Comparison
Composition Scheme vs Regular GST Scheme
The one GST decision every small business actually has to make. Here's the honest trade-off, not just the tax-rate difference.
| Proprietorship | LLP | Private Limited | |
|---|---|---|---|
| Tax rate | 1% (traders/manufacturers) – 5% (restaurants), flat. | Standard GST slabs (5%/12%/18%/28%) depending on goods or services. | |
| Input tax credit | Not available — GST paid on purchases is a pure cost. | Available — GST paid on purchases offsets GST collected on sales. | |
| Interstate sales | Not allowed — Composition Scheme is single-state only. | Allowed, no restriction. | |
| Marketplace selling | Not accepted by most marketplaces (Amazon, Flipkart require Regular GST). | Required and accepted everywhere. | |
| Filing frequency | Quarterly. | Monthly (GSTR-1, GSTR-3B). | |
| Best for | Small, single-state businesses with local, price-sensitive customers. | Anyone selling interstate, on marketplaces, or to B2B customers claiming ITC. |
Choose Composition Scheme if
You sell only within your state, turnover is under ₹1.5 crore, and your customers don't need a GST-inclusive tax invoice.
Choose Regular GST if
You sell on marketplaces, sell interstate, or want to claim input tax credit on what you buy — which covers most growing businesses.
Not sure which applies to you
Take the GST Advisor quiz, or read the full Composition Scheme guide for the complete picture before deciding.