GST Composition vs Regular Scheme Calculator

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 (manufacturers and traders), 5% (restaurants) or 6% (other service providers, turnover up to ₹50 lakh). No ITC. Quarterly filing (CMP-08) + annual return (GSTR-4). No interstate sales allowed.

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 for goods businesses, 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.

The regular scheme is better when:

• You have significant input GST credits that bring your net GST below your composition rate (1%, 5% or 6% 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).

• 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.

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.