Composition levy option allows eligible small taxpayers to pay prescribed tax rate instead of regular GST, foregoing input tax credit.

The Act allows an eligible registered person with turnover below the prescribed threshold to opt for a composition levy at prescribed rates instead of regular tax, subject to exclusions (services other than specified supplies, non-leviable supplies, inter-State outward supplies, supplies via notified e-commerce operators, and notified manufacturers). The option lapses when turnover exceeds the threshold; composition taxpayers must not collect tax or claim input tax credit. Wrongful availing attracts tax determination and penalty under the Act.

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