Opt for GST CMP-02 Composition Scheme by 31 March 2026 now

Small businesses that prefer simple, lump-sum GST tax can switch to the Composition Scheme for FY 2026-27 by filing GST CMP-02 on the portal no later than 31 March 2026. This article explains eligibility, deadlines, filing steps and post-option duties so you can decide quickly and stay compliant.

What is Form CMP-02 and who should file it?

Form CMP-02 is an online declaration that allows eligible taxpayers to opt for the scheme of Composition for the next financial year. Manufacturers of goods other than certain notified classes of goods, traders, and restaurants with turnover below the threshold are eligible to file this form in place of regular returns with a flat rate of tax.

Under Section 10 of the CGST Act, composition dealers pay tax at 1 % for traders, 2 % for manufacturers and 5 % for restaurants, but they cannot collect GST from customers or claim input tax credit (ITC). Those wanting to enjoy reduced GST compliance should file CMP-02 well before the deadline. Need a GSTIN first? Visit our GST registration page.

• Applies to goods suppliers and limited service providers


• Not available for inter-state or e-commerce outward supplies


• Once chosen, the scheme runs for the whole year unless withdrawn

Eligibility criteria for FY 2026-27

The aggregate turnover should not exceed ₹1.5 crores in FY 2025-26. For service providers with a 6% rate, the turnover should not exceed ₹50 lakh. You should also have a GSTIN and not sell ice-cream, pan-masala, and tobacco products. You should also show “Composition taxable person” on invoices.

Turnover limits and key conditions

Turnover includes all the supplies, whether taxable, exempt, or exports, throughout India under the same PAN. If you exceed the limit at any time, you are disqualified, and you must file a CMP-04 within seven days and change to regular GST. The composition dealers issue a bill of supply, not a tax invoice, and can't pass on the credit to the customers.

When should CMP-02 be filed for FY 2026-27?

You may file CMP-02 any time from 1 April 2025 up to 31 March 2026. The option becomes effective from 1 April 2026, provided the application is submitted on or before the cut-off date. Missing it means continuing as a regular taxpayer for the entire FY 2026-27.

Because the GST portal often gets busy near due dates, aim to apply at least a week earlier. Remember, the option cannot be back-dated.

1. Window to apply: 1 Apr 2025 – 31 Mar 2026


2. Effective date: 1 Apr 2026


3. Withdrawal via CMP-04: within seven days of turnover breach

Important dates up to 31 March 2026

Set reminders for 31 March 2026 (last date to opt) and CMP-08 due dates—18 July, 18 October, 18 January and 18 April (for Q4)—to avoid late fees or interest.

Impact of missing the deadline

If you miss the deadline for CMP-02, you have to file GSTR-1 and GSTR-3B on a monthly or quarterly basis and pay taxes at normal rates. This will increase paperwork for small taxpayer GST participants.

How do I submit CMP-02 on the GST portal?

Login to GST portal, go to “Services ➜ Registration ➜ Application to Opt for Composition Levy,” select FY 2026-27, tick the self-declaration, choose business verticals and submit using DSC/EVC. An ARN confirms success. Within 90 days, file ITC-03 to reverse ITC on stock.

Documents and details required

No uploads are needed, but keep turnover figures, stock valuation for ITC-03 and valid DSC/EVC credentials ready. Ensure email and mobile OTPs work.

Common mistakes to avoid

Choosing the wrong FY, skipping ITC-03 and not ticking the eligibility box are frequent errors. For more tips, see our GST compliance guide.

What tax rates and compliances apply after opting in?

Once approved, traders pay 0.5 % CGST + 0.5 % SGST on turnover, manufacturers 1 % (split 0.5 % + 0.5 %) and restaurants 5 % (2.5 % + 2.5 %). Special 6 % rate (3 % + 3 %) applies to service providers up to ₹50 lakh. Taxes are paid through quarterly GST payment CMP-08, and an annual GSTR-4 is due by 30 April.

Composition dealers cannot take ITC, issue e-invoices or make inter-state outward supplies. Timely CMP-08 filing avoids 18 % interest. Read the latest invoice rules here: new GST invoice amendments.

• CMP-08 due: 18th of the month after each quarter


• GSTR-4 annual return due: 30 April following FY


• No inter-state outward supplies allowed

CMP-08 quarterly payment & GSTR-4 annual return

CMP-08 records turnover and tax for the quarter; payment completes once you file it. GSTR-4 consolidates the four CMP-08 statements to reconcile annual figures.

Restrictions on ITC and inter-state sales

Because you forgo ITC, input costs may rise. Re-negotiate supplier pricing or consider staying regular if ITC is critical. Inter-state sales remain barred under the scheme.

Can a taxpayer exit the Composition Scheme later?

Yes. File CMP-04 to withdraw voluntarily or when turnover exceeds the limit. The switch takes effect from the date on CMP-04, after which regular returns begin. To reclaim ITC on stock, file ITC-01 within 30 days.

Keep detailed stock records to compute admissible credit accurately. For notices on wrong option or late filing, see our GST notice guide.

1. Event: turnover breach or business decision


2. File CMP-04 within seven days


3. Submit ITC-01 to re-avail credit on inputs

CMP-04 withdrawal process

Go to “Services ➜ Registration ➜ Application for Withdrawal of Composition,” state the reason, and submit with DSC/EVC. Approval is usually automatic but can be reviewed.

Transition back to regular GST and ITC effects

After exit, issue tax invoices, collect GST, and become eligible for ITC on fresh purchases. Re-entry into Composition is barred for the same FY, so plan cash flow for monthly tax liability.

Conclusion

Filing CMP-02 before 31 March 2026 lets small taxpayers lock in flat FY 2026-27 composition tax rates, minimal returns and hassle-free compliance. Missing the date means continued regular GST obligations with higher paperwork. Early filing prevents portal rush and clarifies next-year tax planning. Maintain turnover records, file ITC-03 on time and monitor CMP-08 schedules. Should requirements change, CMP-04 offers a smooth exit. For expert help with CMP-02, ITC-03 or ongoing GST turnover threshold tracking, Apply Now.