Small businesses can pay GST at lower rates under the Composition Scheme while benefiting from simplified tax compliance.
Key Highlights:
- Eligible businesses can pay GST at rates as low as 1%.
- Businesses with turnover up to ₹1.5 crore can opt for the scheme.
- Lower compliance burden and simplified return filing.
- Traders and manufacturers are taxed at 1%.
- Input Tax Credit (ITC) benefits are not available.
- Interstate sales are not permitted under the scheme.
New Delhi, June 18: The GST Composition Scheme continues to provide a simplified taxation option for small businesses across India. Introduced to reduce compliance requirements, the scheme allows eligible taxpayers to pay GST at fixed lower rates instead of following the regular GST structure.
Businesses with an annual turnover of up to ₹1.5 crore can opt for the scheme, while the threshold is ₹75 lakh for certain northeastern states and Himachal Pradesh. Under the scheme, traders and manufacturers are required to pay GST at just 1%, while non-alcohol-serving restaurants pay 5% and eligible service providers are taxed at 6%.
The scheme offers several advantages, including lower tax liability, simplified record-keeping, and easier return filing. However, businesses choosing the Composition Scheme cannot claim Input Tax Credit (ITC), collect GST separately from customers, or undertake interstate sales. They are also required to issue a Bill of Supply instead of a tax invoice.
Tax experts say the scheme remains a suitable option for small and local businesses seeking to reduce compliance costs while maintaining straightforward GST obligations.
