What is the GST composition scheme and who can opt for it?
The GST composition scheme lets small taxpayers pay GST at a low flat rate on turnover instead of the regular rate — 1% for traders/manufacturers, 5% for restaurants, 6% for eligible service providers — with simpler quarterly filing. It's open to businesses with turnover up to ₹1.5 crore (₹75 lakh in special-category states), but they can't claim input tax credit or make inter-state sales.
1Who can opt in
Businesses with aggregate turnover up to ₹1.5 crore (₹75 lakh in some states); a separate ₹50 lakh limit applies to service providers. You opt in via Form CMP-02 at the start of the year.
2The trade-offs
You pay a low flat rate and file CMP-08 quarterly plus GSTR-4 annually — but you cannot claim ITC, cannot collect GST from customers separately, and cannot make inter-state outward supplies.
Frequently asked questions
Can a composition dealer claim input tax credit?
No — composition taxpayers cannot claim ITC, and they cannot charge GST separately on their invoices. They pay tax out of their own margin at the flat composition rate.
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General information for AY 2026-27, not professional advice. Laws change with each Finance Act, notification or amendment and depend on your specific facts — verify the current position with a licensed CA or advocate before acting.