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Section 10 GST Scheme Analysis

Composition Scheme vs Regular GST Calculator

Compare flat-rate Composition Scheme against Regular GST with Input Tax Credit (ITC) to optimize cash flow and compliance overhead.

Business Category

1% flat on turnover of taxable goods (Turnover limit: ₹1.5 Cr)

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Option A · Simplified1% Flat Rate

Composition Scheme

Ideal for B2C retailers, small restaurants, and local service providers.

Gross Turnover:₹40,00,000.00
Flat Tax Rate:1%
Net Tax Payable:₹40,000.00
Input Tax Credit (ITC):₹0 (Not Permitted)
Est. Annual Compliance / CA Fee:₹12,000.00
Only quarterly payment (CMP-08) & 1 annual return (GSTR-4)
No requirement to maintain granular HSN book-keeping
Cannot issue Tax Invoices (Cannot pass GST credit to B2B buyers)
Cannot make inter-state outward supplies of goods
Option B · Standard18% Output Tax

Regular GST Scheme

Mandatory for inter-state sellers, e-commerce, and heavy B2B suppliers.

Output Tax Collected (18%):₹7,20,000.00
Less: Input Tax Credit (ITC Claim):-₹3,60,000.00
Net Tax Payable to Government:₹3,60,000.00
Est. Annual Compliance / CA Fee:₹36,000.00
Can claim 100% ITC on raw materials, software, and services
Issue Tax Invoices so B2B clients can claim full input credit
Permitted to sell across states (inter-state) & e-commerce
Monthly return filing (GSTR-1, GSTR-3B) and invoice matching

Which scheme should you choose?

Choose Composition Scheme if:

  • 90%+ of your sales are to end consumers (B2C) who don't ask for GST credit.
  • You want minimal compliance, lower accounting expenses, and no invoice matching.
  • Your purchases are from local/unregistered suppliers where ITC is negligible.

Choose Regular GST Scheme if:

  • You sell to other registered businesses (B2B) who require GST invoices.
  • You purchase substantial high-GST inputs or capital goods (laptops, machinery).
  • You sell across state borders or via Amazon/Flipkart/e-commerce.

Need to generate compliant Tax Invoices or Bills of Supply?

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Section 10 Statutory Guidance

GST Composition Scheme Rules, Eligibility & Compliance Guide

Understand statutory turnover caps, Bill of Supply requirements, CMP-08 quarterly schedules, and critical trade-offs before opting in.

1. Statutory Turnover Limits & Prescribed Tax Rates

Fixed flat rates under Section 10 of CGST Act and Notification 02/2019

Traders & Manufacturers
1% Flat Tax

0.5% CGST + 0.5% SGST. Annual turnover cap: ₹1.5 Crore (₹75 Lakhs for Special Category States).

Restaurants (Non-Alcohol)
5% Flat Tax

2.5% CGST + 2.5% SGST. Serving food or non-alcoholic drinks. Turnover cap: ₹1.5 Crore.

Service Providers (Sec 10(2A))
6% Flat Tax

3% CGST + 3% SGST. Standalone service providers and mixed suppliers. Turnover cap: ₹50 Lakhs.

2. Ineligibility & Operational Restrictions

Who cannot opt into the Composition Scheme under CGST law

No Inter-State Outward Supplies

Suppliers selling goods or services across state borders are barred from composition. All sales must remain strictly intra-state.

Zero Input Tax Credit (ITC)

Neither the composition dealer can claim ITC on inward purchases, nor can their B2B buyers claim credit on purchases made from them.

No Tax Collection from Buyers

Dealers must pay the 1%, 5%, or 6% flat tax directly out of their own profit margins; they cannot collect it separately on the bill.

Restricted Goods Manufacturers

Manufacturers of ice cream, pan masala, tobacco products, and aerated beverages are barred under Section 10(2)(e).

3. Simplified Return Filing Calendar

Enjoy zero monthly return fatigue with quarterly and annual statements

Quarterly Payment

Form CMP-08

Summary of turnover and flat tax remittance. Due on the 18th of the month following the close of each quarter (e.g., 18th July for Q1, 18th October for Q2).

Annual Return

Form GSTR-4

Comprehensive annual declaration of aggregate inward purchases and sales turnover. Due by 30th April following the end of the financial year.

Create compliant Bills of Supply or Tax Invoices

Whether you are registered under Regular GST or the Composition Scheme, SwiftGST generates legally compliant bills with zero setup.

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Composition Scheme FAQs

Practical answers to frequent taxpayer queries regarding Section 10 provisions

For manufacturers, traders, and restaurants, the aggregate annual turnover threshold is ₹1.5 Crore in most Indian states (₹75 Lakhs in 8 Special Category Northeastern and Hill States: Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand). For standalone service providers eligible under Section 10(2A), the threshold limit is ₹50 Lakhs.