Small businesses can opt for the GST composition scheme — a simplified regime with lower tax paid on turnover and far less filing. But it is not right for everyone.
How the composition scheme works
Eligible businesses below the notified turnover limit pay a small fixed percentage of turnover as tax and file simplified returns. Invoicing rules are lighter, and compliance takes a fraction of the time.
The catches
- No input tax credit — you cannot claim credit on purchases
- Your buyers get no credit either — a deal-breaker if you sell to registered businesses
- No inter-state sales of goods
- Certain businesses (like most service providers beyond a limit, and e-commerce sellers) are excluded
The quick decision rule
Sell mostly to end consumers within your state with limited purchases carrying tax? Composition often wins. Sell to businesses, across states or online? Regular GST is usually the only sensible route.
We run this comparison with your actual numbers on a free call — see our GST registration service or talk to an expert.
