Composition scheme or regular GST – which actually costs you less in FY 2026-27? The composition rates and limits did not change in GST 2.0, but the regular scheme around them did: the 12 and 28 percent slabs are gone, most goods now sit at 5 or 18 percent, and a standalone restaurant under the regular scheme is at 5 percent without input credit – mandatorily. This calculator holds your customer prices constant and compares the real GST cash cost of the two schemes, checks your eligibility, and flags the B2B trap that arithmetic alone misses.
Compare the two schemes
Notified goods: ice cream, pan masala, tobacco, aerated waters and bricks – manufacturing these bars composition, trading them does not.
What changed in GST 2.0 – and what did not
| Point | Position (verified July 2026) |
|---|---|
| Composition scheme | UNCHANGED by GST 2.0 – section 10 limits (Rs 1.5 crore goods / Rs 75 lakh in eight special states / Rs 50 lakh services) and the 1, 5 and 6 percent rates all stand as before |
| Regular slabs | The 12 and 28 percent slabs were abolished from 22 September 2025 – most goods now fall at 5 or 18 percent, with a 40 percent rate for demerit goods and about 3 percent for gold |
| What that does to the comparison | For goods that moved 12 to 5 or 28 to 18, the regular scheme got cheaper and composition lost some edge; for 40 percent goods, a trader’s 1 percent composition rate became dramatically better – if eligible |
| Restaurants | A standalone restaurant under the REGULAR scheme is 5 percent without input credit – mandatory, no option to elect 18 with credit. Composition restaurants pay 5 percent of turnover from their own pocket. The two now differ mainly on who bears the tax and the filing load |
| The 8 special states | Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand have the Rs 75 lakh goods limit – Assam, Himachal and J&K get the full Rs 1.5 crore |
| E-commerce | Composition dealers may sell GOODS through e-commerce operators within the state since 1 October 2023; supplying SERVICES through an e-commerce operator still bars the scheme |
| Filing load | Composition: four quarterly CMP-08s plus one annual GSTR-4 (due 30 June) – five filings a year, no GSTR-9. Regular: monthly GSTR-1 and 3B, or QRMP up to Rs 5 crore with monthly tax payment anyway – plus 2B-matched credit discipline |
| The B2B reality | A composition dealer issues a bill of supply and cannot pass on credit – registered buyers lose the ITC they would get from a regular supplier, which is why B2B-heavy businesses usually stay regular whatever the arithmetic says |
Composition vs regular – FAQs
Did GST 2.0 change the composition scheme?
No. The September 2025 rate rationalisation abolished the 12 and 28 percent slabs on the regular side but left section 10 untouched – the Rs 1.5 crore and Rs 50 lakh limits and the 1, 5 and 6 percent composition rates are the same in FY 2026-27 as before. What changed is the comparison: the regular scheme became cheaper for many goods, so the composition decision deserves a fresh look.
Who can opt for composition in FY 2026-27?
Goods suppliers with preceding-year aggregate turnover up to Rs 1.5 crore (Rs 75 lakh in eight special-category states), and service providers up to Rs 50 lakh under section 10(2A). You must not make inter-state outward supplies, must not supply services through an e-commerce operator, and must not manufacture the notified goods – ice cream, pan masala, tobacco, aerated waters or bricks. Trading in those goods is fine; manufacturing them is not.
What are the composition rates and on what base?
Manufacturers and traders pay 1 percent, restaurants 5 percent, and 10(2A) service providers 6 percent – split equally between CGST and SGST. The base differs: traders pay on TAXABLE turnover only, while manufacturers, restaurants and 10(2A) suppliers pay on total turnover in the state including exempt supplies – a detail that matters if you have significant exempt sales.
Can a composition dealer sell on Amazon or Flipkart?
For goods, yes – since 1 October 2023 composition dealers may make intra-state supplies of goods through e-commerce operators, with the operator collecting TCS under the special procedure. Supplying SERVICES through an e-commerce platform still disqualifies you, and inter-state sales remain barred either way.
Why does a high B2B share kill the composition case?
A composition dealer issues a bill of supply, not a tax invoice, and cannot charge GST. A registered buyer purchasing from you gets no input credit – buying the same item from a regular dealer effectively costs them up to 18 percent less after credit. That commercial reality usually outweighs the composition scheme’s own savings, which is why the calculator flags it separately from the arithmetic.
How does the comparison work for restaurants now?
Both routes are 5 percent without input credit – the regular scheme mandatorily so for standalone restaurants since GST 2.0. The difference: under regular you collect the 5 percent within your menu price and pay it over; under composition you cannot collect it and pay 5 percent of turnover from your margin – but file just five returns a year. For most standalone restaurants the tax cost is nearly identical and the decision rides on compliance and billing preferences.
What about traders of 40 percent goods?
Demerit goods – pan masala, tobacco products, aerated drinks and luxury items – moved to the 40 percent slab. Manufacturers of most of these were always barred from composition, but TRADERS remain eligible and still pay just 1 percent of turnover, which makes composition dramatically cheaper on paper. Watch this space though: the anomaly is an obvious candidate for a future Council fix.
What returns does a composition dealer file?
A quarterly statement in CMP-08 with tax payment by the 18th of the month after each quarter, and one annual return in GSTR-4 by 30 June following the financial year. No GSTR-1, no GSTR-3B, no GSTR-9. The trade-off: no input credit, and the scheme’s conditions must hold all year.
How do I opt in or out?
Opt in by filing CMP-02 before the financial year starts (by 31 March), and reverse the input credit sitting in your stock and capital goods through ITC-03. Opting out – voluntarily or on crossing the limit – takes CMP-04, after which ITC-01 lets you claim credit on the stock you hold as you re-enter the regular scheme. Mid-year exits are mandatory the day you breach a condition.
Is the 6 percent services composition worth it?
Often not, once you look closely: 6 percent of total turnover with no credit, against a regular service provider charging 18 percent on top of the price (B2B clients reclaim it) and crediting input GST. It fits B2C service businesses with thin input costs – think coaching, salons, repairs – below Rs 50 lakh. For B2B services the regular scheme nearly always wins.
Method notes: composition provisions per section 10 of the CGST Act and Rule 7 of the CGST Rules as they stand in July 2026 (verified unchanged by the GST 2.0 rate rationalisation effective 22 September 2025); regular-scheme slabs, the standalone-restaurant position and filing cadences per the 56th GST Council decisions and current notifications. The comparison holds customer prices constant – B2C prices treated as tax-inclusive, B2B prices as GST-extra – and is indicative, not advice: margins, credit cycles and customer mix differ by business, and scheme choices bind for the year. Computations run entirely in your browser. Reviewed by a practising CA; updated July 2026.