Composition scheme is introduced for small taxpayers to reduce the compliance burden on them

File summarized returns on a quarterly basis instead of multiple monthly returns

Pay tax only to a maximum of 2% for manufacturers, 5% for restaurant service sector and 1% for
other suppliers

Cannot collect any tax from or issue tax invoice to customers

Cannot avail input tax credit

Only those persons who fulfill all the following are eligible to apply for composition scheme

deals only in the intra-state supply of goods (or service of only restaurant sector)

does not supply goods that are not leviable to tax

has an annual turnover below Rs. 75 Lakhs (Rs. 50 Lakhs for North Eastern States) in preceding
financial year

shall pay tax at normal rates in case he is liable under reverse charge mechanism.

not supplying through e-commerce operator

not a manufacturer of ice cream, pan masala or tobacco (and its substitutes)

You need to file an online application to opt for Composition Scheme. Taxpayers who can opt for this
scheme can be categorized as below:

Migrated Taxpayers: Any taxpayer who has migrated from earlier laws and has been granted
provisional registration certificate can file an application under Form GST CMP-01 and further
details in Form GST CMP-03 within 30 days after 1st July 2017.

New Taxpayers: Any person who is liable to register under GST Act after 1st July 2017 can file
Form GST REG-01 and choose his option to pay composition amount in the New Registration
application.

Existing Taxpayers: Any taxpayer who is registered as normal tax payer under GST regime shall
file an application under Form CMP-02 to opt for Composition Scheme at least 7 days prior to
the commencement of financial year for which the option to