FreeComplianceGST composition scheme: eligibility, rates and limits
The composition scheme lets small businesses pay GST at a flat low rate on turnover and file fewer returns. In exchange, they cannot claim input tax credit, cannot charge GST on invoices, and cannot make inter-state sales of goods.
Eligibility and rates
| Business | Turnover limit (previous year) | Rate on turnover |
|---|---|---|
| Manufacturers and traders of goods | ₹1.5 crore (₹75 lakh in some special category states) | 1% |
| Restaurants (no alcohol) | ₹1.5 crore | 5% |
| Service providers (Section 10(2A)) | ₹50 lakh | 6% |
Restrictions
- No input tax credit.
- No inter-state outward supplies of goods.
- No supplies through e-commerce operators that collect TCS (with limited exceptions).
- Cannot collect GST from customers; must issue a bill of supply.
- Manufacturers of certain notified goods are excluded.
Returns
Composition taxpayers pay tax quarterly using CMP-08 (by the 18th after each quarter) and file an annual return in GSTR-4 by 30 June.
Frequently asked questions
This guide is general information, not legal advice. Government fees and procedures change; confirm current figures before you file.
- GST registration threshold: when is GST registration mandatory?
GST registration limits for goods and services, special category states, and the cases where registration is compulsory regardless of turnover.
- Input tax credit under GST: conditions, blocked credits and time limits
How input tax credit works under GST, the conditions in Section 16, blocked credits in Section 17(5), and the deadline to claim it.
- GSTR-1 vs GSTR-3B: the difference and due dates
What GSTR-1 and GSTR-3B report, how they connect through GSTR-2B, monthly and quarterly due dates, and common mismatches.