Small taxpayers with an annual aggregate turnover of up to ₹1.5 crore (₹75 lakh for North-Eastern states and Himachal Pradesh) in the preceding financial year can opt for the GST composition scheme. Eligible businesses include manufacturers, traders, and restaurants (excluding alcohol) that do not engage in inter-state supplies, e-commerce, or manufacturing specific goods like ice cream or tobacco.
A registered person whose aggregate turnover in the preceding financial year did not exceed Rupees one crore fifty lakh (for goods) and Rupees fifty lakh (for services or mixed supply for goods and services), may opt to pay tax under composition scheme.
The following category of tax persons are exempted from payment of 1% of GST in Cash 1. Registered taxpayers who have paid income tax above Rs 1.00 in Income Tax during the last two years continuously 2. Taxpayers who have zero-rated supplies without payment of duty and claimed refund of more than Rs 1.00 lac 3.
Who is not eligible for composition under GST? Businesses engaged in inter-state supplies, making non-taxable supplies, or selling through e-commerce operators are generally not eligible for the composition scheme under GST.
How to Check Status of Composition Scheme under GST by Logging into GST Portal?
The difference between the Composition and Regular GST schemes lies in the tax rate and filing frequency. The Regular GST scheme requires higher compliance with monthly returns and higher tax rates. In contrast, the Composition GST scheme offers lower tax rates and quarterly returns but limits the input tax credit.
What is the Minimum Turnover Limit for GST Registration? Businesses are required to register for GST and pay tax on their annual turnover if their annual revenue exceeds Rs. 40 lakhs in the case of goods supplied and Rs. 20 lakhs for the supply of services.
You can opt for the Composition Levy under GST if you are a regular taxpayer with an aggregate annual domestic PAN-based turnover as specified from time to time.
But persons who are engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax or an agriculturist, to the extent of supply of produce out of cultivation of land are not liable to register under GST.
How to calculate GST?
There are really only two circumstances where customers are exempt from paying GST. The first is if it falls under the basic exemptions such as basic food, sales at duty-free and some medicines for example. The other circumstance is when a business is small enough that they don't have to register for GST credits.
The New GST Rate Structure
The old four-slab structure (5%, 12%, 18%, 28%) has been simplified. The 12% and 28% slabs were eliminated and replaced with a new structure, which is now primarily 0%, 5%, 18%, and a 40% rate for luxury and “sin” goods.
GST is leviable only if aggregate turnover is more than 20 lacs. (Rs. 10 lacs in 11 special category States). For computing aggregate supplies turnover of all supplies made by you would be added.
Rule 5 – Conditions and restrictions for composition levy
(g) he shall mention the words “composition taxable person” on every notice or signboard displayed at a prominent place at his principal place of business and at every additional place or places of business.
You are eligible for this credit if you are a resident of Canada for income tax purposes at the end of the month before and at the beginning of the month in which the CRA makes a payment (read When your GST/HST credit is paid). In the month before the CRA makes a quarterly payment, you must be at least 19 years old.
Answer: If turnover of the entity is less than the limit of Rs. 20 lakhs in a financial year, no tax would be payable. The exemption from payment of tax is applicable to services provided to a business entity having a turnover up to Rs. 20 lakh rupees.
You must register for GST if:
How to Check GST Regular or Composite?
This scheme reduces compliance burdens, offering an easier way to fulfill tax obligations. For the financial year 2025-26, the opt-in period is February 4 – March 31, 2025. Taxpayers who wish to enroll or continue under the scheme must file Form CMP-02 on the GST Portal before the deadline.
Calculating GST under composition scheme is very simple. This calculates the tax as a percentage of the turnover of the taxpayer. For example, if a manufacturer has got a turnover of ₹1 crore, then his GST payable would be 1% of ₹1 crore i.e., ₹1 lakh.
The GST composition scheme is for taxpayers whose aggregate annual turnover is less than ₹1.5 crore (₹75 lakh in special category states). Service providers can be qualified when turnover is less than ₹50 lakh.
Businesses with annual sales of Rs. 40 lakhs or more for goods, and Rs. 20 lakhs or more for services, must register for GST. If the turnover exceeds the allowed threshold, there is a penalty for failing to register under GST.
Registration under GST is mandatory for all businesses whose annual turnover exceeds Rs 40 lakhs in a financial year. This threshold is Rs 20 lakhs for special category states such as Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
Limitations of GST Composition Levy Scheme:
These are: (a) No credit of Input Tax: Any taxpayer registered under Composition Levy scheme will not be eligible to take Credit of Input Tax paid on purchases. Also, the buyer of taxpayer's supplies will not get the credit of taxes paid by taxpayer.