---
title: "GST Composition Scheme: Rules & Limits | Model Diplomat"
description: "The GST Composition Scheme allows small Indian businesses to pay a fixed tax rate of 1-6%, simplifying compliance and reducing tax burden."
url: "https://modeldiplomat.com/learn/glossary/composition-scheme-gst"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- The GST Composition Scheme is a simplified tax option under India's GST law allowing small taxpayers below a turnover threshold to pay tax at a fixed concessional rate.
- What is the turnover limit for the GST Composition Scheme?
- Can a composition dealer claim input tax credit?
- What are the tax rates under the Composition Scheme?
- How does the Composition Scheme differ from the GST exemption threshold?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

The GST Composition Scheme is a simplified tax option under India's GST law allowing small taxpayers below a turnover threshold to pay tax at a fixed concessional rate.

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## Timeline

1. 1 July 2017

   It was conceived when the Goods and Services Tax replaced India's fragmented indirect-tax architecture on , addressing the concern that the regular GST regim…

2. 1 April 2019

   The GST Council, chaired by the Union Finance Minister, has repeatedly recalibrated the scheme—at its 23rd meeting in Guwahati in November 2017 it raised the…

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Example

In January 2019, the GST Council at its 32nd meeting in New Delhi raised the Composition Scheme turnover limit for goods suppliers to ₹1.5 crore and introduced a 6 per cent option for service providers up to ₹50 lakh, effective 1 April 2019.

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