GST CMP-02 explained: opting into composition

Who can opt

Section 10 allows registered persons whose aggregate turnover in the preceding year did not exceed Rs. 1.5 crore (a lower limit applies in certain special category states) to opt for composition. Service providers can opt under Section 10(2A) with a turnover limit of Rs. 50 lakh.

• No inter-state outward supplies of goods
• No supply of goods not taxable under GST
• Not a manufacturer of goods notified as excluded
• Not a casual or non-resident taxable person
• Restaurant services and supplies under Section 10(2A) have their own conditions

When and how to file

File CMP-02 on the portal before the start of the financial year, which in practice means by 31 March for the year starting 1 April. Under Rule 3(4), within 60 days from the start of that year, file ITC-03 to pay back credit on inputs held in stock, inputs in semi-finished or finished goods and capital goods, as Section 18(4) requires.

What changes after opting

• Issue bills of supply, not tax invoices, and do not collect tax from customers
• Mention 'composition taxable person' on bills and on the signboard
• No input tax credit
• Pay tax quarterly in CMP-08 and file the annual return GSTR-4
• Reverse charge tax on inward supplies is paid at normal rates

Common mistakes

• Filing CMP-02 after the year has started
• Forgetting ITC-03, which leads to demands later
• Opting for one GSTIN while another under the same PAN is not eligible
• Continuing inter-state sales after opting

Is it right for you?

Composition suits businesses selling mainly to consumers. B2B sellers often lose customers because buyers get no credit. A professional can compare the costs before you file.

Get it handled for you

Need GST registration done right the first time? Our chartered accountants prepare the documents, file the application and handle any query, so you do not have to visit the GST office. Call or WhatsApp +91 63677 44602, or use the form below.

This guide explains the law in general terms as of October 2026. Time limits and requirements can depend on the facts of your case and on the notice you received.