What is GSTR-3B and when is it due?

GSTR-3B is a monthly self-declared summary GST return. For regular taxpayers, it is due by the 20th of the following month. Late filing attracts ₹50/day late fee (₹25 CGST + ₹25 SGST), capped at ₹5,000.

How do I reply to a DRC-01 GST notice?

DRC-01 is a show-cause notice for tax demand. Log in to GST portal, go to Services > User Services > View Additional Notices, select the notice and file a reply within 30 days — either agreeing and paying, or disputing with supporting documents.

What is the late fee for filing GSTR-1 late?

Late fee for GSTR-1 is ₹50/day (₹25 CGST + ₹25 SGST). For nil returns it is ₹20/day. Maximum cap is ₹10,000 per return. GSTR-1 is due by the 11th of each month for monthly filers.

Can I claim ITC on hotel and restaurant bills?

ITC on restaurant food and beverages is blocked under Section 17(5) CGST Act — not claimable. However, ITC on hotel accommodation is allowed if used for business purposes and the hotel provides a GST invoice with your GSTIN.

What is the GST registration threshold in India?

GST registration is mandatory if annual aggregate turnover exceeds ₹40 lakhs for goods (₹20 lakhs for special category states) or ₹20 lakhs for services (₹10 lakhs for special category states). E-commerce sellers must register regardless of turnover.

GST Composition Scheme 2025: Should Your Small Business Opt In?

sai krishna
Apr 19
2 min read

If you are a small business owner tired of monthly GST return filings and complex ITC calculations, the Composition Scheme might be your best option. Here is everything you need to know before opting in.

What is the Composition Scheme?

The Composition Scheme is a simplified GST compliance option for small taxpayers. Instead of paying GST at standard rates (5%, 12%, 18%, 28%) and filing monthly returns, you pay a fixed flat percentage of your turnover as tax and file returns only once a quarter (GSTR-4 annually + CMP-08 quarterly).

Who Can Opt for Composition Scheme?

You can opt if your annual turnover is below Rs 1.5 crore (Rs 75 lakh for special category states). Eligible categories: Manufacturers of goods. Traders (dealers buying and selling goods). Restaurants NOT serving alcohol. Service providers with turnover up to Rs 50 lakh (special rate: 6%).

Composition Scheme Tax Rates

Manufacturers: 1% of turnover (0.5% CGST + 0.5% SGST). Traders: 1% of turnover. Restaurants (no alcohol): 5% of turnover. Service providers (Section 10(2A)): 6% of turnover. Important: These rates apply on total turnover — NOT on profit.

Key Benefits

1. Less paperwork — only quarterly CMP-08 and annual GSTR-4. 2. No monthly GSTR-1 or GSTR-3B. 3. Simple flat-rate tax calculation. 4. No need to maintain detailed invoice records for ITC. 5. Lower compliance cost.

Key Restrictions — Who Cannot Use It

1. Cannot make inter-state supplies (only local sales allowed). 2. Cannot supply through e-commerce operators (Amazon, Flipkart). 3. Cannot claim Input Tax Credit (ITC). 4. Cannot issue a Tax Invoice — must issue Bill of Supply instead. 5. Must display 'Composition Taxable Person' on all bills and signboards. 6. Suppliers of tobacco, pan masala, and ice cream are excluded.

Is Composition Scheme Right for You?

Choose Composition Scheme if: You sell only locally (within your state). Your customers are mostly end consumers (not GST-registered businesses). You want to reduce compliance burden. You do not have large input costs that would generate ITC. Avoid Composition Scheme if: You sell to GST-registered businesses who need a tax invoice for ITC. You sell pan-India or online. Your input costs are high and ITC benefit is valuable.

Not sure which scheme suits your business? Comment below or follow GSTvala on Instagram @gstvala for daily GST tips.