Composite GST Scheme
The Composite GST Scheme is a simplified GST regime for small businesses in India — flat tax rate, quarterly returns, and no Input Tax Credit. For a standalone restaurant under ₹1.5 crore turnover, it's usually the right pick. But the rules are stricter than most owners realise.
Eligibility
A business can opt into the Composite Scheme if:
- Annual aggregate turnover is up to ₹1.5 crore (₹75 lakh in some special-category states).
- The business supplies goods, restaurants, or notified services only. Regular service providers have a separate ₹50 lakh cap.
- All GST registrations under the same PAN opt in together — you cannot mix schemes across branches.
- The business does not make inter-state outward supplies, does not supply through e-commerce operators, and does not deal in non-taxable goods.
Rates by business type
- Restaurants — 5% flat on turnover (2.5% CGST + 2.5% SGST, not shown separately on bills).
- Manufacturers & traders — 1% flat.
- Notified service providers — 6%.
The trade-off
The scheme is simpler — but you give up two things in exchange:
- No Input Tax Credit. The GST you pay on ingredients, equipment, rent and supplies cannot be reclaimed. You bear it as a cost.
- You cannot issue tax invoices. All your billing has to happen on a document called a Bill of Supply, with the phrase "composition taxable person, not eligible to collect tax on supplies" printed on it by law.
Under the Composite Scheme you cannot separately charge GST to customers. The 5% is included in your menu prices, not added on top. Adding "GST 5%" as a line item on a Bill of Supply is a compliance error and gets flagged in audits.
Filing and paperwork
- Quarterly return — CMP-08 by the 18th of the month following each quarter.
- Annual return — GSTR-4 by 30th April of the following financial year.
- Records must still be maintained for six years — the simplification is filing frequency, not documentation depth.
Opting in and out
Existing GST-registered businesses can opt into the scheme at the start of a financial year by filing CMP-02. New businesses can opt in during registration itself. Crossing the ₹1.5 crore threshold mid-year forces automatic exit — you switch to the regular scheme from the day the limit is crossed and start issuing tax invoices immediately.
In TBN software
Pass, Folio and Slate all handle regular-scheme GST today — flat or per-item rates, with CGST/SGST/IGST shown correctly and audit-safe sequential numbering. Dedicated composite-scheme billing — which switches the document to a Bill of Supply, removes the tax breakup and prints the mandatory legal line — is being added across all three, because getting this wrong is a compliance issue rather than a preference.