GST Composition Scheme vs Regular Scheme Calculator
The composition scheme replaces the whole GST calculation with a flat percentage of turnover, but you lose input credit and cannot pass tax on to buyers. This calculator compares the two routes with your own numbers.
Your numbers
Composition is open to eligible goods suppliers up to Rs 1.5 crore, or Rs 75 lakh in the special category states.
Your results
Excludes the commercial effect on B2B customers, who cannot claim credit on composition sales. Check eligibility and current limits before opting in.
Net tax by scheme as purchases rise
Sweeps Annual purchases of inputs (excluding GST) from 0 to 8000000, holding your other inputs fixed.
Review your GST tax configuration
Optional: a short review of how your ERP handles GST registration type and tax codes.
Optional. The tool and every export work without this. No spam.
How to use the calculator
Enter turnover, the composition rate that applies to you, your normal output GST rate and your annual purchases with their average GST rate. The tool computes net tax under regular registration as output tax minus input credit, and tax under composition as a flat share of turnover. The chart sweeps purchases so you can see where the cheaper scheme changes, which is the break-even point for your business.
- Use values without GST
- Include only purchases that earn credit
- Read the break-even from the chart crossing point
- Test best and worst case purchase levels
The logic of the comparison
Under regular GST you collect tax on sales, deduct credit on purchases and pay the difference. Under composition you pay a fixed rate on turnover, such as 1 percent for manufacturers, and nothing else. Because you cannot collect tax, you must price inside the same margin. The comparison here holds your selling price constant, which is the fair test for a business that mainly sells to consumers or to unregistered buyers.
Reading the result
A manufacturer with Rs 90 lakh turnover selling at 18 percent, with Rs 55 lakh of purchases at 18 percent, owes Rs 16.2 lakh output tax against Rs 9.9 lakh credit, so Rs 6.3 lakh net. Composition at 1 percent costs Rs 90,000. Composition looks far cheaper on tax, but that ignores customers who lose credit and may switch to registered competitors. Low value-add traders see the biggest effect.
Mistakes to avoid
Many owners compare only the tax line and forget that a registered business customer will pay more with a composition supplier because they get no credit. Others cross the limit mid-year or make an inter-state sale, which is not allowed under composition for goods.
- Ignoring loss of B2B customers
- Forgetting that inter-state supply is barred
- Missing the quarterly CMP-08 payment cycle
- Not printing Bill of Supply instead of tax invoice
Frequently Asked Questions
Who can opt for the composition scheme?
Eligible suppliers of goods, and some service providers at a separate rate, whose aggregate turnover is within the notified limit. The limit is Rs 1.5 crore in most states and lower in special category states. Inter-state outward supply and e-commerce supply are generally not allowed.
Can a composition dealer claim input tax credit?
No. Input tax credit is not available and tax cannot be shown or collected from customers. Purchase GST becomes part of the cost. That is why this calculator treats it as no credit on the composition side.
How is composition tax paid?
It is paid quarterly through form CMP-08, with an annual return in GSTR-4. Check the current due dates before planning cash flow, since these have been revised over time.
Does the break-even change with output rate?
Yes. A higher output rate raises regular tax relative to credit, and a higher purchase share raises credit. Change the inputs and watch the chart to find your own crossing point.
If you are choosing between schemes while moving to a new ERP, we can help you set up the tax configuration and reporting so either route stays clean.
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