GST Composition Scheme for Delhi Businesses

Who can opt for the GST composition scheme in Delhi?

You can opt in if your aggregate turnover in the preceding financial year did not cross ₹1.5 crore and you mainly supply goods or run a restaurant. Service providers who do not fit that route can use the separate service composition under Section 10(2A) if turnover stayed within ₹50 lakh.

Delhi is a normal-category territory, so the ₹1.5 crore limit applies here. A lower ₹75 lakh limit applies only in the special category states named in Notification 14/2019-Central Tax. Turnover is counted on your PAN across India, so every GSTIN you hold on the same PAN must opt in together or none can.

A goods supplier under composition may also supply some services, up to 10% of the previous year's turnover in the State or ₹5 lakh, whichever is higher. A Wazirpur steel trader who earns small job-work income, for example, can usually stay in the scheme if that income stays inside the allowance.

Sources: CGST Act Section 10, CGST Rule 7 and Notification 14/2019-Central Tax, checked 10 November 2026. Rule 7 states half of each rate as CGST; the same amount is paid as SGST.

Who cannot opt for composition?

You cannot use composition if you make inter-State outward supplies, supply goods or services that are not taxable under GST, are a casual or non-resident taxable person, or manufacture ice cream, pan masala, tobacco products or aerated waters. Selling through e-commerce operators also carries restrictions.

• Inter-State sellers: a Chandni Chowk wholesaler who ships to buyers in Haryana or Uttar Pradesh is out, because composition allows only intra-State outward supplies.
• Notified manufacturers: ice cream and edible ice, pan masala and tobacco were excluded from 1 April 2019; aerated waters were added later, from 1 April 2022.
• Casual and non-resident taxable persons: barred by Section 10(2)(f).
• Marketplace sellers: the rules on supplies through operators who collect TCS have changed over time, so we check the current position before you list on Amazon, Flipkart or a food app.
• Mainly B2B sellers: not barred, but your buyers cannot claim credit on your bills, which often loses you orders.

GST composition scheme vs regular scheme: which suits you?

Composition suits shops and small manufacturers that sell to consumers inside Delhi, have thin input tax credit and want fewer filings. The regular scheme suits businesses that sell to GST-registered buyers, buy mostly from registered suppliers, or sell outside Delhi.

Since 22 September 2025 most goods fall in the 5% or 18% slab. A retailer of goods taxed at 5% under the regular scheme who also gets credit on purchases may pay less under the regular scheme than the flat 1% on all turnover, depending on margins. Run the numbers on last year's sales and purchases before you opt in. Our GST rates 2026 guide shows the current slabs.

Based on CGST Rule 5 and Section 10(4), checked 10 November 2026.

How to opt for the composition scheme: step by step

New applicants choose composition in Part B of the GST registration form, REG-01. A business already registered under the regular scheme files Form CMP-02 on the GST portal before the financial year starts, so by 31 March to begin from 1 April, and then files ITC-03 within 60 days.

1. 1

   Check last year's turnover

   Add up taxable, exempt and export turnover on your PAN for the previous financial year and confirm it is within ₹1.5 crore, or ₹50 lakh for services.

2. 2

   Check the restrictions

   Confirm you make no inter-State sales, do not manufacture notified goods and that all GSTINs on your PAN will opt in.

3. 3

   New business: opt in REG-01

   Tick the composition option in Part B of the registration application. See our GST registration in Delhi service if you have no GSTIN yet.

4. 4

   Existing business: file CMP-02

   Log in to gst.gov.in, open Services, Registration, Application to Opt for Composition Levy, and file CMP-02 before the new financial year starts.

5. 5

   File ITC-03

   Reverse the input tax credit on stock and inputs held on the day before you switch, within 60 days of the start of the year.

6. 6

   Change your bills and board

   Print bills of supply with the required wording and put "composition taxable person" on your signboard at every place of business.

Returns, due dates and payments under composition

A composition taxpayer files one statement each quarter in Form CMP-08, by the 18th of the month after the quarter, and pays the tax in cash. Once a year, the taxpayer files GSTR-4, due by 30 June following the financial year from FY 2024-25 onward.

Many websites still show 30 April for GSTR-4. That was the old date; Notification 12/2024-Central Tax moved it to 30 June. Tax under CMP-08 is paid from the electronic cash ledger, because there is no input tax credit to use. Any reverse charge tax on notified inward supplies is declared and paid in the same statement.

Source: CGST Rule 62 and Rule 3, checked 10 November 2026. Extensions, if any, are announced on gst.gov.in; see also our GST due dates page.

Rules you must follow after opting in

Once you are in the scheme, you issue a bill of supply instead of a tax invoice, write "composition taxable person, not eligible to collect tax on supplies" at the top of every bill, display "composition taxable person" on your signboard, and never collect GST from customers.

• No tax collection: showing GST on a bill while under composition is a breach of Section 10(4).
• No credit: GST you pay on purchases becomes part of your cost.
• Stay within the limit: the option lapses from the day your turnover in the year crosses ₹1.5 crore, and from that day you must issue tax invoices.
• File CMP-04 within 7 days once you stop meeting any condition, and ITC-01 within 30 days to claim credit on stock held on the date of withdrawal.
• No yearly renewal: the option continues each year until you withdraw or become ineligible.

Penalties and mistakes to avoid

If an officer finds you paid composition tax while not eligible, Section 10(5) lets the department recover the tax due at normal rates plus a penalty, through the demand procedure. Late CMP-08 or GSTR-4 also brings interest and late fees, and long non-filing can lead to cancellation.

Section 29(2)(b) allows the officer to cancel the registration of a composition taxpayer who has not filed the annual return for a financial year beyond three months from its due date. The common mistakes we see in Delhi are these:

1. Selling even one consignment to a buyer outside Delhi while under composition.
2. Charging GST on the bill because the billing software was not switched to bill of supply.
3. Opting in for the Delhi GSTIN but not for a second GSTIN held on the same PAN in another state.
4. Crossing ₹1.5 crore mid-year and not filing CMP-04 within seven days.
5. Missing the GSTR-4 date because an old article said 30 April and the business assumed it had passed.

If a notice has already arrived, see GST notice reply.

How CA in Delhi handles the GST composition scheme

We start with a short comparison of your tax under composition and under the regular scheme, using last year's sales and purchase figures. If composition saves money and fits your sales pattern, we file the opt-in, switch your billing format and run the quarterly and annual filings.

• What you send us: GSTIN or PAN, last year's sales and purchase summary, a list of any sales outside Delhi and your stock value.
• What you get back: a written comparison, the filed CMP-02 or REG-01, ITC-03 where needed, and CMP-08 and GSTR-4 filed on time with acknowledgements.
• Fee: one fixed quote covering the switch and the year of filings, agreed before work starts.

Two firms in our directory list GST registration and GST returns: Khubchandani & Co. Chartered Accountants and Moneymji. For composition switching and withdrawals, CA in Delhi passes the enquiry to the listed firm or partner professional that handles it and confirms scope before work starts. Shop owners around Wazirpur and Ashok Vihar can meet us at Netaji Subhash Place; others can work online with a GST consultant in Delhi. Call or WhatsApp +91 99114 92897.

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