What is the tax rate under Composition Scheme?

author portrait

Sakshi Shah

Aggregate Turnover
Bill of Supply
GSTR-4

Business registered under Composition Scheme cannot collect GST on sales made to its customers. It cannot claim the input tax credit of GST paid on purchases of goods and services. A composite dealer needs to pay GST to the government at a prescribed rate determined on the nature of its business. Here is the prescribed tax rate for different categories of registered suppliers under Composition Scheme:

Nature of Business Item Type Total CGST SGST
Trader Goods 1% 0.5% 0.5%
Manufacturer Goods 2% 1% 1%
Restaurants not serving alcohol Services 5% 2.5% 2.5%
Other Services (effective from 1st April 2019) Services 6% 3% 3%
Calculate Aggregate Turnover under GST
Read how to calculate aggregate turnover to determine eligibility for registration under GST
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Calculate Aggregate Turnover under GST
Read how to calculate aggregate turnover to determine eligibility for registration under GST
Read More

Example – Tax Rate Composition Scheme

Mr.A is a trader registered under Composition Scheme.
Sales Turnover from 01.04.2018 to 30.06.2018 is Rs.10,00,000.
Tax Liability is:
Pay CGST = Rs.5,000 (Rs.10,00,000*0.5%)
Pay SGST = Rs.5,000 (Rs.10,00,000*0.5%)

What is a Bill of Supply under GST?
Read what is a Bill of Supply, who should issue and details in a Bill of Supply
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What is a Bill of Supply under GST?
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FAQs

Should a Composition Taxpayer pay IGST, CGST or SGST?

The taxpayer registered under Composition Scheme cannot collect GST from their customers. However, they must pay GST on sales at specified rates. Composite Dealer should pay CGST and SGST on sales on a quarterly basis. Eg: Tax Rate for a manufacturer of goods is 2%. Thus, manufacturer of taxable goods registered under composition scheme should pay CGST at 1% and SGST at 1% on sales turnover. Composite Dealer is not required to pay IGST on sales.

How should a Composite Dealer pay tax on GST Portal?

The taxpayer registered under Composition Scheme should pay tax while filing GST CMP-08 on the GST Portal. The taxpayer should enter data of sales and purchases in CMP-08 and pay challan to pay tax at the prescribed rate on sales.

What are the returns to be filed by a Composition taxpayer?

Composition taxpayer needs to pay tax and furnish a statement, every quarter in FORM GST CMP-08. Further, he/she is also required to furnish a return for every financial year in FORM GSTR-4.

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