GST Composition Scheme for Goods | Savlana Init

GST Compliance · Composition Scheme

GST Composition Scheme — Lower Tax. Simpler Returns.

The GST Composition Scheme lets eligible goods dealers and manufacturers pay tax at a flat rate on turnover — no invoice-wise return, no ITC complexity, quarterly challan, annual return.

The GST Composition Scheme is a simplified tax payment mechanism available to small taxpayers under Section 10 of the CGST Act, 2017. Instead of computing tax invoice-by-invoice and filing monthly GSTR-1 and GSTR-3B returns, a composition dealer pays tax at a flat rate on aggregate turnover and files a quarterly challan (CMP-08) and a single annual return (GSTR-4). The scheme dramatically reduces the compliance burden for small businesses.

Composition rates vary by category: 1% for manufacturers (0.5% CGST + 0.5% SGST), 1% for traders dealing in goods (0.5% CGST + 0.5% SGST), and 5% for restaurants not serving alcohol. The turnover limit for opting into the composition scheme is ₹1.5 crore aggregate turnover in the preceding financial year (₹75 lakh for special category states). Importantly, composition dealers cannot collect tax from customers, cannot issue a tax invoice, and are not entitled to claim input tax credit.

Opting into the composition scheme is done by filing Form CMP-02 on the GST portal at the beginning of the financial year. Once opted in, the dealer must file Form CMP-08 (quarterly self-assessed tax challan) and GSTR-4 (annual return). The scheme is beneficial for businesses with limited inter-state supply and low input tax credit requirements. We assess eligibility, opt you in correctly, and manage your quarterly and annual filings.

Our Composition Scheme Services

Composition Scheme Eligibility Assessment

Review of aggregate turnover, nature of supply, and inter-state transactions to confirm composition scheme eligibility and expected tax savings.

CMP-02 Filing (Opt-In)

Filing of Form CMP-02 on the GST portal to opt into the composition scheme at the start of the financial year.

Quarterly CMP-08 Filing

Preparation and filing of Form CMP-08 — the quarterly self-assessed challan for payment of composition tax on turnover.

Annual GSTR-4 Return

Preparation and filing of the annual composition return in Form GSTR-4, reconciling quarterly payments with annual aggregate turnover.

Composition Certificate Assistance

Assistance with obtaining and displaying the composition certificate and ensuring correct labelling on bills of supply.

Switch-Back to Regular Scheme

Filing of Form GST CMP-04 to withdraw from the composition scheme when turnover exceeds the limit or inter-state supply commences.

ITC Reversal on Opt-In

Advisory and computation of ITC to be reversed in Form ITC-03 on inputs, input services, and capital goods held on the date of opting into the scheme.

Composition Compliance Advisory

Ongoing advisory on restrictions applicable to composition dealers — no inter-state supply, no tax invoice, no ITC, mandatory bill-of-supply format.

Our Process

Eligibility & Benefit Analysis

We review your turnover, supplier profile, and ITC claims to determine whether the composition scheme results in a lower net tax cost compared to the regular scheme.

CMP-02 Filing at Year-Start

Form CMP-02 is filed on the GST portal at the start of the financial year (typically in March for the next FY) to opt into the scheme.

ITC-03 Reversal Filing

Form ITC-03 is filed to reverse ITC on opening stock and capital goods held on the date of scheme opt-in.

Quarterly CMP-08 Payments

We prepare and file Form CMP-08 each quarter on your turnover data, ensuring timely payment of composition tax.

Annual GSTR-4 Filing

At year-end, Form GSTR-4 is prepared reconciling all quarterly payments and filed with the annual aggregate turnover figures.

Why It Matters

✓Tax at flat rate — 1% on turnover for goods dealers

✓No invoice-wise GSTR-1 filing — quarterly challan only

✓Annual return GSTR-4 instead of 12 monthly returns

✓Significantly lower compliance cost for small businesses

✓Eligibility assessed before opt-in to confirm genuine savings

✓ITC reversal computed and filed correctly on opt-in

✓Smooth switch-back to regular scheme if turnover crosses limit

✓Bill of supply format and compliance restrictions explained

Frequently Asked Questions

Manufacturers and traders dealing in goods with aggregate annual turnover not exceeding ₹1.5 crore (₹75 lakh in special category states) in the preceding financial year are eligible. Businesses making inter-state outward supplies, supplying exempted goods, or engaged in e-commerce supply through an operator are not eligible.

Manufacturers pay 1% of turnover (0.5% CGST + 0.5% SGST). Traders in goods pay 1% of turnover on taxable supplies only. Restaurants (not serving alcohol) pay 5% of turnover. These rates are on the aggregate turnover — not on the profit margin.

No. A composition dealer cannot collect tax from customers and cannot issue a tax invoice. They must issue a Bill of Supply instead, and it must prominently display the words 'Composition Taxable Person, not eligible to collect tax on supplies'.

Form CMP-02 must be filed on or before the date of commencement of the financial year for which the scheme is opted. For the next financial year, it is typically filed in March. A dealer commencing business during the year can opt in at the time of first registration.

Yes. There is no restriction on inter-state purchases. The restriction is only on inter-state outward supplies — a composition dealer cannot make inter-state sales of goods. They can purchase from anywhere in India.

Once aggregate turnover crosses ₹1.5 crore during the financial year, the dealer must file Form CMP-04 to withdraw from the scheme. From the date of withdrawal, they are treated as a regular taxpayer and must file GSTR-1 and GSTR-3B for the remainder of the year.

Want to switch to the GST Composition Scheme?

We assess your eligibility, handle the CMP-02 opt-in, ITC reversal, and manage your quarterly and annual filings — so your compliance stays simple and low-cost.