Composition Return Filing
Simplified Compliance for Small Taxpayers

Composition Return Filing under the GST Composition Scheme offers an easy compliance route for small taxpayers with limited turnover. Designed for traders, manufacturers, and restaurants, this scheme ensures reduced tax burden and fewer GST return requirements. With simplified quarterly payments and an annual return, it promotes business continuity and legal compliance without complex formalities—ideal for micro and small enterprises seeking hassle-free tax filing.

Composition Return Registration

Composition Return Application

Please enter name.
Please enter business name.
Please enter your email id.
Please enter your mobile number.
Please enter your address.
Please select state.
Please enter your mobile number.
Please enter your gst number.
Please enter gst username.
Please select return pending .
     
Please select one value.
Please select package.
You Must agree both Terms before Submitting the Form.
You Must agree both Terms before Submitting the Form.
4.8 4355 customers GST Composition Return

GST Return Filing – Composition Scheme

The GST Composition Scheme is designed to ease the compliance burden for MSME businesses by simplifying GST return filings and GST payment mechanism. In this article, we look at the GST return filing for Composition Scheme in detail.

Composition Scheme Return Filing

All persons registered under the Composition Scheme shall file FORM GSTR-4A every quarter through the GST Common Portal or through a GST Facilitation Centre. GST return for those enrolled under Composition Scheme is due on the 18th of the month, succeeding a quarter. Hence, GST return for composition scheme would be due on April 18th, July 18th, October 18th and January 18th. The GST return filed by a Composition Scheme supplier must include details of:

Composition Scheme – GST Payment Due Date

While filing the GST composition return, the taxpayer is also required to discharge liability towards tax, interest, penalty, fees or any other amount payable under GST by debiting the electronic cash ledger. GST composition is levied at the following rates:

  • Manufacturers, other than manufacturers of such goods as may be notified by the Government – 1%.
  • Suppliers making supplies – 2.5%
  • Any other supplier eligible for composition levy – 0.5%
Withdrawing from GST Composition Scheme

Any taxpayer who is withdrawing from a GST Composition scheme must file FORM GST CMP-04 within seven days of the occurrence of event mandating withdrawal from GST composition scheme. Further, after filing the application for withdrawal from GST composition scheme, the taxpayer must file GST returns till the due date of furnishing the return for the quarter ending September of the succeeding financial year or furnishing of annual return of the preceding financial year, whichever is earlier.

Introduction to Composition Scheme

The GST Composition Scheme is a simplified compliance mechanism introduced by the Government of India to ease the tax burden on small taxpayers and micro-enterprises. This scheme allows eligible businesses to pay GST at a fixed percentage of their turnover, rather than charging tax on every transaction. The compliance requirements are minimal, and the filing obligations are less frequent, making it a practical solution for businesses with limited resources or scale. Designed for manufacturers, traders, and small restaurants operating within a single state, the scheme helps save time and reduce administrative costs. It is particularly beneficial for business-to-consumer (B2C) operations where issuing detailed tax invoices and claiming Input Tax Credit (ITC) may not be necessary. By opting for the composition scheme, businesses commit to not charging GST on invoices and not claiming ITC. Instead, they pay a flat rate on their gross turnover and file quarterly returns (CMP-08) and an annual return (GSTR-4). Let’s explore further who can opt for this scheme, the eligibility criteria, and the ideal time to register.

What is the GST Composition Scheme?

The GST Composition Scheme is a special provision under Section 10 of the CGST Act, 2017, designed to simplify GST compliance for small businesses. Rather than collecting GST from customers and claiming Input Tax Credit, composition dealers pay tax directly on their total turnover at a lower, fixed rate. The objective is to support small businesses in complying with GST laws without heavy accounting and compliance burdens.

Key highlights:

  • Tax is paid on turnover, not per invoice.
  • Input Tax Credit is not available.
  • A composition dealer cannot issue tax invoices.
  • Business must operate only within the state (no interstate supply).
GST Composition Scheme

Who Can Opt for Composition Scheme?

