Home › BUSY Guides › GST Composition Scheme: Who Can Opt, Tax Rates, CMP-08, GSTR-4 and How to Run It in BUSY
GST Composition Scheme: Who Can Opt, Tax Rates, CMP-08, GSTR-4 and How to Run It in BUSY
GST कंपोजिशन स्कीम: कौन ले सकता है, टैक्स रेट, CMP-08, GSTR-4 और BUSY में सेटिंग
Composition scheme for small traders, manufacturers and restaurants: Rs 1.5 crore limit, 1% / 5% / 6% rates, bill of supply, CMP-08, GSTR-4 and the BUSY setup.
The composition scheme lets a small business pay GST at a flat low rate on its turnover and file far fewer returns. It suits small traders, local manufacturers and restaurants whose customers are mostly consumers. It also comes with limits: no input tax credit, no tax on the bill, and no inter-state sales of goods. This guide covers the rules and how to keep the books in BUSY.
Who can opt
- Turnover limit: aggregate turnover up to Rs 1.5 crore in the previous year (Rs 75 lakh in the notified special category states).
- Service providers: a separate composition option (section 10(2A)) is open to service providers and mixed suppliers with turnover up to Rs 50 lakh.
- Not allowed: inter-state outward supplies of goods, manufacturers of notified goods (such as ice cream, pan masala and tobacco products), non-resident and casual taxable persons.
- Same PAN, all registrations: if one GSTIN under a PAN opts, every GSTIN under that PAN must be in the scheme.
- E-commerce: composition suppliers of goods may sell through e-commerce operators within their own state, subject to notified conditions; check the current conditions with your CA.
Tax rates under composition
| Business | Rate on turnover | Split |
|---|---|---|
| Traders (goods) | 1% of taxable turnover | 0.5% CGST + 0.5% SGST |
| Manufacturers | 1% of turnover | 0.5% CGST + 0.5% SGST |
| Restaurants (no alcohol) | 5% of turnover | 2.5% CGST + 2.5% SGST |
| Service providers / mixed suppliers (section 10(2A)) | 6% of turnover | 3% CGST + 3% SGST |
Tax under reverse charge (for example, on legal fees or GTA) is paid at normal rates on top of this, and imports carry their usual duties and IGST.
What changes in daily work
- Bill of supply, not tax invoice: no GST is charged on the bill. The bill must say "composition taxable person, not eligible to collect tax on supplies".
- No ITC: GST paid on purchases is part of the cost. Book purchases inclusive of tax.
- Board at the shop: display "Composition taxable person" at the place of business and on the signboard.
- Purchases from unregistered suppliers of notified goods and services may attract reverse charge; keep them separate.
Returns and due dates
| Form | What | Due |
|---|---|---|
| CMP-02 | Option to join the scheme (existing registered person) | Before the start of the financial year (usually by 31 March) |
| CMP-08 | Statement-cum-challan: quarterly self-assessed tax | 18th of the month after each quarter |
| GSTR-4 | Annual return | 30 June after the financial year (as currently notified) |
| CMP-04 | Opting out during the year | Within 7 days of opting out |
Late CMP-08 brings interest at 18% a year; late GSTR-4 brings a late fee. Use our GST due-date calendar and interest and late fee calculator.
Composition vs regular: a quick test
| Question | Points to composition | Points to regular |
|---|---|---|
| Who buys from you? | Consumers, walk-in customers | Registered businesses that want ITC |
| Where are your customers? | Same state | Other states too |
| Margins and purchases | High margin, small GST on purchases | Low margin, large ITC on purchases |
| Paperwork you can handle | Minimal: quarterly CMP-08, annual GSTR-4 | Monthly or quarterly returns with ITC matching |
Composition in BUSY
Company GST type
Set the company's GST registration type to composition in BUSY's GST configuration, so sales print as a bill of supply without tax.
Sales as bill of supply
Use a sale type or series meant for composition, and print the composition declaration on the bill format (invoice format in BUSY).
Purchases with tax in cost
Book purchases with GST included in the item cost, since no ITC is allowed. Keep RCM purchases in their own type (RCM entry in BUSY).
Quarterly tax
Take the quarter's turnover from the sales register, work out tax at your rate, pay through CMP-08 and book the payment.
Fast daily entry
Composition shops often write many small bills. Bharat Single Entry Composition lets you type bills of supply row after row on one screen inside BUSY.
Rates, limits and due dates are notified by the government and change from time to time. Check the current notification or your CA before opting in or out.
Need it done for you?
Our team sets this up remotely over UltraViewer, usually the same day. Call or message us, or see BUSY services.
Disclaimer: This article is general information for business owners, accountants and tax professionals, written by Bharat Busy Care as understood on the date shown below. It is not legal, tax or professional advice. GST, income-tax and other laws, rates, forms, due dates and portal steps change often: check the current Acts, rules, notifications, circulars and official advisories, and consult your CA or tax practitioner before acting on it. BUSY menu names can differ by version, plan and configuration; take a backup before changing settings. Bharat Busy Care is not responsible for any loss arising from the use of this information. BUSY is a trademark of its owner; Bharat Busy Care is an Authorised BUSY Platinum Partner. See our terms.
अस्वीकरण: यह लेख केवल सामान्य जानकारी के लिए है, कानूनी या टैक्स सलाह नहीं है। नियम बदलते रहते हैं; कोई भी निर्णय लेने से पहले नवीनतम अधिसूचना देखें और अपने CA / टैक्स सलाहकार से सलाह लें।
Updated 03-11-2026 · Bharat Busy Care, Authorised BUSY Platinum Partner
FAQ
What is the turnover limit for the GST composition scheme?
Rs 1.5 crore of aggregate turnover in the previous year for goods suppliers and restaurants (Rs 75 lakh in the notified special category states). For service providers under section 10(2A), Rs 50 lakh.
What is the composition tax rate for traders?
1% of taxable turnover (0.5% CGST + 0.5% SGST). Manufacturers pay 1%, restaurants 5% and service providers under section 10(2A) 6%.
Can a composition dealer claim input tax credit?
No. GST paid on purchases becomes part of the cost, and the dealer cannot charge GST on its bills.
Which returns does a composition dealer file?
CMP-08 every quarter by the 18th of the next month to pay tax, and GSTR-4 once a year (currently due by 30 June).
Can a composition dealer sell to other states?
No inter-state outward supplies of goods are allowed under the scheme. Selling to another state means leaving the scheme.
More BUSY guides
- GSTR-9 and GSTR-9C from BUSY: Who Files, Table-wise Data and Checks
- TDS on Purchase of Goods in BUSY: Section 194Q and New Section 393(1)
- How to Protect Your Business From GST Notices, Scrutiny and Audit
- How to Avoid GST Notices: 12 Red Flags the GST System Catches, and How to Stop Each One
- GST on Advance Received: When Tax Is Due, Receipt Voucher, Refund and Entries in BUSY
Talk to a BUSY expert
Call or message us; we answer in Hindi or English.