GST Composite Scheme vs Regular Scheme: Which Should Your Business Choose?
Last updated: 1 September 2026
If you're registering for GST or reviewing your setup, this is usually the first real decision you make: composite scheme, or regular scheme. Here's what actually differs between them, in plain language, so you can make an informed choice — and know when it's time to talk to a CA.
The Short Version
| Composite Scheme | Regular Scheme | |
|---|---|---|
| Who it's for | Small businesses under the turnover threshold, opted in voluntarily | Everyone else, or anyone who opts out of composite |
| Tax rate | Flat, low rate on total turnover | Standard GST slab rates on each item/service |
| Charges GST to customers | No — tax is absorbed, not shown separately | Yes — CGST/SGST or IGST shown on the invoice |
| Input Tax Credit (ITC) | Cannot claim | Can claim on eligible purchases |
| Invoice type | Bill of Supply | Tax Invoice |
| Inter-state sales | Not allowed | Allowed |
| Return filing | Quarterly payment (CMP-08), annual return (GSTR-4) | Monthly or quarterly (QRMP) returns |
Composite Scheme, in Detail
The composite scheme exists to reduce compliance burden for small businesses. Eligibility is based on aggregate annual turnover staying under a government-set threshold (with a lower threshold for certain special category states, and a separate, lower threshold for service providers opting under the composition scheme for services). In exchange for simplicity, you give up two things: you can't collect GST from your customers as a separate line item, and you can't claim credit for the GST you paid on your own purchases. You also can't sell outside your own state.
Regular Scheme, in Detail
The regular scheme is the standard GST setup: you charge GST at the applicable slab rate for each item or service, show it separately on a Tax Invoice, and can claim Input Tax Credit on your business purchases — which often makes a real difference to your effective cost, especially if your inputs are already GST-paid. There's no turnover cap, and you can sell to customers in other states. The trade-off is more detailed monthly/quarterly return filing.
How to Decide
- Mostly sell to end consumers, low turnover, want simplicity? Composite is usually easier to run.
- Buy a lot of GST-paid stock/inputs and want that credit back? Regular scheme, since composite gives up ITC entirely.
- Sell across state lines, or plan to soon? You'll need the regular scheme — composite doesn't allow it.
- Turnover close to the threshold, or growing fast? Talk to a CA before opting in — crossing the limit mid-year forces a switch.
Switching Later
Neither choice is permanent. You can move from composite to regular any time you choose (or are forced to, by crossing the turnover limit), and you can opt into composite at the start of a new financial year if you're currently on the regular scheme and meet the eligibility criteria.
Whichever scheme you're on, BillSimple generates the right document automatically — Bill of Supply for composite, full Tax Invoice with GST breakup for regular.
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