GST Compliance · 2026
The composition scheme reduces compliance burden for small businesses but comes with significant restrictions — no ITC, no interstate sales, no tax invoice. Here's how to decide which scheme suits your business.
Turnover Limit
₹1.5 Crore
For goods businesses. ₹50L for services.
Composition Scheme — Better When
Regular Scheme — Better When
Composition Scheme Tax Rates — 2026
| Business Type | Tax Rate | Turnover Limit |
|---|---|---|
| Traders (goods) | 1% of turnover (0.5% CGST + 0.5% SGST) | ₹1.5 crore |
| Manufacturers | 1% of turnover (0.5% CGST + 0.5% SGST) | ₹1.5 crore |
| Restaurants (no alcohol) | 5% of turnover (2.5% CGST + 2.5% SGST) | ₹1.5 crore |
| Service providers (SBCS) | 6% of turnover (3% CGST + 3% SGST) | ₹50 lakh |
Special category states (Himachal Pradesh, Uttarakhand, North-Eastern states) have a limit of ₹75 lakh for goods.
Detailed Comparison — 2026
| Feature | Composition | Regular |
|---|---|---|
| Turnover limit | ₹1.5Cr (goods), ₹50L (services) | No limit |
| Tax rate | 1%–6% of turnover | Standard GST rates (5%, 12%, 18%, 28%) |
| Input Tax Credit (ITC) | Not available | Available on eligible purchases |
| Tax invoice | Bill of Supply only | Must issue tax invoice |
| Interstate sales | Not allowed | Allowed |
| E-commerce sales | Not allowed (except services) | Allowed |
| Return filing | Quarterly (CMP-08 + GSTR-4 annual) | Monthly (GSTR-1 + GSTR-3B) |
| Annual return | GSTR-4 (annual) | GSTR-9 (if turnover > ₹2Cr) |
| Compliance burden | Low — 5 filings per year | High — 24+ filings per year |
| Reverse charge (RCM) | Must pay on applicable purchases | Must pay on applicable purchases |
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