Composition levy option allows eligible small taxpayers to pay a prescribed substitute tax instead of regular GST obligations.

Composition levy allows a registered person below the turnover threshold to pay a prescribed composition amount instead of regular tax, subject to prescribed rates and eligibility restrictions. Ineligible activities include certain services, non-leviable supplies, inter-state outward supplies, supplies via e-commerce operators required to collect tax, and notified manufacturing; persons sharing a PAN must opt jointly. The option lapses on exceeding the turnover threshold; composition taxpayers cannot collect tax or claim input tax credit, and wrongful availing attracts tax determination and penalty procedures.

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