Find
Composition means lower tax and simpler returns, but no ITC and no GST charged to customers. Regular means charging GST, claiming ITC and more returns. The better choice depends on your margins and customers.
GST
Composition versus regular scheme cost comparison
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Provisions
Sec 10(1), CGST Act 2017; Sec 10(4), CGST Act 2017; Rule 7, CGST Rules 2017
Analysis
Example: a trader buys Rs 80 lakh and sells Rs 1 crore of 18 percent goods to consumers. In composition he pays 1 percent, Rs 1 lakh, and cannot pass on or claim GST. In regular he collects Rs 18 lakh and claims Rs 14.4 lakh ITC, paying Rs 3.6 lakh, but his prices to consumers rise. For B2C sellers with thin margins composition often helps; for B2B sellers it usually does not.
Close
- Estimate yearly sales, purchases and margin
- Compute tax under composition and under regular
- Consider whether buyers need ITC
- Consider compliance cost and returns
- Choose and file CMP-02 if composition wins
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