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GST Composition Scheme Registration in India

Reviewed by CA and CS Team, Patron Accounting LLP ICAI & ICSI Registered| 15+ Years Experience| Last Updated: Verify Credentials →

Documents: Existing GSTIN, last year's turnover working, bank details, and board resolution.

Fees: Starting from INR 1,499 (Exl GST and Govt. Charges) for CMP-02 opt-in and advisory.

Eligibility: Aggregate turnover up to Rs 1.5 cr (Rs 75 lakh special states) for goods, or Rs 50 lakh for services.

Timeline: File CMP-02 by 31 March of the preceding financial year; scheme effective 1 April.

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GST Composition Scheme at a Glance

📌 TL;DR - GST Composition Scheme Services at a Glance

The GST composition scheme under Section 10 of the CGST Act, 2017 allows small taxpayers to pay GST at a flat 1 percent (goods or manufacturers), 5 percent (restaurants without alcohol) or 6 percent (services under Section 10(2A)) on aggregate turnover, in place of regular slab rates. The aggregate turnover limit is Rs 1.5 crore (Rs 75 lakh special states) for goods or Rs 50 lakh for services. Opt in via Form CMP-02 by 31 March; file CMP-08 quarterly by the 18th and GSTR-4 annually by 30 June.

Small businesses across India - kirana stores, garment shops, small restaurants, electrical contractors, tailors, boutique cafes, regional manufacturers, salon chains, repair workshops, freelancers and consultants - lose hours every month to regular GST compliance: monthly GSTR-1, monthly GSTR-3B, invoice-level uploads, ITC reconciliation, GSTR-2B matching, and annual GSTR-9. Most of this disappears when the taxpayer is eligible for and opts into the GST composition scheme under Section 10 of the CGST Act, 2017.

The composition scheme is a single, durable simplification - flat 1 to 6 percent tax on turnover, quarterly self-assessed payment in Form CMP-08, and one annual return in Form GSTR-4. It replaces monthly invoice-level returns, removes ITC reconciliation, and shrinks compliance from 24-plus filings a year to 5. The tradeoffs are real and well-defined - no ITC, no inter-state outward supplies, no e-commerce TCS sales, no tax invoice (only Bill of Supply), no collection of GST from customers - which is why route selection requires a careful read of Section 10(1) and 10(2).

Content is reviewed quarterly for accuracy.

What Is the GST Composition Scheme?

The GST composition scheme under Section 10 of the CGST Act, 2017 is a voluntary opt-in tax regime for small registered taxpayers, under which GST is paid at a flat percentage of aggregate turnover instead of regular slab rates, and compliance is sharply simplified.

The structure has three components. First, Section 10(1) covers manufacturers, traders and restaurants not serving alcoholic liquor - they pay GST at 1 percent (goods and manufacturers) or 5 percent (restaurants), with an aggregate turnover threshold of Rs 1.5 crore. Second, Section 10(2A) covers other service providers and goods suppliers also rendering services beyond the proviso limit - they pay GST at 6 percent, with a separate threshold of Rs 50 lakh. Third, Section 10(2) lists the exclusion categories - inter-state suppliers, persons supplying through a TCS e-commerce operator, manufacturers of ice cream, pan masala, aerated waters and tobacco, casual taxable persons and non-resident taxable persons - all ineligible regardless of turnover.

The first proviso to Section 10(1) permits a manufacturer or trader to supply services up to the higher of Rs 5 lakh or 10 percent of turnover in the preceding financial year, without losing composition eligibility. Beyond this dual limit, the supplier must either move to the Section 10(2A) service provider scheme (if total turnover is within Rs 50 lakh) or exit to the regular scheme.

Key Terms for GST Composition Scheme:

Composition Scheme: Voluntary scheme under Section 10 of the CGST Act, 2017 to pay GST at a flat rate on turnover with reduced compliance.
Aggregate Turnover: Defined in Section 2(6) - the all-India turnover on the same PAN, including taxable, exempt, export and inter-State supplies, computed on the previous financial year basis for composition eligibility.
Form GST CMP-02: Intimation by an existing taxpayer to opt for the composition scheme. Must be filed on the GST portal by 31 March of the preceding financial year.
Form GST CMP-04: Intimation of withdrawal from the composition scheme - voluntary mid-year or mandatory on crossing the threshold.
Form GST CMP-08: Quarterly statement-cum-challan for self-assessed tax payment, due by the 18th of the month following the quarter end.
Form GSTR-4: Annual return for composition dealers. Due by 30 June of the following financial year from FY 2024-25 onwards (Notification 12/2024-CT dated 10 July 2024).
Form GST ITC-03: Reversal of ITC on closing stock when opting into composition. Filed within 60 days of transition.
Form GST ITC-01: ITC claim on closing stock when exiting composition. Filed within 30 days of transition.
Bill of Supply: Document issued by a composition dealer in place of a tax invoice. Must carry the mandatory note "Composition taxable person, not eligible to collect tax on supplies".

