The 60-second version
GST composition suits turnover up to ₹1.5 crore (₹75 lakh services in some states) — flat rate, quarterly CMP-08, no ITC. I register after Shop Act if crossing threshold.
Composition is simple tax — but blocks ITC and interstate B2B
Returning NRI opening kirana, boutique, or local consultancy may prefer composition — pay tax at fixed rate on turnover without input credit complexity.
Cannot supply interstate, e-commerce, or non-taxable goods; B2B buyers prefer regular GST vendors for ITC.
File CMP-08 quarterly + annual GSTR-4 — switch to regular before crossing turnover cap mid-year.
Export lane: GST LUT guide.
Composition vs regular GST
| Factor | Composition | Regular |
|---|---|---|
| Turnover cap | ₹1.5cr goods / ₹75L services | No composition cap |
| Tax rate | 1–6% flat on turnover | Slab + ITC |
| ITC | Not allowed | Allowed |
| Interstate supply | Not allowed | Allowed with IGST |
| Returns | CMP-08 quarterly | GSTR-1 + 3B monthly |
Composition registration sequence
GST registration
Regular first if needed — opt composition in REG-01.
Confirm category
Trader / manufacturer / restaurant — rate differs.
CMP-08 setup
Quarterly payment of tax on turnover.
Bill format
Composition bill — no tax breakup to customer.
Monitor turnover
Exit composition before exceeding cap.
Scheme pick
Composition start kit
- PAN.
- Aadhaar.
- Shop Act.
- Bank account.
- Rent agreement.
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E-commerce ban
Amazon/Flipkart sellers cannot use composition — regular GST mandatory.
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Freelancer export?
Use regular GST + LUT — composition blocks export zero-rating.
OCI consultant?
Same rules as resident — FEMA separate from GST scheme.
Penalty miss CMP-08?
Late fee per GST Act — set calendar quarterly.
Restaurant?
5% composition without ITC — popular for small eateries.
Multiple states?
Separate composition per state registration.
Cross cap mid-year?
Switch to regular from day turnover exceeds — pay differential.
Your tax year is already running.
RNOR status, exit timing, and DTAA benefits all depend on decisions you make before you land. Don't guess.