To check whether your business can use India’s GST Composition Scheme, assess its aggregate turnover across all GST registrations linked to the same PAN, find the current threshold for its category and state or union territory, and then check every statutory condition and exclusion. Being below a turnover limit is not enough: the business’s taxpayer status, goods, supply locations and sales channels can also affect eligibility. Compare the scheme’s tax and invoice restrictions with the regular scheme before opting.
Run these eligibility checks in order
| Test | What to check | Where to verify |
|---|---|---|
| Business footprint | List every business location and GST registration linked to the same PAN. | CGST Act and composition rules |
| Turnover | Calculate the preceding financial year’s aggregate turnover on an all-India, same-PAN basis. | CGST Act and CBIC FAQs |
| Threshold | Identify the current limit for the relevant composition category and state or union territory. | Check the current Act, applicable state or union territory provisions, and notifications. |
| Other conditions | Screen taxpayer status, supply type and location, goods, sourcing and sales channels. | CGST Act, composition rules, and relevant CBIC sectoral FAQs |
| Business fit | Compare input-tax-credit and invoicing consequences with the regular scheme. | CBIC FAQs |
The CBIC-hosted Act and rules are the primary references for the legal conditions. FAQs and GST Portal materials can help explain procedures, but older guidance may not reflect later amendments; confirm the live requirements before acting.
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1. Identify every registration under the same PAN
Start with the PAN, not a single shop, branch, state or GSTIN. The Act defines aggregate turnover using supplies associated with persons having the same PAN and calculates it on an all-India basis. The composition rules also address the effect of opting for one place of business on other places under the same PAN. Check those provisions together rather than treating each GST registration as an independent eligibility test. Read the CGST Act and composition rules.
Make a list of linked registrations and gather turnover records for each. If the PAN-wide total cannot be reconciled across locations, resolve the difference before deciding whether to opt.
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2. Work out aggregate turnover for the preceding financial year
Aggregate turnover is not simply taxable domestic sales or the amount shown on one GST return. Under the statutory definition, it includes the value of taxable supplies, exempt supplies, exports and inter-State supplies associated with the same PAN, computed on an all-India basis. It excludes central tax, state tax, union territory tax, integrated tax and compensation cess. Apply the definition to the business’s records; the CGST Act and CBIC FAQs provide the relevant references.
For an auditable calculation, assemble sales ledgers and invoices, exempt-supply and export records, inter-State supply records, and turnover information for every linked registration. Keep the included supply categories distinct from inward supplies and amounts excluded by the statutory definition. The eligibility test uses the preceding financial year, so do not substitute a current-month, single-state or single-GSTIN figure.
3. Verify the threshold for the right category and location
There is no safe single threshold to apply to every business. The applicable limit depends on the relevant composition category and state or union territory treatment. The goods composition route and the separate route for eligible service suppliers have different conditions; verify the applicable legal text and current notifications rather than assuming the same limit applies to both.
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4. Check conditions beyond turnover
Even a business below the relevant limit may be ineligible if it fails another statutory or rules-based condition. Review the current Act and rules for the business’s taxpayer status, outward supplies and their locations, goods, sourcing circumstances, and other applicable restrictions. The Act and composition rules set out the framework.
Taxpayer status and goods
Check whether the business falls within an excluded taxpayer category or deals in goods subject to a restriction. Older CBIC explanatory FAQs name ice cream, pan masala and tobacco products as examples of excluded manufacturers, but FAQ wording may not incorporate every later amendment. Confirm the current provision that applies to the particular goods and activity rather than relying on an old example alone. See the CBIC FAQs.
Inter-State supplies and sales through e-commerce operators
Check the current rules for the precise supply and sales channel. Do not assume that every sale through an e-commerce operator automatically bars composition: the treatment is amendment-sensitive, and the answer depends on the current provisions and the business’s arrangement. Review the operator’s role and the type and location of supplies against the Act, rules and relevant sectoral guidance.
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5. Decide whether composition suits the business
Eligibility and suitability are separate questions. A composition taxpayer cannot claim input tax credit on inward supplies and cannot collect composition tax from customers as a regular taxpayer collects GST on a tax invoice. These restrictions can matter if the business has substantial GST-bearing purchases or sells mainly to business customers that value input tax credit. CBIC FAQs explain these consequences.
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Compare the total commercial effect, not just the tax rate or compliance workload:
- Estimate the input tax credit the business would forgo.
- Consider whether customers expect a regular tax invoice and the ability to claim credit.
- Compare pricing and customer expectations under each route.
- Account for every state and registration linked to the PAN, and the work required if activities or turnover change.
6. Use the current portal process and keep monitoring
The GST Portal registration manual describes a composition choice in the registration flow and says a regular taxpayer may opt when likely aggregate turnover is expected to remain below the relevant threshold. For an already registered regular taxpayer, the rules and portal materials refer to opting through FORM GST CMP-02. The forms index also identifies CMP-03 for stock details in relevant cases and CMP-04 for withdrawal, but that index is dated 2019. Confirm the live portal steps, effective date, filing window and forms for the taxpayer’s circumstances before filing. See the GST Portal registration manual, CBIC composition rules and 2019 GST Portal forms index.
Eligibility continues to depend on the business meeting the conditions. The composition rules provide for a move to the regular-tax regime when those conditions cease to be met and prescribe withdrawal procedures. Monitor turnover and business changes, and check the current rules for the triggering date, required filing and stock or credit treatment. Consult the composition rules.
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Ask an Indian chartered accountant or GST practitioner to review the calculation and applicable provisions if the business has multiple GSTINs, supplies across state borders, e-commerce sales, goods that may be excluded, or turnover near a threshold. The useful review is a PAN-wide turnover reconciliation plus a check of the current category, state provisions, notifications and filing requirements—not just confirmation that one portal field is below a limit.
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