Composition levy limits eligibility, mandates simplified quarterly compliance and bars claiming input tax credit collection.

Composition levy is a voluntary simplified regime where eligible small taxpayers pay tax as a fixed percentage of turnover with quarterly returns, must register and intimate using prescribed electronic forms, cannot issue tax invoices or collect tax from customers, and cannot claim input tax credit. Eligibility is computed on an all India basis by aggregate turnover excluding certain supplies and taxes; specified classes of persons and notified goods are ineligible. Withdrawal, denial and correction are governed by prescribed forms and procedures, including stock statements and transition to the normal tax regime with entitlement to input credit on qualifying stock.

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