Businesses eligible for the scheme include:

  • Manufacturers of goods (excluding tobacco, ice cream, pan masala).
  • Traders and shopkeepers engaged in the supply of goods.
  • Restaurants (not serving alcohol).

In recent updates, service providers and mixed suppliers (goods + services) with turnover up to ₹50 lakh are also allowed to opt for composition under Notification No. 2/2019-Central Tax (Rate).

However, businesses involved in:

  • Interstate supply,
  • E-commerce operations,
  • Supply of non-taxable goods or services,

cannot opt for the scheme.

Who Can Opt

Eligibility Criteria and Turnover Limits

To qualify:

  • Aggregate turnover must not exceed ₹1.5 crore (₹75 lakh for NE & hill states).
  • Only intra-state operations are permitted.
  • Dealers cannot be engaged in e-commerce or supply of exempted goods/services.
  • Input Tax Credit (ITC) cannot be claimed.
  • PAN-linked turnover across India is considered for eligibility.

It’s essential to re-evaluate eligibility each year, especially if turnover changes or interstate business begins.

Eligibility

When Should You Opt for It?

Businesses can opt for the composition scheme in the following ways:

  • At the time of new GST registration by selecting the option in Form GST REG-01.
  • At the beginning of a financial year by filing Form GST CMP-02 before 31st March.
  • When their business model is B2C, with limited interstate needs and reduced compliance costs.

Opting at the right time ensures uninterrupted benefits throughout the financial year. However, once opted, businesses must follow the scheme’s conditions strictly or risk penalties and disqualification.

When to Opt

Applicability of Composition Return Filing

The Composition Return Filing under GST is specifically designed for small taxpayers who have opted for the Composition Scheme. It simplifies the return process, reduces filing frequency, and lowers the tax burden. However, not all businesses are eligible to file returns under this scheme. The applicability is restricted to specific categories of businesses with turnover and operational limitations. Below are the key categories that qualify, along with restrictions that must be adhered to.

Manufacturers and Traders

Manufacturers and Traders

Registered manufacturers and traders (excluding manufacturers of certain notified goods like ice cream, pan masala, or tobacco) can opt for the composition scheme and file quarterly returns using Form CMP-08 and an annual return using Form GSTR-4. Their turnover must not exceed ₹1.5 crore (₹75 lakh in select states). These businesses are taxed at a flat rate (usually 1% of turnover).

Restaurants (Not Serving Alcohol)

Restaurants and food service providers who do not serve alcoholic beverages are also eligible under the composition scheme. These businesses are taxed at 5% (2.5% CGST + 2.5% SGST) of their turnover. Filing is done quarterly via CMP-08 and annually via GSTR-4. This helps simplify compliance while ensuring proper tax contribution.

Restaurants (Not Serving Alcohol)
Service Providers (Limited Services Allowed)

Service Providers (Limited Services Allowed)

Certain service providers or mixed suppliers (goods + services) with aggregate turnover up to ₹50 lakh per annum can opt for composition filing under Notification No. 2/2019 – Central Tax (Rate). The tax rate for such service providers is 6% (3% CGST + 3% SGST). This inclusion expands benefits to professionals and small-scale service enterprises, although input tax credit remains unavailable.

Restrictions on Interstate Sales & E-Commerce

The composition scheme is not available to businesses involved in:

  • Interstate supply of goods or services
  • Supply through e-commerce platforms that collect TCS (e.g., Amazon, Flipkart)
  • Exporters
  • Supply of non-taxable goods/services

Restrictions on Interstate Sales & E-Commerce

Engaging in any of the above activities will lead to automatic disqualification from the scheme and may attract penalties. Businesses must carefully assess their operational nature before opting or filing returns under the composition scheme.

