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1. What is Composition Scheme under GST ?

The composition scheme is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs.1.5 crore* ( Rs. 75 lakhs* in case of few States). The objective of composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers. Moreover, it is optional and the eligible person opting to pay tax under this scheme can pay tax at a prescribed percentage of his turnover every quarter, instead of paying tax at normal rate.

*(Latest update as per 23rd GST Council Meeting held on 10th Nov 2017).


2. Tax Rate

For Manufacturer –  CGST 0.5%  SGST 0.5%  Total GST 1%

For Traders (Goods) – CGST 0.5%  SGST 0.5%  Total GST 1%

For Supplier of food or drinks for human consumption (without alcohol) – CGST 2.5%  SGST 2.5%  Total GST 5%

For Service Providers – Cannot opt for Composition Scheme.

(As per the 23rd GST Council Meet, the GST rate for manufacturers is going to be reduced from 2% to 1%.)


3. Who are the persons not eligible for Composition Scheme ?

  • Manufacturer of ice cream, pan masala, or tobacco
  • A casual taxable person or a non-resident taxable person
  • supplier of services, other than restaurant service
  • persons supplying goods which are not taxable under GST law
  • persons making any inter-State outward supplies of goods

4. When will a person opting for composition Scheme pay tax?

A person opting for composition levy will have to pay tax on quarterly basis before 18th of the month succeeding the quarter during which the supplies were made.

Do you have a problem with filing GST Returns? (GSTR-1, GSTR-3B & Matching Purchase Register with GSTR-2) 

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