Opt-In Deadline Form CMP-02 by 31 March

Eligibility and Applicability

Composition eligibility runs on a multi-pronged test under Section 10(1) and Section 10(2A) of the CGST Act, 2017.

Turnover Eligibility

Goods (manufacturer, trader, including restaurants without alcohol) - up to Rs 1.5 crore
Special category states (Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand) - up to Rs 75 lakh
Service providers under Section 10(2A) (notified by Notification 2/2019) - up to Rs 50 lakh

Categorically Ineligible Persons (Section 10(2))

Persons making any inter-state outward supplies of goods or services
Persons supplying through an e-commerce operator required to collect TCS under Section 52 (Amazon, Flipkart, Myntra, Meesho, Zomato, Swiggy and similar)
Manufacturers of ice cream and other edible ice, pan masala, aerated waters, and tobacco substitutes (notified)
Casual taxable persons and non-resident taxable persons under Section 27
Persons supplying goods not leviable to tax under the GST Act

Service Supply Limit Under the 10(1) Proviso

A goods trader or manufacturer opting for Section 10(1) can supply services as well, but only up to the higher of Rs 5 lakh or 10 percent of the turnover in the preceding financial year. Crossing this dual cap forces a move to Section 10(2A) (if total turnover is within Rs 50 lakh) or to the regular scheme.

Who Should Opt In

Kirana, grocery, garment, footwear and general retail traders with turnover under Rs 1.5 cr and a low ITC base
Small restaurants, cafes, sweet shops, and fast food outlets not serving alcohol
Regional manufacturers - candles, plastic items, simple engineering goods, food processing within Rs 1.5 cr
Salon and beauty parlour chains, tailoring shops, repair workshops, freelance designers and consultants under Rs 50 lakh
B2C-dominant businesses where customers are end consumers and ITC claim by the customer is irrelevant
Intra-state only businesses with no Amazon, Flipkart or other TCS marketplace exposure

Who Should Stay Regular

Any business with substantial B2B customers needing ITC pass-through
Any business already selling on Amazon, Flipkart, Meesho, Zomato or any TCS marketplace
Any business with inter-state outward supplies
Manufacturers of ice cream, pan masala, aerated waters, or tobacco substitutes
Businesses with heavy GST-bearing input costs where ITC denial significantly hurts margins

Patron Accounting Composition Services

Service	What We Do
Eligibility Diagnostic	A 12-point check covering aggregate turnover under Section 2(6), the Section 10(1) and 10(2A) thresholds, Section 10(2) exclusions, the service-supply proviso (Rs 5 lakh or 10 percent), TCS marketplace exposure, inter-state screening, and prohibited-product filters. Output is a written go / no-go recommendation.
Composition vs Regular - ROI Modelling	A 2-year cash flow model under both regimes - tax outgo, ITC denial, compliance time, and professional fee. Many businesses recover the entire CMP-02 fee in the first quarter through tax savings alone.
Form GST CMP-02 Filing	End-to-end CMP-02 filing on the GST portal within the 31 March window, capturing trade nature, declared turnover, and the correct scheme category (Section 10(1) goods or 10(2A) services).
Form GST ITC-03 Stock-ITC Reversal	On transition in, ITC on inputs in stock, semi-finished and finished goods, and capital goods (proportionate) is reversed under Section 18(4) read with Rule 44(1)(b). We compute the reversal and file ITC-03 within 60 days.
Bill of Supply Template Design	A Bill of Supply template carrying the mandatory caption, GSTIN, supply description, value (without GST), and authorised signature - compatible with Tally, Zoho Books, Vyapar, MARG and Excel.
Quarterly CMP-08 and Annual GSTR-4	Quarterly self-assessment and CMP-08 filing by the 18th, plus annual GSTR-4 by 30 June reconciling CMP-08 totals with books, inward supply summary, RCM tax, and any DRC-03 payments.
Withdrawal via Form GST CMP-04	Voluntary or mandatory withdrawal when turnover crosses the threshold or inter-state supply begins - CMP-04 filing, then Form GST ITC-01 within 30 days to claim ITC on closing stock under Section 18(1)(c) read with Rule 40.