Types of Composition Returns

Under the GST Composition Scheme, businesses are required to file specific returns based on their compliance cycle. These returns differ from regular GST filings in terms of frequency, format, and content. Below are the primary return forms applicable to composition taxpayers:

CMP-08 – Quarterly Payment Return

CMP-08 is a quarterly statement-cum-challan used by composition dealers to declare self-assessed tax liability and make tax payments. It must be filed by the 18th of the month following each quarter. The form contains details like outward supplies, tax payable, and taxes paid. Filing CMP-08 ensures continued compliance under the composition scheme, even if there are no sales (Nil Return).

GST CMP-02 – Intimation for Opting Composition Scheme

CMP-02 is the form through which an eligible taxpayer notifies the government about opting into the composition scheme. It must be filed before the beginning of the financial year or within the stipulated time during new registration. Once filed, the taxpayer is treated as a composition dealer from the effective date, and all related return obligations (CMP-08, GSTR-4) follow.

GSTR-4 – Annual Return for Composition Dealers

GSTR-4 is the annual return to be filed by composition taxpayers. It summarizes the total turnover, tax paid, and inward supplies during the financial year. The due date is 30th April following the end of the financial year. Unlike CMP-08, which is filed quarterly, GSTR-4 provides a consolidated view of annual operations and is mandatory even for nil turnover.

Due Dates for Filing Composition Returns

Timely filing of GST composition returns is essential to maintain compliance, avoid penalties, and retain eligibility under the scheme. Composition taxpayers must follow specific timelines for submitting quarterly and annual returns. Missing these deadlines may result in late fees, interest charges, and even suspension of GST registration.

Quarterly CMP-08 Filing Timeline

Form CMP-08 must be filed quarterly, by the 18th of the month following the end of each quarter. For example:

  • ● April to June quarter: by 18th July
  • ● July to September: by 18th October
  • ● October to December: by 18th January
  • ● January to March: by 18th April

This form serves as a tax payment declaration and is required even when there are no outward supplies (i.e., for nil returns).

Quarterly CMP-08 Filing Timeline

Quarterly CMP-08 Filing Timeline

Form CMP-08 must be filed quarterly, by the 18th of the month following the end of each quarter. For example:

  • ● April to June quarter: by 18th July
  • ● July to September: by 18th October
  • ● October to December: by 18th January
  • ● January to March: by 18th April

This form serves as a tax payment declaration and is required even when there are no outward supplies (i.e., for nil returns).

Annual GSTR-4 Due Date

Composition dealers must file Form GSTR-4 once a year, summarizing all business activities, turnover, and inward supplies. The due date for filing GSTR-4 is 30th April of the following financial year. Filing this return is mandatory to maintain compliance under the GST regime, even if CMP-08s were filed on time.

Annual GSTR-4 Due Date

Annual GSTR-4 Due Date

Composition dealers must file Form GSTR-4 once a year, summarizing all business activities, turnover, and inward supplies. The due date for filing GSTR-4 is 30th April of the following financial year. Filing this return is mandatory to maintain compliance under the GST regime, even if CMP-08s were filed on time.

Late Filing Consequences

Failure to file CMP-08 or GSTR-4 on time can lead to:

  • ● Late fee of ₹50 per day (₹25 CGST + ₹25 SGST), up to a maximum of ₹5,000.
  • ● In case of nil returns, late fee is ₹20 per day (₹10 CGST + ₹10 SGST).
  • ● Interest @18% per annum on tax dues.
  • ● Blocking of e-way bill generation and possible suspension of GSTIN until compliance is restored.

Staying updated with due dates ensures smooth operations and legal peace of mind.

Late Filing Consequences

Late Filing Consequences

Failure to file CMP-08 or GSTR-4 on time can lead to:

  • ● Late fee of ₹50 per day (₹25 CGST + ₹25 SGST), up to a maximum of ₹5,000.
  • ● In case of nil returns, late fee is ₹20 per day (₹10 CGST + ₹10 SGST).
  • ● Interest @18% per annum on tax dues.
  • ● Blocking of e-way bill generation and possible suspension of GSTIN until compliance is restored.

