GST Composition Scheme Tax Calculator

About GST Composition Scheme

The composition scheme is a simple and easy GST compliance option for small taxpayers. It allows businesses to pay tax at a fixed percentage of turnover without the complexity of regular GST compliance.

Composition Scheme Tax Rates

Category	Tax Rate	ITC Available
Manufacturer	1% of turnover	No
Trader	1% of turnover	No
Restaurant (without bar)	5% of turnover	No
Service Provider	6% of turnover	No

Advantages of Composition Scheme

• Lower tax rate: 1-6% instead of regular 5-28%
• Simple compliance: Quarterly GSTR-4 instead of monthly returns
• Reduced documentation: No need for detailed invoicing
• Lower cost: Reduced accounting and professional fees
• Suitable for small businesses: Ideal for turnover up to ₹1.5 crore

Disadvantages of Composition Scheme

• Cannot claim Input Tax Credit (ITC)
• Cannot make inter-state supplies
• Cannot sell through eCommerce platforms
• Limited to ₹1.5 crore annual turnover
• Must issue Bill of Supply (not tax invoice)

How to Opt for Composition Scheme

New registrations can opt during registration itself. Existing taxpayers must file Form GST CMP-02 by 31st March to opt from 1st April of next financial year.

When to Switch from Composition to Regular

• When your turnover exceeds ₹1.5 crore
• When you want to claim ITC on purchases
• When you need to make inter-state supplies
• When you want to sell through eCommerce
• When your customers need tax invoices