What is the Composition Scheme in GST?
The Composition Scheme is a simplified tax scheme for small taxpayers to reduce compliance burden.
Who can opt in?
• Businesses with aggregate turnover up to ₹1.5 crore (₹75 lakh in some states).
• For service providers (or mixed suppliers), the limit is ₹50 lakh.
Key Features:
- Pay lower tax rates:
- 1% for traders
- 2% for manufacturers
- 5% for restaurants
- 6% for service providers (under special notification)
- Quarterly payment, annual return filing.
- No Input Tax Credit (ITC) allowed.
- Can't deal in interstate supplies (with some exceptions).
Annual Return for Composition Dealers
Form to File: GSTR-4 (Annual Return)
From FY 2019–20 onwards , composition taxpayers file only GSTR-4 annually, instead of quarterly returns.
GSTR-4: What it Contains
• Summary of outward supplies.
• Tax paid during the year.
• Import of goods/services (if any).
• Reverse charge liability.
• Late fees, interest, etc.
Due Date:
30th April of the following financial year (e.g., for FY 2024–25, due by 30th April 2025).
Quarterly Payments via CMP-08
• Even though the annual return is filed once, composition dealers must:
• File Form CMP-08 every quarter (to declare tax and pay it).
• Due Date: 18th of the month following the quarter.
Quarter – Due Date
Apr–Jun – 18th July
Jul–Sep – 18th October
Oct–Dec – 18th January
Jan–Mar – 18th April
Summary Checklist
| Task | Form | Frequency |
|---|---|---|
|
Quarterly Tax Payment |
CMP-08 |
Quarterly |
|
Annual Return |
GSTR-4 |
Annually
|
|
Opt-in for Scheme |
CMP-02 |
Once (yearly, before 31st March)
|