Staying updated with due dates ensures smooth operations and legal peace of mind.

Documents Required for Composition Return Filing

Filing GST returns under the Composition Scheme requires specific documents to validate business transactions, confirm tax liabilities, and maintain legal compliance. Even though composition dealers follow a simplified structure, maintaining the right documentation ensures smooth filing, accurate reporting, and reduces the risk of penalties during audits or scrutiny.

Below is a checklist of commonly required documents:

1. GSTIN and Business Details

Valid GSTIN, trade name, and principal place of business must be available and updated on the GST portal.

2. Sales/Turnover Details

Quarterly or annual turnover figures with corresponding invoices (if any) for outward supplies. These are needed even if no tax was collected, as turnover must be reported in CMP-08 and GSTR-4.

3. Purchase/Inward Supply Details (if applicable)

Details of any inward supplies (B2B purchases), especially from unregistered dealers, must be maintained and reported in GSTR-4.

4. Challan Details (for Tax Paid)

Challan receipts of tax payments made through CMP-08, including dates and transaction references for all four quarters.

5. Bank Statements (if required for verification)

Statements may be used to verify turnover, especially during audits or reconciliation checks.

6. Previous Return Copies

Filing history including previously submitted CMP-08 and GSTR-4 forms for cross-verification and annual summary.

7. Digital Signature Certificate (DSC) / EVC

For company or LLP filings, a DSC is needed. Proprietors and partnerships can file using OTP-based Electronic Verification Code (EVC).

Keeping these documents organized and ready ensures quick and hassle-free GST compliance under the composition scheme. Udyog Suvidha Kendra offers support in document preparation, validation, and error-free filing.

Step-by-Step Process to File Composition Returns

Filing GST Composition Returns involves a structured yet simplified process that ensures timely compliance and reduces the burden on small taxpayers. Composition dealers are required to submit two key forms—CMP-08 (quarterly) and GSTR-4 (annually). Below is a step-by-step guide to help you file your returns correctly:

1

Log in to the GST Portal

Visit www.gst.gov.in and log in using your GSTIN, username, and password.

2

Select CMP-08 for Quarterly Filing

Navigate to the ‘Returns Dashboard’ and select the relevant financial year and quarter. Choose Form CMP-08, which is used to declare self-assessed tax liability and make payment.

3

Enter Turnover and Tax Details

Enter total turnover for the quarter and the corresponding tax payable. If no sales were made, enter zero and proceed with Nil Return filing.

4

Preview and Submit CMP-08

Verify the summary and preview before submitting the return. Make the tax payment online through net banking or other available payment modes.

5

File Annual GSTR-4

After the end of the financial year, go to the returns section and select Form GSTR-4. Enter all relevant details, including inward supplies and tax summary, based on quarterly filings.

6

Use DSC or EVC to File

Use a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) to authenticate and file the return. Download the acknowledgement receipt for your records.

7

Keep Records and Monitor Compliance

Maintain copies of filed returns and challans. Set up reminders for future return deadlines to avoid penalties or suspension of GST registration.

This streamlined process helps businesses under the Composition Scheme stay compliant with minimal effort. Udyog Suvidha Kendra can assist you at every stage—from data preparation to filing and government communication.

Tax Rate Under Composition Scheme

The GST Composition Scheme offers fixed, lower tax rates to simplify compliance for small taxpayers. These rates vary based on the nature of the business. Here's a detailed breakdown of applicable tax rates for different categories under the scheme:

1

Manufacturers – 1% of Turnover

Manufacturers opting for the composition scheme are required to pay GST at 1% of their turnover (0.5% CGST + 0.5% SGST). This excludes manufacturers of items such as tobacco, ice cream, and pan masala, which are not eligible.

2

Traders – 1% (0.5% CGST + 0.5% SGST)

Dealers engaged in trading or supplying goods must pay 1% of their taxable turnover in the state or union territory, split equally between CGST and SGST. This rate helps reduce the compliance burden while maintaining legal consistency.

