- Short answer
- Composition GST is 1% (manufacturers; traders on taxable turnover), 5% (restaurants), 6% (services, 10(2A)) — half CGST, half SGST/UTGST.
- Traders' base
- Taxable supplies only; the other three categories' rows carry no "taxable" limit.
- Charging customers
- Not allowed under section 10(4), which also bars input tax credit; section 31(3)(c) requires a bill of supply.
- Quarterly payment
- CMP-08 by the 18th of the month after each quarter.
- Annual return
- GSTR-4 by 30 June after the financial year, from FY 2024-25 onwards.
- Shopify documentation
- Shopify's India GST page, read September 25, 2026, doesn't mention the composition scheme.
What rate does each type of composition business pay?
Rule 7 of the CGST Rules sets the central share by the kind of supplier you are, and CBIC's Composition Levy Scheme flyer, updated as on November 2022, gives the totals: 1% for manufacturers and traders, 5% for restaurant service and 6% for suppliers under section 10(2A). Half of each total is CGST, half SGST/UTGST.
Composition rate by business type
| Business type | CGST | SGST/UTGST | Total | Applied to |
|---|---|---|---|---|
| Manufacturer | 0.5% | 0.5% | 1% | Turnover in State/UT |
| Restaurant service | 2.5% | 2.5% | 5% | Turnover in State/UT |
| Trader (any other supplier) | 0.5% | 0.5% | 1% | Taxable turnover in State/UT |
| Services supplier under section 10(2A) | 3% | 3% | 6% | Turnover in State/UT |
Central share and base: Rule 7 of the CGST Rules (rows 1–4 in this order) as substituted from 1 April 2020. Totals and the SGST/UTGST half: CBIC's Composition Levy Scheme flyer, updated as on November 2022. Both read September 25, 2026.
If you supply services, don't read the CGST Act's figure as your total. Section 10(2A) says "not exceeding three per cent." — a cap on the central share only, and Rule 7 sets that share at the full 3%. The State half comes on top, so a services supplier pays 6%.
Which row you belong in is a question of eligibility, not rate. Whether a services business can use section 10(2A) at all is answered on its own page.
What turnover do you apply the composition rate to?
Of the four Rule 7 rows, only the trader's limits the base to taxable supplies. Rule 7 applies half per cent to "the turnover of taxable supplies of goods and services in the State or Union territory", so a trader's exempt sales stay outside the calculation.
The manufacturer, restaurant and services rows carry no such qualifier. The services row, for example, runs on "the turnover of supplies of goods and services in the State or Union territory" — the word "taxable" isn't there, so the exclusion written into the trader's row isn't written into these three.
None of the four rows names a sales channel, so Rule 7 doesn't set Shopify orders apart: they fall into your State or Union territory turnover on the same terms as your other sales.
Can you charge composition GST to Shopify customers?
No. Section 10(4) bars a composition dealer, including one under section 10(2A), from collecting tax from the buyer, and takes away input tax credit:
A taxable person to whom the provisions of sub-section (1) or, as the case may be, sub-section (2A) apply shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax.
The levy therefore comes out of your own takings, so it belongs in your price and margin, not on the customer's receipt.
Instead of a tax invoice you issue a bill of supply, as section 31(3)(c) requires of a registered person paying tax under section 10. What else the scheme changes in the tax your store charges has its own section.
Shopify's India GST page, read September 25, 2026, doesn't mention the composition scheme. What it offers is a general exemption, not a composition setting: "If a customer is set to be tax exempt, then no tax is charged on their orders. If a product is set to be tax exempt, then no tax is charged for that product."
When do you pay composition tax and file the return?
You pay quarterly. Under Rule 62, the tax goes in with a statement in FORM GST CMP-08 "till the 18th day of the month succeeding such quarter".
You file once a year, in FORM GSTR-4. The rule's base deadline is 30 April after the financial year, but a proviso inserted by Notification 12/2024-CT moves it to 30 June for FY 2024-25 onwards.
Rule 62 sets both deadlines for a registered person paying tax under section 10, so a services supplier under section 10(2A) pays and files on the same dates as a trader.
This article was written entirely by AI under human editorial direction. The editor sets the topic and structure, runs multi-stage validation on facts, links, and interactive elements, and verifies the output is useful from a business perspective. All claims are checked against official Shopify sources. Details may change — always confirm critical data at shopify.com.
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