BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.
Running a small business comes with plenty of challenges, and tax filing shouldn’t be one of them. That’s where the GST Composition Scheme comes in. It’s designed to help small businesses with simplified tax rates and reduced compliance. In this guide, we explain the gst rate for Composition Scheme, eligibility rules, and how it benefits small traders and service providers.
The Composition Scheme under GST (Goods and Services Tax) is a simplified tax scheme for small taxpayers. Instead of collecting GST on every invoice and filing monthly returns, eligible businesses can pay tax at a fixed rate on their total turnover and file quarterly returns.
It is ideal for:
| Business Type | GST Rate (Composition) |
|---|---|
| Traders / Dealers (Goods only) | 1% (0.5% CGST + 0.5% SGST) |
| Manufacturers (not dealing in tobacco, ice cream, etc.) | 1% |
| Restaurants (not serving alcohol) | 5% |
| Service providers (limited categories) | 6% (3% CGST + 3% SGST) |
Businesses can apply if:
Get a Free Demo – Best Billing and Invoicing Software
| Limitation | Details |
|---|---|
| Cannot issue tax invoices | Only bill of supply allowed |
| Cannot collect GST from customers | Tax is paid from own margin |
| No Input Tax Credit (ITC) available | Cost may increase slightly |
| Cannot do inter-state sales | Only intra-state supply allowed |
Get a Free Trial – Best Accounting Software For Small Business
| Requirement | Frequency |
|---|---|
| GST Return (GSTR-4) | Quarterly |
| Annual Statement (GSTR-9A) | Yearly |
| Payment of Tax via CMP-08 | Quarterly |
Understanding the gst on composition scheme helps small businesses save time and money while staying compliant with tax laws. It’s a smart choice if your operations are simple and primarily local.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.