3

Restaurants – 5%

Restaurants that do not serve alcohol can opt for the composition scheme and pay a fixed 5% GST on total turnover (2.5% CGST + 2.5% SGST). This rate is applicable only to standalone restaurants, not part of larger hotel chains.

4

Service Providers – 6%

Eligible service providers can opt into the scheme under the Composition Scheme for Services, introduced via Notification No. 2/2019. They must pay 6% GST (3% CGST + 3% SGST) on turnover, applicable if their total turnover is up to ₹50 lakh annually.

Limitations of the Composition Scheme

While the GST Composition Scheme offers several compliance and cost benefits, it also comes with specific limitations that businesses must carefully evaluate before opting in. Understanding these restrictions is crucial to avoid legal issues and ensure long-term scalability.

Cannot Collect GST
Cannot Collect GST from Customers

Composition dealers are not allowed to charge GST on their invoices. This can create confusion with business clients who may not be able to claim Input Tax Credit on such transactions.

No Input Tax Credit
No Input Tax Credit Allowed

Businesses under the composition scheme are not eligible to claim Input Tax Credit (ITC) on purchases. This increases the effective cost of inputs and may make the scheme less beneficial for those with higher procurement volumes.

Restricted Inter-State Trade
Restricted Inter-State Trade

Dealers registered under the composition scheme are restricted from making inter-state outward supplies. This limits their ability to scale operations across multiple states or serve clients beyond state borders.

E-Commerce Not Allowed
E-Commerce Selling Not Allowed

Composition scheme taxpayers are prohibited from supplying goods or services through e-commerce platforms that are required to collect Tax Collected at Source (TCS) under GST. This limits online selling opportunities.

Ineligible for SEZ Supplies
Ineligible for SEZ Supplies

Suppliers cannot make any supplies to Special Economic Zones (SEZs) while under the composition scheme. Businesses targeting SEZ clients or export-linked operations should opt for regular GST registration instead.

When to Exit from Composition Scheme

There are specific scenarios under which a taxpayer must or may choose to exit the GST Composition Scheme. Timely withdrawal ensures legal compliance and uninterrupted business operations under the regular GST regime.

Engaging in Non-Eligible Activities

Businesses become ineligible to remain in the composition scheme if they begin activities such as:

  • Inter-state supply of goods or services
  • Supplying through e-commerce operators
  • Selling to SEZs
  • Offering exempt goods/services

Engaging in such transactions necessitates an immediate exit and regular registration to remain compliant.

Non-Eligible Activities

Turnover Exceeds Threshold

If a taxpayer’s aggregate turnover exceeds the prescribed limit (₹1.5 crore for most states; ₹75 lakh for special category states), they are required to mandatorily exit the composition scheme and shift to regular GST registration. Failing to do so can lead to penalties and demand notices from GST authorities.

Voluntary Exit Process & Filing GST CMP-04

A taxpayer may also voluntarily opt out of the composition scheme for business scalability or operational flexibility. This is done by filing Form GST CMP-04 on the GST portal. Once filed, the taxpayer must start complying with all requirements of the regular GST scheme, including monthly returns and ITC management.

Comparison: Composition Scheme vs.
Regular GST Scheme

Choosing between the Composition Scheme and the Regular GST Scheme depends on the nature, size, and operational needs of your business. Below is a side-by-side comparison to help you understand which model suits your enterprise best.

