GST registration and choosing the composition scheme are separate decisions. First determine whether your business must register; only then assess whether a registered business qualifies for composition. Regular taxpayers generally follow GSTR-1 and GSTR-3B, with QRMP available to eligible businesses. Composition taxpayers instead pay quarterly through CMP-08 and file annual GSTR-4, issue bills of supply, cannot charge GST separately, and cannot claim input tax credit (ITC).
Registration and composition are different questions
A small business does not automatically have to register for GST simply because it operates in India. Registration liability depends on the applicable rules and the business’s circumstances. The GST Portal describes the registration application flow for both normal and composition applicants; an applicant indicates composition status as part of that process. The effective date for a normal taxpayer’s registration depends on applying within the applicable period after liability arises. See the GST Portal registration guide.
Composition is an optional simplified levy for a registered person who meets the statutory conditions. It does not remove the need to establish whether registration is required, and choosing it is not available to every registered business. The relevant conditions can depend on turnover, the type and location of supplies, the business category, state-specific rules, and exclusions in the law. Review the current CBIC GST materials and GST Portal guidance; where the facts involve mixed supplies or cross-state activity, get advice specific to the business.
Regular GST and composition compared
| Topic | Regular taxpayer | Composition taxpayer |
|---|---|---|
| Who may use it | Registration is required where the applicable liability rules say so. A registered taxpayer follows regular treatment unless eligible for and opting into a permitted alternative. | An optional route for eligible registered persons, subject to turnover limits, supply restrictions, business-category rules, and other conditions. |
| Outward-supply reporting | Files GSTR-1 when applicable. The GST Portal says an applicable taxpayer must file a nil GSTR-1 for a period with no business activity. | Excluded from GSTR-1 under the composition process. |
| Returns and tax payments | Generally files GSTR-1 and GSTR-3B under the applicable filing arrangement. Eligible taxpayers may opt for QRMP, which means quarterly filing of both returns with monthly tax payments. | Pays self-assessed tax quarterly through CMP-08 and furnishes annual GSTR-4 under the described composition process. |
| Customer document | Issues a tax invoice when required under invoice rules. | Issues a bill of supply and does not collect GST separately from the customer under the scheme. |
| Input tax credit | May claim eligible ITC subject to statutory conditions. | Cannot claim ITC on purchases. |
| Business constraints | Uses the normal GST invoice and credit framework, subject to the Act and rules. | Faces restrictions including limits on inter-State outward supplies and other conditions. |
The comparison follows the GST Portal returns guidance, its QRMP guidance, and CBIC’s composition scheme materials and composition notification. For document requirements, see the CBIC materials and current invoice rules.
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How regular GST reporting works
GSTR-1 and GSTR-3B
GSTR-1 is the statement of outward supplies. Regular taxpayers who are required to file it must submit it for each applicable period, including a nil return when there was no business activity. GSTR-3B is the return used for summary reporting and payment under the applicable arrangement. The Portal lists online entry, an offline returns tool, and third-party applications through GST Suvidha Providers as ways to prepare GSTR-1.
QRMP for eligible regular taxpayers
QRMP is an optional arrangement for eligible regular taxpayers: they file GSTR-1 and GSTR-3B quarterly while paying tax monthly. GST Portal guidance describes a ₹5 crore turnover ceiling for eligibility, but the page includes date-specific examples. Verify the current portal conditions before relying on that figure or opting in. QRMP changes filing frequency; it does not make a regular taxpayer a composition taxpayer.
How composition reporting and customer documents work
Quarterly CMP-08 and annual GSTR-4
Composition taxpayers make quarterly self-assessed tax payments through CMP-08 and furnish annual GSTR-4. This is a different reporting cycle from regular GSTR-1 and GSTR-3B filing, but it still involves recurring payment and annual reporting responsibilities. Check the current GST Portal for due dates and filing requirements because administrative details can change.
Bill of supply, no separately collected GST, and no ITC
A composition taxpayer issues a bill of supply rather than a tax invoice for supplies under the scheme. The taxpayer cannot collect GST separately from customers and cannot claim ITC on purchases. These are central trade-offs: the route may simplify reporting, but the business absorbs GST on its eligible purchases rather than offsetting it through credit, and customers do not receive an ITC-bearing GST invoice from that supplier. See the GST Portal composition guidance and applicable CBIC rules and notifications.
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Threshold figures need a date and a fact-specific check
CBIC’s 2019 GST update reported a ₹1.5 crore composition threshold for goods, a ₹75 lakh limit for specified states, and a separate ₹50 lakh threshold for certain service suppliers under the scheme introduced for services. These are figures published in that 2019 update, not a complete determination of current eligibility. Subsequent notifications, the state, the supply mix, and excluded categories can affect whether a particular business qualifies. Check current CBIC and GST Portal materials and the governing Act and rules before choosing the scheme.
For background, the dated figures appear in the CBIC composition update. A published threshold should not be treated as permission to opt in without checking all applicable conditions.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to decide which route fits the business
- Establish registration liability. Check whether and where the business must register under current GST rules; do not start by assuming that every small business must register.
- Check composition eligibility. Compare current turnover rules with the business’s state, supply types, business category, and any exclusions or restrictions.
- Map customers and geography. Consider whether the business makes inter-State outward supplies and whether business customers need eligible ITC from their purchases.
- Compare the compliance cycle. Assess regular GSTR-1 and GSTR-3B filing, or QRMP if eligible, against quarterly CMP-08 payments and annual GSTR-4.
- Compare the tax and invoice consequences. Weigh the regular invoice and potential ITC framework against composition’s bill of supply, prohibition on separately collecting GST, and lack of ITC on purchases.
Composition may be worth evaluating where the business meets the rules and its supply pattern and customer base suit the scheme. A business that sells across state lines or serves registered customers who value eligible input credit should carefully assess the restrictions and invoice consequences before opting in. Eligibility is a legal question tied to the particular facts, not just a turnover figure.
Quick Recap
What to verify before filing or opting in
- Current eligibility conditions, thresholds, state-specific rules, and excluded categories in force for the business.
- Whether registration is required and the applicable timing for the application.
- The current filing arrangement, form requirements, and due dates shown on the GST Portal.
- Whether the business’s customers, supply locations, and purchase-credit needs are compatible with composition.
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