Composition Scheme under GST offers small taxpayers a simple way to pay tax at a fixed rate on their turnover instead of following the regular monthly return cycle. The GST portal has opened the online application process for the financial year 2026-27, so eligible businesses can opt for this scheme and reduce their daily compliance work.
This scheme is a centrally sponsored arrangement implemented by the Finance Department, Government of NCT of Delhi. It is governed by Section 10 of the CGST Act, 2017 and Rules 3 to 7 of the CGST Rules, 2017. Instead of filing monthly GSTR-1 and GSTR-3B returns, a composition taxpayer pays a flat percentage of turnover and files one quarterly statement and one annual return.
Composition Scheme - Introduction
For the financial year 2026-27, the eligibility threshold stands at an aggregate turnover of Rs 1.5 crore in the preceding financial year. This limit was raised from Rs 1 crore with effect from 1 April 2019 and has remained unchanged since. For eight specified states, namely Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand, the limit is Rs 75 lakh. Since Delhi is not one of these states, businesses registered in Delhi can opt for the scheme up to a turnover of Rs 1.5 crore.
Existing taxpayers must file Form GST CMP-02 on the GST portal before the commencement of the relevant financial year. For the financial year 2026-27, the window to file CMP-02 closed on 31 March 2026. New taxpayers can opt for the composition levy while applying for fresh registration through Part B of Form GST REG-01. Participants must file Stock Intimation within 30 days of opting for the levy.
Key Information
| Scheme Name | To Opt for the Composition Scheme |
|---|---|
| Level | State |
| Scheme For | Individual |
| Beneficiary State | Delhi |
| Category | Banking, Financial Services and Insurance |
| Benefit Type | Cash |
| DBT Scheme | No |
| Nodal Department | Finance Department |
| Turnover Limit | Rs 1.5 crore (Rs 75 lakh for specified states) |
| Composition Rates | 1% for manufacturers and traders, 5% for restaurants, 6% for service providers |
| Official Website | gst.gov.in |
Benefits
Composition Scheme lowers the burden of tax payment and return filing for small businesses. Instead of the monthly return cycle, a composition taxpayer files one quarterly statement and one annual return, which saves both time and effort.
- Simplified GST Compliance: Eligible taxpayers pay tax at a fixed rate on turnover rather than the regular GST regime, which reduces the number of returns and the overall compliance load.
- Lower tax rates: Manufacturers and traders pay tax at 1%, restaurants at 5% and service providers at 6%, which is far below the regular GST rates.
- No monthly returns: A composition dealer files the quarterly statement in Form GST CMP-08 and the annual return in Form GSTR-4 instead of monthly GSTR-1 and GSTR-3B.
Eligibility
Only regular GST taxpayers who stay within the turnover limits can opt for the composition levy. The option is indivisible across registrations, which means all registrations under the same PAN must opt for the scheme together.
- The applicant must be a regular GST taxpayer with an aggregate annual PAN-based turnover within the limit of Rs 1.5 crore (Rs 75 lakh for specified states) in the preceding financial year.
- New Taxpayers: Persons liable to register under the GST Act can opt for the composition amount during the new registration process through Part B of Form GST REG-01.
- Existing Taxpayers: Taxpayers registered as normal taxpayers must file Form GST CMP-02 on the GST portal before the commencement of the financial year.
- Persons excluded from the scheme include casual taxable persons, non-resident taxable persons, suppliers of goods not leviable to GST, and manufacturers of notified goods such as ice cream, pan masala, tobacco, aerated water and bricks.
Application Process
Existing taxpayers can apply for the composition levy online through the official GST portal. The steps are given below.
STEP 1 - Visit the official website at gst.gov.in and log in using your credentials.
STEP 2 - Navigate to the Services menu, go to Registration and select Application to Opt for Composition Levy.
STEP 3 - Verify your business details, including GSTIN, legal name and address.
STEP 4 - Review and select the Composition Declaration to confirm that you will follow all the applicable conditions.
STEP 5 - Check the verification box to declare that all the information provided is accurate.
STEP 6 - Select your authorised signatory and enter the place of business to activate the submission options.
STEP 7 - Choose your preferred submission mode, which can be DSC, E-sign or EVC.
STEP 8 - Confirm the action by clicking Proceed. If using DSC, select the signature, click Sign and wait for the success message.
STEP 9 - Upon successful validation, an Application Reference Number (ARN) is sent to your registered email and mobile number within 15 minutes.
Documents
Keep the following details ready before starting the application so that the process runs smoothly.
- Permanent Account Number (PAN)
- Goods and Services Tax Identification Number (GSTIN)
- Form GST REG-01 for new taxpayers
- Form GST CMP-02 for existing taxpayers
- Stock Intimation filed within 30 days
- Details of stock held on the day preceding the application
- Details of inward supply from unregistered persons
- Input Tax Credit (ITC) reversal details
Compliance After Opting In
Once a taxpayer opts for the scheme, certain filing requirements must be met on time. The quarterly statement of self-assessed tax is filed in Form GST CMP-08 by the 18th of the month following the quarter. The annual return is filed in Form GSTR-4 by 30 June following the financial year, a date that was revised from 30 April by Notification No. 12/2024-Central Tax dated 10 July 2024. A composition dealer cannot claim input tax credit and must issue a bill of supply instead of a tax invoice.
References
FAQ's
What is the primary objective of this scheme?
It provides a simplified tax payment framework for eligible GST taxpayers to reduce compliance burdens by paying tax at a fixed rate on turnover.
Who is eligible to participate?
Regular GST taxpayers who stay within the annual turnover limit of Rs 1.5 crore (Rs 75 lakh for specified states) and satisfy the GST eligibility conditions can participate.
Can a new taxpayer register for this scheme?
Yes, new taxpayers can opt for the scheme while applying for GST registration through Part B of Form GST REG-01.
How do existing taxpayers apply?
Existing taxpayers must file Form GST CMP-02 on the GST portal before the start of the financial year. For FY 2026-27, the window closed on 31 March 2026.
What are the composition tax rates?
Manufacturers and traders pay 1%, restaurants pay 5% and service providers under Section 10(2A) pay 6% on their turnover in the state.
Are there specific filing requirements for stock?
Yes, applicants must file Stock Intimation within 30 days of opting for the scheme. Failure to do so may result in removal from the scheme.
What quarterly and annual forms are mandatory?
Taxpayers must file the quarterly statement in Form GST CMP-08 by the 18th of the month following the quarter and the annual return in Form GSTR-4 by 30 June.
Who is excluded from this scheme?
Non-resident foreign taxpayers, casual taxable persons, suppliers of goods not leviable to GST, and manufacturers of specific notified goods are ineligible for the Composition Scheme.