GST Composition Scheme for Restaurants – 5% Rate and Quarterly CMP-08 Filing
Introduction
Running a restaurant involves managing food costs, staff expenses, rent and several other operating costs. GST compliance can add another layer of responsibility, particularly for small restaurant businesses.
The GST Composition Scheme provides a simpler compliance mechanism for eligible small taxpayers. For eligible restaurant businesses, tax is payable at a 5% composition rate, subject to the conditions of the scheme. The major advantage is simpler compliance, with tax being paid through Form GST CMP-08 on a quarterly basis instead of following the regular monthly GST return mechanism.
As of 2026, eligible restaurant taxpayers can consider composition where the applicable turnover conditions and other requirements under Section 10 of the CGST Act and related notifications are satisfied. GSTN has specifically recognised restaurant-service taxpayers within the ₹1.5 crore composition threshold framework.
GST Rate for Restaurants Under Composition Scheme
For an eligible restaurant opting for composition, the effective GST rate is:
GST Rate – 5% of turnover
The 5% rate is generally made up of:
2.5% CGST
2.5% SGST/UTGST
The restaurant composition scheme is different from the regular GST rate applicable to restaurant services. Under the regular scheme, restaurant service other than at specified premises is also generally subject to 5% GST, but with the condition that input tax credit is not available.
Who Can Opt for the Scheme?
A restaurant may opt for composition if it satisfies the prescribed eligibility conditions, including the applicable turnover limit.
For restaurant businesses, the relevant composition turnover limit is ₹1.5 crore, subject to the applicable provisions and conditions.
The taxpayer must also comply with the restrictions applicable to composition taxpayers. For example, a composition taxpayer cannot collect GST separately from customers and cannot claim input tax credit on purchases.
Quarterly CMP-08 Filing
One of the practical benefits of the composition scheme is the simplified tax-payment mechanism.
A composition taxpayer is required to furnish Form GST CMP-08 quarterly for declaring self-assessed tax and making the payment.
The general due date for CMP-08 is:
18th of the month following the relevant quarter.
For example:
Quarter CMP-08 Due Date
April–June 18 July
July–September 18 October
October–December 18 January
January–March 18 April
GSTN has confirmed the 18th-day due date for CMP-08 filing.
Important Restrictions
Before choosing composition, a restaurant owner should understand that the scheme comes with certain limitations:
GST cannot be collected separately from customers.
Input Tax Credit cannot be claimed.
A Bill of Supply, rather than a tax invoice, is issued.
The taxpayer must follow the applicable restrictions on inter-State outward supplies.
The words “composition taxable person” are required to be displayed as prescribed.
The taxpayer must pay applicable tax under reverse charge wherever applicable.
Is Composition Scheme Beneficial for a Restaurant?
For a small restaurant with relatively straightforward operations, the composition scheme can reduce the compliance burden and make GST payments easier to manage.
However, the decision should not be based only on the 5% rate. Since input tax credit is not available and GST cannot be charged separately to customers, the restaurant should compare the overall tax cost under the regular scheme with the composition scheme before opting for it.
Conclusion
The GST Composition Scheme continues to be a useful compliance option for eligible small restaurants in 2026. With a 5% composition tax rate and quarterly CMP-08 filing, it offers a relatively simple GST framework for businesses that meet the eligibility conditions.
At the same time, restaurant owners should carefully consider the loss of ITC, restrictions on the scheme and their actual turnover before making the decision. Choosing composition should be a business decision, not merely a decision based on the headline 5% tax rate.
Aman Kumar Poddar is an Accounts Executive in TAXAJ's Accounts & Taxation team. With over six years of industry experience, Aman handles bookkeeping, tax filings and day-to-day compliance for clients. TAXAJ is a multi-disciplinary consulting firm spanning finance, taxation, legal, secretarial, FEMA and IPR, with offices in Delhi, Bihar, Bangalore and Goa.
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