Particulars Composition Scheme Regular GST Scheme
Eligibility Businesses with turnover up to ₹1.5 crore (₹75 lakh in some states) No turnover limit
GST Rate Fixed lower rate (1%–6%) Varies by goods/services (5%, 12%, 18%, 28%)
Tax Invoice Cannot issue tax invoice or collect GST Can issue proper tax invoice and collect GST
Input Tax Credit (ITC) Not allowed Allowed
Return Filing Quarterly (CMP-08) & Annual (GSTR-4) Monthly/quarterly (GSTR-1, GSTR-3B) & Annual (GSTR-9)
E-Commerce Selling Not permitted Permitted
Interstate Sales Not allowed Allowed
Compliance Burden Low Moderate to high
Ideal For Small traders, manufacturers, and service providers with low turnover Medium to large businesses with interstate and B2B transactions

How Udyog Suvidha Kendra Helps You

1

End-to-End Return Filing Assistance

We assist with timely preparation and online submission of CMP-08 and GSTR-4 returns, ensuring accurate details and compliance with GST regulations for composition dealers across all sectors.

2

Advisory on Eligibility and Exit Strategy

Our experts help you understand composition eligibility, applicable turnover limits, and advise on when to switch to the regular GST scheme based on your business growth.

3

Document Preparation and Compliance Alerts

We prepare and verify all required documents, ensure accurate tax calculation, and send automated alerts for due dates—helping you avoid penalties and stay compliant year-round.

Composition Return Registration FAQs

Who is eligible for the GST Composition Scheme?
Businesses with an annual turnover of up to ₹1.5 crore (₹75 lakh in special category states) engaged in intra-state sales can opt for the Composition Scheme. It is ideal for small traders, manufacturers, and select service providers seeking simplified tax compliance and reduced filing requirements.
CMP-08 is a quarterly statement-cum-challan for composition taxpayers to declare their self-assessed tax liability. It must be filed by the 18th of the month following the end of each quarter, even if there is no transaction during the period.
GSTR-4 is the annual return that composition dealers must file by April 30th of the next financial year. It summarizes the quarterly tax payments (via CMP-08) and includes details of outward supplies, tax liability, and other relevant disclosures for the entire year.
No, dealers under the Composition Scheme cannot collect GST from customers. They must issue a bill of supply instead of a tax invoice, and mention “composition taxable person” on all bills, as per GST compliance requirements.
No, ITC is not available to composition taxpayers. They cannot claim credit on GST paid for purchases and also cannot pass ITC to customers, making the scheme suitable only for businesses with minimal input tax liabilities.
No, composition scheme dealers are restricted from selling through e-commerce platforms like Amazon or Flipkart. Engaging in online sales requires registration under the regular GST scheme, which allows inter-state transactions and tax collection.
The tax rate under this scheme is fixed and lower than regular GST. It’s 1% for traders and manufacturers, 5% for restaurants not serving alcohol, and 6% for eligible service providers, calculated on total turnover.
No. Composition dealers can only engage in intra-state supplies. Any inter-state sale is strictly prohibited under this scheme. Violating this condition may result in cancellation of registration and penalties.
Late filing attracts a penalty of ₹50 per day (₹25 CGST + ₹25 SGST), subject to a maximum limit. Additionally, interest at 18% per annum is charged on any unpaid tax amount until payment is made.
You can voluntarily opt out by filing GST CMP-04 if your turnover exceeds the limit or you wish to collect GST and claim ITC. After exiting, you'll need to start filing regular GST returns like GSTR-1 and GSTR-3B.
Yes, but only if their annual turnover is up to ₹50 lakh. Such service providers pay tax at 6%, and like others in the scheme, they cannot collect GST or claim input tax credit on purchases.
Yes. You must first register under GST and then opt for the composition scheme by filing Form CMP-02 before the beginning of the financial year to avail of the simplified return filing and reduced compliance.
Switching is allowed, but only at the beginning of a financial year unless you exceed the turnover limit. Frequent switching may invite scrutiny, so it should be done based on business needs and with proper guidance.
Composition dealers must file CMP-08 quarterly, GSTR-4 annually, issue bill of supply, and clearly display “composition taxable person” at their place of business. They must also maintain basic records and comply with payment timelines.
We offer complete support from checking your eligibility to filing CMP-08 and GSTR-4, managing due date alerts, preparing documents, and ensuring compliance with GST laws—helping you avoid errors, penalties, and unnecessary legal issues.