TL;DR for CAs
- Composition offers lower compliance for small taxpayers.
- Turnover limits and supply restrictions apply.
- Cannot collect tax or make inter-state outward supplies (as restricted).
What it is
The composition levy allows eligible small taxpayers to pay tax at a fixed rate on turnover with simplified returns.
Who it applies to
Manufacturers, traders, and restaurants within notified turnover limits and conditions.
Key provisions
- Rate structure by category
- CMP-08 and annual return filings
- Restrictions on e-commerce/interstate supplies as applicable
Practical tips for CAs
Screen clients for interstate expansion plans before opting in. Track threshold breaches mid-year.
Common mistakes
Issuing tax invoices; crossing threshold without migrating; mixing ineligible services.
For general guidance only. Verify with the latest Finance Act, GST notifications, and ICAI guidance notes before advising clients.