In Hindi: कंपोज़िशन स्कीम · Also called: composition levy
The composition scheme is a simpler way for a small business to pay GST: a flat percentage of its turnover in the state, instead of tax charged on each sale.
For goods, it is open to a business whose turnover in the previous financial year did not exceed ₹1.5 crore, or ₹75 lakh in Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand.
The trade-off is what it rules out. A composition business cannot collect GST from its customers, cannot claim input tax credit on what it buys, cannot sell to another state, and cannot supply services through an e-commerce operator that collects tax at source (selling goods through one has been allowed since 1 October 2023). Instead of tax invoices it issues bills of supply, headed with the words “composition taxable person, not eligible to collect tax on supplies”.
