GST Composition Scheme

The GST Composition Scheme is a simplified tax mechanism under the Goods and Services Tax framework, run by the Central Board of Indirect Taxes & Customs in coordination with States. The scheme enables small taxpayers to pay tax at a prescribed fixed rate of turnover, instead of the normal GST regime, thereby reducing compliance burden. Your enterprise can benefit by opting into this scheme if you meet the eligibility criteria you will pay lesser tax documentation and fewer returns, helping simplify operations.

Key Features
Financial Assistance
Eligibility Criteria
Documents Required
Application Process for the Scheme

Key Features

Lower turnover threshold eligibility: The scheme is designed for “small taxpayers” whose aggregate turnover in the previous year does not exceed the specified limit (for example ₹1.5 crore for most states) so your business if small enough may qualify.
Fixed tax rate on turnover instead of standard GST rates: Under the scheme you pay tax as a fixed percentage of your turnover (for example 1% or 6% depending on business type) instead of the full GST slab rates; this can improve your cash-flow.
Simplified compliance – fewer returns and less complex filing: Composition dealers need to file quarterly returns and an annual return instead of monthly returns required under normal GST, making it easier for you.
Only intra-state supplies allowed : To avail the scheme you must be doing supplies within the same state – interstate outward supplies are not permitted under Composition scheme.
Input Tax Credit not available to you or your buyers: If you opt for the scheme, you can’t claim ITC on your purchases; also your buyers won’t get ITC for purchasing from you — that is a trade-off for simplified tax.

Financial Assistance

(This scheme is tax-compliance related rather than a direct subsidy or grant scheme, so “assistance” in this context is about simplified tax burden and compliance.)

Component	Assistance Provided	Detailed Explanation
Reduced Tax Rate on Turnover	Pay tax at a lower fixed rate instead of full GST slabs	Example: If you are a trader with turnover ₹1.2 crore and you opt for the scheme, you pay e.g. 1% of turnover instead of standard GST, improving cash-flow.
Simplified Compliance & Filing	Lower compliance burden	Example: Instead of filing monthly returns and multiple forms, you file CMP-08 every quarter and GSTR-4 annually under this scheme.
Improved Liquidity	Lower tax cost + fewer filing burdens = better liquidity	Example: You save cost/time, and you don’t have to wait to claim ITC — though you also lose ITC, the simplicity may outweigh for small unit.

Eligibility Criteria

Who Can Apply:

A registered taxpayer under GST whose aggregate turnover in the preceding financial year did not exceed the threshold limit set for the Composition Scheme (typically ₹75 lakhs for most states) in respect of intra-state supplies.
Small traders, manufacturers , and eligible service providers supplying goods or specified services within a state.
A taxable person opting at the beginning of financial year or at registration for new taxpayers to choose composition levy.

Who Cannot Apply:

Taxpayers making inter-state outward supplies or exports.
Persons supplying services other than those specified for composition scheme .
Taxpayers who wish to claim Input Tax Credit for purchases .
Businesses with turnover exceeding the prescribed threshold limit in the previous year.

Documents Required

GST registration details and business profile.
Aggregate turnover of previous year to check threshold.
Option form filled and submitted.
Quarterly return and annual return filings.
Bill of Supply format – business must clearly mention “Composition taxable person, not eligible to collect tax on supplies”.

Application Process for the Scheme

Option 1: Apply with Bullit

Click here to start instantly with guided support.
Our team verifies if you meet the Composition Scheme criteria, compiles your documents, and handles the filing of Form GST CMP-02 on your behalf. You can focus on your business while we coordinate end-to-end.
Recommended for: Small business owners who prefer expert assistance in opting into the scheme seamlessly.

Option 2: Direct Government Portal Process

Log in to the GST portal
Navigate to “Services → Registration → Application for Composition Levy ”.
Fill in required details and submit.
On successful filing, the taxpayer is opted-in for the composition levy for the financial year.
Maintain compliance: issue bill of supply, pay tax at prescribed rate, file quarterly returns and annual return .

Option 3: Apply Through the Official GST Portal

You can also apply directly through the official GST portal.
Simply log in to your GST account (or register if you’re a new taxpayer), choose the “Composition Levy” option under registration, fill in the required business details, and upload supporting documents.
Once submitted, the application will be reviewed and approved online, after which you’ll receive confirmation of your Composition Scheme status on the portal dashboard.
This option is best for applicants familiar with GST procedures who prefer to manage the process digitally on their own.