If You’re on Composition, Can You Sell to a Customer in Another State?
GSTZone Desk · Updated 2026
Short answer
No — a composition dealer is restricted to intra-state supply of goods only, and this isn’t a soft guideline. Even one genuine inter-state sale can make the dealer ineligible for the composition scheme altogether, not merely subject to extra tax on that single transaction.
In detail
This is worth stating plainly because the consequence is more serious than people often assume. It’s not that an inter-state sale by a composition dealer gets separately taxed at a different rate while the rest of the business stays in composition — Section 10(2)(c) makes intra-state-only supply a CONDITION of eligibility for the scheme itself.
That means a single inter-state sale, even an accidental or one-off one (a customer from a neighbouring state who happened to buy something, or an order that unexpectedly shipped across a state line), can put the dealer’s entire composition status at risk for that period, not just the individual transaction.
This is exactly why composition genuinely doesn’t suit a business with any realistic near-term ambition to sell beyond its home state — the scheme’s design assumes and requires a purely local, intra-state customer base.
GSTZone tip
If you’re on composition and even occasionally get inquiries from customers in other states, put a clear policy in place — either decline those specific orders, or start seriously planning your transition out of composition before an accidental inter-state sale puts your whole scheme status at risk.
Related questions
What if the customer travels to my state to buy and takes it back themselves?+
If the actual supply genuinely takes place within your state (the sale is completed and goods handed over locally), this is generally still an intra-state supply for GST purposes, regardless of where the customer later takes the goods.
Does this restriction apply to composition service providers too?+
The separate services composition scheme has broadly similar intent around keeping the taxpayer’s supply chain simple and localised, so the same caution applies.
Want the law itself?
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