Our Process

Step-by-Step Procedure to Opt In

From the eligibility check to the first quarterly CMP-08 and annual GSTR-4, here is exactly how Patron Accounting runs the composition opt-in.

Step 1

Confirm Eligibility (15 Days Before)

Verify aggregate turnover for the preceding financial year. Confirm no Section 10(2) exclusion applies - no inter-state supplies, no TCS marketplace listings, no notified manufactured goods, not a CTP or NRTP. Service supply by a goods trader must be within Rs 5 lakh or 10 percent of last year's turnover.

No exclusion Proviso met

Eligibility 01

Step 2

Compute ITC-03 Reversal Liability

Tabulate ITC availed on inputs in stock, semi-finished and finished goods, and capital goods (proportionate to remaining useful life) as on the day before transition. This must be paid through the electronic cash ledger via Form GST ITC-03 within 60 days under Section 18(4) read with Rule 44(1)(b).

Stock tabbed Section 18(4)

Reversal 02

Step 3

File Form GST CMP-02 by 31 March

Log in to the GST portal, navigate to Services then Registration then Application to Opt for Composition Levy, select the FY and category (Section 10(1) or 10(2A)), submit declarations, and verify with DSC or EVC. The portal generates an ARN; the scheme is effective from 1 April.

ARN generated Effective 1 Apr

CMP-02 03

Step 4

Update Invoicing - Move to Bill of Supply

From 1 April, replace the tax invoice with a Bill of Supply carrying the caption 'Composition taxable person, not eligible to collect tax on supplies' at the top. Update Tally, Zoho Books, Vyapar, MARG or your accounting software template accordingly.

Caption added Software set

Bill of Supply 04

Step 5

File Form GST ITC-03 Within 60 Days

Compute and file Form GST ITC-03 with the stock-ITC reversal under Section 18(4), paying through the electronic cash ledger. Failure to file within 60 days draws Section 50 interest at 18 percent per annum.

Within 60 days Paid via cash

ITC-03 05

Step 6

Maintain Books in Simplified Format

Composition dealers maintain basic stock and sales registers. Invoice-level ITC matching is not required, but turnover records and Bill of Supply sequence numbers must be maintained for the GSTR-4 annual return.

No ITC match Sequence kept

Books 06

Step 7

File Form GST CMP-08 Quarterly

By the 18th of the month after each quarter, compute total outward turnover, apply the rate (1 / 5 / 6 percent), pay through the electronic cash ledger, and submit CMP-08. Quarters: Apr-Jun (due 18 Jul), Jul-Sep (18 Oct), Oct-Dec (18 Jan), Jan-Mar (18 Apr).

By the 18th Self-assessed

CMP-08 07

Step 8

File Form GST GSTR-4 Annually by 30 June

By 30 June of the next FY (Notification 12/2024-CT), file GSTR-4 consolidating all four CMP-08 returns, inward supplies, RCM tax, and any DRC-03 payments. Late fee is Rs 50 per day, capped at Rs 2,000 (Rs 500 for nil returns).

By 30 June Consolidated

GSTR-4 08

Document Checklist for Opt-In

Keep these ready for an efficient opt-in:

Eligibility Working

Last financial year's aggregate turnover working under Section 2(6) - all-India PAN basis
Service supply percentage of total turnover (for the Section 10(1) proviso test)
Confirmation of no inter-state outward supply in the preceding 6 months
Confirmation of no TCS marketplace listings (Amazon, Flipkart, Meesho, Zomato, Swiggy)

GSTIN and Constitution

Existing GSTIN registration certificate (Form GST REG-06)
PAN of the business and authorised signatory
Board resolution authorising the composition opt-in (for companies and LLPs)

Stock Working for ITC-03 Reversal

Stock register as on the day before transition
Inputs, semi-finished goods, finished goods, capital goods (with purchase invoice references)
ITC availed on each line item; capital goods residual useful life calculation

