Chartered Accountant · ICAI M.No. 153926 · FRN 136869W · Reviewed on 7 October 2026
The rate card, precisely
Manufacturers and traders: 1% (0.5% CGST + 0.5% SGST) — for traders, computed on taxable supplies of goods; manufacturers on total turnover. Restaurants and caterers (no alcohol): 5%. Service providers and mixed suppliers who don’t fit the goods scheme: 6% under section 10(2A), available up to ₹50 lakh of turnover. Brick kilns sit in their own 6%-without-ITC regime. Goods suppliers may also supply services up to 10% of turnover or ₹5 lakh, whichever is higher, without losing the scheme.
What the flat rate does not cover
RCM liabilities run at full rates — freight, advocate fees, sponsorship and the rest are payable in addition to the composition levy, with no ITC relief. Inter-state outward supplies are barred (inward inter-state purchases are fine). You issue a bill of supply, never a tax invoice, and must display “composition taxable person” on signboards and bills. Cross ₹1.5 crore mid-year and you exit the scheme from that day — with ITC-01 to claim stock credit within 30 days.
Compliance rhythm and the real decision
Quarterly CMP-08 payments and an annual GSTR-4 (due 30 June following the year) — a fraction of the regular scheme’s filing load. But the decision is commercial, not clerical: B2B customers get no credit from you, so composition suits B2C-heavy traders, restaurants and small service providers with thin input credits. Our GST practice runs the composition-vs-regular arithmetic on your actual margins before you opt.