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Taxability of 'Composite Supply' and 'Mixed Supply' shall be dealt with as per section 8 of CGST Act, 2017. In order to understand the statutory provisions, first we have to understand the meaning of following terms along with examples for better understanding :

Bundle of Goods and Services:

Bundle of Goods and Services means Mixture of Goods and Services i.e. supply of Goods and Services simultaneously. Further, Bundle is classified into two categories:-

i) Naturally Bundled: Means Goods and / or Services which does not change the essential character of Goods and / or Services being provided. For example, supply of Machinery (Goods) along with installation (Service) thereof at the customer site. This service is clearly said to be naturally bundled. In the said example, essential character of provision of Goods / or Services shall be Supply of Goods (Machinery) and not the installation service, which is regarded as only an ancillary service.

ii) Not Naturally Bundle: Means Provision of Goods and / or Services which are not naturally bundled. For example, a company has launched a scheme in which it sells a bottle of shampoo along with a Soap which is given as free to promote their sales and a single price is being charged. In the said example, Supply of Shampoo along with Soap is not said to be naturally bundled because the company has the option to sell shampoo and soap separately, however, in order to promote sales, both are being supplied together.

After gaining an understanding of above said terms, let us understand the concept of Composite Supply and Mixed Supply along with statutory provisions :-

i) Composite Supply: It means supply of more than one Goods and / or Services which are naturally bundled together.

Taxability: Under Composite Supply, It shall be deemed to be a supply of those Goods and /or Services, which constitutes the principle supply therein. As per the above example given in meaning of 'Naturally Bundled', Supply of Machinery along with installation services shall be taxed at the rate being levied on Supply of Machinery under GST.

ii) Mixed Supply: It means supply of more than one Goods and / or Services which are not naturally bundled together.

Taxability: - Under Mixed Supply, it shall be deemed to be a supply of that Goods and /or Services therein, which are liable to tax at the highest rate of GST. As per the above example given in meaning of 'Not Naturally Bundled', Say, Price of Shampoo along with Soap (being supply with Shampoo) is Rs 100 and rate of GST on Shampoo is 5% and on Soap is 18%, therefore, higher rate of Soap @ 18% is being charged supply of Shampoo along with Soap i.e. Rs 18 (18% of Rs 100).

Hope everyone gets a better understanding of the concept explained above.

Disclaimer: This write up is based on the understanding and interpretation of author and the same is not intended to be a professional advice.

The author is a chartered accountant and can also be reached @ hello@advalueadvisors.com.


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Category GST, Other Articles by - ankit bhutani 



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