What the composition scheme costs you
The flat rate is attractive, but the trade-offs are structural rather than cosmetic.
- You cannot collect GST from customers or issue a tax invoice
- You cannot claim input tax credit on your purchases
- Your customers get no credit, making you unattractive to B2B buyers
- You cannot make inter-state outward supplies
- You cannot supply through an e-commerce operator that collects TCS
Who composition actually suits
It works for businesses selling to end consumers, where the customer has no use for input credit and the compliance saving is real: local retailers, small restaurants, neighbourhood service providers. It works badly for anyone selling to registered businesses, because your buyers lose credit and will price that in.
QRMP: the middle path
QRMP keeps you as a normal taxpayer with full credit and tax invoices, but you file GSTR-1 and GSTR-3B quarterly instead of monthly. Tax is still paid monthly for the first two months of the quarter, either as a fixed sum based on last period or on actual liability. For most growing businesses this is the better simplification.
Leaving the scheme
Composition eligibility ends the day turnover crosses the limit — not at year end. From that day you must issue tax invoices and file as a normal taxpayer, and you must file the intimation to withdraw. Missing the crossover date is a common and expensive mistake.
Common questions
Can I be under composition in one state and normal in another?+
No. Composition applies across the whole PAN. If you opt in, every registration under that PAN is under the scheme.
Does a composition dealer pay reverse charge?+
Yes. Reverse charge liability applies normally, and it is paid at the standard rate rather than the composition rate — with no credit available against it.
How do I opt into QRMP?+
It is chosen on the GST portal per quarter, and once selected it carries forward until you change it. Eligibility is based on the previous financial year's aggregate turnover.