GST Composition Scheme — Is It Right for You?
The Composition Scheme is a simplified GST option for small businesses. Here is everything you need to decide.
Eligibility Criteria
Tax Rates Under Composition
| Business Type | Tax Rate |
|---|---|
| Traders | 1% (0.5% CGST + 0.5% SGST) |
| Manufacturers | 1% |
| Restaurants | 5% |
| Service providers | 6% |
Benefits of Composition
Limitations
- Cannot collect GST from customers
- Cannot claim ITC on purchases
- No interstate supply
- No e-commerce
- Must mention "Composition Dealer" on invoices
Who Should Opt?
Good for:
- Local retailers
- Small manufacturers
- Restaurants without interstate operations
- Businesses with few purchases
Not good for:
- Interstate traders
- E-commerce sellers
- Exporters
- B2B with GST-registered buyers