GST registration and choosing the composition scheme are separate decisions. First determine whether your business must register and where; then, if registered, check whether it qualifies for composition. Regular taxpayers generally follow GSTR-1 and GSTR-3B, while composition taxpayers pay quarterly through CMP-08 and file annual GSTR-4. Composition also means issuing bills of supply, not collecting GST separately, and not claiming input tax credit (ITC).
Registration and composition answer different questions
Being a small business does not, by itself, establish that GST registration is required. Liability depends on the applicable GST rules and the business’s facts. The GST Portal describes the registration application flow for both normal and composition applicants; an applicant indicates whether it is opting for composition as part of that process. The effective date of normal-taxpayer registration depends on filing within the applicable period after liability arises. See the GST Portal registration guide.
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Composition is an optional route for registered persons who meet the statutory conditions. It is not a way to avoid checking registration liability. Eligibility can depend on turnover, type of business, supply mix, state and other restrictions, so a business with mixed activities or customers in other states should verify its position before opting in.
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| Area | Regular taxpayer | Composition taxpayer |
|---|---|---|
| Eligibility | Registration is governed by applicable GST liability rules. A registered person follows regular treatment unless eligible and opting for another permitted route. | Optional for eligible registered persons, subject to turnover limits, supply restrictions and other statutory conditions. |
| Outward-supply return | GSTR-1 reports outward supplies. Where it applies, a nil GSTR-1 is still required for a period with no business activity. | Excluded from GSTR-1. |
| Returns and payment | GSTR-1 and GSTR-3B under the applicable filing arrangement. Eligible regular taxpayers may use QRMP: quarterly returns with monthly tax payments. | Quarterly self-assessed tax payment through CMP-08 and annual GSTR-4 under the composition process. |
| Customer document and tax collection | Tax invoice when required under invoice rules. | Bill of supply; GST is not collected separately from the customer under the scheme. |
| Input tax credit | Eligible ITC may be claimed subject to statutory conditions. | ITC on purchases cannot be claimed. |
| Supply constraints | Normal GST invoice and credit framework applies, subject to the Act and rules. | Restrictions include limits on inter-State outward supplies and other conditions. |
The GST Portal’s returns guidance describes GSTR-1 preparation options, including online entry, an offline returns tool and third-party applications through GST Suvidha Providers. Filing requirements and portal workflows can change, so confirm the current requirements and due dates on the Portal.
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What turnover limits do the published sources describe?
CBIC’s 2019 update reported a ₹1.5 crore composition threshold for goods, with specified state exceptions, a ₹75 lakh limit for specified states, and a separate ₹50 lakh threshold for certain service suppliers under a scheme introduced for services. These are dated figures, not a complete current eligibility test. The CBIC 2019 update should be read alongside current law, notifications and state-specific applicability; turnover alone does not establish eligibility.
For regular taxpayers, the GST Portal’s QRMP guidance describes a ₹5 crore turnover ceiling for eligibility. The page includes date-specific examples, so check the current Portal conditions rather than relying on the figure in isolation.
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What compliance looks like in practice
Regular taxpayer
- File GSTR-1 to report outward supplies and GSTR-3B under the applicable schedule.
- Check whether QRMP is available and appropriate. Under that arrangement, eligible regular taxpayers file GSTR-1 and GSTR-3B quarterly while paying tax monthly, subject to turnover and filing conditions.
- Issue tax invoices when required, and claim ITC only when the statutory requirements are met.
Composition taxpayer
- Pay self-assessed tax quarterly through CMP-08.
- Furnish annual GSTR-4.
- Issue a bill of supply rather than separately charging GST to the customer.
- Do not claim ITC on purchases.
The GST Portal’s composition guidance describes CMP-08 and GSTR-4. The forms and payment cadence simplify the reporting routine, but do not remove filing or payment obligations.
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- Establish registration liability. Check the applicable rules for your business and state before treating either tax route as available.
- Check eligibility, not just turnover. Review current limits, business category, supply types and restrictions against the composition rules. Seek qualified tax advice if your activities or locations are mixed.
- Map customers and locations. Inter-State outward supplies are a key restriction to assess. Consider whether customers are registered businesses that need eligible ITC from purchases.
- Compare the compliance routines. Regular treatment involves GSTR-1 and GSTR-3B, with QRMP potentially available to eligible taxpayers. Composition uses quarterly CMP-08 and annual GSTR-4.
- Consider the commercial effect. Composition’s bill of supply, inability to collect GST separately and no ITC can affect pricing and the value of your offer to business customers.
- Verify current rules before opting in. Threshold summaries can be dated, while notifications, state rules and the details of a business’s supplies matter. Use current CBIC and GST Portal material and get professional advice where eligibility is uncertain.
Documents for customers
Regular taxpayers use a tax invoice when required by the invoice rules. Composition taxpayers issue a bill of supply and do not collect GST separately under the scheme. The GST Portal’s invoice guidance covers the relevant document requirements. A paper bill-of-supply book may be useful for businesses that issue paper documents, but its fields should be checked against current requirements; having a book does not ensure compliance.
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