Composition Scheme Under GST
Last updated: 2 July 2026 · 6 min read
The composition scheme is a simplified option for small businesses: pay a low flat rate on turnover, file quarterly, but forgo input tax credit and the ability to charge GST to customers.
Limits and rates
| Type | Turnover limit | Rate |
|---|---|---|
| Traders / manufacturers | ₹1.5 cr (₹75 lakh special states) | 1% |
| Restaurants (no alcohol) | ₹1.5 cr | 5% |
| Service / mixed (sec 10(2A)) | ₹50 lakh | 6% |
Key conditions
- No inter-state outward supplies.
- Cannot collect GST from customers or claim input tax credit.
- Must issue a Bill of Supply, not a tax invoice.
- Certain manufacturers (e.g. ice-cream, pan masala, tobacco) and e-commerce sellers are barred.
Check your eligibility with the composition scheme checker.
FAQ
What is the turnover limit?
₹1.5 crore for goods (₹75 lakh in special states); ₹50 lakh for services/mixed.
Related: composition checker, registration limit, QRMP scheme.
For informational purposes only. Verify with the official GST portal or a qualified tax professional.