Composition scheme, quarterly returns, and input tax credit—how small businesses can leverage GST to their advantage.
GST offers several benefits and schemes designed for small businesses. Many MSMEs miss out because they don't know these exist. Here's a quick guide.
Composition Scheme
If turnover is under ₹1.5 Cr (₹75 Lakh for services in some states), you can opt for composition. Pay tax at 1–5% on turnover, file quarterly returns, and no input tax credit. Simpler compliance, but you can't issue tax invoices or claim ITC. Best for B2C businesses with limited purchases.
Quarterly Returns (QRMP)
Turnover under ₹5 Cr? Opt for QRMP—file GSTR-1 and GSTR-3B quarterly instead of monthly. Pay monthly self-assessment for months 1 and 2; full return in month 3. Cuts return filing from 12 to 4 times a year.
Input Tax Credit
Claim ITC on purchases for business use. Ensure vendors have filed GSTR-1 so invoices appear in your GSTR-2B. Reconcile monthly to maximise ITC and avoid last-minute surprises.
Nil Return Facility
No outward supplies in a month? File a nil return via SMS. Quick and easy. Don't skip—non-filing attracts late fees.
Late Fee Waiver
CBIC occasionally waives late fees for delayed returns. Check notifications. Even if you miss a deadline, file as soon as possible—partial relief is better than none.
Review your options annually. As turnover grows, composition may no longer suit you. Plan the transition.
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