In this article
Reviewed October 2026. GST rates were rationalised in September 2025 and procedures such as the Invoice Management System and refund annexures have evolved since this article was first written. Verify current rules before acting, and see our latest GST & tax news.
Startups usually choose between the regular scheme and, if eligible, the composition scheme. The choice affects pricing, cash flow and compliance effort.
Regular scheme
- Collect GST on sales and claim ITC on purchases
- Can sell inter-state and to other GST-registered businesses without friction
- More returns and reconciliation work
Composition scheme
- Pay tax at a low fixed percentage of turnover
- Simpler quarterly compliance
- No ITC and no GST charged to customers, which can hurt B2B competitiveness
- Restrictions on inter-state supply and certain business types
Eligibility limits and rates of the composition scheme are notified by the government and change from time to time. Confirm the current rules before opting.
Which one fits you?
| Situation | Usually better |
|---|---|
| B2B sales, heavy purchases, inter-state selling | Regular |
| Small local retailer selling to consumers | Composition (if eligible) |
| Online / marketplace seller | Regular |
Not sure? Our GST registration team can model both for your numbers.
Helpful tools & services
Need expert help with this?
Talk to the GstMan team. We will guide you step by step.
General information only; not professional advice. Rates, limits and due dates change. Verify with official sources or consult a professional. Reviewed October 2026. See our editorial policy.
