GST Composition Scheme — Is It Right for You?
📅 Updated 31 Aug 2026
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The Composition Scheme is a simplified GST filing option for small businesses that reduces compliance burden.
Who Qualifies?
| Business Type | Turnover Threshold |
|---|---|
| Manufacturers & Traders | Up to ₹1.5 crore annual turnover |
| Service providers | Up to ₹50 lakh annual turnover |
Businesses in special category states (North-East) have lower thresholds.
Key Benefits
- Pay a flat low rate instead of the standard GST rates:
- Manufacturers: 1% of turnover
- Traders: 1% of turnover
- Restaurants: 5% of turnover
- Service providers: 6% of turnover
- No invoice-level reporting — file a simple quarterly return (CMP-08)
- Quarterly tax payment — less frequent compliance
Key Limitations
- Cannot issue Tax Invoices — must issue a Bill of Supply instead.
- Cannot charge GST from customers — the flat rate is absorbed by you.
- Cannot claim ITC — no input tax credit on purchases.
- Cannot supply inter-state goods.
- Cannot supply through e-commerce operators (like Amazon, Flipkart).
Composition Scheme in BillYantra
If you are on the composition scheme:
- Go to Settings → Company Profile.
- Under GST Type, select Composition Dealer.
- BillYantra will generate Bills of Supply instead of Tax Invoices.
- No GST line items will appear on your bills.
Should You Choose Composition?
| Choose Composition if... | Choose Regular if... |
|---|---|
| Mostly B2C customers (who don't need ITC) | Mostly B2B customers (who need ITC) |
| Low purchase GST (ITC not valuable) | Significant purchases with ITC to claim |
| You want minimal compliance | You can handle monthly returns |
| Turnover is well below ₹1.5 crore | Turnover is close to or above threshold |
Consult your CA before opting in or out of the composition scheme, as switching affects all your returns and billing.
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