GST Composition Scheme vs Regular GST
GST Composition vs Regular — which scheme suits your business turnover?
Overview
The GST Composition Scheme allows small businesses to pay GST at a fixed rate on turnover with minimal compliance. Regular GST requires monthly return filing but allows Input Tax Credit (ITC). Your choice depends on turnover, nature of business, and whether you sell to GST-registered buyers.
Head-to-Head Comparison
| Factor | GST Composition Scheme | Regular GST | Winner |
|---|---|---|---|
| Eligibility (Turnover Limit) | Up to ₹1.5 crore (₹75L for some states) | All businesses above ₹40L / ₹20L threshold | Tie |
| Tax Rate | 1% (traders), 5% (restaurants), 6% (services) | 5% / 12% / 18% / 28% as applicable | A wins |
| Input Tax Credit (ITC) | Cannot claim ITC | Full ITC available | B wins |
| Return Filing | 1 quarterly return (CMP-08) + 1 annual (GSTR-4) | Monthly GSTR-1 + GSTR-3B (or quarterly under QRMP) | A wins |
| Inter-State Supply | Not allowed | Fully allowed | B wins |
| E-commerce Supply | Not allowed | Allowed | B wins |
| Invoice to B2B Buyers | Cannot issue tax invoice — buyers get no ITC | Tax invoice issued — buyers claim ITC | B wins |
| Compliance Burden | Very low — 5 filings per year | High — 24+ filings per year (monthly) | A wins |
Data updated for FY 2025–26. Regulations may change — consult a professional before deciding.
Which Should You Choose?
Choose GST Composition Scheme if…
Choose Composition Scheme if your turnover is under ₹1.5 crore, you primarily sell to end consumers (B2C), and you want minimal GST compliance.
Get GST Composition SchemeChoose Regular GST if…
Choose Regular GST if your turnover exceeds ₹1.5 crore, you sell to GST-registered businesses (B2B), or your purchases carry significant ITC.
Get Regular GSTStill not sure which to choose?
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Talk to an Expert — FreeFrequently Asked Questions
Common questions about GST Composition Scheme vs Regular GST
Yes. Manufacturers with turnover up to ₹1.5 crore can opt for Composition Scheme and pay GST at 1% on turnover. However, they cannot issue tax invoices or claim Input Tax Credit on purchases.
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