Banking and Payments

Bank account proof
ITC-03 challan for the stock-ITC reversal

Common Challenges and Patron Solutions

Challenge	Impact	How Patron Accounting Solves It
TCS Marketplace Disqualification	Traders listing on Amazon, Flipkart, Meesho, Zomato or Swiggy assume composition is still possible, but Section 10(2)(d) disqualifies anyone supplying through a TCS operator.	We review the supply mix and either advise delisting or recommend staying on the regular scheme.
Inter-State Supply Trap	A single inter-state outward supply during the year invalidates composition for the entire period and triggers a Section 10(5) demand at regular rates plus interest and penalty.	We map all customer locations against the supply-origin State to catch inter-state flows early.
ITC-03 Reversal Surprise	New composition dealers overlook ITC-03 - a trader with Rs 50 lakh stock at 18 percent ITC carries a Rs 9 lakh reversal hit, sometimes negating the year-1 benefit.	We model this in the ROI evaluation at Step 1 of the opt-in process, so there are no surprises.
Service Supply Beyond the Proviso Cap	A grocer who also rents out delivery vans may exceed the Section 10(1) proviso (Rs 5 lakh or 10 percent) without realising.	We track service revenue monthly and switch the client to Section 10(2A) (if within Rs 50 lakh) or to the regular scheme with full disclosure.
Crossing the Threshold Mid-Year	On any day turnover crosses Rs 1.5 crore (or Rs 50 lakh under 10(2A)), composition lapses automatically under Section 10(3).	We diary the threshold against monthly turnover and alert clients 30 days ahead, then file CMP-04 within 7 days and ITC-01 within 30 days.
Bill of Supply Compliance	Software templates default to tax invoices and may inadvertently include 'GST 18 percent' lines, which a composition dealer cannot charge.	We configure invoicing software with a Bill of Supply layout including the mandatory composition caption.
GSTR-4 Three-Year Trap	From July 2025, the portal does not accept GSTR-4 more than 3 years past its due date (GSTN advisory 7 June 2025), barring older returns.	We diary 12 months ahead of the 3-year window for any historic GSTR-4 still pending.

Composition Scheme Service Fees

Fee Component	Amount
Patron Accounting Professional Fees	Starting from INR 1,499 (Exl GST and Govt. Charges) - CMP-02 opt-in and advisory
Composition Eligibility Diagnostic + Form GST CMP-02 opt-in filing	Starting from INR 1,499 (Exl GST and Govt. Charges)
ITC-03 stock-ITC reversal computation and filing	Quoted on stock complexity
Bill of Supply template design (Tally, Zoho, Vyapar, MARG)	Included in the standard package
Quarterly Form GST CMP-08 filing	Quoted per quarter
Annual Form GSTR-4 filing by 30 June	Quoted annually
Withdrawal Form GST CMP-04 plus Form GST ITC-01 filing	Quoted on assessment
Government Fees on the GST portal	NIL on CMP-02; late fee on GSTR-4 Rs 50/day capped at Rs 2,000 (Rs 500 nil); CMP-08 late fee Rs 200/day capped at Rs 5,000

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free GST Composition Scheme consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

Time Taken for Composition Activities

Stage	Estimated Timeline
Eligibility diagnostic and ROI modelling	1 to 3 working days
Form GST CMP-02 opt-in filing	Same working day
Scheme effective date	1 April of the new FY
ITC-03 stock reversal filing	Within 60 days of transition (Section 18(4), Rule 44(1)(b))
Bill of Supply template setup	1 to 2 working days
Quarterly Form GST CMP-08	By the 18th of the month following each quarter
Annual Form GSTR-4	By 30 June of the next FY (Notification 12/2024-CT)
Mandatory CMP-04 withdrawal on threshold breach	Within 7 days of crossing; ITC-01 within 30 days

The hard deadline is Form CMP-02 by 31 March of the preceding FY - the scheme then runs from 1 April. CMP-08 is due by the 18th after each quarter and GSTR-4 by 30 June of the next FY; ITC-03 must follow the opt-in within 60 days, and ITC-01 within 30 days of any opt-out.

Key Benefits

Benefits of Filing Through Patron Accounting

12-Point Eligibility Diagnostic

Prevents wrongful opt-in and downstream Section 10(5) demand.

ROI Modelling

Shows real tax saving versus ITC denial - many clients recover the Patron fee in Q1 alone.

Accurate ITC-03 Reversal

Computed precisely, so there is no Section 50 interest surprise.

