GST Composition Scheme — Limits, Rates, CMP-08 and GSTR-4
Quick answer: The composition scheme lets small businesses pay tax on total turnover at a flat rate with no input tax credit: 1% for traders and manufacturers, 5% for restaurants without alcohol and 6% for services. The ceiling is ₹1.5 crore for goods and restaurants and ₹50 lakh for services, and ₹75 lakh for goods suppliers in special-category states. Tax is paid quarterly through CMP-08 and the annual return is GSTR-4.
Last verified 26 October 2026 against published GST rules summaries. Confirm against the official GST notification list before any filing; we re-check it before each filing cycle.
Limits and rates
| Category | Turnover ceiling (per PAN) | Tax rate on total turnover |
|---|---|---|
| Traders (goods) | ₹1.5 crore | 1% (0.5% CGST + 0.5% SGST) |
| Manufacturers (goods) | ₹1.5 crore | 1% |
| Restaurants without alcohol | ₹1.5 crore | 5% (2.5% CGST + 2.5% SGST) |
| Service providers | ₹50 lakh | 6% (3% CGST + 3% SGST) |
| Goods suppliers in special-category states | ₹75 lakh | 1% |
The ceiling is measured on aggregate turnover across all businesses under the same PAN.
Returns and deadlines
| Return | What it is | Due date |
|---|---|---|
| CMP-08 | Quarterly statement and tax payment | 18th of the month after the quarter |
| GSTR-4 | Annual return | 30 April after the financial year |
Composition taxpayers do not file GSTR-1 or GSTR-3B.
What composition does not allow
- Charging GST separately on invoices or collecting tax from buyers. Bills must state that the supplier is a composition taxable person and is not eligible to collect tax.
- Claiming input tax credit on purchases.
- Inter-state supplies, with limited exceptions.
- Selling through e-commerce platforms.
- Manufacturing ice cream, pan masala, tobacco products or aerated drinks, which are excluded from the scheme.
Moving in and out of the scheme
- Opting in: file CMP-02 on the GST portal. Confirm the timing for your case, since it depends on whether you are opting in at registration or at the start of a financial year.
- Turnover crosses the ceiling: you move to the regular scheme from the day the limit is crossed. The regular rules then apply, including invoicing and input tax credit.
- Opting out: file CMP-04 when you leave the scheme.
What we do
- Eligibility check against turnover, state category and exclusions before you opt in
- CMP-08 and GSTR-4 preparation, with books matched to turnover
- Move-out planning before you cross the ceiling
Related: GST return filing: GSTR-1, GSTR-3B and QRMP and GSTR-9 and GSTR-9C annual return.
Talk to us before you file anything
Frequently asked questions
What is the GST composition scheme turnover limit?
₹1.5 crore for goods traders and manufacturers and restaurants without alcohol, ₹50 lakh for service providers, and ₹75 lakh for goods suppliers in special-category states. The ceiling applies to aggregate turnover across all businesses under one PAN.
What tax rate applies under composition?
1% for traders and manufacturers, 5% for restaurants without alcohol and 6% for service providers. The rate applies to total turnover, and no input tax credit can be claimed.
When is CMP-08 due?
By the 18th of the month after each quarter. It is the quarterly statement and tax payment for composition taxpayers.
When is GSTR-4 due?
By 30 April after the financial year ends.
Can a composition dealer charge GST to customers?
No. Bills must state that the supplier is a composition taxable person and is not eligible to collect tax.
What happens if turnover crosses the limit?
You move to the regular scheme from the day the limit is crossed. Plan this before the year-end, because invoicing and input tax credit change from that date.