Composition Scheme
The Composition Scheme is a method of collecting tax from vendors belonging to the unorganiz  ed sector, who may not invoice every transaction. Under this scheme, a vendor with an aggregate annual turnover of less than Rs 1.50 crore (Rs 75 lakhs for Himachal Pradesh and the North East states) will agree to pay a fixed percentage of his turnover as tax.
The turnover was originally lower at Rs 75 lacs and has been revised (doubled) by the GST council post their 23rd meeting in Nov 2017.

Service providers are NOT eligible for the Composition Scheme. Restaurants serving alcohol are NOT eligible for the Composition Scheme.


Under the scheme, a taxpayer shall pay tax as a percentage of his turnover during the year without the benefit of ITC.
The rate of tax for CGST and SGST/ UTGST each shall not exceed :

  • 5% in case of restaurants not serving alcohol (2.5% CGST + 2.5% SGST)
  • 1% of the turnover in state / UT in case of ALL goods suppliers. No distinction between manufacturing and other suppliers.(0.5% CGST + 0.5% SGST)
  • NOTE :
  • Old rates were higher for suppliers other than Manufacturers. i.e. higher for Traders. GST council equated rates as per their 23rd meeting of Nov 2017.

A taxpayer opting for composition levy shall not collect any tax from his customers nor shall he be entitled to claim any input tax credit. The composition scheme is optional. Taxpayers making inter-State supplies shall not be eligible to enrol for the Composition Scheme.

Composition Scheme Rates

Type of Business
Manufacturers and Traders 0.50 % 0.50 % 1.00 %
Restaurants (AC and non-AC) 2.50 % 2.50 % 5.00 %
Composition Scheme NOT applicable for : Service providers / Restaurants serving alcohol


A Composition Dealer will enjoy the benefits of lesser returns & compliance along with payment of taxes at nominal rates.
A composition dealer will file only 2 returns -- GSTR4 and GSTR 9A.

FORMS to be filed

Particulars Interval Due Date
GSTR 4 Return for Composition Dealer Quarterly 18th of the month succeeding quarter
  GSTR 9A Annual 31st Dec of the next financial year
** Please check the CBEC site for due date extensions


Following taxable persons are not granted permission to opt for the scheme (i.e. Excluded ) who:
  • Supplies goods not leviable under the Act
  • Supplies services
  • Makes a supply of goods other than intra state i.e. interstate or import / export
  • Makes a supply of goods through Electronic Commerce Operator i.e. Ecommerce and liable to collect taxes
  • Manufactures such goods as may be notified
  • In case a taxable person has different business segments having same PAN, he must register all such businesses under the scheme.
If an individual has different business segments such as :
  1. Textiles
  2. Electronics
  3. Food Items
then he must register for all the above segments collectively under the Composition Scheme or simply opt not for the scheme.