What is the GST composition scheme?

A simplified GST scheme for small businesses. You pay a flat 1% of turnover (traders) or 6% (manufacturers/restaurateurs), file quarterly returns, but cannot claim input tax credit or make interstate sales.

When is the composition scheme better than regular GST?

Composition is better when your input tax credit is low — your net GST under the regular scheme would exceed 1% of turnover. It also has much lighter compliance (quarterly returns instead of monthly).

Can I switch from regular to composition GST?

Yes, but only at the start of a financial year (April 1) by filing Form GST CMP-02. Once you leave the composition scheme, you cannot re-enter for 12 months.

GST Composition vs Regular Scheme Calculator

Compare your tax under the regular GST scheme vs the composition scheme. Enter your turnover, GST rate and input credits to see which regime saves you more — and why.

Annual turnover

₹

Total annual turnover from all supplies.

₹5 crores

Applicable GST rate on sales

The GST rate on your main product or service.

Total input GST paid annually

₹

Total GST paid on purchases, raw materials, and expenses over the year.

₹30 lakhs

Eligible for Composition Scheme?

Composition scheme is available for businesses with turnover ≤ ₹1.5 Cr (₹75L for special category states). No input tax credit is available under this scheme.

Net GST payable — Regular scheme

₹60,00,000

Turnover exceeds composition limit — regular scheme is mandatory.

Effective GST rate — Regular12%

RecommendationRegular scheme (required)

Estimates only — not financial, tax or legal advice. Figures vary by state, capital and individual circumstances.

Need help choosing a GST scheme?

Our compliance experts can advise on whether composition or regular GST is right for your business.

Explore grants available to GST-registered businesses

A GST registration opens the door to many government schemes and subsidies. Browse what you qualify for.

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How to use this calculator

Compare your GST liability under the regular scheme vs the composition scheme — and see which one saves you more.

1
Enter your annual turnover. Total turnover from all supplies. The composition scheme is only available up to ₹1.5 Cr (₹75L for special category states).
2
Enter your GST rate and input credits. The GST rate on your main product/service, and the total input GST you pay annually on purchases and expenses.
3
Check eligibility. If your turnover exceeds ₹1.5 Cr, the composition scheme is not available and you must use the regular scheme.
4
Compare the results. See your net GST under each scheme side by side, plus a recommendation on which regime suits you.

Regular scheme vs Composition scheme

The regular GST scheme allows you to collect GST from customers, claim input tax credit (ITC) on purchases, and file monthly returns. The composition scheme is a simpler alternative for small businesses — you pay GST at a flat rate on turnover, file quarterly returns, but cannot claim ITC or issue tax invoices.

Regular scheme: Collect output GST, claim ITC, file monthly (GSTR-1, GSTR-3B) + annual return. Works best when you have significant input credits.
Composition scheme: Pay 1% of turnover (traders) or 6% (manufacturers/restaurateurs). No ITC. Quarterly filing (CMP-08) + annual return (GSTR-4). No interstate sales allowed.

When is the composition scheme better?

The composition scheme wins when your input tax credit is low — for example, a service business with few purchases or a retailer with thin margins. At 1% of turnover, it's often cheaper than the net GST under the regular scheme if you don't have substantial input credits.

The trade-off is that you cannot issue GST invoices to customers (so they cannot claim ITC), which may be a deal-breaker if you sell to registered businesses.

When the regular scheme is better

The regular scheme is better when:

You have significant input GST credits that bring your net GST below 1% of turnover.
Your customers are registered businesses who need GST invoices to claim their own ITC.
You make interstate sales (not allowed under composition).
Your turnover exceeds ₹1.5 Cr (composition not available).
You are in a service business with composition rate of 6% (service provider under composition is taxed at 6%, making it less attractive).

Important limitations of the composition scheme

No input tax credit — you cannot claim ITC on any purchases or expenses.
No interstate supplies — you can only sell within your state.
No e-commerce sales — you cannot sell through Amazon, Flipkart, etc. under composition.
Not available to all businesses — certain categories like ice cream, tobacco, and pan masala manufacturers are excluded.
Service providers pay 6% (not 1%) under composition — check whether the rate still works for you.

Switching between schemes

You can switch from regular to composition only at the start of a financial year (April 1) by filing Form GST CMP-02 before April 30. Switching from composition to regular is possible at any time — but once you switch to regular, you cannot go back to composition for 12 months.