Integrated Bill of Supply

Template integrated with Tally, Zoho, Vyapar or MARG so day-1 invoicing is clean.

Timely Quarterly CMP-08

Filed by the 18th with payment optimisation.

Annual GSTR-4 by 30 June

Filed on time so the late fee is avoided.

Threshold Monitoring

30-day pre-alert with a smooth CMP-04 plus ITC-01 transition if growth crosses Rs 1.5 cr.

Trusted by Businesses Across India

10,000+ Businesses | 4.9 Google Rating | 50,000+ Documents Processed | 15+ Years

Trusted by Hyundai, Asian Paints, Bridgestone and 10,000+ other businesses across India, including 1,200+ composition dealers across the kirana, garment, restaurant, salon and small-manufacturer segments.

Outcome proof: In FY 2025-26, Patron Accounting filed 410 Form CMP-02 opt-in applications. 96 percent of eligibility diagnostics correctly captured Section 10(2) exclusions on day one. The average annual GST saving per client switching from regular 5 percent or 12 percent slabs to 1 percent composition was Rs 1.8 lakh, with 84 compliance hours saved per year (24 monthly returns down to 5).

With offices in Pune, Mumbai, Delhi, and Gurugram, Patron Accounting serves businesses across India - both in-person and remotely. See our GST registration support in Pune for local assistance.

Composition Scheme vs Regular GST

Parameter	Composition Scheme	Regular GST
Governing Provision	Section 10 CGST Act, 2017	Section 9 CGST Act read with Sections 7-8
Turnover Limit	Rs 1.5 cr (goods) or Rs 50 lakh (services)	Registration threshold (Rs 20 / 40 lakh); no upper cap
Tax Rate	Flat 1 / 5 / 6 percent on turnover	5 / 12 / 18 / 28 percent per HSN or SAC
Tax Collection From Customer	Not allowed - cannot collect GST	Mandatory - GST shown on tax invoice
Input Tax Credit	Not available	Available subject to Sections 16 and 17
Invoice Document	Bill of Supply with composition caption	Tax invoice under Section 31
Inter-State Supply	Not allowed	Allowed
E-Commerce TCS Marketplace	Not allowed	Allowed
Returns	CMP-08 quarterly + GSTR-4 annually = 5 per year	GSTR-1 + GSTR-3B monthly + GSTR-9 = 25 per year
Opt-In Form	Form CMP-02 by 31 March	Form REG-01 anytime
Best For	Small B2C retailers, restaurants, manufacturers, and service providers with low ITC and intra-state customers	B2B suppliers, ITC pass-through, inter-state sellers, marketplace sellers

Related Patron Services

GST Services - the complete GST services hub covering registration, returns, ITC, refunds, notices and audits.
GST Registration - the standard route before composition opt-in.
GST Returns - regular GSTR-1, GSTR-3B and GSTR-9 filing for non-composition clients.
GST Refund - refund applications under Section 54.

Related registration engagements that often run alongside a composition opt-in - GST Registration under Rule 14A (the 3-day fast track for low B2B output tax), GST Registration Amendment via Form REG-14, and GST Registration Cancellation via Form REG-16 plus GSTR-10 - are available as part of the wider GST compliance suite.

Legal and Compliance Framework

Provision	Subject
Section 10(1), CGST Act, 2017	Composition scheme for manufacturers, traders, restaurants - turnover threshold Rs 1.5 cr
Section 10(1) proviso	Service supply up to the higher of Rs 5 lakh or 10 percent of turnover allowed
Section 10(2)	Persons categorically ineligible - inter-state, TCS marketplace, ice cream / pan masala / tobacco / aerated waters, CTP, NRTP
Section 10(2A)	Composition scheme for service providers - turnover threshold Rs 50 lakh, rate 6 percent
Section 10(3)	Composition lapses on the day turnover crosses the prescribed threshold
Section 10(5)	Tax demand at regular rates plus penalty where composition wrongly availed
Section 18(4)	ITC reversal on inputs in stock when opting into composition
Section 18(1)(c)	ITC entitlement on stock when ceasing to be a composition dealer
Rule 3-7, CGST Rules, 2017	Forms and process for opt-in, eligibility, and rate computation
Rule 44(1)(b)	Mechanism for the ITC-03 stock-ITC reversal
Rule 40	Form ITC-01 entitlement on opting out
Notification 2/2019-Central Tax (Rate)	Notified scheme for service providers under Section 10(2A) at 6 percent
Notification 12/2024-CT dated 10 July 2024	GSTR-4 due date shifted from 30 April to 30 June from FY 2024-25

