacturers of notified goods such as ice cream and pan masala.

Rates (CGST + SGST combined)

• Manufacturers: 1%; traders: 1% of turnover of taxable supplies; restaurants (not serving alcohol): 5%; Section 10(2A) suppliers: 6%.

Returns

• CMP-08 (statement-cum-challan) quarterly, by the 18th of the month after the quarter.
• GSTR-4 annual return by 30 April following the financial year.

Restrictions

No ITC, no tax charged on invoices (issue a "bill of supply"), display "composition taxable person" at the premises and on bills, and pay RCM where applicable.