Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

A new concept of supplying the goods together has been introduced in GST regime which will cover supplies made together irrespective of the fact whether they are related or not. Though the concept of bundled services was there under Service Tax Law which is similar to composite supply but the concept of mixed supply is totally new.

Composite Supply

Section 2(30) of the GST Act defines Composite Supply as a supply of two or more taxable supplies of goods or services or both or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.

Principal Supply is defined in Section 2(90) of the Act. It means the supply of that goods or service which constitute the predominant element of the composite supply.

So for a Composite Supply two conditions are to be fulfilled:

(a) Supply of two or more goods or services together.
(b) They are naturally bundled and supplied together in the ordinary course of business.
(c) One of them is a Principal Supply.

Tax liability on Composite Supply

Section 8 of the GST Act provided that a composite supply shall be treated as the supply of such Principal supply. So if the Principal supply is Supply of goods than the rate of tax applicable on such goods will be the rate applicable on the composite supply and vice versa.

Now let us understand this with few examples.

'A' goes to a service station for service of his car. Now during the course of service certain parts of the car are changed. Now this will be a composite supply of labour job and parts (goods) where labour job will be the Principal Supply and has predominant element and tax will be paid on composite supply as it is a supply of labour job.

Now lets us take the other way round.

'A's car engine breaks down and he goes to service station for its replacement and during the course of replacement certain labour job is done. Now this will be composite supply of goods (engine) and labour job but here the predominant element will be change of part or Supply of goods and not that of service and now this will be supply of goods and tax will be paid on the rate at which that engine (goods) is taxable.

Mixed supply

Mixed supply under GST means two or more individual supplies of goods or services, or any combination, made together with each other by a taxable person for a single price. Each of these items can be supplied separately and is not dependent on any other.

It shall not be a mixed supply if these items are supplied separately.

For tax under GST, a mixed supply comprising two or more supplies shall be treated as supply of that item which has the highest rate of tax.

Illustration in Revised GST law: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices when supplied for a single price is a mixed supply. All can be sold separately. Assuming aerated drinks have the highest GST rate, aerated drinks will be treated as principal supply.

Let us consider another set of examples:

Booking train tickets: You are booking a Rajdhani train ticket which includes meal. It is a bundle of supplies. It is a composite supply where the products cannot be sold separately. You will not buy just the train meal and not the train ticket. The transportation of passenger is, therefore, the principal supply.

Many shops offer a free bucket with detergent purchased. This is a mixed supply as it does not satisfy the 2nd condition, i.e., it can be sold separately. You can buy either just a bucket or just detergent. The highest rate of GST will then apply. Assuming that plastic buckets have the higher rate, this rate will apply on the whole mixed bundle.


Published by

Varun Chadha
(Taxation Advisor)
Category GST   Report

5 Likes   13 Shares   16500 Views


Related Articles


Popular Articles

Follow Book Book GST Live Course Book Business Course caclubindia books

CCI Articles

submit article

Stay updated with latest Articles!