CMP-08 › Rates and limits

Composition scheme rates and limits

The composition scheme lets a small business pay GST as a small percentage of its turnover, with one quarterly payment and one yearly return, in place of monthly returns and invoice-level tax.

Rates (CGST + SGST/UTGST together)

Business	Rate	Charged on	Rule
Trader (buys and sells goods)	1%	Turnover of taxable supplies in the state (exempt sales not taxed)	CGST Rule 7, from 1 January 2018
Manufacturer	1%	Turnover in the state	CGST Rule 7
Restaurant or caterer not serving alcohol	5%	Turnover in the state	CGST Rule 7
Service provider or mixed supplier (₹50 lakh scheme)	6%	Taxable supplies	Section 10(2A), Notification 2/2019-CT(Rate)

Half is CGST and half is SGST (or UTGST). The tax comes from your own pocket: you cannot charge it to customers.

Turnover limits

• ₹1.5 crore of aggregate turnover in the last financial year for goods, manufacturers and restaurants (section 10(1)).
• ₹75 lakh in some special category states (north-eastern states and others notified); check the limit for your state on the GST portal.
• ₹50 lakh for the service providers' scheme under section 10(2A).
• A trader under section 10(1) may also give services worth up to 10% of turnover or ₹5 lakh, whichever is more.

Who cannot opt

• Businesses making inter-state outward supplies.
• Non-resident taxable persons and casual taxable persons.
• Manufacturers of notified goods such as ice cream, pan masala and tobacco products.
• Suppliers through e-commerce operators who must collect tax at source, except suppliers of goods, who may sell through them since 1 October 2023 under conditions.
• Suppliers of goods that are not taxable under GST, such as petrol and diesel.

Example

A kirana shop in Lucknow sold ₹9,60,000 in July–September 2026, of which ₹2,10,000 was fresh vegetables and grains that are exempt. Tax = 1% of ₹7,50,000 = ₹7,500 (CGST ₹3,750 + SGST ₹3,750), due by 18 October 2026. A dhaba with the same turnover would pay 5% of ₹9,60,000 = ₹48,000.