The GST Composition Scheme continues to be a crucial relief measure for small taxpayers across India. Designed to simplify compliance and reduce tax burdens, the scheme allows eligible businesses to pay GST at lower, fixed rates while enjoying easier filing procedures. Here’s a comprehensive overview of the turnover limits, tax rates, eligibility criteria, and filing deadlines under the scheme for FY 2025–26.
What is the GST Composition Scheme?
The GST Composition Scheme is a simplified tax structure available to small taxpayers under the Goods and Services Tax (GST) regime. It allows eligible businesses to pay tax at a fixed percentage of their turnover instead of the regular GST rates and file quarterly returns instead of monthly ones.
Turnover Limits for FY 2025–26
As per the current GST law, the eligibility turnover threshold for opting into the Composition Scheme is:
- Manufacturers and Traders of Goods: Annual aggregate turnover up to ₹1.5 crore.
- Special Category States: ₹75 lakh turnover limit (includes northeastern states, Himachal Pradesh, Uttarakhand, etc.).
- Service Providers (Composition Scheme for Services): Annual turnover up to ₹50 lakh.
These thresholds are based on turnover in the preceding financial year and are subject to conditions specified under GST Rules.
Tax Rates Under the Composition Scheme
The tax rates under the Composition Scheme vary depending on the nature of the business:
- Manufacturers and Traders: 1% of turnover (0.5% CGST + 0.5% SGST)
- Restaurants not serving alcohol: 5% of turnover (2.5% CGST + 2.5% SGST)
- Other Service Providers (including mixed supply of goods and services): 6% of turnover (3% CGST + 3% SGST)
It is important to note that composition dealers cannot claim input tax credit (ITC).
Ineligibility Criteria
Not all businesses are allowed to opt for the Composition Scheme. The following are not eligible:
- Businesses engaged in inter-state outward supplies
- Suppliers of non-taxable goods under GST
- E-commerce sellers required to collect TCS under Section 52
- Manufacturers of tobacco, pan masala, and ice cream
- Casual taxable persons and non-resident taxable persons
- Input Service Distributors (ISD)
- Persons liable to deduct TDS under GST provisions
Key Compliance Dates for FY 2025–26
Timely compliance is critical under the Composition Scheme. Here are the important deadlines:
- Form CMP-02 (Opt-In Form): Must be filed by March 31, 2025 to opt into the scheme for FY 2025–26.
- Quarterly Statement (CMP-08): Due by the 18th of the month following each quarter.
- Annual Return (GSTR-4): Due by April 30, 2026 for FY 2025–26.
All filings must be done online via the official GST portal: www.gst.gov.in
How to Opt Into the Composition Scheme
To opt into the Composition Scheme:
- Visit the GST portal and log in with your credentials.
- Navigate to Services > Registration > Application to Opt for Composition Levy.
- Fill and submit Form CMP-02 before the due date.
- File ITC-03 (for reversal of input tax credit) within 60 days of opting in.