Penalty exposure: Wrongful availment triggers Section 10(5) - tax demand at regular rates plus penalty under Section 73 or 74 depending on suppression. Late CMP-08 attracts a late fee of Rs 200 per day combined (capped at Rs 5,000 per return); late GSTR-4 attracts Rs 50 per day combined (capped at Rs 2,000; Rs 500 for nil returns). E-way bill generation is blocked after two quarters of non-filing under Rule 138E and can be unblocked via Form GST EWB-05 after clearing pending returns. From July 2025, GSTR-4 cannot be filed beyond 3 years from its due date (GSTN advisory dated 7 June 2025).

Authoritative references: GST Common Portal, CBIC - Section 10 of the CGST Act, 2017, and India Code - CGST Act 2017.

Who is eligible for the GST composition scheme?

A registered taxpayer with aggregate turnover up to Rs 1.5 crore in the preceding financial year (Rs 75 lakh in 8 special category states: Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand) under Section 10(1) of the CGST Act, 2017 for goods, manufacturers and restaurants not serving alcohol. Service providers can opt under Section 10(2A) up to Rs 50 lakh. The taxpayer must not be in any Section 10(2) exclusion category - inter-state supplies, TCS marketplace, ice cream / pan masala / aerated waters / tobacco manufacturer, casual taxable person or non-resident taxable person.

What is the turnover limit for GST composition scheme?

For goods (manufacturers, traders, restaurants without alcohol) the aggregate turnover threshold under Section 10(1) is Rs 1.5 crore in regular states and Rs 75 lakh in 8 special category states. For service providers under Section 10(2A) the threshold is Rs 50 lakh nationally. Aggregate turnover is computed under Section 2(6) of the CGST Act on all-India PAN basis including taxable, exempt and export supplies.

What are the tax rates under GST composition scheme?

Three flat rates under Section 10 of the CGST Act, 2017 - 1 percent (0.5 percent CGST + 0.5 percent SGST or UTGST) for goods manufacturers and traders; 5 percent (2.5 percent CGST + 2.5 percent SGST or UTGST) for restaurants not serving alcoholic liquor; and 6 percent (3 percent CGST + 3 percent SGST or UTGST) for service providers and mixed suppliers under Section 10(2A) read with Notification 2/2019-Central Tax (Rate). The rate applies to aggregate turnover of taxable supplies in the State.

Can a composition dealer make inter-state supplies?

No. Section 10(2)(c) of the CGST Act, 2017 categorically disqualifies any person making inter-state outward supplies of goods or services from the composition scheme. A single inter-state outward supply during the year voids composition for the entire period and triggers Section 10(5) demand at regular rates plus interest under Section 50 and penalty under Section 73 or 74. Inter-state inward supplies (purchases from other states) are allowed.

Can a composition dealer claim Input Tax Credit?

No. Composition dealers are not eligible for Input Tax Credit. Tax paid on inputs, input services and capital goods becomes part of cost. Section 18(4) read with Rule 44(1)(b) requires reversal of ITC on stock held on the day before transition through Form GST ITC-03. The trade-off is the flat 1 to 6 percent rate against the regular 5 to 28 percent slabs with ITC offset.

What is the difference between CMP-08 and GSTR-4?

Form GST CMP-08 is a quarterly statement-cum-challan for self-assessed tax payment, filed by the 18th of the month following each quarter. Form GSTR-4 is the annual return that consolidates the four CMP-08 returns plus inward supplies and RCM tax, filed by 30 June of the next financial year under Notification 12/2024-CT dated 10 July 2024. CMP-08 carries tax payment; GSTR-4 carries the year-end reconciliation.

How to opt for the composition scheme on the GST portal?

Existing taxpayers log in to the GST portal, navigate to Services then Registration then Application to Opt for Composition Levy, select the financial year and category (Section 10(1) for goods or Section 10(2A) for services), submit declarations confirming eligibility, and verify with DSC or EVC. The filing must be completed by 31 March of the preceding financial year. The scheme is effective from 1 April of the new financial year. Form GST ITC-03 stock-ITC reversal must follow within 60 days.

What happens if turnover exceeds the composition threshold during the year?

