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 The GST Composition Scheme offers simplified compliance and lower tax rates for small businesses. Learn eligibility, tax rates, restrictions, and how to opt in.

  6 min read  Updated 15 March 2026  Ahopez Innovations Team Composition SchemeGSTSmall BusinessSimplified Filing The GST Composition Scheme is designed for small businesses to reduce compliance burden. Instead of filing monthly returns and paying GST on every invoice, composition taxpayers pay a flat quarterly tax as a percentage of their turnover.

## Eligibility (Who Can Opt)

Business TypeTurnover LimitManufacturers & Traders (goods)≤ ₹1.5 Crore aggregate turnover in previous FYRestaurants (food & beverages)≤ ₹1.5 Crore aggregate turnoverService providers (SARC scheme)≤ ₹50 Lakh aggregate turnover## Tax Rates Under Composition Scheme

TypeGST Rate on TurnoverManufacturers1% (0.5% CGST + 0.5% SGST)Traders (goods only)1% (0.5% CGST + 0.5% SGST)Restaurants5% (2.5% CGST + 2.5% SGST)Service providers (SARC)6% (3% CGST + 3% SGST)## Key Restrictions

-  Cannot make inter-state outward supply of goods
-  Cannot supply exempt goods
-  Cannot issue a GST tax invoice — only a Bill of Supply
-  Customer cannot claim ITC on purchases from you
-  Cannot sell through e-commerce platforms (except restaurants on Zomato/Swiggy)
-  Cannot collect GST separately on invoices — tax is borne by you from your turnover
## Filing Under Composition Scheme

ReturnFrequencyDue DateCMP-08 (tax payment statement)Quarterly18th of month after quarter endGSTR-4 (annual)Annually30th April of next financial year Pro Tip To opt for composition scheme, file Form CMP-02 on the GST portal at the beginning of the financial year (before 31st March). Once opted, it applies for the full year.

 ## File GST returns with zero manual work

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