Composition Scheme
A simpler, lower-rate option for small businesses.
Who is eligible
Businesses with turnover up to ₹1.5 crore (₹75 lakh in some special category states) can opt into the composition scheme, provided they don't make inter-state outward supplies.
What you pay
Composition taxpayers pay a flat, lower rate on turnover — typically 1% for traders and manufacturers, and up to 6% for eligible service providers — instead of standard slab rates.
The trade-off
In exchange for simpler compliance and lower rates, composition taxpayers cannot collect GST from customers, cannot claim input tax credit, and must file simpler quarterly returns like CMP-08.
When it makes sense
It suits small, mostly business-to-consumer sellers whose customers don't need input credit and who want to minimize paperwork rather than optimize the last percentage point of margin.
Switching in or out
You can opt in at the start of a financial year, and you must switch to regular registration if your turnover crosses the threshold mid-year.