Under Section 10(3) of the CGST Act, 2017 composition lapses automatically on the day aggregate turnover crosses Rs 1.5 crore (or Rs 50 lakh under 10(2A)). The taxpayer must file Form GST CMP-04 within 7 days of the breach, pay tax at regular rates from the next day, and file Form GST ITC-01 within 30 days to claim ITC on closing stock under Section 18(1)(c) read with Rule 40. Regular GSTR-1 and GSTR-3B compliance begins prospectively.

GST composition scheme kya hai aur kaun le sakta hai?

GST composition scheme Section 10 ke under chote businesses ke liye flat tax rate option hai. Goods aur restaurant ke liye Rs 1.5 crore tak turnover par 1 percent ya 5 percent flat tax dena hota hai. Services ke liye Section 10(2A) ke under Rs 50 lakh tak 6 percent. Customers se GST collect nahi kar sakte aur ITC bhi nahi mil sakta. Form CMP-02 portal par 31 March se pehle file kariye aur 1 April se scheme shuru ho jaayegi. Phir CMP-08 quarterly aur GSTR-4 saalana file karna hota hai.

Quick Answers

Governing section? Section 10 of the CGST Act, 2017.
Threshold (goods)? Rs 1.5 cr (Rs 75 lakh in 8 special states).
Threshold (services)? Rs 50 lakh under Section 10(2A).
Rates? 1 percent goods, 5 percent restaurant, 6 percent services.
Opt-in? Form CMP-02 by 31 March.
Quarterly? Form CMP-08 by the 18th of the next month.
Annual? Form GSTR-4 by 30 June of the next FY.
ITC? Not available. Reverse via Form ITC-03 within 60 days of opt-in.
Inter-state? Not allowed (Section 10(2)(c)).
Marketplace sales? Not allowed if the operator collects TCS (Section 10(2)(d)).
Tax invoice? No - issue a Bill of Supply with the composition caption.
Patron fee? Starting from INR 1,499 (Exl GST and Govt. Charges).

Why the 31 March Deadline Matters

Form GST CMP-02 must be filed by 31 March of the preceding financial year. Miss this single date and composition is unavailable for the entire next financial year - a Rs 1.5 lakh to Rs 5 lakh saving forgone for many small businesses.

Form GST ITC-03 stock-ITC reversal must follow within 60 days of transition; a lapse triggers Section 50 interest. Wrongful availment (inter-state supply, TCS marketplace listing, prohibited product) triggers a Section 10(5) demand at regular rates plus penalty.

The compliance gain - 5 filings instead of 25 - is durable only when the route fit is right from day one. A quick eligibility diagnostic settles it.

Opt In Before the 31 March Window Closes

The GST composition scheme under Section 10 of the CGST Act, 2017 is the single best simplification available to small Indian taxpayers - flat 1 to 6 percent tax on turnover, quarterly self-assessed CMP-08, annual GSTR-4 by 30 June, no ITC reconciliation, and no monthly invoice uploads. The threshold is Rs 1.5 crore for goods and restaurants (Rs 75 lakh in special states) and Rs 50 lakh for services under Section 10(2A).

Opt-in is via Form GST CMP-02 by 31 March of the preceding FY, with Form ITC-03 stock-ITC reversal within 60 days under Section 18(4). Wrongful availment triggers a Section 10(5) demand. Patron Accounting LLP, a CA and CS led firm with 15+ years of experience across Pune, Mumbai, Delhi and Gurugram, runs the eligibility diagnostic, opt-in filing, ITC-03 reversal, Bill of Supply template, quarterly CMP-08 and annual GSTR-4 compliance, plus the mandatory CMP-04 withdrawal if turnover crosses the threshold.

Pair this with our GST Registration for the standard route, GST Returns for regular filing, and GST Refund for Section 54 claims.

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GST Composition Support Across India

With offices in Pune, Mumbai, Delhi, and Gurugram, Patron Accounting serves businesses across India - both in-person and remotely.

GST Registration and Composition by City

On-the-ground opt-in support plus remote CMP-08 and GSTR-4 delivery

Related Services

End-to-end support across the GST compliance lifecycle

Content Created: 26 May 2026 | Last Updated: | Next Review: 1 September 2026 | Reviewed By: CA & CS Team, Patron Accounting LLP

This page is reviewed quarterly (Tier 1 cadence) and on any CBIC notification touching Section 10, composition rates, the GSTR-4 due date, or the eligibility list.

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